The Best Business Books Of 1995

From global power to intrigue in the boardroom, from sharp ideas to prickly personalities, this year's top 10 business books cover an array of absorbing subjects.

In a competitive world, global economic might is fleeting. Is Japan beginning to fade, as some observers say? Far from it, says Eamonn Fingleton in Blindside: Why Japan Is Still on Track to Overtake the U.S. by the Year 2000 (Houghton Mifflin). In what our reviewer, former Tokyo Bureau Chief Robert Neff, called a "prodigiously researched and engagingly argued" work, Fingleton asserts that, in spite of the obvious problems, Japan continues to show inordinate competitive muscle. And rather than putting a burden on exporters and consumers, the mighty yen, he says, is "one of the principal levers" of Japan's power.

Most provocatively, Fingleton contends that the Japanese system, with its industrial targeting and research and development collectives, "is not capitalism at all but a new formulation that is as sharp and portentous a break from capitalism as capitalism was from feudalism." Although occasionally given to alarmism and overstatement, Blindside provides a novel, audacious take on the world's second-largest economy.

Another global power--albeit a less conspicuous one--is the subject of Steven Solomon's The Confidence Game: How Unelected Central Bankers Are Governing the Changed World Economy (Simon & Schuster). Solomon scopes in on the masters of the world economy, the central bankers.

Starting with a fascinating account of Federal Reserve Chairman Alan Greenspan's effort to limit the damage of the 1987 global stock market crash, The Confidence Game often "reads more like a thriller than a treatise on monetary affairs," according to our reviewer, William Glasgall. In keeping with the book's title, Solomon demonstrates how central bankers--even when they're not sure what action should be taken--have found they can talk away many near-crises. But the author warns of a creeping danger: In the quest for prosperity, national governments are transferring more and more authority to the central bankers.

All nations pursue prosperity--but only a few find it. What do such global powerhouses as Japan, Germany, and the U.S. have in common? They're all "high-trust" societies, says Francis Fukuyama, Rand Corp. senior social scientist, in Trust: The Social Virtues and the Creation of Prosperity (Free Press). Despite a sometimes ponderous style and a tendency to run on, Fukuyama doesn't shy away from the big questions--and he has a way of seizing on current hot topics.

Here, Fukuyama addresses the relationship between healthy community life and wealth creation. And he asserts that selfish behavior, often extolled by economists, can be self-defeating. For a society to prosper, he says, it must enjoy a high level of "spontaneous sociability," under which its members tend to form and join a range of voluntary organizations, from sports societies to religious groups. These in turn prepare citizens to work cooperatively in large, private companies that are able to amass capital and develop technologies efficiently.

In contrast, the citizens of low-trust societies such as Italy, China, and France tend to avoid people who are not part of their immediate families, thus crippling attempts to build corporate structures. The analysis ignores numerous key issues, said reviewer Christopher Power--including the current difficulties faced by "high-trust" Germany. But just by tackling such major questions, Fukuyama has his readers reaching for their thinking caps.

Tasty food for thought is also provided by The Winner-Take-All Society (Free Press) by Robert H. Frank and Philip J. Cook, professors of economics and public policy, respectively, at Cornell and Duke Universities. The star system, according to which small differences in performance result in huge differences in rewards, has long been the rule in sports and entertainment. Now, say the authors, such winner-take-all markets are found throughout the global economy, with disastrous results.

The concentration of huge rewards among a handful of winners--in business, the media, law, medicine, higher education, and elsewhere--has dramatically widened the gap between rich and poor, they say. Moreover, the lure of huge gains skews the career choices of the next generation, as too many youths strive to become the next Michael Eisner or Madonna. And the pursuit of blockbuster movies and best-selling books has led to a dumbing-down of culture. How to curb this mania to be No.1? Here, the authors fall short, said reviewer Kathleen Madigan. Nevertheless, Winner-Take-All Society frequently scores a bull's-eye.

The target of Serpent on the Rock (HarperBusiness), by New York Times reporter Kurt Eichenwald, is scandal-plagued Prudential-Bache Securities Inc. Between 1980 and 1990, Eichenwald says, Pru-Bache engaged in "the most destructive fraud ever perpetrated on investors by Wall Street." It sold more than $8 billion in risky limited-partnership offerings--resulting in losses running to hundreds of millions.

Who was to blame? Eichenwald fingers "a small group of executives who cut corners or ignored problems as they promoted the firm and built personal empires." The limited-partnership deals provided lavish lifestyles for these execs--and vanished life savings for numerous investors. Reviewer Leah Nathans Spiro found the biggest heroes of the tale to be the state regulators who pushed to win a reasonable settlement for the unhappy investors. One moral: The system of state securities regulators, often said to be unnecessary, shouldn't be abandoned.

A very different ordeal in executive ranks is the subject of James Champy's Reengineering Management: The Mandate for New Leadership (HarperBusiness). Specifically, Champy's solo sequel to Reengineering the Corporation, which he co-authored in 1993 with CSC Index Consulting Group colleague Michael Hammer, points out the shortcomings of many efforts at "reengineering"--or rethinking and redesigning basic business practices.

