Email Dialogue on Business Books, Self-Education, and Mental Models

The very interesting Josh Kaufman and I had an email-style dialogue on business books, self-education, mental models, and more on this wiki page and copied on this blog post (continued below the fold).

Josh runs the Personal MBA Recommended Reading List — a list of the best business books one would need to read for a comprehensive business education. It’s a terrific resource that’s well worth reviewing. In our exchange, we talk about the list of books and whether recently published ones should be excluded, and then meander into the difference between books offering systems / models and practical advice, and conclude on how prominent a role books should play in the self-education process.

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From: Ben Casnocha
To: Josh Kaufman
Re: Personal MBA 2008 – The Recency Effect
July 27, 2008   11:54 PM

Dear Josh,

Congrats on launching the 2008 recommended list for the Personal MBA. As a fellow bookslut, I love perusing "best of" lists of books. I admire your chutzpah to compile such a list in the business genre as we would probably both agree that crap dominates this category of books. As someone who wrote a book on entrepreneurship last year, and in the process immersed myself in the industry, I saw up close how many stupid "leadership" books (to pick just one sub-category) come out each year. The scary thing is that people must be buying these management-guru authored books or else they wouldn’t be published!

So kudos to you for sifting through all the crap and finding the gems and providing a fabulous guide for the self-improvement crowd. And double kudos for adopting an appropriately broad definition of the genre — indeed your list contains some items (such as Deep Survival) that would be shelved far from a traditional business shelf in a bookstore. As Jim Collins has said, the majority of a business person’s reading should be books not traditionally thought of as "business" texts.

But let me probe on one aspect of the list that I find troubling: its inclusion of books published recently. One of your picks, Ethics for the Real World, was published just a few weeks ago. Another, Four Hour Workweek, was published last year. It’s truly bizarre to see these juxtaposed with enduring classics like The Effective Executive by Peter Drucker on a "best business books of all-time" list. The ultimate sign of a book’s effectiveness is its lasting power, no? — if it is still being talked about at least a few years after pub date. The inclusion of hot new books underscores the list’s vulnerability to fads or clever launch-date marketing buzz.  Several friends of mine, minutes after reading it, said Four hour Workweek changed their life — but you can only evaluate this statement a year or two after its utterance, to see if the book actually has changed their life in the way they predicted it would. Until then, we hold our breath.

The fact that you dropped Seth Godin’s The Dip (published last year) from last year’s list would indicate to me that it seemed big and important at the time, but in hindsight, not so much. Right? Even the most self-aware humans can fall prey to the recency effect which says we assign disproportionate salience to recent stimuli/observations. So Josh, why not make it a "system rule" that no book published in the last 3 years is eligible? To me, this would improve the authority and respectability of your list considerably.

Later, I want to ask what role books play in the self-education process.

Until then,

Ben

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From: Josh Kaufman
To: Ben Casnocha
Re: Personal MBA 2008 – The Recency Effect
July 29, 2008   10:46 PM

Dear Ben,

Thanks for your kind words and thoughtful critique of the Personal MBA – I greatly appreciate your support, as well as your questions.

First, a clarification on the purpose of the Personal MBA Recommended Reading List. My intent in creating the list was not to create a list of "business books that have stood the test of time" – that would be easy enough to do with a simple program that listed the top-selling business books published before 2005 that are still in print. My intent was more qualitative: if a person wants to educate themselves about business, what is the best set of books he or she should read, based on my research to date? Best, in this case, is defined by (1) comprehensive, (2) practical, and (3) efficient.

The intended outcome of the Personal MBA is an individual who is capable of thinking clearly about business-related issues, making sound decisions, and building a sustainable and profitable business. To that end, I try to select the very best books I’m aware of, regardless of the publication date.

While I love to find classic books that have succeeded in the market over long periods of time – it’s a very good indicator the book is worth looking into – the world of business literature changes quickly, and many new books are simply better (or more practically relevant) than older books in the same category. Ethics for the Real World is a great example – it’s the most useful book on business ethics I’ve come across, and I’ve reviewed quite a few.  To me, it doesn’t matter so much that it’s new – it’s the best I’ve found, so it’s on the list.

In addition, there are best-selling books that have "stood the test of time" that I do not consider great – Jim Collins’ Good To Great comes to mind. (The entire book is an exercise in survivorship bias, as detailed by PMBA-recommended The Halo Effect.)  Strong sales don’t earn a book a place on the list – the usefulness and practicality of the content is far more important.

To me, the rarest and most valuable books are those that teach you how to think about something, and that’s what several new books do exceedingly well. Presentation Zen teaches you how to think about presenting to business audiences. Ethics for the Real World teaches you how to think about moral issues in the workplace. The Ultimate Sales Machine teaches you how to think about generating and closing leads. It’s Not About the Money teaches you how to think about your financial management tendencies. The 4-Hour Workweek teaches you to think about businesses in terms of systems, etc. 

