Naresh Gupta: People before Strategy
What is the Senior Vice-President (PPBU) & Managing Director, Adobe India reading?
Among all the business and management books I have read, I would rate Good to Great, by Jim Collins, the highest. It is backed by hard facts and it is clear that the author did not start out with preconceived notions.
The book articulates the need for Level 5 leaders — people who are intensely passionate about the success of the organisation, with personal fame and riches being secondary. It stresses upon the need to get good people before deciding what to do: People before strategy.
If you don’t have the right people, execution will suffer; the right people will come up with the right strategy and execute it as well. “People are not your most important asset — only the right kind of people are.”
The book also stresses upon the value of facing brutal facts that are often brushed under the carpet. A great organisation must face up and deal with the bad news. Another key point is that you build upon incremental advantage rather than look for that one big idea. The Hedgehog Concept — that everyone can build a deep insight of the business — takes time to develop but is critical and helps navigate and direct the organisation.
I use this book in my work a lot. I pay deep attention to the quality of people, try to be honest about the business and challenges. We try to have a very open environment and give people the freedom to fail as long as they make a sincere attempt.
Two other books that I like fall into a similar category: Freakonomics and The Undercover Economist.
Freakonomics is an economist’s take on everyday happenings; the income levels of drug peddlers in the US or match fixing in sumo wrestling in Japan. It is just very, very interesting data. The key learning for me is the importance of the incentive system. In the context of the Chicago school system, the book says that teachers helped students cheat in order to get higher incentives. This was an unintended consequence: People will manipulate things to their advantage.
Similarly, The Undercover Economist looks at why economies work. The key idea is the concept of marginal cost — the price of a good is determined by its marginal value. The book underlines the value of institutions in the development of a country. Countries with powerful institutions do well over the long run. India has some strong institutions like the RBI, IITs, IIMs, SEBI, Supreme Court, Election Commission, parliament, etc. and they are one of the primary reasons we have done well over the last couple of decades. We need to preserve and strengthen these and other institutions to ensure continued growth and development. Institutions should be sacrosanct.
The Little Book That Beats the Market is my favourite book on stock market investment. It proposes a very simple model that allowed the author, Joel Greenblatt, to beat the market. Greenblatt’s Gotham Fund delivered 30 percent-plus returns over 20 years, much higher than what Warren Buffett was able to deliver over this period. He looks at two parameters: Valuation and return on employed capital. Based on these two parameters, he ranks the companies and decides the portfolio. It is a very well written book. My son read it at the age of 12!
(Co-ordinated by Neelima Mahajan-Bansal)
(This story appears in the 04 December, 2009 issue of Forbes India. To visit our Archives, click here.)
