In the competitive environment of the latter twentieth century, innovations in competitive strategy have life cycles of ten to fifteen years. Each innovation is followed by major shifts in competitive positions and in corporate fortunes. As these shifts occur, concerned managements struggle to understand the nature of their competitors' newfound advantage. However, like a military secret the new source of advantage soon becomes understood by all and is thus no longer an exploitable innovation. A new innovation must be found.
Today's innovation is time-based competition. Demanding executives at aggressive companies are altering their measures of performance from competitive costs and quality to competitive costs, quality, and responsiveness. Give customers what they want when they want it. This refocusing of attention is enabling early innovators to become time-based competitors. Time-based competitors are offering greater varieties of products and services, at lower costs and in less time than are their more pedestrian competitors. In so doing they are literally running circles around their slower competition.
Companies are obtaining remarkable results by focusing their organization on responsiveness. Each of the companies in Table 1-1 uses its response advantage to grow at least three times faster in the U.S. than other companies in the industry and with profitabilities that are more than twice the U.S. industry average.
TIME-BASED COMPETITORS OUTPERFORM THEIR INDUSTRY
The five examples in Table 1-1 illustrate the competitive force of timely responsiveness to customer needs.
Wal-Mart is one of the fastest growing retailers in the United States. Its stores move nearly $20 billion of merchandise a year. Only K Mart and the floundering giant, Sears, are larger. Wal-Mart's success is due to many factors not the least of which is responsiveness. Wal-Mart replenishes the stock in its stores on average twice a week. Many stores receive deliveries daily. The typical competitor -- K Mart, Sears, or Zayre -- replenishes its stock every two weeks. Compared to these competitors, Wal-Mart can
* Maintain the same service levels with one-fourth the inventory investment
* Offer its customers four times the choice of stock for the same investment in inventory
* Do some of both
Wal-Mart is growing three times faster than the retail discount industry as a whole and has a return on capital that is more than twice as high as the industry average.
Atlas Door is now the leading supplier of industrial overhead doors in the United States. In concept, these doors are simple. They are just very wide and high. However, the variations of width and height are almost endless. Consequently, unless the buyer is lucky and requests a door that is in stock, he or she might have to wait several months until the desired door can be designed and manufactured -- that is, unless they order from Atlas Door. Atlas can fill an order for an out-of-stock door in three to four weeks, one-third the industry average.
Customers are rewarding Atlas Door's responsiveness by buying most of their doors from them, often at 20 percent price premiums. Atlas Door's leading competitor, the Overhead Door Corporation (a division of the Dallas Corporation) has slipped into second place and continues to lose share. Atlas Door is growing three times faster than the industry, and it is five times more profitable than the average firm in the industry.
WilsonArt is the brand name for a line of decorative laminates manufactured by Ralph Wilson Plastics, a unit of Premark. Decorative laminates were pioneered by Formica, a company whose early success made its name a household word. Today, WilsonArt is the largest domestic manufacturer of decorative laminates, although Formica is the largest worldwide producer. Wilson Plastics is successful in the U.S. because, compared to its competitors, it is much more responsive. If a user's desired laminate is not available through a local distributor or at Wilson's regional distribution center, Wilson promises to manufacture and deliver the desired product in ten days or less. Some competitors need more than 30 days to respond to an out-of-stock situation. Demand for WilsonArt decorative laminates is growing three times faster than overall demand, and the profitability of Ralph Wilson Plastics is four times greater than that of the average competitor.
Thomasville Furniture is a new breed of competitor in a U.S. industry plagued by slow and unreliable suppliers. Thomasville has a quick-ship program. A buyer is promised 30-day delivery if the article desired is not in stock at the company stores. The average industry response to a similar out-of-stock situation is longer than three months. Thomasville is growing four times faster than the industry, and the company is twice as profitable as the U.S. industry average.
Citicorp introduced Mortgage Power three years ago. It promised the buyer and the realtor a loan commitment in fifteen days or less. The typical loan originator requires 30 to 60 days to make a commitment. Demand for Citicorp's mortgage loans is growing more than 100 percent per year in an industry with an average growth of 3 percent per year. In the second year of the program, Citicorp was the largest mortgage loan originator in the United States, and management is looking to triple its share in less than five years. Astonishingly, on February 8, 1989, Citicorp announced that henceforth mortgage commitments would be made in fifteen minutes.
