The Outsiders

Great book, provides superb insights on capital allocation, share repurchase, frugal and reduced bureaucracy. A well written book. Must read for all

The Outsiders is a collection of eight short stories, each on an exceptional company of the last half century, emphasizing the importance of Capital Allocation i.e. how to best deploy firms capital (equity and debt) and resources (people). Everything described/summarized in this book is taught in MBA classrooms and Corporate Finance books but rarely we observe it in practice. The author has emphasized on the similarities between the culture and key attributes of these eight companies to the companies that didn't prosper in the same era. The principles of success remain the same - frugality, low overheads, accountability, maximizing long-term shareholder value, among others. These stories are not about extraordinary innovation that happened at Google, Facebook, Apple, Amazon or Microsoft but of companies that went on to achieve exceptional results doing ordinary businesses with discipline, and how these companies fared when faced disruption (from the likes of Google). The principles of value generation will continue to remain the same even today, however, I am all the more encouraged to read this book several times in future because India is so much like America of 1960s-1990s.

Interesting book but a little repetitive. I am sure there must have been very successful CEOs during that period who gave much higher return than S&P but followed a different model - not necessarily stock repurchase and did not pay Dividend . Those CEOs should also have been discussed.

Great insights and common threads among greatest CEO

Good and practical lessons learnt. Gives insight of the US corporations between 1950 to 2000. A great read for leaders.

The author, William N. Thorndike Jr., has mentioned eight CEOs during whose tenures the returns generated by their shares have outperformed those of industry peers and the broad market by a wide margin for very long duration of time. He considers such CEOs as truly outstanding CEOs and has explored their backgrounds, management approaches and major decisions taken by them to achieve extraordinary returns for their shareholders. Although these CEOs have followed an independent and contrarian decision making (which is why they have been called ‘The Outsiders’), the author has found some similarities among them with respect to their management approaches (especially capital allocation decisions) and their personalities. Although there are no strict formula, the ‘outsider’ CEOs mentioned in the book did the following: They disdained dividends, made disciplined (occasionally large) acquisitions, used leverage selectively, opportunistically bought back a lot of stock at cheap prices, minimized taxes, decentralized operational decisions, centralized capital allocation decision, and emphasized cashflows instead of reported net income. Personality wise these outsider CEOs have been generally frugal, humble, analytical, understated, not-so-charismatic and did not seek much spotlight. The book has been written in a very simple and readable manner and conveys its message very clearly. However, I felt that there may be survivorship bias in author’s viewpoints at several places. Also, I felt that although the book is more informative in nature, it is not highly insightful. There is too much repetition of some aspects such as buybacks, decentralized operational decisions, large & opportunistic acquisitions, etc. I felt that these concepts can be better instilled in the reader’s mind with conceptual explanation rather than repetitive examples, whereas the author has adopted the latter.

Its a fantastic Book for a business man to an investor. Its focus is completely on the way wisely the managers who have allocated capital in their respective business and have generated extraordinary returns over the period of their tenure in the business. Capital allocation is more of an art than science. It has more to do with the Managers inner skills. And this skills have created huge enterprises over period of years and created huge empires.

Simple English can reach every one's heart and mind. It's interesting to read