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Lessons from the Titans: What Companies in the New Economy Can Learn from the Great Industrial Giants to Drive Sustainable Success
Three top Wall Street analysts reveal enduring lessons in sustainable success from the great industrial titans--the high-tech companies of their day--to the disruptors that now dominate the economy.
Before Silicon Valley disrupted the world with new technologies and business models, America's industrial giants paved the way. Companies like General Electric, United Technologies, and Caterpillar were the Google and Amazon of their day, setting gold standards in innovation, growth, and profitability. Today's leaders can learn a great deal from their successes, as well as their missteps. In this essential guide, three veteran Wall Street analysts reveal timeless lessons from the titans of industry--and offer battle-tested survival tactics for an ever-changing world. You'll learn:
how GE became the largest company on earth--only for a culture of arrogance to set in motion the largest collapse in history
how Boeing reassessed risks, raised profits--and tragically lost its balance
how Danaher avoided the pitfalls of tremendous success--by continually reinventing itself
how Honeywell experienced a near-fatal cultural breakdown--and executed a flawless turnaround
how Caterpillar relied too much on forecasting, lost billions--and rallied by recommitting to the basics
Filled with illuminating case studies and brilliant in-depth analysis, this invaluable book provides a multitude of insights that will help you weather market upheavals, adapt to disruptions, and optimize your resources to your best advantage. You'll learn hard-won lessons in innovation, growth, resilience, and operational excellence, as well as the time-proven fundamentals of continuous improvement for lasting success. In the end, you'll have your own personal toolbox of useful takeaways from more than a century's worth of data, experience, wisdom, and can-do spirit, courtesy of some of the greatest business enterprises of all time. This is how manufacturers survived the first disruptors of technology--and how today's giants can survive and thrive during continuous cycles of disruption.
Before Silicon Valley disrupted the world with new technologies and business models, America's industrial giants paved the way. Companies like General Electric, United Technologies, and Caterpillar were the Google and Amazon of their day, setting gold standards in innovation, growth, and profitability. Today's leaders can learn a great deal from their successes, as well as their missteps. In this essential guide, three veteran Wall Street analysts reveal timeless lessons from the titans of industry--and offer battle-tested survival tactics for an ever-changing world. You'll learn:
how GE became the largest company on earth--only for a culture of arrogance to set in motion the largest collapse in history
how Boeing reassessed risks, raised profits--and tragically lost its balance
how Danaher avoided the pitfalls of tremendous success--by continually reinventing itself
how Honeywell experienced a near-fatal cultural breakdown--and executed a flawless turnaround
how Caterpillar relied too much on forecasting, lost billions--and rallied by recommitting to the basics
Filled with illuminating case studies and brilliant in-depth analysis, this invaluable book provides a multitude of insights that will help you weather market upheavals, adapt to disruptions, and optimize your resources to your best advantage. You'll learn hard-won lessons in innovation, growth, resilience, and operational excellence, as well as the time-proven fundamentals of continuous improvement for lasting success. In the end, you'll have your own personal toolbox of useful takeaways from more than a century's worth of data, experience, wisdom, and can-do spirit, courtesy of some of the greatest business enterprises of all time. This is how manufacturers survived the first disruptors of technology--and how today's giants can survive and thrive during continuous cycles of disruption.
352 pages, Hardcover
Published July 7, 2020
About the author
Scott Davis
5 books28 followersScott Davis serves as Chairman and CEO of Melius Research, where he is also the lead research analyst covering the multi-industry sector. He has 25 years of industrials equity research experience and has covered over 30 multi-industry names with an aggregated market capitalization of approximately $1 trillion.
Davis has led elite research teams for the past 20+ years, ranking in the top decile of all Wall Street analysts in nearly every time period. For the past 17 years, Institutional Investor magazine has recognized Davis as the number one ranked multi-industry analyst on six occasions and within the top three in most of the remaining years. Prior to Melius Research, Davis was a Managing Director and Head of the Global Industrials Research Group first at Morgan Stanley for 16 years then at Barclays Plc for 6 years. He and his work have been cited in hundreds of publications, including the Wall Street Journal, New York Times, Forbes, and Fortune, and he appears regularly on CNBC, Bloomberg, Fox, and CNN.
Davis has led elite research teams for the past 20+ years, ranking in the top decile of all Wall Street analysts in nearly every time period. For the past 17 years, Institutional Investor magazine has recognized Davis as the number one ranked multi-industry analyst on six occasions and within the top three in most of the remaining years. Prior to Melius Research, Davis was a Managing Director and Head of the Global Industrials Research Group first at Morgan Stanley for 16 years then at Barclays Plc for 6 years. He and his work have been cited in hundreds of publications, including the Wall Street Journal, New York Times, Forbes, and Fortune, and he appears regularly on CNBC, Bloomberg, Fox, and CNN.