Clearly, the time advantage is enabling time-based competitors to upset the traditional leaders of their industries and to claim the number one competitive and profitability positions. When a time-based competitor can open up a response advantage with turnaround times three to four times faster than its competitors, it will almost always grow three times faster than the average for the industry and will be twice as profitable as the average for all competitors. Moreover, these estimates are "floors." Many time-based competitors grow faster and earn even higher profits relative to their competitors.
When a company capitalizes on a strategy innovation, its competitors must change. In times of change, executives have two basic choices: Sit out the change until its utility becomes clear or seize the initiative and take action before other competitors do. Generally, companies that actively seek and promptly exploit the newest strategy innovation grow faster and more profitably than do more slowly reacting companies. The challenge to executives is to recognize and act upon the new sources of advantage in their industry before competitors do and to be willing to adapt again when the current source of advantage is exhausted. To do so requires an appreciation of the shifts that have occurred and are occurring.
STRATEGY INNOVATIONS: A RETROSPECTIVE
Until recently, innovations in business strategy were episodic. A major discovery, usually technology based, would upset the balance of an industry, and corporate fortunes would shift. For example, in transportation the railroads drew hoards of customers from river boats and horse-drawn overland transportation companies in the 1880s only to lose customers in the midtwentieth century to trucking firms. Similarly, coal companies replaced wood companies in the market and were themselves upstaged by oil companies.
Historically, the risk of an episodic change has required that management always be prepared for the unexpected, though it seldom was. Today, episodic changes in business strategy are fewer and they are being supplanted by evolutionary change -- a continuum of change, not only in physical technologies but in managerial technologies as well.
Time-based competitive advantage is the most recent in a succession of the managerial innovations that have had impact on business outcomes in the last 40 years. The others include experience curve strategies, portfolio strategies, the strategic use of debt, de-averaging of costs, and restructuring for advantage.
Experience Curve Strategies
One of the innovations in strategic: thinking, implemented in the 1960s, was the use of cost behavior insights as a cornerstone for corporate strategy. An example of an early insight is experience-curve cost behavior. The theory of the experience curve is that the costs of complex products and services, when corrected for the effects of inflation and arbitrary accounting standards, typically decline about 20 to 30 percent with each doubling of accumulated experience.
The fact that costs decline with accumulated volume has been recognized for a long time. In 1925, officers in the U.S. Army observed that as accumulated production volume of airframes increased, per-unit costs declined. In later investigations, the Army more specifically described the nature of this dynamic: They calculated that the fourth plane assembled required only 80 percent as much direct labor as the second, the eighth plane only 80 percent as much direct labor as the fourth, the sixtieth plane required only 80 percent as much direct labor as the thirtieth, and so on.
During World War II, the understanding of this cost behavior was critical for planning resource requirements in the aircraft industry. After the war, the aircraft industry continued to plot learning curves. For example, the learning phenomena for the Martin-Marietta-built Boeing B-29 and the Lockheed-built Boeing B-17, as described in a 1957 article, are shown in Exhibit 1-1. Learning curves continue to be used to predict program costs, to set schedules, to evaluate management performance, and to justify contract pricings. Moreover, the concept has been disseminated beyond the aircraft industry.
By the mid-1960s, experience effects were becoming well known and integrated into the strategies of companies. Examples of the decline in costs and in prices with experience are shown in Exhibits 1-2 and 1-3. In Japan the price of beer in constant yen has declined a little less than 20 percent with each doubling of accumulated experience. Electric power generation costs in the United States decline about 20 percent with each doubling, in part because the direct cost per megawatt of electrical generating capacity declines to about 20 percent with each turbine manufacturer's cumulative megawatts of turbine capacity.
Such price declines reflect underlying cost declines. Costs decline with accumulated experience because
* Workers and management learn to perform their tasks more efficiently
* Better operational methods are adopted such as improved scheduling and work organization
* New materials and process technologies become available that enable costs to be reduced
* Products are redesigned for more efficient manufacturing
Costs have been found to decline continually for extended periods. Some costs go down in a steady fashion. Others decline slowly, then very fast and then again slowly as innovations in design and production technologies are exploited.
