Why Bill Gates and Warren Buffett call this their favorite business book

Why Bill Gates and Warren Buffett call this their favorite business book

“Among the greatest problems facing American industry today … is ‘the problem of communication.’”

How little has changed in the 54 years since John Brooks published those words in an article about GE’s price-fixing scandal of the late 1950 and early 1960s. It’s one of a number of stories in “Business Adventures: Twelve Classic Tales from the World of Wall Street,” a collection of Brooks’ best work at The New Yorker, that would seem at first to be old news, but are surprisingly insightful and relevant to business today.

The book was first published in 1969, but went out of print for a period of time until Bill Gates and Warren Buffett brought it back to life in 2014 by proclaiming it as their favorite business book. It not only returned to print shortly after, but quickly climbed the best-seller lists.

While clearly written during a much different time, two things make the book evergreen. First, Brooks’ attention to detail, ability to convey complex ideas to the average reader and wit in the face of the business world’s absurdities make these stories stand as great pieces of storytelling. Second, the stories are also great pieces of journalism, which present unfiltered behind-the-scenes case studies – particularly of corporate crises – that today’s business leaders can learn from.

Some of the most famous entries include “Xerox Xerox Xerox Xerox,” a history of Xerox Corporation’s rise, and “The Fate of the Edsel,” a comprehensive account of what lead to Ford’s biggest flop. The above quoted text comes from “The Impacted Philosophers,” in which he details a Congressional hearing into GE that found “a breakdown in intramural communication so drastic as to make the building of the Tower of Babel seem a triumph of organizational rapport.” Advanced Design SettingsEven stories like “The Fluctuation,” about the strange stock market crash of 1962, which you would think only the most dedicated financial historians would care about today, make for gripping reading.

Here were some of the stories and ideas that our staff found most useful and interesting.

Alex Dalgliesh, Associate Vice President

An instant favorite of mine from this collection is “The Fate of the Edsel,” also one of Bill Gates’ favorites from the book. Quite simply, the tale reads like a comedy of errors and a roadmap for what not to do. It’s filled with details about the worst-case result of unabashed egotism, failure to change course in the face of failure and a lack of attention paid to consumer needs and wants. It’s a wonderful case study into the complexities and nuances of developing a product and bringing it to market – and a warning for what can go terribly wrong.

While Ford seemed to set out with the right mindset – to be “advertised, and otherwise promoted, strictly on the basis of preferences in polls” – Brooks eloquently asserts that “some old-fashioned snake-oil-selling methods, intuitive rather than scientific, crept in.” As a marketer, I can’t think of a better lesson to take away. There will always be times when acting on instinct pays off, but there is simply no replacement for acting on insights that are well-researched, well-informed and well-tested prior to execution.

Frederica Braithwaite, Account Executive

I was surprised by Xerox’s focus on company culture. The company founder, Joseph Wilson, had a distinct point of view on corporate values that was ahead of his time – and which was often misunderstood during the mid-1960’s. Described as “the Xerox spirit,” the company donated millions of dollars towards educational and charitable organizations, and exercised civil hiring practices when it wasn’t popular. In his interview with Brooks, Wilson says, “I’d hope that we would have the courage to stand up for a point of view that was unpopular if we thought it was appropriate to do so.” They certainly did, and Wilson himself lost millions in stock value at one point when their public positions weren’t well-received.

Clearly, Xerox was innovative then and is still an impressive company today, but I was particularly impressed by this approach to values. Brooks leaves the story open-ended, because obviously the company’s story was far from over at that point, but the fact that they have continued to be an industry leader, while continuing to make history in regard to social values, should make them a model for all businesses aiming to improve their corporate responsibility.

Lee Procida, Lead Content Strategist

I’m inherently skeptical of case studies produced by, or in participation with, the companies themselves, because there’s so much incentive to exaggerate successes or gloss over shortcomings. Unfortunately, that’s primarily what you find in works of business and marketing advice, which is why in-depth business journalism like this is so valuable.

The story that stuck with me most was “The Impacted Philosophers,” because the descriptions of people failing to clearly communicate with each other is something I think we’ve all experienced to some degree, and persists in almost any organization. It’s especially frustrating for us as communicators, because so much time is wasted, and effort spent working in the wrong direction, because people are unwilling or unable to say exactly what they mean. In the story, Brooks describes the situation at GE this way:

“Specifically, it would appear that a subordinate who received a direct oral order from his boss had to figure out whether it meant what it seemed to or the exact opposite, while the boss, in conversing with a subordinate, had to figure out whether he should take what the man told him at face value or should attempt to translate it out of a secret code to which he was by no means sure he had the key.”

In a lot of cases, this sort of unnecessary confusion leads to inefficiencies, but in this case it lead to something much worse, and should certainly serve as a cautionary tale.

On a less weighty note, my favorite cocktail party fact from the book is that consultants for Xerox initially hated the name Xerox, saying no one would be able to spell or pronounce it, and that it seemed negative because it sounded like zero. And then, of course, it became so popular that it became a verb itself, as Google is today. It was also interesting that it was actually shamelessly modeled off the then-titan of the industry at the time, Kodak. I think those types of stories about the imperfect early days of paragons like Xerox should take a little pressure off those businesses just starting to build their brand – you don’t have to be perfect at every stage in order to make it to the next level.

This article is part of our B On The Books series, in which Braithwaite staff explain their favorite ideas from the best business and marketing books. Read more in this series.

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