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From the PublisherIt seems like an easy option to read a business autobiographyrather than a self-improving book on the workings of companies ormarkets.
The attraction is that it may be a more palatable way to pick upbusiness tips, and has lengthy theories presented in pottedform.
Both are true of Joel Stern's memoir, Against the Grain: How tosucceed in business by peddling heresy. The emphasis here is onpeddling, and he is proud of it. "I dash about to sell ideas," hewrites in a section on "serious" jet-setting. Not long before his61st birthday he visited 12 cities, "some more than once", on fourcontinents in 27 days.
Of course, the book also sells Stern Stewart & Co, thefinancial consulting firm he founded in 1982, which has developedand popularized the concept of EVA - economic value added - "theprofit that results after deducting the cost of all capitalinvested in the firm".
Such peddling of his firm is sometimes irksome, but Stern Stewart'stheories on how to measure profit and wealth created forshareholders remain a healthy antidote to earnings per share.Simila rly, Stern's skepticism about share options as a form ofremuneration rings true - as well as providing the backdrop for hissales pitch on EVA-related incentives.
But the main interest of Stern himself lies in his unusualcombination of academic, entrepreneur and salesman. Teaching hasalways been an important part of his career and, even if youdisagree with him, he makes you think.
The academic side blossomed at the University of Chicago graduatebusiness school. He was drawn there by Milton Friedman's bookCapitalism and Freedom, which prompted a Damascene conversion tofree markets. There he lived through a revolution in financialtheory led by the likes of Merton Miller, Nobel Prize winningeconomist.
Aware of his lack of economics training, he kept piping up withquestions. Finally Miller snapped and suggested he visit the dean'soffice: "There will be a derringer in the file for you. Please keeppulling the trigger until something exciting happens."
Stern stuck at the financial theory. And he did so on limitedmeans, which prompted his first entrepreneurial burst. As anorthodox Jew, he could not eat in the student mess. Hisself-catering demanded a fridge, which he bought for Dollars 38 andthen rented out to fellow students at Dollars 12 per half shelf perquarter, grossing Dollars 432 a year. "With that towering return oninvestment, I was convinced that the free enterprise system workedjust fine."
He started work at Chase Manhattan Bank and joined the corporatefinancial research team, where he developed his disdain forconventional accounting and worked on free cash flow analysis. Herailed against such gimmicks as "smoothing out" earnings, arguingthat it was not so easy to fool the market.
When set loose on clients, he insisted a fee was charged for theanalytical service. Giving it away would devalue it - a view thatequity researchers in the 1990s would have done better to abideby.
Stern broke away, with some colleagues and backing from a client.Ron Palamara, of Anacomp, asked what the new business was worth."Dollars 10m," Stern replied - it sounded like a "nice roundnumber". Palamara bought a 50 per cent stake.
Bennett Stewart, another graduate of the University of Chicago, isthe firm's other leading light. Stern had recruited him to theChase team via an interview that involved debating financial theoryin a car wash.
Stern's autobiography is short, with the story of the man and thefirm taking up a mere 142 pages. The personal side includes hisreligious devotion and love affairs with South Africa, libertarianpolitics and a woman he bumped into on a flight to Phoenix. Theseleaven the mix, although the reader will occasionally ask himselfhow much he cares.
The final two sections of the book include a question and answersession on such topics as corporate greed and business ethics, anda selection of articles comprising useful short lectures oncorporate finance and efficient market theory.
Stern describes himself as a missionary. The term is apt because herealizes that good ideas are worth nothing if they are notpublished and pushed. Like this zealous role model, he can beirritating - but he is, above all, stimulating. (FinancialTimes, November 13, 2003)
“…he is above all,stimulating…”(Financial Times, 13 November 2003)