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Best Business Books of 2006


Wal-Mart would be nowhere without the metal box. When experts look for the factors behind the recent vast increase in world trade, they tend to point to such things as new communications technology and the advance of Third World capitalism. But, says author Marc Levinson, there's another, often-overlooked cause: the shipping container. In the early 1960s, before the now-ubiquitous can was much employed, moving goods from one country to another was often prohibitively expensive. Today freight costs are all but negligible. In The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger (Princeton University), Levinson delivers an engrossing account of how this came to be. Of particular note is his chronicle of Malcom P. McLean, a North Carolina truck driver who built a freight empire and then, 50 years ago, gambled everything to create the first company with containerized ships.

You say you would rather think out of the box? Well, Levinson's work is only one of the top 10 business books of the year as selected by BusinessWeek reviewers.

2006 produced a bumper crop of memoirs and biographies. A pioneer of capitalist creativity is described in Hershey: Milton S. Hershey's Extraordinary Life of Wealth, Empire, and Utopian Dreams by Michael D'Antonio (Simon & Schuster). This is a richly detailed look at the chocolate man and an absorbing history of his company. By the late 1890s, Hershey had figured out that the future lay not in caramels, which he first made, but in chocolate, which had already claimed a mass market in Europe. D'Antonio describes how Hershey perfected a distinctive version of the stuff and had sales approaching $8 million by 1913. The author also devotes considerable ink to the Pennsylvania town Hershey designed according to his utopian principles. By the early 1900s, the manicured burg featured electrified, centrally heated homes owned by well-paid company workers, a state-of-the-art chocolate factory, a medical clinic, and, as its centerpiece, a model school for orphan boys supported by a foundation that held the majority of company stock.

A much better known capitalist and philanthropist is the subject of David Nasaw's absorbing Andrew Carnegie (Penguin Press). By the time of his death, in 1919, Carnegie had bequeathed a total of $350 million, or at least $8 billion in today's dollars. "My business is to do as much good in the world as I can," he announced. But as Nasaw shows, Carnegie's roles as philanthropist and rapacious businessman were closely linked. He pushed his partners and his employees relentlessly, so that he could give away even more money. He did his best to monopolize steel production, fix prices, and restrict foreign steel with tariffs. He extolled leisure for all, yet he fought bitterly against steelworkers' attempts to cut their 12-hour days to 8 hours. The book is a meticulous account of a paradoxical American original.

You can read about a mogul who turned his fortune to very different ends in The Sack of Rome: How a Beautiful European Country with a Fabled History and a Storied Culture Was Taken Over by a Man Named Silvio Berlusconi by veteran journalist Alexander Stille (Penguin Press). As Prime Minister from 2001 to 2006, Berlusconi owned or controlled all six of Italy's national television networks, or 90% of the country's airwaves. But here, Berlusconi comes across not as a talented CEO but as an unscrupulous salesman who ruthlessly deploys cronyism for maximum financial gain, exploits media power to attack rivals, and changes laws to derail criminal lawsuits against himself. At the same time, readers come to understand Berlusconi's showman-like appeal. Said reviewer Gail Edmondson: "The Sack of Rome is a frightening case study and one that has plenty of bearing on our own media-driven politics."

One other biography focuses on a living legend: Andrew S. Grove, the former Intel CEO. In Andy Grove: The Life and Times of an American (Portfolio), Harvard Business School historian Richard S. Tedlow takes a comprehensive look at the tech titan's life and work, providing greater entr??e than ever before into Grove's mind. Tedlow tracks the passage of young Andr??s Istv??n Gr??f from communist Hungary to the U.S., his schooling, and his early years at Intel Corp., (INTC) where he became operations director under co-founders Robert Noyce and Gordon E. Moore. Later chapters describe the company's growth pains, various crises, and struggles to adapt to rapid technological change. The author draws on Grove's personal journals to show the evolution of his thinking??nd to chronicle his doubt and satisfaction. One shortcoming: Grove's personal life remains relatively unexplored.

Why are some companies able to crank out one breakthrough after another, while others search in vain for a single great idea? To Curtis R. Carlson of research and development contract firm SRI International, true innovation is less the result of individual eureka moments than of taking a methodical, disciplined approach. In Innovation: The Five Disciplines for Creating What Customers Want (Crown Business), Carlson and co-author William W. Wilmot say: "The best source of information...is your prospective customers and partners." Other recommendations include building innovation teams, brainstorming frequently with participants from different departments, empowering "champions" to keep initiatives on track, and aligning the entire enterprise around creating value for customers. Carlson knows whereof he speaks. His company, renowned since the 1970s, pioneered everything from the computer mouse to robotic surgery.

The most disruptive innovation faced by a majority of companies continues to be the Internet. And in the analysis of Wired Editor-in-Chief Chris Anderson, the far-reaching effects are still being absorbed. In The Long Tail: Why the Future of Business Is Selling Less of More (Hyperion), Anderson asserts that the mass market is giving way to "a mass of niches." As the Net relentlessly cuts the cost of finding and distributing products, it's accelerating the arrival of entirely new markets for obscure books, movies, games, foodstuffs, and more. Now, niche products can be stocked efficiently in warehouses, ordered by anyone with a computer and a credit card, and shipped cheaply around in the world. Does that spell the end of the Hollywood blockbuster? Some of Anderson's claims are exaggerated, but The Long Tail is one of this season's most thought-provoking books.

Also stimulating is The Poker Face of Wall Street (Wiley), which reviewer Peter Coy called "a sprawling, idiosyncratic, and sometimes poker-obsessed book filled with nuggets about American history and finance." Author Aaron Brown, a respected Morgan Stanley (MS) risk manager with degrees from Harvard University and the University of Chicago, offers a novel thesis: Gambling has been a basic engine of U.S. capitalism. For example, he says, betting became a key means of capital formation on the Western frontier, providing winners with stakes big enough to fund major projects. The same wagering instinct, says Brown, lay behind the creation of the agricultural futures exchanges. The book's arguments, such as a perceived mathematical link between bookmaking on the World Series and the pricing of stock options, aren't always easy to follow. But it's the quirkiness that makes this work special.

Another surprising volume is Why Most Things Fail: Evolution, Extinction & Economics (Pantheon) by economist Paul Ormerod. Failure, says the author, is endemic: The world is simply too complex for anyone to make predictions about anything but the near future. What you can't predict, you can't avoid. As a consequence, mass extinction??hether of species or businesses??s more common than we might imagine. What can be done? Ormerod provides a few suggestions. For government, he counsels restraint, since most interventions in market workings will just make matters worse. For business, he offers two bits of advice. Keep trying to predict the future, because "even a tiny bit of genuine knowledge goes a very long way." And keep experimenting, because eventually something will pan out.

Finally, a fun read that draws insights from a wide range of scholarly disciplines is Michael J. Mauboussin's More Than You Know: Finding Financial Wisdom in Unconventional Places (Columbia University). The intellectually omnivorous author is chief investment strategist at Legg Mason Capital Management and an adjunct professor at Columbia Business School. In 30 brief chapters, he tackles investment philosophy, the psychology of investing, competitive strategy, and complexity theory. Abstract concepts, from the difference between risk and uncertainty to the distinction between individual and collective decisions, are described with the help of a diverse set of characters, from gambling legend Puggy Pearson to golfer Tiger Woods. "You will be a better investor, executive, parent, friend??erson??f you approach problems from a multidisciplinary perspective," he writes. With prospects like that, you'll be more than ready to face the New Year.

By Hardy Green


Race, Class, and the Future of Ferguson
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