Recent Reading: A Monthly Medley

These are some of my favorite reads from the month of September.  Enjoy!

The "Maximize Profits" Trap in Decision Making
(Joseph L. Badaracco, Harvard Business Review)

The author, a Harvard professor, makes a strong case for considering the interests of all stakeholders, and not just shareholders when making corporate decisions.  He talks about the fact that general human decency should be thought more important than profit maximization.  Profit is good, but not when it's gained by taking advantage of others.

What Makes a Company "Christian?"
(Hugh Welchel, Institute for Faith, Works & Economics)

I absolutely love the following quote from this article: "Can we find our way to seeing the health of business as more complex than simply maximizing shareholder profit, to one that in fact addresses profit, people, and planet at the same time—and therefore a more sustainable profitability?"  Also, the author provides an excellent list of how Christians in business can live out their faith through their work.

The X Factor
(Eventide Funds)

Using academic research the author shows that supplier relations are very important to business success.  The main finding is that if you treat your suppliers as partners rather than cost centers, you will be more profitable in the long-run.  Not only is it biblical to treat all stakeholders well (including suppliers!), but it's also good for business.

How Elizabeth Holmes's House of Cards Came Tumbling Down
(Nick Bilton, Vanity Fair)

This is a must-read about Elizabeth Holmes, a one-time darling of the investment world, and her firm Theranos.  It's such a fascinating story that Hollywood is already in the process of making a movie about it (apparently it will be directed by Adam McKay who did "The Big Short" and Jennifer Lawrence will play the lead).  Holmes created a mirage of a company (Theranos) using lies and secrecy, and she was even listed on the Forbes list of wealthiest self-made women, with an estimated net worth of $4.5 billion at one time (Forbes has since adjusted her net worth down to zero).  This is a long read, but well worth it.

Snapchat and the Future of Wearables
(Ben Thompson, Stratechery)

I'll start out by saying that I'm not a Snapchat user, and I don't fully understand the purpose of the Snapchat platform.  However, this article is more focused on the "wearables" space (think Fitbit, Apple Watch).  The author describes that wearables have not reached critical mass yet because there hasn't been a compelling use case or a built-out ecosystem.  But with Apple marketing the new Watch 2 as a health and wellness device, it has a compelling use case, and there is a more robust ecosystem built out now thanks to the efforts of Fitbit.  It will be interesting to watch this play out over time, but one thing is for sure: wearables are here to stay.

Investors Today Prefer Companies With Fewer Physical Assets
(Barry Libert, Megan Beck, and Yoram Wind, Harvard Business Review)

The authors make a compelling case that hard assets are becoming less necessary in business today.  In fact, companies with asset-light models are garnering higher multiples from investors.  Consider this from Scott Redler (T3 Live): "Uber, the world's largest taxi company, owns no vehicles.  Facebook, the world's most popular media owner, creates no content.  Alibaba, the most valuable retailer, has no inventory.  And Airbnb, the world's largest accommodation provider, owns no real estate."  Business owners and managers would be wise to take notice and adapt accordingly.