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Displaying 1 - 30 of 43 reviews
January 23, 2022
Fantastic read for anyone looking to better understand the industrials landscape. Particularly useful for investors but recommended for operators too. My notes below. Warning: Spoilers
Investment frameworks: identify underperformer with a new CEO who is planning to tackle the cost base first then use cash flows to derisk and/or invest in growth, note that it usually takes +5yrs to fix production issues, be wary of plans that try to tackle all the problems at once, be wary of mega mergers done is a CEOs twilight years rarely work out well
Important financial metrics: R&D to judge investment, inventory turns for production efficiency, capex to depreciation ratio to see if they are just investing only enough replace what is wearing out (if=1), “first pass” rates to judge what % of product comes off the line first time without issues (should be +90%), incremental margins to assess efficiency of growth (should be 23-35% for mining equipment)
General lessons
Good managers foster humble cultures, encourage continuous improvement, hold the line on corporate costs, have extreme custom focus, and allocate capital in a disciplined manner. Most companies that talk about culture don’t have one.
Hire good people and pay them well. Not just for the job they have today but the job they will get tomorrow.
Nothing destroys a culture faster than wasteful spending and celebrity behavior among executives.
Experience can be a valuable asset as manufacturers reduce production costs over time and affording economies of scale that make it difficult for new entrants to compete
Lean manufacturing key principles: reduce waste, decrease inventory, and build what is needed quickly rather than trying to predict demand, for a quick assessment of Lean abilities look for clean factories, high employee engagement, and most importantly good safety as it is highly correlated with smooth operations, kaizen can be applied to anything not just manufacturing, however it is easy to implement but hard to sustain
Technology advances too fast for it to be done solely internally. Successful companies will have teams that engage with external parties. Perhaps located near universities. Or connected to venture capital hot spots. Only 1 in 5 industrial companies has an office near Silicon Valley.
Case Studies
GE: attack the cost base first to improve FCF, optimize the portfolio towards growth, turn over your employee base (within reason), board size matters (8-10 right), use benchmarking and accountability to inject humility
Boeing: 50yrs of industry data suggests only half of aircraft development programs make money, even successful programs subsequently lose money on the first 100-200 planes as the streamline and fine tune manufacturing to reduce costs, don’t underestimate the competition or the severity of a crisis
Danaher: built largely on razor/blade M&A, DBS is their core process of improvement, small continuous improvements > giant one off leaps, passing on a bad deal as important as executing a good one and it signals highly disciplined management, ideal unit volume growth is 4-6% as high rates require more capital (overtime, supply bottlenecks, new capacity investments) while lower doesn’t have the incremental margins, 2-3% can come from LEAN improvements to get more throughput with the additional 2-3% coming from software and equipment investments, mistakes are learning experiences if you have humility, despite buying higher priced assets today they are earning similar spreads because debt costs have fallen so much but they are buying assets with less cyclicality and better LT prospects, employees are more likely to quit because of bad managers rather than pay so increased turnover is a sign management is doing something wrong, screen for humility as much as talent when recruiting
Honeywell: modern portfolio theory can be applied within conglomerates as well (diversification = better risk adjusted returns) but it usually winds up being that the poorly performing businesses become time sucks for mgmt, cost structure and liabilities need to be attacked before growth can become the focus (defense before offense), culture is an output of incentives, HOS is Honeywell’s DBS, it focuses on defects/million, on time delivery, safety, and inventory turnover, factories can achieve bronze, silver, or gold, Cote’s key success was hiring the right people and incentivizing them well, pay top talent not only for the job they have today but the job offer they will get tomorrow, turnarounds take time
United Technologies: UTC started with attacking the cost base but never pivoted to funding growth with the savings, incentive systems that don’t evolve risk destroying value and absolute targets can result in underinvestment elsewhere as not all costs are bad (R&D, wages), don’t fire the bearers of bad news as feedback is essential, Carrier selling thru distributors and sold less than 50% of an asset it allowed them to recognize profits but not sales in an “unconsolidated JV” which boosted margins
Caterpillar: faces additional cyclical pressure which makes forecasting even tougher, despite bringing in an economist for CEO they were never able to get forecasting right which exacerbated the swings, for customers a mining truck that costs $4m might be hauling $1m of copper everyday in good times while sitting completely idle in bad times, CAT failed to learn the lessons from the auto industry 20yrs earlier where it was get LEAN or have your lunch eaten by the Japanese, there was a clear roadmap of what to do yet they didn’t, make sure the org chart is clear enough that it’s easy to “know which throat to choke”