"The revolution we started has gone, at best, only halfway," Champy writes. Through interviews with managers who have executed successful reengineering efforts at such companies as Wisconsin Energy, Intel, and Frito-Lay, Champy attempts to show readers how to overcome the hurdles. Reviewer John A. Byrne found much of this oral history repetitive and uninformative. Still, he said, "managers awash in the ugly chaos of tearing apart their companies will find guidance and consolation here."

Two very different managers who were also inventors-cum-entrepreneurs provide the fodder for valuable business books. Neil Baldwin's Edison: Inventing the Century (Hyperion) delineates the life and creative processes of Thomas Alva Edison. Among Edison's well-known contributions: the light bulb, the phonograph, and the motion picture. Yet along with such successes, Edison stubbornly stuck by numerous errors in judgment--for example, calling radio a "fad."

Today's research and development wonks might be hard put to adopt Edison's favorite method of problem-solving: Simply try everything. But Baldwin shows Edison to be equally adept at creating systems, such as Edison Electric Light Co., a predecessor of General Electric Co. that manufactured and installed everything required to illuminate the night. Thus, as reviewer Peter Coy noted, "in an era when how-to titles on management and creativity seem to flood into bookstores, readers in search of inspiration could do worse than to read this richly detailed biography."

In Startup: A Silicon Valley Adventure (Houghton Mifflin), Jerry Kaplan describes the experiences of an equally ambitious, but far from equally successful, inventor: himself. In 1987, Kaplan launched one of Silicon Valley's hottest outfits, GO, which attempted to pioneer computers that would translate handwritten scribbles into computer text. By 1993, GO--along with $75 million in investment--was gone.

Kaplan tells of his brushes with such titans as Bill Gates and John Sculley, both of whom wanted in on the action. Sculley's Apple Computer merely flirted with using Kaplan's system, and Gates's Microsoft, says a GO exec, "ripped off our stuff." But it was investor AT&T that finally pulled the plug, ending GO's near-constant quest to stay afloat. Such engrossing details, said reviewer Kathy Rebello, make for "a delectable account of what it's like to try to spin a dream into Silicon Valley gold."

Such dreams are often merely a prelude to regret. Certainly, the visions of a nirvana in cyberspace are overblown, says Clifford Stoll, author of Silicon Snake Oil: Second Thoughts on the Information Highway (Doubleday). Heard the one about how the Infobahn will educate our kids, revive democracy, and allow cyber citizens to overcome poverty and deprivation? Tell me another, says Stoll, an astronomer-turned-computer-security expert who once helped to hype the Internet.

The current infatuation with computers, Stoll insists, is endangering our libraries, which are abandoning books for computers--and a jumble of contextless data. Our education system, he says, is also losing out, as funds are diverted into the eye candy of "edutainment" software. And the democratic forums of online chat rooms are nothing more than another vast wasteland, dominated by vapid chatter and extremist bullies. Are such claims merely the ravings of a Luddite? No, said reviewer Geoff Lewis: Stoll shows himself to be "a thoughtful, witty observer...who also happens to be a serious scientist." As we stare into the online future, we would do well to keep Stoll's cautionary words in mind.

One who seems ever unruffled by the future is investor Warren Buffett. Perhaps that's why so much about the Oracle of Omaha gets written--and read. The best book by far on this legendary character, said reviewer Chris Welles, is Roger Lowenstein's Buffett: The Making of an American Capitalist (Random House). As is his usual practice, Buffett neither helped nor hindered the author. Yet Welles found that Lowenstein had produced a "lively, smoothly written, and elaborately researched" biography of the superinvestor, whose portfolio racked up a compounded annual gain of 28.6% between 1957 and 1994.

How does Buffett do it? "It all comes from Graham," he once said--Benjamin Graham, that is, the father of "value investing," which holds that every stock has an intrinsic value independent of the market's assessment. But, of course, it's Buffett's extra je ne sais quoi that really does the trick, keeping Buffett-watchers guessing. "Much about Buffett remains obscure," admits Lowenstein. It's just such mysteries that inspire journalists to keep digging--and readers to keep searching business books for answers.

The Best Business Books Of 1995


Why Japan Is Still on Track to Overtake the U.S. by the Year 2000

By Eamonn Fingleton


The Making of an American Capitalist

By Roger Lowenstein


How Unelected Central Bankers Are Governing the Changed World Economy

By Steven Solomon


Inventing the Century

By Neil Baldwin


The Mandate for New Leadership

By James Champy


By Kurt Eichenwald


Second Thoughts on the Information Highway

By Clifford Stoll


A Silicon Valley Adventure

By Jerry Kaplan


The Social Virtues and the Creation of Prosperity

By Francis Fukuyama


By Robert H. Frank and Philip J. Cook

Before it's here, it's on the Bloomberg Terminal.