Issue link: https://www.e-digitaleditions.com/i/58063
"IMPORTANT LESSONS HAVE BEEN LEARNED, NEW PRACTICES ADOPTED, AND A BALANCE HAS BEEN STRUCK (AT LEAST FOR A WHILE) BETWEEN THE COMPETING FORCES OF REGULATION, ORDER, AND CREATIVE CHAOS." –Separating Fools From Their Money History repeats itself, and that's especially true of financial history. In Separating Fools From Their Money, Scott B. MacDonald and Jane E. Hughes give a lively and informative account of the very checkered past of Wall Street. From the Panic of 1792 to the dot-com bust, the authors find fascinating patterns in the way American financial crises unfold and are resolved. They identify four recurring themes: the existence of speculators with influence and political connections; the cyclical nature of boom and bust, scandal and reform; the larger-than-life personalities displayed by the major players; and the fervent faith in the market that leads investors into particularly disastrous courses. Even through these dark chapters, the authors believe the assorted robber barons have sometimes been forces for good, or at least innovation, in the mar- ket: "Important lessons have been learned, new practices adopted, and a balance has been struck (at least for a while) between the competing forces of regulation, order, and creative chaos." The tales of characters such as William Duer, Diamond Jim Fisk, Michael Milken, and Dennis Kozlowski are deeply entertaining— and highly edifying as well. (Transaction Publishers, $32.95) It's easy for companies to get caught up in the "corporate cycle," first focus- ing on the "brave new world" of growth, long-term results, and specific units of the business. Then, after hitting a period of stagnation, they refocus on the "back to basics" areas of profitability, short-term results, and the company as a whole. When that strategy begins to sour, it's back to the "brave new world." This continuous cycle is caused by what Dominic Dodd and Ken Favaro call The Three Tensions: prof- itability versus growth, short-term versus long-term thinking, and an emphasis on the whole versus parts of the company. Business leaders who can find their way out of the either/or trap fare significantly bet- ter at providing total shareholder return, the authors say. While they admit it's not easy, they do offer solutions. For instance, executives can achieve profitability and growth simultaneously if they focus on customer benefit—and Dodd and Favaro closely dissect how those cus- tomer benefits can be uncovered and nurtured. Highlights of the book are case studies of businesses that have been famously successful or unsuc- cessful in their attempts to integrate their companies' "tensions." (Jossey- Bass, $27.95) It might not be surprising to learn that the vast percentage of American lead- ers in the 20th century have been white males, but some of the other traits they have in common are a little unexpected. In Paths to Power, authors Anthony J. Mayo, Nitin Nohria, and Laura G. Singleton consider factors such as birthplace, religious affiliation, education, socioeconomic class, race, and sex. A disproportionate number of lead- ers have come from New York; many others have hailed from the Midwest. For most of the cen- tury, a foreign-born immigrant who wanted to make his mark would do well to head West, where an entrepreneurial spirit was rewarded. During that same time period, businessmen who were Presbyterian or Episcopalian had a better chance at being successful than members of other religions— until education, particularly an MBA degree, began to eclipse reli- gious affiliation as the background of choice. The authors illustrate their hard data with dozens of col- orful sketches of business leaders, from American Airlines president Cyrus Smith to newspaper pub- lisher Dorothy Schiff. They never forget why these tales of leadership are important. Because businesses "have had such an impact on the literal and figurative landscape of America," they write, "it is critically important to understand how this power was attained and who was able to grasp it." (Harvard Business School Press, $35) ■ z BizEd MARCH/APRIL 2007 65