Heart & Soul: Five American Companies That Are Making the World A Better Place
Robert L. Shock is the author of 55 books, including several that have made the New York Times best-seller list. Before becoming an author, Shock was the founder and CEO of two companies, Shock Associates and American Executive Life Insurance.
Shock set out to find examples of “good” companies, and to write their stories. His criteria was to find companies where the leaders treat people (customers and employees) as human beings. His goal was to find five such companies, and “it was considerably more difficult to find five companies than I anticipated.” His conclusion is that such companies are few, but by profiling these it can act as an inspiration to others. In each case Shock characterized the leaders as those who believed “if you enrich the lives of others first, you shall reap the rewards of success.” Further, he drew the general conclusion that “a company with a heart and a soul will ultimately be more successful in the marketplace.”
The book provides detailed profiles of the five companies and their leaders, indicating something of their personal motivations along with the development of their businesses. The business descriptions are stories and anecdotes more than analyses or comparisons of practices. As such, they may serve as motivation, but not much in the way of systematic development of a common approach to addressing key business problems. The broad points about ethical behavior and valuing people are a part of each story.
I admit I wanted to like this book, but it fell short of something I would recommend. There are three reasons for this. First, the author concludes, “although there are American companies with a heart and soul, their numbers are few and consequently finding them was a difficult undertaking.” Companies that misbehave make the headlines, but I have had little trouble uncovering many good companies in the Conversations I have published in Ethix. There are a number of books emerging with profiles of good companies including Ted Malloch’s Spiritual Enterprise: Doing Virtuous Business and Mark Gunther’s Faith and Fortune: The Quiet Revolution to Reform America’s Business. I don’t believe it was because of the author’s high standard, as he claims, but because he simply didn’t look hard enough. In fact, some of the companies in his profile, in my view, would pale in comparison with Flow Automotive, Pacific Crest Cabinets, or Costco to name just a few of the companies I have studied. Further, his companies were all privately owned, but I have found some great public companies as well.
Second, I believe the author’s premise that, “a company with a heart and a soul will ultimately be more successful in the marketplace” is simply not supportable. Often this is true, but it breaks down for two reasons. First, it takes much more than having a heart and soul to make a business successful. There are some creative things that must be done right, some detailed execution that must be accomplished, and there is a question of timing and luck that comes into the picture. Second, sometimes trickery succeeds, at least in the short term. In an ideal world, best behavior would be awarded with best success, but that is not the world we live in. Motivating acting well in business with the promise of success just doesn’t hold up.
The third concern is the premise of the successful company. There are certainly successful leaders, but a company does not always remain successful through leadership or external environmental changes. Witness the number of companies documented in Tom Peters’ In Search of Excellence that have fallen from respect or have subsequently failed altogether. Understanding the transient nature of success in business is sobering indeed. As a more minor criticism, companies and leaders are imperfect, and it is tricky to set them up as an ultimate model.
The book adds to the understanding that business can be done in a positive way, and that businesses can be a positive force in their communities. These profiles do help make this point. But the criticisms of the book dampen my enthusiasm for recommending it.
Reviewed by Al Erisman
Ending the Management Illusion: How to Drive Business Results Using the Principles of Behavioral Finance
by Hersh Shefrin. New York: McGraw Hill, 2008. viii, 328 pp.
Hersh Shefrin is the Mario L. Belotti chair in the Leavey School of Business at Santa Clara University. He is the author of Beyond Greed and Fear along with numerous research articles in finance and behavioral finance.
Business leaders assume they have much more control than they do. Leaders have a tendency to accept data that agrees with their point of view and reject data that does not. Followers are often confused by management decisions because they don’t understand the financial fundamentals. Businesses can address these issues by emphasizing financial literacy for all of their people, Shefrin argues. This provides the foundation for understanding, helps to avoid the biases that come from those who want to consider only their own “facts,” and provides the basis for objective leadership.
Shefrin develops this subject starting with the fundamentals of finance in chapter two. He then covers the topics of Gremlins (those biases that come from private interpretations of data causing leaders to miss things they should see), the basics of accounting (and why a subject that seems so precise to the outsider is filled with “rules of thumb”), and the subject of incentives (why common financial objectives for leaders may produce unintended consequences). He also builds the case for “open book” accounting, assuring that everyone in the organization can better understand the basis for decisions and their own role in getting the company to the goal. This necessitates intensive literacy training in finance for all employees. He concludes with the role of simulation, using a tool for gaining insight into the implications and connections between planning and execution.
This book makes the case for the importance and insight that is possible for a financially informed organization. As such, it provides essential reading for leaders and workers in any business. The book also has its weaknesses. The author has a number of hobby horses only loosely connected to his primary objective. His folksy, personal sidetracks might be distracting to some readers. More of a problem from my point of view is the author’s position that company performance can be completely measured by its financial performance: A company exists simply to make as much money as it can. There is little doubt that financial performance is a very important part of the measure of a company, but I would say only a part.
Distractions aside, I found this book to be useful and at times incredibly insightful. Another book dealing a macro view of psychology and economics, Animal Spirits: How Human Psychology Drives the Economy, and Why It Matters for Global Capitalism by George Akerlof and Robert Shiller (2009), started well with a brilliant introduction, but simply didn’t deliver on its promise. I admit I gave up on that book before the end.
This one is better. Behavioral finance is a very important area where every business person should grow in understanding. This is a good place to start.
Reviewed by Al Erisman
The Battle: How the Fight Between Free Enterprise and Big Government Will Shape America’s Future
Arthur Brooks is president of the American Enterprise Institute for Public Policy Research, and former professor of Business and Government at Syracuse University. He is the author of eight books.
According to the thesis for this book, 70 percent of Americans believe in free enterprise supported by limited government, low taxation, and the support for individual opportunity. Equal opportunity does not mean equal outcomes for individuals because, through hard work, some will make more of their opportunities than others. The remaining 30 percent believe in big government and “share the wealth” strategies seeking equal outcomes for individuals regardless of individual effort. The problem, according to Brooks, is the 30 percent who dominate the media and universities have controlled the intellectual argument sweeping the left into power in 2008. Brooks writes his book seeking to lay out the intellectual argument for free enterprise.
Overall, I was disappointed. I found a few good insights, particularly in his chapter linking happiness and fulfillment. But the general tone represents a caricature of both sides of the argument. My conclusion is that he represents a case for less than 10 percent on the extreme right, and most of his arguments are against the less than 10 percent representing the extreme left. The majority of the people I know fit in neither category, and would label his analysis “not helpful.”
Reviewed by Al Erisman