Inside this chapter
Joel SternA key bookErik SternA key bookJohn KayBooks and sourcesDaniel KahnemanBooks and sourcesRichard RumeltBooks and sourcesAswath DamodaranKey sourcesNassim Nicholas TalebSources I Encountered in the Literature ReviewRita McGrath and Ian MacMillanRoger Martin and ColleaguesSaras Sarasvathy and EffectuationViolina Rindova and ColleaguesSharon Alvarez and Jay BarneyDavid Teece and Dynamic CapabilitiesManaging the Existing Portfolio and New PossibilitiesHenry Chesbrough and Learning from Rejected DirectionsWhat I Seek to Bring Together in This BookThe following people and sources helped me develop the approach presented in this book.
To manage business in an age of uncertainty by creating possibilities, thinking from first principles and exercising economic discipline.
My thinking developed through practical experience and encounters with people and ideas. They helped me identify the challenge, create possibilities and choose a direction.
Here, I present some of the people who have influenced me. Through personal relationships, books, articles, websites and explanations I returned to.
The first part is a personal, abbreviated list of influences. In the second part, I have added sources I encountered in the literature review after writing the latest draft. They allow us to examine the relationship between this book’s framework and other approaches.
Alongside the personal influence, I mention books and sources for further study. I recommend becoming familiar with their writing and examining what it can offer your thinking.
Joel Stern
Joel was my mentor for many years.
I learned much from him about people and how to work with them. He helped me examine accounting thinking through an economic and financial perspective.
That distinction continues to guide me in assessing businesses and understanding value creation.
A key book
By Joel Stern, John Shiely and Irwin Ross.
The book addresses the implementation of EVA in an organization. It connects value measurement, management decisions and incentives.
Erik Stern
Erik, Joel’s son, had a major influence on my business thinking.
Our work together continued for years. It broadened my view of innovation in the financial world.
A key book
The Value Mindset: Returning to the First Principles of Capitalist Enterprise
By Erik Stern and Mike Hutchinson.
The book connects value creation, company structure and incentives for managers and employees.
John Kay
For years, I followed his writing in the Financial Times.
His books gave me a solid, broad foundation for understanding, managing and developing businesses.
Books and sources
Foundations of Corporate Success: How Business Strategies Add Value
Why Firms Succeed is the American edition of the book.
Obliquity
Radical Uncertainty: Decision-Making Beyond the Numbers
With Mervyn King.
The Corporation in the 21st Century
John Kay’s website and details of his books
Daniel Kahneman
Kahneman deepened our understanding of how people think and make judgments. His insights have stayed with me for years.
I must admit that I have not always managed to incorporate them into my own behavior...
Books and sources
Noise: A Flaw in Human Judgment
Noise was written with Olivier Sibony and Cass Sunstein.
Richard Rumelt
A few years ago, I met John Kay. As I remember it, he said that Rumelt’s conception of strategy was, in his view, the real thing.
He was highly critical of other models. He described them as mumbo jumbo of no practical use. I was happy to agree with him.
Books and sources
Good Strategy/Bad Strategy: The Difference and Why It Matters
The Crux: How Leaders Become Strategists
Rumelt and his books on the publisher’s website
Aswath Damodaran
Damodaran’s website and explanations made a major contribution to my economic and financial understanding. They broadened the foundation I had received from Stern.
I returned to his data, valuation tools and explanations. I also used them in a course for finance managers I taught at Bar-Ilan University’s continuing education division.
When I needed to calculate a firm’s cost of capital, he was a central source of data and method for me.
Many of his datasets are updated annually. They allow comparisons across industries and regions around the world. Some of the data are updated at different intervals.
I also recommend following his articles and posts. They are especially interesting for those who want to deepen their understanding of valuation and finance. Analysts, finance managers and managers.
Key sources
Damodaran’s website at New York University
Datasets by industry and region
Personal background and the purpose of the website
Nassim Nicholas Taleb
Taleb’s thinking on uncertainty has been a guiding light for me since
his book The Black Swan.
Years later, he expanded his view of how an organization should act
during and after a crisis. Antifragile.
He is witty in his writing, both in his books and on social media.
I always enjoy reading his original perspective.
| The Black Swan |
|---|
Antifragile
Sources I Encountered in the Literature Review
The review clarified the relationship between the book’s ideas and existing literature. For some sources, full texts were examined. For others, the review examined authors’ descriptions, tables of contents and abstracts. Here, I indicate what I found relevant and provide the source for further study.
Rita McGrath and Ian MacMillan
The Entrepreneurial Mindset 2000
The book addresses creating opportunities under uncertainty, building capabilities and managing a portfolio of possibilities. In discovery driven planning, they connect assumption testing with staged investment. This is an important connection to the sequence in my book.
Discovery Driven Planning 1995
Discovery Driven Growth 2009
Roger Martin and Colleagues
Bringing Science to the Art of Strategy 2012
The article was written with Lafley, Rivkin and Siggelkow. The process connects creating possibilities, clarifying conditions, testing and choice. In a later explanation, Martin also includes changing the conditions for realization. The connection to this book lies in the thinking process and in building a path to action.
Saras Sarasvathy and Effectuation
Causation and Effectuation 2001
Effectuation starts with identity, knowledge and available relationships. It develops directions with partners and limits the loss to what can be afforded. It enables action that does not depend on prediction. In my approach, purpose and the principle guide the search. In effectuation, goals themselves can also emerge through action.
Violina Rindova and Colleagues
Shaping Possibilities 2021
The article addresses the development of new strategies through an intention to change reality, inquiry and dialogue with stakeholders. It is particularly close to the connection between creating possibilities and partnership. Rindova and Courtney had earlier also examined shaping and adapting under uncertainty.
To Shape or Adapt 2020
Sharon Alvarez and Jay Barney
Discovery and Creation 2007
The article distinguishes discovering opportunities from creating them through entrepreneurial action. This distinction predates my book. I also use the term possibility for a capacity to act that has not yet taken shape as a specific business opportunity.
David Teece and Dynamic Capabilities
Explicating Dynamic Capabilities 2007
Teece examines identifying and shaping opportunities, seizing them, and changing the company’s resource and capability base. This provides a foundation for understanding how to build the capacity to act as reality changes.
Managing the Existing Portfolio and New Possibilities
The Invincible Company 2020
Osterwalder, Pigneur, Etiemble and Smith connect managing existing businesses with developing initiatives tested through experiments. They distinguish the management and investment approaches appropriate to each. This offers an important practical comparison for managing possibilities over time.
Henry Chesbrough and Learning from Rejected Directions
Sometimes Success Begins at Failure 2003
Chesbrough describes how a direction that did not succeed can find another use. This connects with preserving knowledge after shelving. In this book, I link that preservation to documenting the reason for the decision, releasing resources and examining whether the bottleneck has changed.
What I Seek to Bring Together in This Book
These sources offer important approaches to creation, inquiry and decision.
I seek to connect:
Purpose and first principles,
Capabilities and partnerships,
Economic discipline and joint learning by people and AI.
This integration should help managers decide what to create, what to build, where to invest and what to shelve. Its contribution will be tested through what we can understand and do with it.