There are many other books about the importance of building business systems (like Michael Gerber’s The E-Myth), but The 4-Hour Workweek wins because it most effectively conveys the very tangible benefits of business systems: more time and energy to do important things. The reason so many people hold The 4-Hour Workweek in high regard (or call it "life changing") is that the book teaches you how to build useful systems, then encourages you to experiment with your own projects. As a result, most FHWW readers I’ve talked with (1) walk away with the impression that they’re capable of building useful business systems, and then (2) actually try to start a new business or improve an existing one. Convincing people to take action is the hallmark of a great book, which earns the FHWW a place on the list, even though it was published last year.

The recency effect is very real, and I attempt to consciously discount my judgments about new material to compensate. Keep in mind that the recency effect doesn’t just apply to books that have just been published – it applies to all books that are new to me, even those that are decades old. For that reason, I review all of the books on the list when I make revisions – becoming "bored" with a previous selection is always a danger, as is giving preferential treatment to incumbents. Reviewing previous selections helps me mitigate the potential for bias, since both books are fresh in my mind while making selection decisions.

When it comes down to it, PMBA readers are trusting my research and judgment when they choose a book from the Recommended Reading List. While I’m certainly not perfect in eliminating potential bias, I think most of my readers would agree that the quality of the list is very good, and is improving over time. The vast majority of PMBA readers trust my research enough to trust my recommendations, and if they don’t, they’re always free to read something else.

That’s not to say my judgment is always the last word – each edition of the PMBA Recommended Reading List is significantly influenced by the feedback of readers. The PMBA Community is quite strong, and I actively solicit their feedback about the books they read throughout the year. Sometimes that results in books being removed from the list.

The Dip is a great example of the role of feedback in the PMBA selection process.  I think the core lesson of The Dip – learning when to quit and when to keep going – is incredibly important, which is why the book was included in the 2007 edition of the list. The removal of The Dip from the 2008 edition wasn’t a recognition that the book wasn’t great – it was a recognition that a signficiant number of my readers believed it wasn’t as great as other books on the list. In the end, The Dip was perceived as a weaker selection than others, and so it was cut to make room for new selections, in accordance with the constraints I’ve set for myself in managing the list.

I think it’s possible to overcompensate for the recency effect (or any other cognitive bias) – there’s as much danger in over-reacting to a cognitive bias as there is in under-reacting. I consider it my responsibility to highlight the very best books I’m aware of when I publish the Recommended Reading List, which is the reason I haven’t adopted a time-delay policy – it’s an overcompensation that favors social proof (commercial success + the reviews of others) vs. independent research and honest judgment.  While there certainly is the potential for recency bias in my selection process, I believe the feedback I receive from PMBA readers effectively mitigates this risk.

Thanks for the opportunity to explore this topic with you, Ben – I’m looking forward to our future conversations about education and business!

All the best,

Josh

From: Ben Casnocha
To: Josh Kaufman
Re: Personal MBA 2008 – How to judge books
August 7, 2008   9:42 PM

Dear Josh,

Thanks for the reply. I want to explore something you said that I find really interesting:

To me, the rarest and most valuable books are those that teach you how to think about something, and that’s what several new books do exceedingly well. Presentation Zen teaches you how to think about presenting to business audiences. Ethics for the Real World teaches you how to think about moral issues in the workplace. The Ultimate Sales Machine teaches you how to think about generating and closing leads. It’s Not About the Money teaches you how to think about your financial management tendencies. The 4-Hour Workweek teaches you to think about businesses in terms of systems, etc. There are many other books about the importance of building business systems (like Michael Gerber’s The E-Myth), but The 4-Hour Workweek wins because it most effectively conveys the very tangible benefits of business systems: more time and energy to do important things.

This is an interesting perspective. You clearly value "systems" and "frameworks." I do too. Elsewhere, you have expressed your admiration for Charlie Munger’s Poor Charlie’s Almanak and his "mental models." I also admire them. Here’s my concern: academics and deep thinkers and analytically-minded programmers eat this stuff up, but I think the making of models is only half the game. To really be successful, you need tactical / actionable advice such as "use the word ‘investment’ not ‘price’ when framing the cost of your product to a customer"; some case studies of how others are leading their lives; a dose of inspiration so you believe you can do what you want; and an understanding that in the most intense of moments, built-in processes often fail to offer the stability or predictability that its managers envisioned.

