What business lessons can we take from the book Business Adventures? Some time ago, Bill Gates asked Warren Buffett to recommend a good business book, and Buffett gave him a title that, until then, was unknown to the vast majority of people. The book, written more than 50 years ago by a little-known author, John Brooks, was called Business Adventures (in Spanish it was published as Aventuras empresariales). Today we pull out the most important business lessons from it.
See also: Bill Gates: what I learned from Warren Buffett
Why is it considered one of the best business books?
You might think that business, and the way business is done, has changed a lot since the book was written. But the truth is that the key lessons we can take from it are timeless: they do not lose their validity as time goes by.
Nor is it a book that stays on the surface, listing the steps entrepreneurs followed to succeed or the lessons from entrepreneurs we can copy. Brooks looks at specific problems and examines each situation in depth, paying special attention to the human beings who run and work in the company.
Because in the end, however automated the processes, the manufacturing and so on may be, there are people behind every company. And where there are people, there is room for mistakes.
What will you find in Business Adventures?
Business Adventures recounts 12 stories, 12 critical moments in American industry, such as the rise and fall of Xerox or the fiasco of the Ford Edsel. What makes some companies thrive and others fail? People. One of the first lessons we can draw from this book is that technologies can change and improve, business practices and the nature of business can change, but people never change.
So let’s go through some of the key business lessons we can take from Business Adventures.
7 key lessons from Business Adventures
1. The lesson of the 1962 flash crash
If there is one thing we know today, it is that we humans are emotional creatures. We believe we are rational but, as Daniel Kahneman showed in his book Thinking, Fast and Slow, the truth is that we are thoroughly irrational beings.
The flash crash of 1962 proved it once again. In just three days, fear and panic drove the stock market down by $20 billion (in the money of the time), only for it to bounce back a day later. Analysts would later try to explain what had happened with convincing arguments, but both the facts and the arguments are far from convincing. The only convincing explanation is that the human brain is capable of reasoning about as rationally as a mosquito.
2. The business lesson of the Ford Edsel fiasco
The Edsel is still used as a case study in business schools, and people still speculate about what went wrong. Brooks is clear about what happened.
While Ford explained that the car was the product of opinion polls, Brooks believes that Ford’s executives only pretended to agree with what the polls said.
So pay close attention to your market. Customers’ wishes can change very quickly. Ford probably designed a car based on what people supposedly wanted, but while Ford was busy building the Edsel, potential buyers changed their tastes and set their sights on a different kind of car.
This is something that never happened to Steve Jobs, since one of his mottos was: “People don’t know what they want until you show it to them.”
3. The lesson of the Texas Gulf case of 1959
Just as people can be so deeply irrational, they can also be incredibly generous. When Texas Gulf executives discovered land rich in minerals, they chose to benefit their relatives and friends, telling them about the find so they could buy shares before everyone else. Meanwhile, they denied the discovery to the public. You could say that this is where insider-trading laws were born.
4. The lesson of Xerox’s success and fall
Never trust quick success. Nobody expected photocopiers to take off when Xerox brought its product to market in 1959. But by 1964 revenues were so good that the company could afford to spend 4 million on philanthropic causes. In 1965, however, while Xerox was busy with philanthropy, its competitors had got their act together and knocked the company off its perch as the industry leader.
You cannot rest on your laurels, blinded by success. Fortunately, Xerox went through a real roller coaster of good and bad decisions. At least the company has managed to reinvent itself again and again.
5. A lesson from the Piggly Wiggly investment debacle
Revenge does not always taste sweet, and it almost never pays. Just ask the indignant owner of Piggly Wiggly, Clarence Saunders, who tried to get even with the scheming short sellers by buying up all the shares, and all he got in return was a brush with bankruptcy.
6. A lesson from the Bretton Woods conference of 1964
A small group of determined individuals can prevail against a bigger, stronger enemy. When a group of expert speculators came to believe that Britain could not hold its exchange rate, they started betting against the pound on the market. Despite the long odds and the strong alliance of the central bank against them, they won.
There are many more lessons to be drawn from the book, which you will find quite entertaining and interesting. It is a journey into the business past, full of events that repeat themselves again and again in today’s world.
See also: 7 lessons from Tools of Titans, Tim Ferriss’s book
Featured image: Terry Robinson, CC BY-SA 2.0, via Wikimedia Commons.
