Millions of readers have consumed the wisdom of such greats as Peter Deming, Jack Welch, Jeff Bezos, Steve Jobs, Tom Peters, Jim Collins, Peter Drucker and Michael Porter. Yet proportionally few if any new industry giants arise as a result of all this excellent advice: most businesses fail to scale.
With thousands of books on small business, leadership and entrepreneurship available, one might wonder why business success is not more common. Can we really improve our odds by following the wisdom of chronicled success?
Yes, we can—with one caveat: reading about business success can just as easily diminish your chances of actually achieving it. You can modestly improve your odds by learning to avoid obvious mistakes; but you can also become confused by trying to decide which advice to follow.
Business success comes from successfully navigating a vast array of variables and decisions, which all depend on your specific context, time, place, and circumstances. Mastering this complexity is both an art and a science. Think of the game of chess: there are 64 squares, 16 pieces and a relatively simple set of rules—a child can understand the basics. Yet chess masters have been playing the game for a thousand years, and still find new challenges.
According to Wikipedia, there are some 1043 possible positions after the first move alone. This tells us that even in a relatively constrained system, there’s a combinatorial explosion. The field of business has an almost infinite number of possible moves, a constantly evolving set of rules, and far more than two players competing for dominance. Business today is frighteningly unconstrained—a complex game played in the chaotic cauldron of the global economy, involving a myriad micro-decisions, macro-economic forces, and random events.
The result is that even the most assiduous application of past wisdom can never assure future success.
As well, the context of business changes constantly. Think of Henry Ford, one of the earliest successful mass manufacturers. His achievement—producing a reliable and affordable car—is an inspiration for all entrepreneurs. Yet the technological landscape has altered dramatically since then, with major advances in materials, electronics, computing, global communications and robotics.
The result is that historical insights are insufficient in this new landscape: new technology, new economic drivers and new fashions create new market dynamics that require entirely new navigational aids.
But the road markers are never obvious to the people trying to assess all the alternatives. Just as the passage of time increases complexity, it also shifts context—eroding the relevance of past observations. Although basic rules (such as the laws or supply and demand, or the strategy of hiring the best people) remain constant, many of the parameters of today’s business world would be completely alien to Adam Smith. History rarely repeats itself, at least not perfectly.
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Think of the epic battle in the 1980s between computer giants Microsoft and IBM. Back then, Bill Gates’s strategy was to penalize any PC manufacturers who used operating systems other than Windows. That would never work today: smartphone and tablet makers are wiser and wary of making IBM’s “give away the farm” mistakes. Changes in technology, competition, globalization and regulatory and trade environments can radically shift the importance of the different variables, meaning that lessons learned from one set of circumstances are increasingly ineffective in future contexts.
Another critical factor is the constantly changing business environment. Think of it as a complex fabric woven of many factors: global economics, company strategy, individual ingenuity, customer dynamics, informed decision-making, inspired timing, current market forces, timely innovation, industry competition, and corporate agility. The number of unique combinations of circumstances is virtually infinite,
While most business writers try hard to analyze the secrets of success, and to find patterns, logic and causes, we must remember that hindsight does not necessarily mean insight. Business gurus may outline the paths they took, but they may also misunderstand or misinterpret the reasons for their actions. Even the smartest can, and often do, confuse correlation with causation, emergent strategy with directed strategy, and outcomes with explanations.
So how to choose? Which books are most authoritative? The best strategy is to seek out the best-known, ones that have been critically acclaimed by experts. Select authors who have withstood the test of time—who have been deeply immersed in their fields for years. (Recall Malcolm Gladwell’s Outlier mantra of “ten thousand hours”—the minimum time necessary to achieve mastery of any skill.) Such people can distinguish real patterns from hypotheses, insights from anecdotes. They are less prone to the errors of oversimplification, overreaching pattern hypotheses or thinly slicing data.
Some writers are particularly good at understanding the vast array of different dynamics. They describe, accurately and in detail, the specific context of any business success; and they also recognize which factors are independent of context—and hence timeless. Untangling those variables, and analyzing which matter most, helps to demystify causality. Think of baking a cake: just knowing its ingredients doesn’t explain its texture and taste. The method matters as much as the constituents.
Finally, the most effective business authors tend to be the best writers. They may even be naÃ¯ve about the actual analysis; but they’re keen observers, able to intimately chronicle the story of what happened, to whom, and when—and sometimes even why. In this category are three notable books: Eric Jackson’s PayPal Wars, Steve Kemper’s Code Name Ginger, and Walter Isaacson’s biography of Steve Jobs. These writers have an eye for that allows readers to draw their own conclusions about the stories.
Will reading these books give you a serious competitive edge? Sadly, no. But they will open your mind to the existence of at least some of the causal elements that distinguish the big fish from the small fry in a vast ocean of business opportunity—and that in itself is a benefit.
Andrew Waitman has spent far more than 10,000 hours directly involved in high-growth technology businesses. He is deeply curious, analytical and pragmatic in studying causal links and applying insights between business inputs that lead to successful business outcomes. He is currently the Chief Executive Officer of Pythian, a global Data Infrastructure Managed Services company that has been on the Profit 500 ranking of Canada’s Fastest Growing Companies for the past three consecutive years.