Roper: M&A strategy 1) lower asset intensity than core; 2) good biz in niche industry, 3) excellent mgmt, they’ve focused on bolt-on deals with a heavy software focus, retaining mgmt is key, outsourced business quality analysis (McK or BCG) usually provides a more independent view because internal M&A teams want to do deals in order to justify their existence so are incentivized to skew positive, process is geared to find all the mistakes up front which is opposite DAN who asks “tell me what you didn’t tell me now that the deal is closed”, acquired companies are run autonomously with stars left alone to do what they do best, mispricing in niche industries can last a very long time, entrepreneurs usually over invest in product development and underinvest in sales and marketing
Transdigm: airlines have always chosen safety over price so many parts have evolved into mini monopolies where the same manufacturer has been producing the part for decades and now also enjoys lower unit costs due to accumulated knowledge, this combined with the regulatory moat (FAA approval difficult) means aviation supply chain has a lot of good businesses, aerospace aftermarket parts are highest margin in industrial space (60-100%), demand tends to be stable as wear and tear is reasonably steady (unit demand stability + pricing power = ability to take leverage), older aircraft need parts more often but the installed base shrinks as airlines upgrade planes so difficult for new entrants to justify capital required to get certification, legacy manufacturers can push thru aggressive price increases which offset volume declines, when no M&A is available that won’t dilute portfolio they pay special dividend
Stanley Blacker: implementing Lean unlocked almost $4bn in working capital which was deployed in M&A and invest in skunks works projects like FlexVolt, teams were left alone with only quarterly check ups
United Rentals: key example of success after commoditization, aerials account for the majority of the business, well timed technology investments allowed them to shift incentives to ROA and reduced competitions between branches, increased collaboration (asset sharing) resulted in more national accounts which are less cyclical
Investment frameworks: identify underperformer with a new CEO who is planning to tackle the cost base first then use cash flows to derisk and/or invest in growth, note that it usually takes +5yrs to fix production issues, be wary of plans that try to tackle all the problems at once, be wary of mega mergers done is a CEOs twilight years rarely work out well
Important financial metrics: R&D to judge investment, inventory turns for production efficiency, capex to depreciation ratio to see if they are just investing only enough replace what is wearing out (if=1), “first pass” rates to judge what % of product comes off the line first time without issues (should be +90%), incremental margins to assess efficiency of growth (should be 23-35% for mining equipment)
General lessons
Good managers foster humble cultures, encourage continuous improvement, hold the line on corporate costs, have extreme custom focus, and allocate capital in a disciplined manner. Most companies that talk about culture don’t have one.
Hire good people and pay them well. Not just for the job they have today but the job they will get tomorrow.
Nothing destroys a culture faster than wasteful spending and celebrity behavior among executives.
Experience can be a valuable asset as manufacturers reduce production costs over time and affording economies of scale that make it difficult for new entrants to compete
Lean manufacturing key principles: reduce waste, decrease inventory, and build what is needed quickly rather than trying to predict demand, for a quick assessment of Lean abilities look for clean factories, high employee engagement, and most importantly good safety as it is highly correlated with smooth operations, kaizen can be applied to anything not just manufacturing, however it is easy to implement but hard to sustain
Technology advances too fast for it to be done solely internally. Successful companies will have teams that engage with external parties. Perhaps located near universities. Or connected to venture capital hot spots. Only 1 in 5 industrial companies has an office near Silicon Valley.
Case Studies
GE: attack the cost base first to improve FCF, optimize the portfolio towards growth, turn over your employee base (within reason), board size matters (8-10 right), use benchmarking and accountability to inject humility
Boeing: 50yrs of industry data suggests only half of aircraft development programs make money, even successful programs subsequently lose money on the first 100-200 planes as the streamline and fine tune manufacturing to reduce costs, don’t underestimate the competition or the severity of a crisis
Danaher: built largely on razor/blade M&A, DBS is their core process of improvement, small continuous improvements > giant one off leaps, passing on a bad deal as important as executing a good one and it signals highly disciplined management, ideal unit volume growth is 4-6% as high rates require more capital (overtime, supply bottlenecks, new capacity investments) while lower doesn’t have the incremental margins, 2-3% can come from LEAN improvements to get more throughput with the additional 2-3% coming from software and equipment investments, mistakes are learning experiences if you have humility, despite buying higher priced assets today they are earning similar spreads because debt costs have fallen so much but they are buying assets with less cyclicality and better LT prospects, employees are more likely to quit because of bad managers rather than pay so increased turnover is a sign management is doing something wrong, screen for humility as much as talent when recruiting
Honeywell: modern portfolio theory can be applied within conglomerates as well (diversification = better risk adjusted returns) but it usually winds up being that the poorly performing businesses become time sucks for mgmt, cost structure and liabilities need to be attacked before growth can become the focus (defense before offense), culture is an output of incentives, HOS is Honeywell’s DBS, it focuses on defects/million, on time delivery, safety, and inventory turnover, factories can achieve bronze, silver, or gold, Cote’s key success was hiring the right people and incentivizing them well, pay top talent not only for the job they have today but the job offer they will get tomorrow, turnarounds take time