Contrast two successful entrepreneurship books of late. Founders at Work (a "supplement" on your list) is a compendium of stripped-bare interview transcripts with founders of start-ups. There is no commentary or analysis supplementing the interviews. Just interview transcripts. Four Hour Work Week contains few interviews / detailed case studies and instead introduces various systems and specific advice on how to build a life that works for you. If you do X, and then wholesale it, then buy AdWords, then do this, then do that….you will automate your income flow, then you can travel, and then you can be happy. What I like about Founders at Work — and I wonder if this approach is lacking in the PMBA selection methodology — is that it doesn’t pretend that you can systematize success, or that if you follow these 1-10 processes you’ll be happy or successful. Rather, through the sheer diversity of examples, it teaches that there is no one path and that randomness really does affect the outcome of our efforts.

There’s no doubt that in the end this is your list and it’s your judgment. But at the same time, it’s not called "Josh’s Favorite Business Books." It’s called "The Personal MBA." So I think including books that play to casts of mind different than your own would broaden the list’s overall appeal. For example, you may revel in systems, but some people learn and get inspired more by reading a compelling first-person memoir about life or business — and best I can tell, the memoir, despite its age-old power to inspire and indirectly teach, has no representation on your list.

I’ll let you reply, but let’s shift gears a bit in our next exchange: to what extent should books be part of one’s business education? For example, I would argue that if you want to get better at doing presentations, you shouldn’t read books on presentation skills, but you should instead do presentations. However if you want to learn accounting, books are good; you can’t just do accounting with no prior knowledge and expect to learn. Some skills are readily learned by reading books; some are not. And on top of it all, some people learn best by consuming text, and some people do best with other formats. Hence, I never implore people become booksluts like me; instead I suggest they find the method / medium of learning that works best for them. You’re big on self-education. How big are you on books, relative to other pieces of that pie?

Yours,

Ben

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From: Josh Kaufman

To: Ben Casnocha

Re: Personal MBA 2008 – Mental models and self-education in general

August 16, 2008   2:12 PM

Excellent points, all.  A few thoughts:

 

Here’s my concern: academics and deep thinkers and analytically-minded programmers eat this stuff up, but I think the making of models is only half the game. To really be successful, you need tactical / actionable advice such as "use the word ‘investment’ not ‘price’ when framing the cost of your product to a customer"; some case studies of how others are leading their lives; a dose of inspiration so you believe you can do what you want; and an understanding that in the most intense of moments, built-in processes often fail to offer the stability or predictability that its managers envisioned.

That’s a very valid concern: I’ve tried to balance the theory and practical advice portions of the list as best I can, with a slight emphasis on practicality. Books like Hiring Smart, The Sales Bible, The New Leader’s 100-Day Action Plan, and The Simplicity Survival Handbook are almost entirely practical, while books like Seeing What’s Next, Influence, and Judgment are more theory-based.  Most of the books are somewhere in between – Getting Real is about design philosophy, but presents its message in terms of practical decisions and choices you can make in the process of starting a company or designing a product. 

Personally, I think a mix of theory and practical advice is most effective, particularly when stories and anecdotes are used to provide examples of the theory in action, as is the case with How to Win Friends and Influence People and Made to Stick.

That said, I’m a huge advocate of concepts and models for a good reason: mental models are the best means of making a messy world manageable. (How’s that for alliteration?)

Life (and by extension, business) is complicated. While you’re correct that models and processes don’t (and can’t) completely account for the complexity of business, that’s not the ultimate purpose of a model: models are a starting point that allows you to rapidly evaluate an ambiguous situation and decide what to do next.

Models and business-related concepts are simply ways of expressing patterns that commonly recur in business situations, similar to your Business Rules of Thumb. For example, every single successful business in the world (1) creates something of value to others, (2) generates prospects, (3) convinces those prospects to purchase, (4) delivers that value to the purchaser, and (5) collects more money than it spends on the transaction. The same goes for increasing revenue: you can either (A) attract more customers, (B) sell more to your existing customers, or (C) encourage your customers to purchase from you more often.

Once you internalize these simple models, it makes it much easier to evaluate potential opportunities or find ways to improve your existing business.  The more mental models you have at your disposal, the more effectively you’ll be able to respond to a wide variety of situations.

Processes are important for the same reasons: the vast majority of successful businesses rely on duplicating some type of product or service. Processes ensure that value is created, prospects are generated, sales are made, value is delivered, and money is collected efficiently and reliably.  While some people find it easier to think in terms of system and process than others, that doesn’t diminish the fact that all businesses are improved primarily by creating new processes and systems or improving the systems and processes upon which the business currently depends.

Some people pick up mental models most effectively by reading, some by reading anecdotes about others, and others via first-hand experience. However they’re learned, I think the repertoire of mental models a businessperson collects over the years is (by far) one of their most valuable assets. That’s ultimately what I intend to teach via Business Mental Models, a course I’m currently developing to teach others the mental models I’ve learned through the process of creating the PMBA.