Being able to predict next year's prices is enormously important to management. Being able to predict prices in five and ten years hence is a major strategic advantage. The managements of certain aggressive companies have realized that well-documented cost behavior could be factored into their pricing strategies. They set pricing and investment strategies as a function of volume-driven costs. At times, they reduced prices below current costs in anticipation of the decline in costs that they knew would result from expansion of volume. Capacity was added ahead of demand. The earliest companies to adopt experience-based strategies ran roughshod over their slower-adapting competitors. They often preempted their competitors by claiming enough of a growing demand so that when their competitors attempted a response, little volume remained, and the leaders' costs could not be matched.
Texas Instruments (TI) was an early user of experience-curve cost dynamics, and they grew rapidly against competitors whose managements did not understand the phenomenon. TI was an early technical innovator in silicon transistors and later semiconductors. The company was a management innovator as well. TI's management observed that with every doubling of accumulative production volume of a transistor, diode, and eventually a semiconductor, costs declined to 73 percent of their previous level. They managed a business with an inherent 73 percent learning curve and relied on this insight to set cost-cutting programs to ensure the continued decline in costs. In the market, TI slashed the prices of its products to stimulate demand so as to drive up the accumulated volume of production and drive down costs. TI hammered its competitors in diodes and transistors, moved on to prevail in semiconductors, and ultimately in hand-held calculators and digital watches.
Later, however, the management of TI encountered severe competitive problems in its watch and calculator businesses. Overreliance on experience-curve-based strategies at the expense of market-driven strategies is often cited as the underlying flaw in TI's approach. This is an oversimplification. TI's determined effort to drive costs down allowed no room for product-line proliferation. That single-minded focus created an opening for hard-pressed competitors such as Casio and Hewlett-Packard to sell on features rather than on price -- a strategy that eventually became the standard for the industry when costs and prices declined to the point that consumers cared more for function and style than for price.
Though other firms may not rely on them so completely as Texas Instruments, strategies exploiting experience cost behaviors are still relevant. In today's semiconductor industry, for example, experience effects continue to drive managements to seek volume. Moreover, in most industries, even when executives do not explicitly base their strategies on managing experience effects, they implicitly recognize experience effects when they set market share targets. Market share is a surrogate for volume -- the fundamental driver of experience effects. The company with the greatest market share obtains the most volume on the margin and on the margin increases its accumulated volume faster. For example, the manufacturing costs and profitabilities of the major Japanese tire manufacturers reflect the differences in market share (Exhibit 1-4). Competitors tend to sort out this way until one can break the equilibrium.
Just as experience-based strategies were becoming widespread, a new strategic insight emerged. At the time, in the late 1960s and the early 1970s, companies were generally organized into profit centers that could be managed for the most part as independent businesses. This structure enabled corporate management to set performance goals such as profitability for the executives of the operating units and to allocate capital against clear business returns. The General Electric company (GE) and Westinghouse pioneered profit-center management prior to World War II, and GE became recognized as the leader in the use of this management concept.
The difficulty with the profit center organization structure is clearly described by business strategy analyst Bruce D. Henderson.
In large scale, diversified, multiproduct companies it was impractical for central management to be familiar in depth with each business, each product, each competitive segment, and each unit's implied strategy. This led to more and more reliance on short-term suboptimization of results....The inevitable short-range viewpoint induced by quarterly profit measurements as the prime control often confined profit center management to tactical resource management only.
In other words, individual businesses are more or less left to fend for themselves in the profit center structure. For example, in a profit-center corporate structure, a high-growth operation will generally receive capital commensurate with the returns it is generating. This can often mean that such a company does not get all the capital it could use because a high-growth operation must invest resources before demand, which increases its expenses and reduces profitability. Conversely, a slow growth operation in a profit-center corporate structure can generate large volumes of excess cash which more often than not, gets reinvested in the operation because it is profitable, whether the operation needs the investment or not. Bruce Henderson went on to write about the profit center structure:
There...was little real management judgment possible at the corporate level with respect to overall strategy except with regard to financial policy. This conflict between strategy and structure may account for a company such as Westinghouse having been the pioneer and technical leader in products that ranged from automobile generators to television tubes to silicon transistors and integrated circuits yet enjoying no success in these products. On the other hand, when the developments were clearly strategic enough to threaten the core business of the company, Westinghouse became a world leader in such developments as alternating current machinery and later atomic power. (Thus, the threat overrode the controlling influence of the profit center structure.)