United Technologies: UTC started with attacking the cost base but never pivoted to funding growth with the savings, incentive systems that don’t evolve risk destroying value and absolute targets can result in underinvestment elsewhere as not all costs are bad (R&D, wages), don’t fire the bearers of bad news as feedback is essential, Carrier selling thru distributors and sold less than 50% of an asset it allowed them to recognize profits but not sales in an “unconsolidated JV” which boosted margins
Caterpillar: faces additional cyclical pressure which makes forecasting even tougher, despite bringing in an economist for CEO they were never able to get forecasting right which exacerbated the swings, for customers a mining truck that costs $4m might be hauling $1m of copper everyday in good times while sitting completely idle in bad times, CAT failed to learn the lessons from the auto industry 20yrs earlier where it was get LEAN or have your lunch eaten by the Japanese, there was a clear roadmap of what to do yet they didn’t, make sure the org chart is clear enough that it’s easy to “know which throat to choke”
Roper: M&A strategy 1) lower asset intensity than core; 2) good biz in niche industry, 3) excellent mgmt, they’ve focused on bolt-on deals with a heavy software focus, retaining mgmt is key, outsourced business quality analysis (McK or BCG) usually provides a more independent view because internal M&A teams want to do deals in order to justify their existence so are incentivized to skew positive, process is geared to find all the mistakes up front which is opposite DAN who asks “tell me what you didn’t tell me now that the deal is closed”, acquired companies are run autonomously with stars left alone to do what they do best, mispricing in niche industries can last a very long time, entrepreneurs usually over invest in product development and underinvest in sales and marketing
Transdigm: airlines have always chosen safety over price so many parts have evolved into mini monopolies where the same manufacturer has been producing the part for decades and now also enjoys lower unit costs due to accumulated knowledge, this combined with the regulatory moat (FAA approval difficult) means aviation supply chain has a lot of good businesses, aerospace aftermarket parts are highest margin in industrial space (60-100%), demand tends to be stable as wear and tear is reasonably steady (unit demand stability + pricing power = ability to take leverage), older aircraft need parts more often but the installed base shrinks as airlines upgrade planes so difficult for new entrants to justify capital required to get certification, legacy manufacturers can push thru aggressive price increases which offset volume declines, when no M&A is available that won’t dilute portfolio they pay special dividend
Stanley Blacker: implementing Lean unlocked almost $4bn in working capital which was deployed in M&A and invest in skunks works projects like FlexVolt, teams were left alone with only quarterly check ups
United Rentals: key example of success after commoditization, aerials account for the majority of the business, well timed technology investments allowed them to shift incentives to ROA and reduced competitions between branches, increased collaboration (asset sharing) resulted in more national accounts which are less cyclical
November 12, 2020
I won this book on Goodreads. I have been an investor since 1978. This book contains ten company case studies of what went wrong and how the Chief Executive Officers (CEOs) turned them around. Provides "lessons learned" (my words not the authors) at the conclusion of each chapter and a comprehensive concluding chapter. Provides analytics that can be applied by investors who are considering stock investments in industrial companies. This is a great tool for investors. Those who are current holders of General Electric (GE) stock, however, be warned. SPOILER ALERT: Negative GE information like that provided by Analyst Stephen Tusa (not one of these authors) in the mid 2010's was known by other Wall Street Analysts as early as 2003. I was infuriated as I read the GE chapters. I was a Morgan Stanley client in 2004 and purchased GE stock for my IRA on the recommendation of my broker. Morgan Stanley failed in it's fiduciary responsibility to clients by coercing its stock analysts to change cautionary or negative ratings on GE.
In my opinion, corporate officers who cheat clients and the public should be held accountable, led out of their offices in handcuffs, stripped of their golden parachutes and jailed.
In my opinion, corporate officers who cheat clients and the public should be held accountable, led out of their offices in handcuffs, stripped of their golden parachutes and jailed.
February 16, 2021
Interesting case studies, fair and well stated/supported thesis, overall a good and interesting book. Good lessons for investment, management, or just general knowledge about industry in general. Would recommend.
May 26, 2023
Written by an investment analyst and you can tell, it's a bit dry and only really has two points: do lean manufacturing and do return maths. That being said, it makes those points with well laid out case studies on companies not well covered elsewhere.
February 19, 2023
"Lessons from the Titans" is a good update on a series of business books with more pertinent examples from the business world, in the style of previous works such as Jim Collins' "Good to Great". While the lessons are as applicable now as they were when initially argued (in other texts) and the stories are interesting, it generally lacks in truly novel ideas.
