Future of the Corporation (Pfizer Lecture)

Future of the Corporation (Pfizer Lecture)
Michael Novak | 1996-01-01 00:00:00 | AEI Press | 51 | Company Profiles
This book reviews the long history of the corporation in the West and in the United States and examines the central role of business and economic growth in the strengthening of civil society and democracy. Two related books are The Fire of Invention, the Fuel of Interest and On Corporate Governance.

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The Legacy of Fischer Black

The Legacy of Fischer Black
Bruce N. Lehmann | 2004-12-16 00:00:00 | Oxford University Press, USA | 320 | Company Profiles
Fischer Black was a remarkable social scientist, one whose contributions range from the lofty perch of highbrow theory to the trenches of practical application. The papers represented in this work span the same range, the contributions of a remarkable array of financial economists who embody in different ways Fischer's ideal of insight from economic theory that both guides and is rooted in the kind of detailed observation of relevant aspects of actual financial markets. It is hoped that readers find this volume to be both a fitting tribute and a stimulus to further research. After all, the advancement of economic science remained a constant goal throughout Fischer's remarkable career in the many and disparate venues in which he plies his trade.
Reviews
This book is an elucidation of the applied science of financial economics, as told through a dozen chapters contributed by many of the preeminent researchers in the field. While none of the material draws directly from Fischer Black's own work, the spirit of the research is what drove Lehmann to select these particular examples. Most of the twelve chapters in this volume derive from talks given at the 1996 Berkeley conference on finance in honor of Fischer Black. In addition to these historic presentations, Lehmann added his own comprehensive summary of the work of Fischer Black, from the Sharpe-Treynor CAPM applied to Black's relatively overlooked wheat economy model, to Black's zero-beta CAPM, to Black's empirical investigations and collaborations, to the Black-Scholes-Merton options pricing model, to his work on international asset pricing and asset allocation, as well as Black's rigorous treatment of business cycles and macroeconomics. Also fortuitously added is a contribution on "Crisis and Risk Management" by one of Black's most famous collaborators, Myron Scholes, who provides an excellent review of this critical subject from the unique perspective of a Nobel Laureate with first-hand experience in managing the Long Term Capital Management liquidity crisis. Also added is a beautiful review of the contributions of Black, Merton and Scholes to economics by the 2003 Financial Engineer of the Year as voted by the IAFE, Darrell Duffie.



Stewart Myers, who in 1976 published Black's "Dividend Puzzle" paper, as well as Black's astounding reinterpretation of Jack Treynor's 1962-1963 MIT presentations of CAPM, in his wonderful text "Modern Developments in Financial Management", reviews Black's many contributions to corporate finance, including real options and accounting issues.



Bob Litterman provides a treatment of risk budgeting as currently practiced at Goldman Sachs, many of the approaches having been pioneered when Black was a partner there. This chapter reminded me of my days as a young analyst in Goldman's Asset Management division, when the following story circulated amongst the troops: At one presentation on risk management to some brokers, someone in the audience asked Black, who was the presenter, "If you're so smart, why aren't you rich?" To which Black calmly reflected for a moment and then replied, "If you're so rich, why aren't you smart?"



Although there is no substantial difference between the models in Black-Litterman (1991) and Black's earlier collaboration with Jack Treynor in their 1973 paper, "How to Use Security Analysis to Improve Portfolio Selection", Lehmann's compilation treats the earlier paper for the first time in Steve Ross' excellent chapter on noisy rational expectations. This chapter provides a theoretical explanation for the existence of intermediation in capital markets, such as mutual funds, which accommodates an unstable equilibrium.



Mark Rubinstein and Jens Jackwerth's chapter on imputing risk-neutral probabilities from options prices, asset prices and the risk-free rate takes a general equilibrium approach much similar to the approach favored by Black. Scott Richard adds a negatively-correlated factor to the one-factor model of Black-Karasinski in order to better price term structure derivatives. Douglas Breeden examines the empirical negative convexity (why don't they simply refer to it as "concavity"?) in the mortgage market. Huang and Stoll examine the returns of liquidity providers on the NYSE and find that liquidity providers such as specialists and dealers profit at the expense of public limit orders.



Brennan, Chordia and Subrahmanyam analyze 13 years of data, use individual securities in order to avoid the problems associated with forming artificial portfolios, and, using APT-style factors, find that after adjusting for risk, mean asset returns are significantly related to certain firm characteristics: size, analyst following, membership in the S&P 500 index, 12 month lagged returns, and the bid-ask spread (negative!). Lehmann provides a discussion of the Brennan et al paper in Chapter 8, discussing the problematic nature of their task, suggesting potential methodological improvements to their procedure and discussing the portfolio formation issue as well as the data-mining aspect of the specification searches.



While a title like "The Legacy of Fischer Black" might whet potential readers' appetites for a volume reprinting Black's own work, Lehmann has done a masterful job of both describing Black's own work and assembling a current group of research that is similar in spirit to the type of work in which Black was interested and engaged. This volume, paired perhaps with Perry Mehrling's "Fischer Black and the Revolutionary Idea of Finance" will provide the reader with a relatively comprehensive overview of the incredible work in economics performed by Fischer Black and his successors.