Innovative competitors came to view their collection of businesses not as profit centers but as members of a portfolio of businesses, each of whose elements have different cash generation potentials as well as different strategic objectives. Some businesses are mature with healthy competitive positions and can generate more cash than needed to sustain their position. Others are growing rapidly and need more cash than they can generate to strengthen and preserve their emerging competitive positions. Thus, a business that needs cash for strategic growth could be fed from another, slower-growing, cash-rich division. In other words, instead of regarding the corporation as a collection of individual businesses where reinvestment is driven by the profit performance of each unit, the collection of businesses is managed as a portfolio of businesses -- a portfolio that should contain some stable properties, some high growth/high risk properties, and some properties that are to be disposed of when the opportunity arises.
The use of cash should be proportional to the rate of growth of a business. The rate of cash generation is a function of the profitability of a business, which, because profits are the residual of costs and prices, is itself a function of the competitive position or market share of not only the business but of its competitors. If a business can achieve a two-to-one market share advantage over its largest competitor it should have predictably lower costs for the same value added.
The growth-share matrix was developed as a tool to enable management to visualize the balance of cash use and cash generation of its entire collection of businesses so that trade-offs could be made among the various opportunities to apply cash (Exhibit 1-5). The vertical axis is the rate of growth of demand. The horizontal axis is a measure of cash generation or a proxy for cash generation, such as relative market share. Relative market share is defined as the share held by the business divided by the share held by the largest competitor. Generally the chart is divided into four quadrants by two intersecting lines. The vertical line passes through the point where relative market share is one. To the left of this point, the business should be competitively advantaged and to the right -- competitively disadvantaged. The horizontal line passes through the growth rate desired by management. Businesses are then located within the matrix depending on their market growth rates and their relative market share position. Depending on the quadrant they fall in, they are categorized as cash cows, dogs, stars, or question marks:
* Cash cows occupy the lower left quadrant. Companies in this quadrant are growing slowly and, therefore, do not require much cash to sustain their growth. However, because the companies have strong market positions, they should be advantaged in costs and profits and generate much cash.
* Dogs occupy the lower right quadrant. Growth is low but so are relative positions. Because these companies are competitively disadvantaged, they are unlikely to be generating much excess cash and may, if severely disadvantaged, actually consume cash even when profits are reported. As such they are cash traps and can eventually even create negative value.
* Question marks appear in the upper-right quadrant. These businesses are in fast-growing markets but have not yet achieved competitive advantage. As such they are not generating cash and are in need of much cash to enable management to enhance advantage and move the business to the left as far as is possible. Without the needed cash for growth, it will slow, and the business will slip into the lower-right quadrant to become a dog.
* Stars are the upper left quadrant. These businesses are growing rapidly and therefore need much cash. But because these businesses are competitive leaders they are also generating a substantial portion if not all of the cash they need.
The trick was to have a portfolio rich with cash generators and with high opportunity cash users while maintaining a positive cash balance. Surprisingly, this is not much of a trick in the long run. Most companies develop balanced portfolios over time by default as severely disadvantaged businesses are closed or sold off under the continual pressure for profits and cash. The real challenge is to consciously manage the movement of businesses within the portfolio. Management must allocate the corporation's resources to move question-marked businesses into the star position before the growth slows, to keep the stars advantaged so that when growth slows the stars become cash cows, and to manage the cash cows for cash. The dogs need to be worked out of the portfolio.
Strategic advantage can be achieved against a competitor -- often a profit-center-oriented competitor -- who is not coordinating its collection of businesses as a portfolio. Such a competitor will tend to underinvest in a high-growth business and overinvest both in a low-growth business and in businesses having poor competitive situations. Thus if a portfolio-oriented competitor has a high-growth question mark or star, it can out-invest a profit-center-oriented competitor, not because it necessarily has more money but because it is not constrained by internal resource allocation schemes from pushing its question marks and stars.
