The Outsiders: Eight Unconventional CEOs and Their Radically Rational Blueprint for Success

In his highly readable book The Outsiders, William Thorndike reveals some surprising insights that distinguish the most successful CEOs of US public companies from their peers.In identifying the featured CEOs, Thorndike uses as his benchmark the return to shareholders measured on a cash-on-cash basis over a significant length of time, comparing star CEOs with their industry peers. Based on solid research of public company returns data, Thorndike first identified those companies that produced the highest long-term returns in their respective industries, measured by the increase in earnings per share. Then by studying the major actions taken over that time period, supplemented by interviews with CEOs, subordinates and investors, he developed a clear profile of what underlay each CEO's success. The result not only pinpointed some CEOs whose names may not be familiar to most readers, it also revealed a consistent pattern of decision making across all those studied in a variety of businesses and led to some interesting - and unconventional - conclusions.The key insight is what those most successful CEOs focused on. It was not, as commonly thought, on industry expertise (although they certainly had that) nor operational efficiency (though that, too, was very important - but handled by subordinates) nor even long-term strategic vision (though, again, they certainly were not short on vision). For these "outsiders," the key was a laser-like focus on, and an ability to make bold decisions about, resource allocation: where and when to allocate capital as well as human resources, including when to recover those same resources (and returns) via sales of parts of a company or the repurchase of company shares.There is much more to Thorndike's findings than this summary. Indeed, I rarely read business books because they are so often filled with fluff and one can usually learn what one needs to know from a review or from chapter summaries. The Outsiders breaks that mold for me. It is filled with surprising insights, very well-written and enjoyable to read.

Seth Klarman once said that Ben Graham’s works were “the north star” of investing, and I would argue that Thorndike’s “The Outsiders” is the north star of managerial capital allocation. The eight CEO’s profiled in this book all resisted the institutional imperative and subsequently compounded capital at 20%+ returns over ~20+ year time periods.While share repurchase programs are often taken for granted today, it wasn’t that long ago that they were viewed as a novel form of financial voodoo, practiced by a select few, as profiled in this excellent book. Unfortunately today’s repurchase programs bear little relevance to those of yesteryear. Today, repurchase programs are more commonly used as a way to offset dilution from options, and lack a point of view on valuation, more commonly destroying than creating value. The best CEO’s use repurchases and equity issuances opportunistically, as an additional avenue of shareholder value creation. Perhaps Steve Wynn said it best, upon being questioned on the timing of a repurchase program and subsequent equity issuance.“When we did the equity -- It is a job and you can take this as a final statement on the subject going forward. It is the job of the board of directors and especially the CEO to take advantage of market and that market movement is extreme. Now, when a company increases its value by 50% in 60 days, that's an unnatural movement to value and the market also goes the other way sometimes. These unnatural movements -- no company gets to be worth twice as much in 60 days as it was before to any intelligent person. When that happens, we take advantage of it. If everybody is hungry for shares, we let them have it. And if the shares goes down, we buy them. That policy is a statement of policy for this company. Period.”The Outsiders offers a playbook of long-term value creation. The book should be mandatory reading for all corporate finance courses taught in business school, although smarter minds than I have had said similar things about Ben Graham’s works, and he still remains persona non grata. Purchasing this book is likely one of best capital allocation decisions you will make!

Even though the book is more than a decade old, its lessons are refreshing. It shows how a company can provide value to its shareholders without necessarily exploiting the workers. In many cases, and in a very different manner from Jack Welch`s approach, significant power and incentives were given to the lowest ranks of operations.

Good price , excellent book

Great book with eye-opening insights on what managerial steps it needs to make a succesful company more efficient and grow its stock. Throughout the book a pattern emerged: A focus on growing cashflow per share (not eps) seems to be what made these companies succesful and stock prices rise exorbitantly in the long run.Of course these businesses also need to be run well operationally, but in the end it all came down to capital allocation, and suprisingly often this just meant buying back its own stock.

Every business owner and CEO should read this and the be better at their jobs. An easy, interesting read as well. Have recommended it to many.

El libro es una maravilla. La encuadernación y la edición muy buena