January 17, 2022
Read this book for work but was actually fantastic. Highly recommend for others who are also blue collar/salt of the earth/brick by brick people
May 7, 2021
I work for one of the companies included as a case study here, my husband works for another, and both our employers are intimately linked with two others listed. I'm not sure what I expected of the book. It isn't meant to be a collection of amazing insights, but more of historical case studies, explaining how/why a company grew to be what it is. I do wish I'd received this book as part of my new employee orientation, as it did help connect various dots regarding corporate leadership and the various dynamics.
January 29, 2024
Here's a review from someone who is NOT this book's target audience, for what it's worth...
I picked up this book by mistake, thinking it would be a history of business in the industrial age. I would never normally read this. I don't own or manage a business and I have pretty much negative respect for Wall Street types and their mindset. I don't even know if I like capitalism as a general concept. Nevertheless, I was curious and gave this book a chance. I was surprised and pleased that it was generally well- researched, moderate, and based on logic and facts instead of hype and business buzzwords. The authors decry quick fixes and trends and look to history to see what has worked and what hasn't - and why.
They argue that the best way to achieve sustainable, long-term business success (profits) is by creating a good SYSTEM. A solid business structure will enable average employees to succeed, protect the business from incompetent managers, and ensure slow but consistent growth. Rather than relying on one star CEO, one big discovery ("disruption") or one lucky acquisition, wise businesspeople will set up a system that encourages sustainable, predictable, and repeatable success.
What kind of system, you ask? Well, it turns out that what great businesses have in common are boring things like compensating employees fairly, weeding out bad managers and incompetent employees, pursuing focused R&D, providing exceptional customer service and response to customer feedback, and aiming for incremental (1-2%) yearly profit gains rather than gambling on potential windfalls predicted to come 10 years down the line. This REALLY shouldn't come as a surprise to people, but in the age of start-up culture and risky investment gambles, people need a reminder of what actually makes companies successful.
There is one part of the argument, however, that I really didn't understand and I'm not sure I agree with. The authors (unsurprisingly) posit that increasing shareholder value is the most important measure of a business's financial success and that this must be the overall goal of any company. Okay, fine, I can accept that as a way of measuring business success. I am not at all sure, though, that a business could follow the authors' advice to compensate employees well, make high quality products, provide great customer service, and invest in R&D, AND also provide impressive shareholder returns. What they are talking about is reinvesting money into the business for long-term growth, paying for everyday, unsexy structural development that doesn't do anything to inspire investors, which to me seems intrinsically opposed to maxing out shareholder profits each year/quarter, a short term goal that disincentivizes long term planning and investment in essential-but-not-directly-profitable aspects of the company. I think it must be extraordinarily rare for a business to walk that line confidently and successfully. It may work for giant established companies looking to continue their market dominance and grow steadily into the future rather than going under, but I'm not sure newer businesses, or businesses smaller than a world famous gigantic institution, could ever make this model work. If that's the case, this book should have been private advice to about 50 people across the globe, not a book for the general public.
I picked up this book by mistake, thinking it would be a history of business in the industrial age. I would never normally read this. I don't own or manage a business and I have pretty much negative respect for Wall Street types and their mindset. I don't even know if I like capitalism as a general concept. Nevertheless, I was curious and gave this book a chance. I was surprised and pleased that it was generally well- researched, moderate, and based on logic and facts instead of hype and business buzzwords. The authors decry quick fixes and trends and look to history to see what has worked and what hasn't - and why.
They argue that the best way to achieve sustainable, long-term business success (profits) is by creating a good SYSTEM. A solid business structure will enable average employees to succeed, protect the business from incompetent managers, and ensure slow but consistent growth. Rather than relying on one star CEO, one big discovery ("disruption") or one lucky acquisition, wise businesspeople will set up a system that encourages sustainable, predictable, and repeatable success.
What kind of system, you ask? Well, it turns out that what great businesses have in common are boring things like compensating employees fairly, weeding out bad managers and incompetent employees, pursuing focused R&D, providing exceptional customer service and response to customer feedback, and aiming for incremental (1-2%) yearly profit gains rather than gambling on potential windfalls predicted to come 10 years down the line. This REALLY shouldn't come as a surprise to people, but in the age of start-up culture and risky investment gambles, people need a reminder of what actually makes companies successful.