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FedEx Delivers: How the World's Leading Shipping Company Keeps Innovating and Outperforming the Competition

FedEx Delivers: How the World's Leading Shipping Company Keeps Innovating and Outperforming the Competition
Madan Birla | 2005-06-15 00:00:00 | Wiley | 215 | Company Profiles
An inside look at leadership practices that enabled the world's leading shipping company to outthink and outperform its competition

Using firsthand accounts from top leaders at FedEx, FedEx Delivers explains how the company became an international powerhouse and one of the most trusted global brands by using leadership practices that tapped into the creativity and commitment of its employees.

Both a compelling business story and a prescription for business success, FedEx Delivers presents a model to show how these practices created and sustained an innovation culture. Readers will learn how to apply this model to their organizations for developing a culture of innovation that evolves with the times and offers fresh solutions to new challenges.

Innovative thinking and disciplined execution are what made FedEx a market leader, and they can help any business in any industry do the same. Each chapter covers a different aspect of innovation with real-life stories that highlight its effectiveness, and offers valuable ideas that lead managers through the process of implementing those practices.

By breaking innovation down to its three simplest steps-generation, acceptance, and implementation of ideas-and offering proven leadership practices that really work, FedEx Delivers offers unique insight and invaluable advice on building an organization that can adapt to any challenge and meet any goal in today's highly competitive global economy.
Reviews
My disclaimer: As with any opinion, it is only my opinion! And everyone's will vary depending on who reads the book and what the reader is looking for. I look for ways to improve businesses, sales, and my life.



On a 1 to 5 scale, 5 being the best:



Readability 4: The book reads pretty well, although a little slow at times. One of those books I picked up for a long flight. It was interesting as well and occupied my time.



Information and new ideas 5: Some great ideas were shared and they demonstrated the simplicity in which some problems can be solved.



Applicable Ideas 5: As I stated, great ideas to innovate into other businesses. Especially in regards to problem solving.



Value 5: I took away several ideas which gave me ways to improve the business that I am in.



Overall Score 5: Another book for reference in my library. You might want to buy it as well.



Madan Birla did a fine job!



Rip Walker

Author: Rip's Book of Common Sense Selling: Improving Sales Through Process Implementation


Reviews
Not sure if this was a book to promote himself or explain the origin and inner workings of FedEx, but it was a pathetic mishmash and virtually unreadble. I now blame this guy personally when my FedEx overnight doesn't arrive on time.
Reviews
Fred Smith and FedEx overcame incredible obstacles in the company's start-up, and cannot be congratulated enough for doing so. In addition, it went on to become the first service company to win the prestigious Baldrige Quality Award in 1990. However, Birla's "FedEx Delivers" does neither readers nor FedEx any service by its incomplete and simplistic coverage.



Birla's book emphasizes a quasi-Baldrige/human-relations perspective. However, my research showed that maintaining an important competitive advantage and low costs are far more important to organizational success. Birla does not address these aspects. (This conclusion is reinforced by several Baldrige Award winners subsequently encountering severe financial downturns after winning the award - even bankruptcy.)



The second major problem with the book is that it does not cover FedEx's series of acquisitions since successful startup. These include Viking Freight, Watkins LTL Express, Roadway Package Express, Flying Tigers, and Kinkos. Again, FedEx has done a great job of building these existing businesses, but Birla tells us none of it - important since so many acquisitions fail. Neither does he address the resulting incursion of substantive competitive disadvantages. (One obvious issue is substantial route and facility overlap between various divisions - this becomes increasingly untenable as fuel prices increase.)



Finally, my experience (FedEx Ground) is that FedEx has NOT tried to substantially change the human-relations environment in these companies - even though they may seriously contradict Birla's summary of the original Baldrige-winning FedEx.



For example, FedEx Ground drivers are not company employees - rather hired by thousands of truck-owners contracting with FedEx, and labeled "independent contractors." If you're an independent contractor, neither the company nor the truck owner pays state workers compensation or federal unemployment and disability taxes. They are also released from matching workers 7.65% Social Security and Medicare taxes; an independent contractor pays the full 15.3% load. This creates great inconsistencies in work environment and pay. Almost all the FedEx Ground drivers and all the owner-operators receive no benefits and are paid far less than their UPS counterparts. (My sense is that FedEx is turning Watkins LTL into a similar situation, while reducing pay, increasing non-productive wait-times, and eliminating benefits at the same time - despite having been ruled in violation of IRS regulations and subjected to assessments estimated to eventually total $1 billion!)



Another issue is that because the over-the-road truck owners have invested considerable time and equity in their trucks and routes, FedEx has been unable to take advantage of much-more fuel-efficient piggy-back rail service - without buying out truck owners at considerable expense, which it has chosen not to do. (UPS uses considerable piggy-back rail service.)



