The Money Makers
How to be the next big thing
By Steven Martinovich
It's been said that anyone can be successful in good economic times but it takes a special talent to spin gold from straw in harsh economic times, such as the ones we're currently mired in. And while it's impossible to end up on the positive side of the ledger every time, there are those managers who always seem to make the best out of every situation. They may occasionally lose, but even from their losses often comes greater successes.
Anne-Marie Fink's highly informed The Money Makers: How Extraordinary Managers Win in a World Turned Upside Down purports to teach readers how to be one of those special business talents. Fink is well-placed to offer such advice given her history as an equity analyst and professional investor with access to the most prominent names and balance sheets in the business world, from stolid blue chips to leading edge technology firms.
As with most such efforts, Fink offers up a series of rules for managers but unlike the standard texts, some of them would appear at face to be contrary to intelligent practice. It's accepted, for example, that businesses must ruthlessly cut out all inefficiency to increase profit and return maximum value to investors. Waste, after all, is money that was unproductively spent, the enemy of good business practices.
Fink argues, however, that inefficiency and duplication can actually be good for a business, even in tough economic times. In observing businesses through the years, she believes that maximum efficiency actually produces suboptimal results over the long term by stifling innovation. Citing the example of Google, which actually pays its employees to blue sky projects seemingly unrelated to its core search engine/advertising model, new products and services can result out of time and money that initially seems wasted.
Other counterintuitive advice includes the belief that the customer isn't always right because they don't know your industry and all its issues and trends as well as you do. Ignoring your costumers, as railway companies did in the 1990s when they began switching to intermodal solutions to freight transport, actually helped clients who didn't believe that a hybrid solution of train/truck service would save them time and money.
The Money Makers isn't purely a contrarian effort, of course, and Fink offers less controversial advice when she cautions against profitless growth and allowing small problems to grow into bigger ones. Other advice is probably easier to consider rather than actually implement – such as avoiding being sunk by megatrends by identifying long-term trends early on. Of course, if these things were impossible, managing businesses would be a matter of luck and we wouldn't have superstar CEOs.
Although The Money Makers is geared to managers, it also serves a useful role for investors. While most of us are focused in the usual metrics to determine whether a company is a good bet, Fink's effort forces the investor to question the things which might not appear on balance sheets, but rather are buried in the annual reports that only the dedicated plough through or are mentioned in a speech to a trade group. From those nuggets an investor can often determine whether a sure bet is really a poorly run company flailing around for a strategy or a seeming dog is poised for an explosion.
Given the issues raised by the troubles in the American financial sector, and the general malaise produced by the wider economic downturn, The Money Makers should be on most business executives' and investors' reading lists. While some might roll their eyes at yet another investor telling managers how to run their businesses, Fink performs a valuable service by forcing them to answer some questions about their current practices – and during a recession answering those questions differently might produce the next big thing.
Steven Martinovich is a freelance writer in Sudbury, Ontario, Canada.
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