There’s no doubt that in the end this is your list and it’s your judgment. But at the same time, it’s not called "Josh’s Favorite Business Books." It’s called "The Personal MBA." So I think including books that play to casts of mind different than your own would broaden the list’s overall appeal.

Point taken. That’s actually the reason that I created the “supplemental” lists – there are a lot of fantastic books out there that only speak to a certain sub-segment of readers.  For example, Founders at Work is a fantastic read if you want to start a startup, but for corporate middle managers, there are better uses of time, like reading Peter Krass’ Books of Business Wisdom. In my experience, most business history, business reference, and business profile titles are hit-or-miss – a book may be great for some people, but not so great for others.  The supplemental lists provide the opportunity to feature great books without sending the message that they’re appropriate for all PMBA readers.  (Side note: I’m working on the business profiles category now: if you have recommendations, please let me know.)

That said, I think a list of “Josh’s Favorite Business Books” would be noticeably different from the PMBA – there are hundreds of books (like Poor Charlie’s Almanack) that I’ve personally found interesting / enlightening / useful that don’t fit the PMBA selection criteria.  While the PMBA reading list certainly isn’t perfect, I think the vast majority of businesspeople will find that the reading the selections in the core list expands their practical understanding of business dramatically, ultimately resulting in more opportunities for business success.

 

…To what extent should books be part of one’s business education? For example, I would argue that if you want to get better at doing presentations, you shouldn’t read books on presentation skills, but you should instead do presentations. However if you want to learn accounting, books are good; you can’t just do accounting with no prior knowledge and expect to learn. Some skills are readily learned by reading books; some are not.

Regarding the role of practical experience, we’re definitely on the same page – I think you need an equal mix of reading books / taking courses and actually practicing what you learn.  Reading without action is only marginally useful.

Books are wonderful because they allow you to learn lessons that others learned through years (or decades) of sometimes-painful experience in a few hours.  In The Art of Exceptional Living, Jim Rohn shares what he learned in the process of working himself into crippling debt as a young man.  While the “school of hard knocks” is always an effective teacher, it’s far better to learn from Rohn’s mistakes than repeat them yourself.

You’ll always learn more by actually starting a business, writing a business plan, or managing a team than by simply reading about those subjects. Reading books and taking courses is useful because it allows you to perform at a higher level more quickly, either by understanding the principles involved or avoiding common mistakes.  To use your example, giving presentations is the best way to learn presentation skills, but if you also read a few books in preparation or after giving a few talks, you’ll move up the learning curve more quickly.

 

You’re big on self-education. How big are you on books, relative to other pieces of that pie?

On the whole, I’m a major advocate of books for a number of reasons: they’re inexpensive, well-organized, easy to procure, and useful for reference purposes.  It’s also easier to consume printed materials efficiently via structured reading techniques, like those taught in 10 Days to Faster Reading.  Books represent a major portion of my own education, but they’re certainly not the only means of educating yourself.

Audio books are great for taking advantage of otherwise non-productive time, like travel or doing chores. Audio is harder to use as a reference, but listening while doing something else is a major benefit. (Note: many PMBA titles are available in downloadable audio format via Audible.com.)

Blogs and magazines can be fantastic sources of learning, as long as you’re following sources with a high signal-to-noise ratio.  I’m not a huge fan of most major business periodicals, since they tend to focus more on status / power porn than presenting useful information, but magazines that cover areas related to business (like Wired, The New Yorker, and Psychology Today) can be wonderfully inspiring and thought-provoking.  Any source of original, well-written, and well-researched essays is valuable, and the wider the net you cast, the better.

In-person courses can sometimes be good investments, as long as a large portion of the course is devoted to hands-on practice of the skills you want to learn.  (A great example is the 12-week Dale Carnegie “Effective Communications & Human Relations” course, in which you actually practice public speaking and working with others more effectively.)  In my opinion, most lecture-based courses over 30 minutes in length are only marginally useful, and could be more effectively internalized via recorded audio or written material.

Online courses can also be very helpful in learning new skills, particularly if they’re taught by a practitioner and presented in video form. Screencasts allow you to follow along with the presenter as they actually do something, which is an easy way to gain exposure to new ways of working, particularly for computer-related learning.  I recently completed a online course in screencast format that cost a few thousand dollars, and it was worth every penny.  As long as you’re learning from a reputable source and you know what you’re buying, there’s a wide variety of skills that online courses teach extremely well.

You can also learn a lot the old fashioned way: by talking with people. Mentors and peers are an extremely valuable source of information and inspiration, and time spent in conversation with other smart people is always a good investment.

Thanks for the conversation, Ben.