Judge a Book by What's Inside its Cover

8 December 2009

Alexander Friedman is CFO for the Bill and Melinda Gates Foundation and a judge for the Business Book of the Year Award. Here, he speaks to Phin Foster about lifelong learning, philanthropy and what makes a brilliant business book.

1. Have you enjoyed being a judge for the Financial Times and Goldman Sachs Business Book of the Year Award?

It's been a privilege. Lifelong learning is such a cool thing, but one of the biggest challenges is that there is never enough time to read all the things you want. When it is part of an assignment like this, you're given a welcome push.

"Lifelong learning is such a cool thing, but one of the biggest challenges is that there is never enough time to read all the things you want."

2. So the reading has not been too much of a strain?

It's been less challenging than it might have been. I was talking to a friend of mine, a judge for the National Book Awards here in the US, who had to plough through 400 books. I can't see how that's possible.

3. The winner, Lords of Finance, was about the Great Depression. What effect did the financial climate have on this year's list?
A number of the books were either directly linked to the crisis or weaved in key historical issues. That said, the FT and Goldman Sachs were intent on having a balanced group of nominees, so many were concerned with other subjects.

4. Have recent events demanded a new approach to business writing?

The classics in the management category from when I was at business school and authors such as Jim Collins are still doing well and I expect always will; the issues they tackle are timeless. Few managers have not been affected in some fundamental way by what has been happening in the financial markets, however, some changes are inevitable.

5. How seminal a shift do you believe it has been?

In the last century we had two world wars, a pandemic that wiped out 3% of the world's population, the Great Depression; there has never been a period of time that passed without some cataclysmic upheaval. Perhaps the financial crisis isn't so unprecedented in terms of the tumult it has caused; it was the years of calm that were the aberration.

6. Why do you think so many writers have delved into the past for inspiration?

It's an old adage, but you can't understand the present if you don't study history. For example, there's been a massive refocus on Keynesian economics over the last 18 months. It's about reanalysing if the assumptions we've taken for granted still hold. This requires going back and looking at the root of these assumptions and critically analysing them for yourself.

7. What about the ways we access information: is the business publishing sector still relevant?

More than ever. One of the problems with the information age is that everything is so immediate there's little time for reflection. You end up with reactive trends and, given the herd-like manner of the markets, you need to view events from a distance in time.

8. Are there role models in this regard?

Warren Buffett has made the point time and again of how important it is to be outside Wall Street and away from the Bloomberg ticker. In that sense, business books will always have their place. They allow for reflection and provide a wider perspective we often miss.

9. What makes a business book successful?

The same kind of qualities I enjoy in a conversation: can this person weave together seemingly unconnected key points to tell a story that has great insight in a way I understand? I read science at university and remember how great physicists explained complex concepts in ways that spoke to me. That skill is essential in business publishing because the majority of your readers will not be experts. You must be able to tell a story that resonates.

"Warren Buffett has made the point time and again of how important it is to be outside Wall Street and away from the Bloomberg ticker."

10. Do you have to agree with a book's central argument for it to work?

As with art, you may not like an individual painting, but does that mean it has no relevance? Some might say no. Others try to look beyond their reaction and find its value.

11. Can business leaders develop too narrow a focus?

It's a real danger. The people we hold up as great leaders, investors or managers are those who look at a set of circumstances and see them differently. History tends to look upon these people as genius contrarians and there's a lot to be said for the way in which they treat baseline assumptions that most of us blindly follow.

12. Does lifelong learning encourage such an approach?

Absolutely. I see it with Bill and Melinda Gates, two of the best lifelong learners I have ever met. Malcolm Gladwell has recently been focusing on some of the challenges that business leaders face in ensuring they don't simply ride on their success. Lifelong learning is perhaps your best bet in addressing that human frailty.

13. Is business publishing a broader church than it's sometimes given credit for?

Exceptional books transcend their genre. Jonathan Livingstone Seagull can be read as a business book, a self-improvement doctrine or anything you want it to be. There are books like that periodically and that's the ultimate goal of a prize like this: identifying titles that transcend their brief.

14. What books have done that for you?

It's a cliché, but I read Art of War when at the Pentagon, again when I started in investment banking and many times since. I take little pieces away each time. Its lessons are pretty universal.

15. What about a purely business title?

I first read Analysis for Financial Management by Robert C Higgins when I started at Columbia and return to it still. It is a simple introduction to finance, written for the general business manager, and is the best finance title I've read.

My teacher at the time was David Beim, who had previously run investment banking at Bankers Trust. He and the book together could explain these extremely complex finance issues in the simplest way. That's something that really stuck with me: behind every complex spreadsheet is a simple story you should be able to tell yourself.

16. Has there been a seminal book on philanthropy?

The Foundation by Joel Fleishman came out a few years ago and gives a good overview, but I think you're onto something. It is a relatively untouched area given the number of philanthropic donors there are and the role it's played, especially in US society.

17. Is there an appetite for more literature?

The mindset is changing as philanthropy becomes more prevalent in people's minds. The Gates Foundation is a good example. Because it's led by people such as Bill and Melinda, and Warren Buffett's contribution was so striking given its size and selflessness, there's much more of an understanding of philanthropy in the average person's mind now. People want more information.

18. With philanthropy operated along more traditional business lines, are the lessons universal?

"I was trying to apply basic investment techniques to philanthropy and it took a little while for me to realise that it demanded a different approach."

Buffett has said it and I can speak from experience: philanthropy is pretty damn hard. You don't have market forces giving you the necessary feedback and the discipline that creates.

I came from investment banking, which is a cut-throat business. This is equally tough in a different way and I'm not sure whether you can take business principles and directly apply them.

I tried to do that when I first got here, but soon realised that I needed to learn new skills. I was trying to apply basic investment techniques to philanthropy and it took a little while for me to realise that it demanded a different approach.

19. The management challenge must be similar?

The basic principles apply to us just as they do to any other mid-size organisation. However, we have something no other business can offer: psychic income of the first order. That's the reason people come to this organisation in the first place and it's the reason they stay.

It's a hard world to be in, in the sense you're focused on difficult problems and you try and make progress, but progress is often deeply challenging and it takes a while. You have to be committed to the mission, and leadership and management are an integral part of that.

20. Does that mean you might write a book?

I'll need a little help, but it would certainly be an interesting thing to think about further down the line.