There is one part of the argument, however, that I really didn't understand and I'm not sure I agree with. The authors (unsurprisingly) posit that increasing shareholder value is the most important measure of a business's financial success and that this must be the overall goal of any company. Okay, fine, I can accept that as a way of measuring business success. I am not at all sure, though, that a business could follow the authors' advice to compensate employees well, make high quality products, provide great customer service, and invest in R&D, AND also provide impressive shareholder returns. What they are talking about is reinvesting money into the business for long-term growth, paying for everyday, unsexy structural development that doesn't do anything to inspire investors, which to me seems intrinsically opposed to maxing out shareholder profits each year/quarter, a short term goal that disincentivizes long term planning and investment in essential-but-not-directly-profitable aspects of the company. I think it must be extraordinarily rare for a business to walk that line confidently and successfully. It may work for giant established companies looking to continue their market dominance and grow steadily into the future rather than going under, but I'm not sure newer businesses, or businesses smaller than a world famous gigantic institution, could ever make this model work. If that's the case, this book should have been private advice to about 50 people across the globe, not a book for the general public.
December 24, 2020
I received a copy of this book via a Goodreads giveaway and though the content is dense, it is great content.
The three authors - Davis, Copeland, and Wertheimer - share their collective insights of covering 10 behemoth companies over time: when things went well and recognized success and when things failed and lead to disaster, were their driving factors? Then, not only do they explore these companies as case studies of themselves, but they distill the common threads to help provide a framework for success as we continue to move forward.
I personally really appreciated the chapters on Danaher & Roper - probably because they were the more obscure and less-well known companies covered for me, and it was fascinating!
My only complaint, in the conclusion the authors suggest that on average, the worst years of a CEO are their first and their final 2 years in the role - and go so far as to suggest a few CEOs would have benefited by stepping down earlier than they did. The first is obvious - given the time needed to onboard and get buy in for a new direction. The second feels a bit disingenuous - As with many public companies, if the CEO isn't performing, often they are put on notice and then ousted by the board. If a CEO IS performing, they will keep that person there. To suggest there's a specific point in which one should know it's time for them to exit is something that can only be said when looking back.
Other than that - highly recommend for anyone in business and/or anyone interested in advancing in business!
The three authors - Davis, Copeland, and Wertheimer - share their collective insights of covering 10 behemoth companies over time: when things went well and recognized success and when things failed and lead to disaster, were their driving factors? Then, not only do they explore these companies as case studies of themselves, but they distill the common threads to help provide a framework for success as we continue to move forward.
I personally really appreciated the chapters on Danaher & Roper - probably because they were the more obscure and less-well known companies covered for me, and it was fascinating!
My only complaint, in the conclusion the authors suggest that on average, the worst years of a CEO are their first and their final 2 years in the role - and go so far as to suggest a few CEOs would have benefited by stepping down earlier than they did. The first is obvious - given the time needed to onboard and get buy in for a new direction. The second feels a bit disingenuous - As with many public companies, if the CEO isn't performing, often they are put on notice and then ousted by the board. If a CEO IS performing, they will keep that person there. To suggest there's a specific point in which one should know it's time for them to exit is something that can only be said when looking back.
Other than that - highly recommend for anyone in business and/or anyone interested in advancing in business!
May 15, 2023
An ode to capital allocation and incremental improvement, very much in the spirit of The Outsiders.
Main takeaways:
- leadership matters: even massive, centuries old industrial companies can be made or broken by the quality of their CEO
- continuous improvement and process intensity: success isn’t a function of disruptive innovation or game changing acquisitions. It’s a function of small improvements repeated over a long period of time. Whether it’s Lean, Kaizen, Agile, OKRs, etc…, bringing intensity to ongoing process improvement is critical.
- capital allocator mindset: the best companies think about organic/inorganic initiatives through the lens of a capital allocator (ie with a focus on ROIC, cash return on investment, etc)
- culture as an outcome: when done right, culture is an output, not an input. It’s a function of leadership’s actions and incentive structures, and isn’t nice words on a page
- incentives matter: the best companies are thoughtful about incentives. People respond strongly to incentives, so if they’re motivating the wrong behaviors, your company will suffer
In summary - the “industrial titans” covered in the book didn’t succeed with glamorous, game changing, disruptive innovations. They succeeded with unglamorous, but relentless focus on process integrity, incentive alignment, and cash generation.
Main takeaways:
- leadership matters: even massive, centuries old industrial companies can be made or broken by the quality of their CEO
- continuous improvement and process intensity: success isn’t a function of disruptive innovation or game changing acquisitions. It’s a function of small improvements repeated over a long period of time. Whether it’s Lean, Kaizen, Agile, OKRs, etc…, bringing intensity to ongoing process improvement is critical.
- capital allocator mindset: the best companies think about organic/inorganic initiatives through the lens of a capital allocator (ie with a focus on ROIC, cash return on investment, etc)
- culture as an outcome: when done right, culture is an output, not an input. It’s a function of leadership’s actions and incentive structures, and isn’t nice words on a page
- incentives matter: the best companies are thoughtful about incentives. People respond strongly to incentives, so if they’re motivating the wrong behaviors, your company will suffer
In summary - the “industrial titans” covered in the book didn’t succeed with glamorous, game changing, disruptive innovations. They succeeded with unglamorous, but relentless focus on process integrity, incentive alignment, and cash generation.