In the 1960s and early 1970s, a classic portfolio battle was waged by Dow Chemical against Monsanto. In this battle, Dow actively managed its portfolio for advantage, and Monsanto did not. While Monsanto's management was not afraid to move into businesses with good growth potential, they had a tendency to underinvest in their growth businesses as can be seen in the growth/growth chart in Exhibit 1-7a. In this chart, the various businesses of Monsanto are located on one axis according to growth in overall demand, and on the other axis, by their rate of expansion. Monsanto was expanding its businesses, but beyond this, no pattern seems to exist at first glance. However, if all businesses with market demand growing at a rate less than 15 percent are ignored, a different picture emerges. In 11 of the 14 businesses with market demand growing at a rate faster than 15 percent, Monsanto was expanding only three businesses faster than demand. The other 11 were growing slower than demand and, therefore, losing share.
Thus, for businesses with slow-growing markets, Monsanto's management was gaining share in more than twice as many businesses as it was losing share. But in Monsanto's fast-growing businesses, resources were not forthcoming at a rate sufficient to meet the growth of demand. Slower-growing businesses continued to receive resources for growth in excess of what was needed to hold position and generate profits, which could have been used to fund the fast-growth businesses. These growth patterns are characteristics of managements that seek near-term profits and allocate resources according to profit-center methods. Monsanto's portfolio at the time of this battle with Dow is shown in Exhibit 1-7b. As might be expected, the mix of businesses was heavily skewed towards question marks and dogs. This skew reflects the pattern discussed previously of losing share in high-growth businesses. The portfolio was not very profitable.
In the early 1970s, Dow was much more aggressive than Monsanto in pursuing growth businesses. Dow's businesses are shown in the growth/growth chart in Exhibit 1-7c. Note that, compared with Monsanto in Exhibit 1-7a, Dow did not have as many high-growth business opportunities as did Monsanto. Monsanto had seven businesses whose growth in demand exceeded 20 percent, while Dow had only two. Dow was growing overall, but its mix of businesses included many with moderate growth, and some that were stopped dead. In fact, eight businesses were not growing at all despite reasonable market growth. However, of the 23 growing businesses, 20 were growing as fast or faster than demand. These patterns are characteristics of managements driven by market share. Their theory is go for dominance or get out.
Dow's portfolio is shown in Exhibit 1-7d. The portfolio was much stronger than Monsanto's with the weight of the businesses to the left of the competitive parity line. The underlying profitability of this portfolio is good and the effect of the aggressive growth policies of Dow's management can be clearly seen.
The Strategic Use of Debt
As the experience curve and the portfolio were becoming widely understood and used for developing management strategies in the late 1960s and early 1970s, some companies began to use debt aggressively to fund investments in their competitive positions. Often these companies were smaller than the leading competitors of their industry, and their managements found that the judicious use of debt could offset structural competitive disadvantages, enabling them to grow faster than their leading competitors despite the fact that they generated less profit per dollar of revenue.
Corporations grow when they have good products, competitive prices, and growing demand. Cash is needed to grow a business. The cash available for growth is a function of the profits generated by the business and the financial policies chosen for the use of that cash. Pricing, debt policies, and dividend policies are the key financial policies influencing growth. Differential financial policies are often an important element of the strategy employed by one competitor in outperforming another. Differing financial policies can enable one competitor to grow faster than another even if the faster-growing competitor is fundamentally disadvantaged.
The impact of differing financial policies on the competitiveness of companies can be shown with an example. One company, Company A, is the leader, and the other company, Company B, is the follower. The leader has much greater total sales and is much more profitable than the follower. However, despite having lower profits, Company B is pricing under the leader and growing much faster than the leader and the market.
Company B can accomplish this because its management has chosen more aggressive financial policies than the management of Company A. The management of Company A is very conservative in its financial strategy. Management likes high profits, the good debt quality ratings that come with high profits and no debt and high dividends per share. Company B, as a follower, wants high growth and has chosen financial policies -- high debt-to-equity ratios and no dividends -- that fund this growth in the face of the lower profits created by price cutting and comparatively high costs of production.
Company B, the follower, is growing more than twice as fast as the leader and is undercutting the prices of the leader by 15 percent, even though its costs are 25 percent higher. The effects of the financial policies of Company B that make this possible are shown in Table 1-2.
Company A wants to grow 10 percent per year. To meet this target, Company A must increase its asset base by 10 percent, or by $6 million, per year; it finances this increase entirely with retained earnings. Its prices and costs yield operating profits of $36 million. After taxes and dividends, $6 million is left for growth.
