What I’m doing
As part of our hiring at Simple, there’s a little question at the end:
Please include a cover letter telling us something awesome about you and the projects you’ve worked on, along with the best product management book you’ve ever read, regardless of claimed subject. (You like “Design of Everyday Objects?” So do we.)
We ask because we’re curious about candidates, and we get often get more information in the cover letter than we do in the resume (for instance: why are they in product management? Do they read all of a job listing before applying?)
A surprising proportion don’t have a book. For those who did, I decided I’d read all the books that came up and do a write-up on their place on the Product Management Bookshelf.
Have a suggestion for something I should read? Nope! Gotta apply.
Today’s book tldr
“Good to Great” by Jim Collins
Is it worth reading? Yes but not for the reasons you’re told to read it.
Sarcastic summary: take lessons from several companies about to fall
Well go on then
“Good to Great” is a wonderful example of survivor bias, and a cautionary tale. If you go out and take a successful actor, for instance, you can go into excruciating detail about everything they did (she puts chia seeds in their smoothies!) and attribute their success to those details. But if you don’t look at it the other way — do actors who put chia seeds in their smoothies succeed more often? There may be millions who do and don’t succeed — chia seeds may make it less likely to succeed. Blind imitation doesn’t help.
Here, in selecting companies that seemed destined to rule forever, Collins demonstrates the fallibility of this approach.
He provides eleven examples, and compares them to someone else in their space.
One great company? Fannie Mae!
“For example, the Fannie Mae people were not passionate about the mechanical process of packaging mortgages into market securities. But they were terrifically motivated by the whole idea of helping people of all classes, backgrounds, and races realize the American dream of owning their home.” -p. 110
I’ll suggest that Collins bought into their line, but also that looking back at this, it’s strange to read that and think “perhaps they should have been more passionate about the mechanics of what they’re doing, as the mission relied on it.”
It becomes a cautionary tale that a great mission without sustainable economics is worthless and even dangerous.
“Good to Great” discusses Fannie Mae’s turnaround — seven years later, having brought about a market collapse, the U.S. Government placed them in receivership, at a cost of hundreds of billions of dollars. And they still haven’t spun them back out, because it’s unclear how they’d even do that without crashing the housing market again (and because as housing prices have risen, Fannie Mae’s profitable for the Feds to hold onto, a danger in itself).
This is not isolated. Circuit City went under eight years after the book.
“Let me put it this way: If you had to choose between $1 invested in Circuit City or $1 invested in General Electric on the day that the legendary Jack Welch took over GE in 1981 and held to January 1, 2000, you would have been better off with Circuit City — by six times.” — p. 33
After that through today, you’d have lost ~1/3rd of your GE money and all of your Circuit City money. GE’s market capitalization as I write this is $289 billion dollars.
On the other hand, Bethlehem Steel was gone in two years after the book and Nucor’s up 360%. Wells Fargo took a hit along with Bank of America and then has done wildly better. Kimberly-Clark bought their comparison point.
My point is this approach: asking why the successful are successful, is ultimately limited. You can ask a lucky gambler why they’re so hot at craps and odds are good they’ll have a convincing answer — or at least, one they’re convinced of.
No one at Fannie Mae was examining their success in 2001 and realizing they’d gone wrong. Examining failure, when assumptions are open to question and it’s easier to tease out luck’s role, is in general far more fruitful.
I would bet though that “Great to Gone” would not have sold nearly as well. We look for inspiration, not cautionary tales.
Takeaways for my fellow Product Managers
In hiring consider whether favoring people from high-profile successful companies is potentially survivor bias, and also, whether people from humbler backgrounds might have learned as much or more from their experiences, even failures.