April 6, 2022
For people interested in the capital goods/aerospace indsutries, here a great series of monographies about successful and less successful companies (Boeing, Caterpillar, Honeywell, Roper Technologies, Danaher to name a few).
The authors are Wall St analysts who covered those companies at large investment banks and now at their own research boutique (Melius Research).
Most of the monographies are pretty insightful and really interesting since some companies are not very known by the general public.
There is a great focus on Lean management and how some companies have deeply applied its principles to improve their day-to-day operations to the benefit of both customers, employees and shareholders.
There is also an interesting description of the CEOs of those companies and how they turned around companies with great assets but that were poorly managed.
The only drawback is the lack of bibliography. We can assume the authors have read a couple of interesting book over the course of their respective careers.
There are also a limited number of significant failures (GE excepted).
But overall a very good read.
The authors are Wall St analysts who covered those companies at large investment banks and now at their own research boutique (Melius Research).
Most of the monographies are pretty insightful and really interesting since some companies are not very known by the general public.
There is a great focus on Lean management and how some companies have deeply applied its principles to improve their day-to-day operations to the benefit of both customers, employees and shareholders.
There is also an interesting description of the CEOs of those companies and how they turned around companies with great assets but that were poorly managed.
The only drawback is the lack of bibliography. We can assume the authors have read a couple of interesting book over the course of their respective careers.
There are also a limited number of significant failures (GE excepted).
But overall a very good read.
January 21, 2022
Overall a good read. Many companies portrayed in this book were unknown to me and I was amazed on how successful they are. There is a bit of repetition in the overall message and lessons learned but I liked the scrutiny the authors used to evaluate the ups and downs of the big US industrials. Author refers to Lean process without presenting any of the companies that created this concept. Would have been good to also investigate the Japanese conglomerates who initiated the Lean, Kaizen processes. It would be interesting to see how the tech unicorns of today will evolve and whether the tools described in the book which helped the big industrials survive downturns are the same for the new world which is thriving on ample liquidity, market share and top lines.
August 6, 2020
Wowser...This was a doozy. I think each of the chapters in this book could probably have been a stand alone story. I don't know if there was corruption at GE, but the history of what went on there was well...strange to say the least. Boeing was intriguing. These guys changed their company from a perennial money loser to a cash machine. Then it basically blew up. All the stories in here were entertaining and unique - Roper, Stanley Works, Caterpillar, Danaher, Honeywell were some of my other favorites. The authors are all top ranked wall street analysts and it was clear they had a totally different perspective and knowledge of these companies.
August 6, 2020
10 / 10. I would recommend this book to any investor and anyone who works at a company that they care about. Valuable lessons and context on what drives sustainable success and what can lead to the pitfalls of failure, the lessons are applicable to just about any industry. The case studies in the book (GE, Boeing, Danaher, Honeywell, United Technologies, Caterpillar, Roper, Transdigm, Stanley Black & Decker and United Rentals) were very well researched and give a fascinating behind the scenes look, from the factory floor to the boardroom, at how and why some of these companies found success and others found failure.
April 18, 2022
What I love the most about the book is that it features success and failure stories of companies that you rarely hear about (except GE). One can learn a lot from industrials Titans especially about cash discipline, growth strategies…etc.
As we mainly hear about the tech stars nowadays, I found the book very refreshing with a clear focus on business financial basics. Do the basics well first!
Each chapter brings a different angle and story on what can be learnt from the case study. I would have loved to deep dive more on the financials to illustrate some of the arguments.
This book should be recommended to all MBAs students.
As we mainly hear about the tech stars nowadays, I found the book very refreshing with a clear focus on business financial basics. Do the basics well first!
Each chapter brings a different angle and story on what can be learnt from the case study. I would have loved to deep dive more on the financials to illustrate some of the arguments.
This book should be recommended to all MBAs students.
July 11, 2023
This book is so bad! I only read the first two chapters on GE and am not reading any further. It’s clearly written by average sell-side guys on squishy management lessons coming out of blue chip companies. The analysis could have been so much deeper - these companies are public and decades of data on them is freely available. If I were writing it, I would have spoken about strategy, how it translated into company financials (margins, return on capital, EPS / FCF growth, capital allocation) and the lessons coming out of it for current investors / operators. They took a great idea and just ran it to the ground. Disappointment of epic proportions.