Still another problem arising out of its acquisitions and new start-ups is that FedEx has duplicating routes - FedEx Express (its air arm), FedEx Ground, and FedEx Home Delivery vehicles all overlap in their service areas. (Conversely, UPS' use of a single vehicle for package delivery also allows it to charge by service speed, NOT transport type - often allowing use of low-cost ground transport instead of aircraft to provide higher-revenue next-day service.) Again, FedEx helps overcome these strategic disadvantages by paying employees less, and sometimes hiring unqualified drivers (eg. FedEx Ground OTR) - contrary to Birla's book.



FedEx has greatly benefitted from periodic UPS labor union strikes - a sustained competitive advantage also ignored by Birla. (On the other hand, Birla also ignores FedEx's labor strife among its pilots, especially after acquiring Flying Tigers.)



Bottom Line: "FedEx Delivers" is not worth reading.
Reviews
I'm afraid that I've to say that it is a terrible book on both FedEx and Innovation. The book talks a very little about FebEX in terms of its story and its business innovation, although in the name of FedEX Delivers. And it is very shallow and unsystemic, actually no (much) value, in learning of management and of innovation.

It is almost waste of time!

Sorry of my frank comments but I just share my feeling.
Reviews
I was very disappointed in this book on Fed Ex. This is a great management theory book but really told me nothing about how Fed Ex is innovating again and again. I am hoping that someone will come out and tell us how Fed Ex as a company is succeeding but it is not this book. For those interested in academic management you will find this interesting otherwise don't waste your time and money.

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A Business and Its Beliefs : The Ideas That Helped Build IBM

A Business and Its Beliefs : The Ideas That Helped Build IBM
Thomas J. Watson | 2003-04-24 00:00:00 | McGraw-Hill | 108 | Company Profiles
The timeless business book that still brings perspective and guidance to today's bottom-line executives

When first published in 1963, IBM CEO Thomas Watson Jr.'s A Business and Its Beliefs gave readers an unprecedented look inside IBM's executive offices. Watson--son of IBM's founder-- candidly discussed how the company clung to its values during the first great technological shift, and how this refusal to compromise became IBM's strength. He also became one of the first CEOs to question business's place and responsibility in society, and openly discuss how firms could meet expanding social expectations while still turning a profit.

The groundbreaking ideas in this book still resonate with today's managers. This newly published edition reintroduces Watson's ideas to a new generation of decision-makers in search of IBM-style standards for their own organizations. A to-the-point examination of the values and beliefs that built and sustained IBM, its message is as valuable today as it was four decades back--and will once again strike a resounding chord with executives everywhere.
Reviews
The IBM official biography have this to say about Thomas Watson Jr.



" During his leadership, IBM grew from a medium-sized business to one of the dozen largest industrial corporations in the world. When Mr. Watson became CEO in 1956, IBM employed 72,500 people and had a gross income of $892 million. When he stepped down in 1971, employees numbered more than 270,000 and gross revenue was $8.3 billion. Fortune magazine once called him "the greatest capitalist who ever lived."





It is a great book, though I initially had misgivings getting the book. Are the principles of 1963 applicable today? When I looked at the Amazon site, it was ranked 433,861 in sales, and I would be the first to review it. Uhmmmm... If I had not been so enamored by his story by another book, "Father , Son & Company" which he co-authored with Peter Petre, I would not have bought this one.



Notwithstanding, I will not hesitate to say it is still one of the most important book in building the foundation of a great corporation, much akin to the principles in the bestseller book "Built to Last" by Jim Collins (#31 in Amazon list) . Only it is less sensational, but written by a True Blue practitioner who can really claim to the saying, been there, done that. With plethoras of business books proliferating, it is important to see, before believing, that the authors recommendations match his accomplishments. Or else, there will always be the question -- if he knows the stock market so well, why is he writing the book instead of investing in Wall Street?



It is one of those rare books, that is as relevant today as it was published over 40 years ago. According to Watson in laying the foundation on the importance of beliefs ( we call it now VISION) , "



"the basic philosphy, spirit and drive of an organization have far more to do with its relative achievements than do technological or economic resources, organization structure, innovation or timing. All these things weigh heavily in success. Buthey are, I think, transcended byhow strongly the people believe in its basic precepts and how faitfully they carry them out."



What are these basic precepts? He outlined three:



- have respect for the individual



- give the best company service of any company in the world.



- pursue all tasks with the idea that they can be accomplished in a superior fashion



He says, " The relationship between man and the customer, their mutual trust, the importance of reputation, the idea of putting the customer first -- all these things, if carried out wth real conviction by a company can make a great deal of difference in its destiny."



He is a great man, and it is a great book, if only to review what we may have forgotten in our haste to accomplish our everyday tasks. He is a great manager, but the one thing that will always put him in my all time list of great people will be an incident when he refused a higher salary and bonuses from a grateful board saying his pay was already enough, and he said something that I hope I will always remember in my own quest for fulfillment and happiness --- " I do not want to be a pig. "



by wilson ng

www.bizdrivenlife.net



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