Company B's financial policies enable it to grow at 25 percent per year. Because of low prices and higher costs, Company B's operating margin is 37 percent, or less than two-thirds the operating margin of the leader. After interest payments and taxes, Company B has only $1.25 million of profits available for growth. Since this is not enough to meet management's growth targets, no dividends are paid and an additional $2.5 million is borrowed from the banks to obtain the $3.75 million needed to grow the asset base at 25 percent per year.
For now, Company B is strategically using debt to fund its attempt to gain share over Company A. If the management of Company A does not cut prices, increase customer value, which is effectively a price cut, or change its financial and investment policies to check the growth of Company B, it could find itself slipping into the follower position with higher costs, lower profits, and a poor business position.
Dow funded its attack on Monsanto's businesses with debt. Dow's absolute debt-to-equity ratio in the early 1970s was 1.1:1 compared to Monsanto's ratio of 0.46:1. On the margin, Dow borrowed 2.2 dollars of debt for every dollar of profit generated while Monsanto borrowed only 0.3 dollars of debt for each dollar of profit generated. Thus, in this period of high growth, Monsanto's management was actually constraining growth with conservative financial policies that decreased debt risks but increased competitive risks.
Debt as a strategic weapon remains a powerful influence on competition today. Many North American companies are yielding an unfair competitive advantage to their Japanese and European competitors by refusing to remove the "debt umbrella" they hold over their less-strong competitors. By refusing to match the financial policies of their competitors, these North American companies often negate the other competitive advantages they have such as costs, technology, market share. As Bruce Henderson has observed,
It is important to realize that competitive superiority can be converted into either higher return on equity or lower risk under extreme conditions. In turn this relationship can be converted into either lower prices or higher return for the same risk. Where competitive position is price (or investment) sensitive, debt can become a major strategic weapon.
Use more debt than your competition or get out of the business. Any other policy is self limiting, no-win, or a bet that the competition will go bankrupt before they displace you?
Needless to say, with increasing debt comes increasing financial risk. However, increasing financial risk must be weighed against the risk that a competitor will use debt to fund faster growth to a leadership position. If management insists on conservative financial policies, it risks losing market position. Later, in the 1980s, there emerged the risk of lo
How Time-Based Competition is Reshaping Global Markets
Competing Against Time
How Time-Based Competition is Reshaping Global Markets
With many detailed examples from companies that have put time-based strategies in place, such as Federal Express, Ford, Milliken, Honda, Deere, Toyota, Sun Microsystems, Wal-Mart, Citicorp, Harley-Davidson, and Mitsubishi, the authors describe exactly how reducing elapsed time can make the critical difference between success and failure. Give customers what they want when they want it, or the competition will. Time-based companies are offering greater varieties of products and services, at lower costs, and with quicker delivery times than their more pedestrian competitors. Moreover, the authors show that by refocusing their organizations on responsiveness, companies are discovering that long-held assumptions about the behavior of costs and customers are not true: Costs do not increase when lead times are reduced; they decline. Costs do not increase with greater investment in quality; they decrease. Costs do not go up when product variety is increased and response time is decreased; they go down. And contrary to a commonly held belief that customer demand would be only marginally improved by expanded product choice and better responsiveness, the authors show that the actual results have been an explosion in the demand for the product or service of a time-sensitive competitor, in most cases catapulting it into the most profitable segments of its markets.
With persuasive evidence, Stalk and Hout document that time consumption, like cost, is quantifiable and therefore manageable. Today's new-generation companies recognize time as the fourth dimension of competitiveness and, as a result, operate with flexible manufacturing and rapid-response systems, and place extraordinary emphasis on R&D and innovation. Factories are close to the customers they serve. Organizations are structured to produce fast responses rather than low costs and control. Companies concentrate on reducing if not eliminating delays and using their response advantage to attract the most profitable customers.
Stalk and Hout conclude that virtually all businesses can use time as a competitive weapon. In industry after industry, they illustrate the processes involved in becoming a time-based competitor and the ways managers can open and sustain a significant advantage over the competition.
- Free Press |
- 304 pages |
- ISBN 9780743253413 |
- February 2003
Read an Excerpt
Articles About This Book
Posted on 250 Words
Posted by Sam McNerney
I'm always interested in what other people are reading. Yesterday, I searchedthe web for book recommendations from prominent business leaders. I unearthed a few gems. In a Reddit AMA, Bill Gates revealed that his favorite book of the last decade...