August 6, 2020
This book was a great read and frankly more entertaining than I thought a book about corporate culture, leadership and the industrial vertical could be. I learned a lot about why large corporates succeed and fail but the book reads way more like a storybook than a textbook. The authors get the key points across but guys like Larry Culp, Brian Jellison, the Rales Brothers, Dave Cote, Dave Anderson, Nick Howley, Jeff Immelt, Jack Welch, etc. really bring this book to a level that makes you want to read more. Yes, its ‘sleepy industrial america’ but what these companies have meant to the U.S. economy, and what these leaders did – both good and bad – is way more exciting than I think most people know.
July 7, 2023
This book talks about the ups and downs of the US industrial giants, and how leadership and culture could determine the fate of these companies. The author starts by laying out analogies between the FAANG and the conglomerates 20-30Y ago, and what the former should be learning from the latter. While GE was at once the household name of corporate America, it has now become 25% smaller in market cap than Honeywell ($140b mcap), which almost went bankrupt in early 2000s. The author centers discussion on the CEOs - their backgrounds, traits, and the systems they creates. The successful leaders discussed are 1) Efficient operators (rolled out Kaizen/ continuous improvement), 2) cash flow / working cap mgmt, 3) well-thought capital allocator (M&A + PMI were prevalent in industrials; perhaps m&a is inevitable in order to sustain growth in maturing industries), and 4) Long term mindset. Operational excellence, rather than modest produce differentiation, is the key to success (“lean based” system is mentioned several times). The author was a good storyteller and the audiobook was easy to follow
April 10, 2022
Galima laikyti senosios investavimo mokyklos atstovai pasakoja istorijas apie industrines aviakomanijas, kas joms sekėsi ir kas nesisekė, kaip sugebėjo griūti ar vėl atsikelti. Kelios iš istorijų gana dažnai naudojamos kaip pavyzdžiai įvairiose knygose, bet kai kurios įmonės visiškai negirdėtos. Nors šiek tiek jaučiasi niekinantis naratyvas ilgalaikei naujųjų tech public kompanijų sėkmei, bet, mano vertinimu, gana blaiviai žiūrima į ilgalaikę situaciją.
April 26, 2023
Easy to read, comprehensive and entertaining (for nerds). The key lessons in the book for mine were that the great companies focus on incremental improvements - kaizen - rather than moving in leaps and bounds, and having business systems in place help to protect companies from key man risk and culture slippage. These are lessons that can be taken across all businesses, not just the industrials in this book.
January 23, 2021
Being in the industry, I found this book to be educational and to the point. Great read for everyone - whether you are a factory worker, in corporate finance or a potential stock investor; great to get insights into well-run and struggling companies! I will admit that some cases were more well-written than other but still a 5 star book.
June 13, 2022
Useful case studies. For me, this was particularly helpful in identifying the factors which have enabled companies to successfully create value over decades, despite pursuing a serial acquisition strategy. Conventional wisdom and scepticism of this strategy still holds on a probability basis but I found tools from this book to question this so as not to be dismiss rare finds.
March 26, 2023
This was a very good read, though at times it felt repetitive and lacking substance. Author talks a lot about Lean manufacturing, but does not always go into specifics of how various businesses implemented it. Either way, there were some really good business stories in there and the last chapter summarized the lessons from them all really well.
April 6, 2023
The book only looks at industrials but claims that the principles go for all businesses, especially tech, without any form of proof. They have a bias against tech and are quite snubbish about the best companies of our time.
There are some interesting stories, but if you have been in investing for a while, you will not learn something new here.
There are some interesting stories, but if you have been in investing for a while, you will not learn something new here.
November 17, 2023
Interesting success stories from e.g. GE, Boeing, Stanley Black & Decker, Honeywell and Caterpillar. Strong - or at least visionary - leaders in many cases. Good to read, but not much to learn, really. The authors said it well in the end: "There's more art, and perhaps a bit more luck, to business success than we would like to admit."
February 29, 2024
A fairly typical business book, contrary to what I expected due to very positive reviews. A lot of repetition and focus on success, although the GE chapter was a refereshing deviation from the success trend. Sadly, most of the stories are already told in more detail elsewhere or are well-studied, at least in the investing circles.
January 19, 2021
Interesting and Insightful
I really enjoyed, and learned from, the case-study approach. The author's unique perspectives made the content even more interesting as compared to the polished talking points and metrics gamesmanship so prevalent from today's corporate-class.
I really enjoyed, and learned from, the case-study approach. The author's unique perspectives made the content even more interesting as compared to the polished talking points and metrics gamesmanship so prevalent from today's corporate-class.
July 7, 2023
I thought this book documenting case studies and lessons learned on various industrial companies was a solid read. This book would be useful for those seeking to read about companies such as GE and Danaher and learn about what has made them successful, what lead to destruction, etc.
August 25, 2023
Some great insights from some Wall Street analysts that spent decades analysing some flagship US industrial businesses. Success and failure often came down to the humility, incremental learning and feedback loops employed by the leadership team (CEO).
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