Bookshelf | May/June 2020

View a selection of reviewed business books from the May/June 2020 print issue.
REIMAGINING CAPITALISM IN A WORLD ON FIRE

REIMAGINING CAPITALISM IN A WORLD ON FIRE

The principle of maximizing shareholder profit has exacerbated environmental degradation, economic inequality, and institutional collapse, says Harvard’s Rebecca Henderson. “Taken literally, single-minded focus on profit maximization would seem to require that firms … fish out the oceans, destabilize the climate, fight against anything that might raise labor costs—including public funding of education and health care,” she writes. Addressing these problems is not just a moral imperative for business, but a financial one, she points out, as businesses will find it challenging to make money if coastal cities are flooded and half the population is underemployed. She argues for cooperation between business and government, but sees that as only one step toward reimagining capitalism. The others include creating shared value, building purpose-driven organizations, cooperating along the supply chain, and rewiring finance with metrics that capture environmental and social costs. “We have no realistic alternatives,” she warns. “We must find a way to make this work.” (PublicAffairs, US$28)

 


Fast TimesFAST TIMES

Companies that don’t pursue digital transformation will see revenues decline by an average of 12 percent, according to Arun Arora, Peter Dahlstrom, Klemens Hjartar, and Florian Wunderlich of consulting firm McKinsey. Companies that do will see gains of 16 percent above that level. But to be successful in adopting a digital strategy, the authors warn, business leaders must recognize several essential truths: Digital transformation requires a massive commitment of funds, resources, and people. Before attempting transformation, leaders must understand where the value in their businesses lies and what they want to accomplish. Transformation will succeed only if the company culture encourages experimentation and tolerates failure. “Everything about a digital transformation should be focused on how a company can set the right direction, and then learn and adapt faster than their current—and future—competitors,” they write. The book is designed is to help leaders gain clarity and articulate their purpose as they set out on their transformative journeys. (Amazon Publishing, US$29.95)

 

 


Lead from the FutureLEAD FROM THE FUTURE

Most business leaders operate from a present-forward perspective, write Mark W. Johnson and Josh Suskewicz of the management consultancy Innosight. CEOs often look a few years ahead and try to respond to anticipated changes when they should be engaged in future-back thinking—imagining what business might look like ten years in the future and taking the steps necessary to get there. “There are countless business cases about long-established companies that failed because … leaders extrapolated the present forward instead of envisioning a truly different competitive environment,” write Johnson and Suskewicz. They acknowledge that the urgent problems of today will keep pulling harried executives back to immediate concerns, and they emphasize that companies should not abandon triedand- true products for unproven innovations. But even while leaders take care of current business, the authors note, they must constantly be “laying the groundwork for a future that is likely to be as different from the present as the present is from the past.” (Harvard Business Review Press, US$30)

 

 


Luck

LUCK

Chengwei Liu of ESMT Berlin doesn’t think that the world’s greatest performers are in control of their destinies as much as they’d like to believe—and that holds true whether those high achievers are football teams, investors, or entrepreneurs. “Luck and self-reinforcing mechanisms play a much greater role than the merit and effort of the persons involved,” writes Liu. For instance, Canadian hockey players who were born between January and March tend to have better careers because the cutoff date for joining a new league is January 1, and children born earlier in the year are bigger than their teammates; the training advantages they enjoy follow them their whole lives. In business situations, success often depends on circumstances wholly outside a manager’s control, such as political shifts, competitors’ offerings, and consumer demand. Nonetheless, Liu believes business leaders can “strategize with luck—not because there are systematic ways to get luckier than others, but because the ways people are fooled by randomness are non-random and predictable.” It’s a different way of looking at success—and for it. (Routledge, US$31.95)

 

 


In An Ideal BusinessIN AN IDEAL BUSINESS

“Management is philosophy in action,” writes Santiago Iñiguez of IE Business School. He examines the work of a diverse group of 22 women—some philosophers, some business leaders—and explores how their ideas resonate in the business world. For instance, he talks with Jiang Qiong Er, founder of a premium products company in China, about achieving “equilibrium between two opposites, reason and emotion.” After discussing neuroscience with Patricia Churchland of the University of California San Diego, he muses, “If there is a biological basis to the sense of identification and belonging … what initiatives are open to senior management to foster this feeling among the workforce?” Iñiguez believes that philosophy is critical to management precisely because the business world is so fast-paced that leaders have little time to reflect, and so they have little sense of their roles in the world. He writes, “If our behavior and our decisions at work … always respond to certain values and principles, might it not be a good idea to identify and analyze them?” (Palgrave MacMillan, $29.99)

 

 


The Merit MythTHE MERIT MYTH

In America, higher education is supposed to be the great leveler, but admissions policies at elite institutions consistently favor affluent white students over disadvantaged minority candidates, say Anthony P. Carnevale of Georgetown University’s Center on Education and the Workforce (CEW), journalist Peter Schmidt, and Jeff Strohl of CEW. According to the authors, “College has become the capstone in an inequality machine that raises and perpetuates class and race hierarchies and sinks the lower classes.” They call for serious reforms, including encouraging top institutions to change admissions policies to admit more “strivers,” their name for “young people who have encountered hardship and deprivation and demonstrated determination and resilience that will enable them to do just fine at a tough, selective college.” But they believe it’s equally important to “reach back into high schools and look ahead to labor markets to ensure students are getting the educations they need.” America’s education system will never provide social mobility, they say, until it can provide a balance between rewarding merit and providing equal opportunity. (The New Press, US$27.99)

 

 


Carbon DividendsCARBON DIVIDENDS

One way to slow climate disruption is to limit the consumption of fossil fuels. But solutions like cap-and-trade cause prices to rise; people who consume the most pay the most, but poorer consumers are harder hit because they pay a higher percentage of their incomes. There is an equitable solution, suggests James K. Boyce of the University of Massachusetts Amherst: carbon dividends. Money from fines levied on big energy producers would be disbursed equally to all citizens. Wealthy consumers who use more energy might find their costs exceed their dividends, but poorer people who consume less energy will come out ahead. And everyone—from oil companies seeking to reduce fines to middle-class consumers hoping to lower heating bills—would have an incentive to use fewer fossil fuels or invest in clean energy. This solution also benefits people who are alive right now, thus circumventing one flaw of many current proposals that “demand sacrifices by the present generation for the sake of the future generation,” writes Boyce. His well-reasoned book masterfully deconstructs a wicked problem—and offers a powerful, hopeful solution. (Polity Press, US$12.95)

 

 


Teaching By HeartTEACHING BY HEART

Harvard Business School professor Thomas J. DeLong shares personal stories and hardwon observations about what it takes to be an effective, passionate, and mesmerizing teacher. He details his own successes, failures, ambitions, insecurities, and classroom experiments, while also sharing insights about great teachers he has seen in action. One of his own courses is Authentic Leadership, and he sees strong parallels between teaching and leadership: “The best teachers are also leaders, and the best leaders are also teachers.” He explores the difficulty—and necessity—of creating a classroom experience that is equally compelling for several dozen diverse students, all of whom are driven by their own needs and biases. He also explains why he spends so much time preparing for the very first class of the semester. “It is the one that sets the standard for openness, for congruence, for being vulnerable.” An intimate look into a very public profession. (Harvard Business Review Press, US$30)

 

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