The Reading Room

The Outsiders

William M. Thorndike Jr

Published: 2012, Harvard Business Review Press

The Outsiders is a book about 8 idiosyncratic CEOs who were able to generate an astounding average return for their shareholders by outperforming the S&P 500 by over 20 times and the peer group by over 7 times, primarily by focusing on capital allocation and decentralising operations. In the Outsiders, William dwells on the traits and methods applied by these unique leaders to achieve such exceptional performance, and the lesson those decisions hold for today’s managers and entrepreneurs. William’s research on these 8 CEOs and his ability to extract the key ingredients which led to their success, is exceptional.

All of these CEOs were outsiders as all were first-time chief executives (half not yet forty when they took the job), and all but one were new to their industries. They were not bound by prior experience or industry convention, and their collective records show the enormous power of fresh eyes. This fox-like outsider’s perspective helped these executives develop differentiated approaches, and this informed their entire management philosophy. As a group, they were deeply independent, generally avoiding communication with Wall Street, disdaining the use of advisers, and preferring decentralised organizational structures. Below are some of the snippets from the book, which I found most striking;
Tom Murphy CEO of Capital Cities had a highly differentiated capital allocation approach from his peers. He rejects diversification and instead created an unusually streamlined conglomerate that focused laser-like on the media businesses it knew well. He paid de minimis dividends, rarely issued stock, made active use of leverage, regularly repurchased shares, and between long periods of inactivity made the occasional very large acquisition.

Henry Singleton CEO was founder of Teledyne which was an industrial conglomerate that had acquired 130 companies, ranging from aviation electronics to specialty metals and insurance. It focused on profitable, growing companies with leading market positions, often in niche markets mainly using Teledyne’s pricey stock as the acquisition currency. However, with the multiple on his stock falling and acquisition prices rising, he bought back an astonishing 90 per cent. of Teledyne’s outstanding shares at low P/Es whilst revenues and net income continued to grow, resulting in an astonishing fortyfold increase in earnings per share.

Bill Anders, CEO of General Dynamics, turnaround strategy was highly unusual. Following the crash of defence stocks he sold the majority of General Dynamics’s businesses but chose to remain in those businesses which were numbers one or two by market leadership. Instead of investing the cash, Anders chose to return most of it to shareholders through innovative tax-efficient techniques.

John Malone was the CEO of TCI which became the largest cable company. He achieved this through investments in joint ventures in order to increase scale and value for shareholders. At the time of the sale to AT&T, the company had forty-one separate partnership interests. It had the lowest programming costs the least maintained facilities, most complex structure, and, oh yes, far and away the highest returns.

Katharine Graham CEO of The Washington Post’s defining managerial trait was her unique ability to identify and attract talent to both the company and the board. The decision to welcome Warren Buffett (who had accumulated a large chunk of Post’s stock) onto the Company’s board was a highly independent and unusual since Buffett was virtually unknown. Again, the choice of a mentor is a critically important decision for any executive, and Graham chose unconventionally and extraordinarily well.

Warren Buffett CEO of Berkshire Hathaway bought his first share of Berkshire Hathaway for $7. Today, the stock is worth over $400,000. Buffett’s story best exemplifies the idea of the CEO as an investor. His ability to invest not only in the best people but also business for long-term, avoiding the unnecessary financial and human costs of churn. He was an extremely efficient manager of a growing portfolio of operating businesses, and through extreme decentralisation has been the cornerstone of exceptional returns.

All the outsider CEOs took the approach of a long-term investor, rather than a highly paid employee. As stated in the Preface to the book all eight CEOs believed, amongst other things that:
• Capital allocation is a CEO’s most important job.
• What counts in the long run is the increase in per share value, not overall growth or size.
• Cash flow, not reported earnings, is what determines long-term value.
• Decentralised organisations release entrepreneurial energy and keep both costs and ‘rancour’ down.
• Independent thinking is essential to long-term success, and interactions with outside advisers can be distracting and time-consuming.
• Sometimes the best investment opportunity is your own stock.
• With acquisitions, patience is a virtue … as is occasional boldness.

William sums up the book with an extremely helpful outsider checklist derived from his learnings of these 8 Outsider CEOs. This is a tool which can help any business steer through challenging times and generate exceptional returns for their shareholders. As an analyst, the book has added immense value to me and will help me to identify the right CEOs to invest over the long term.


Shahil Shah
7 September 2022

The information contained above and in other entries in the Ocean Dial Book Review Series is intended for general information and entertainment purposes only, and should not be relied upon in making, or refraining from making, any investment decisions. No information provided herein should or can be taken to constitute any form of advice or recommendation as to the merits of any investment decision. You should take independent advice from a suitably qualified investment adviser before making any investment decisions.

Ikigai – The Japanese Secret to a Long and Healthy Life

Hector Garcia & Francesc Miralle

Published: 2016, Cornerstone

We all have an ikigai. It’s the Japanese word for ‘a reason to live’ or ‘a reason to jump out of bed in the morning’. It’s the place where your needs, desires, ambitions, and satisfaction meet. A place of balance. Small wonder that finding your ikigai is closely linked to living longer.

Read more

Filterworld: How Algorithms Flattened Culture

Kyle Chayka

Published: 2024, Bonnier Books Ltd

From trendy restaurants to city grids,  algorithmic recommendations dictate our experiences and choices. Over the last decade, this network of mathematically determined decisions has taken over, almost unnoticed, as we’ve grown increasingly accustomed to our insipid new normal.

Read more

The Innovator’s Dilemma: When new technologies cause great firms to fail

Clayton M Christensen

Published: 1979, Harvard Business Review Press

Innovation expert Clayton Christensen explains why most companies miss out on new waves of innovation. No matter the industry, he says, a successful company with established products will get pushed aside unless managers know how and when to abandon traditional business practices.

Read more



This website is provided by Ocean Dial Asset Management Limited, whose Registered Office is at 30 Coleman Street, London EC2R 5Al and Registered Number 05583807. Ocean Dial Asset Management Limited is authorised and regulated by the Financial Conduct Authority (“the FCA”), with registered number 447424.

The information contained herein does not constitute a distribution, an offer to sell or the solicitation of an offer to buy any securities in any jurisdiction in which such distribution or offer is not authorised. In particular, the information herein is not for distribution and does not constitute an offer to sell or the solicitation of any offer to buy any securities in the United States of America or to or for the benefit of any U.S. Person as such term is defined under the United States Securities Act of 1933, as amended.

No investments or services mentioned on this website are directed at U.S. Persons who are not Professional Clients or Eligible Counterparties as defined by the UK Financial Conduct Authority (FCA) Handbook or Qualified Purchasers as defined under the Investment Company Act of 1940. The information contained herein does not constitute a distribution, an offer to sell or the solicitation of an offer to buy any securities in any jurisdiction in which such distribution or offer is not authorised.


ODAM does not manage money for retail clients. Eligible investors only may access ODAM’s expertise through the funds or investment companies for which it acts as investment manager.

This website is not directed at you if Ocean Dial Asset Management Limited (“ODAM”) is prohibited by any law of any jurisdiction from making the information on this site available to you, and is not intended for any use which would be contrary to local law or regulation. This website and its contents are not intended to sell services or products over the Internet, rather for Internet viewer convenience and information purposes.

Information displayed in this website contains material that may be interpreted by the relevant authorities in the country from where you are viewing the website as investment advertising or an offer to purchase securities. Accordingly the information on this website is only intended to be viewed by the persons who fall outside the scope of any law that seeks to regulate investment advertising in the country of your residence or in the country in which the website is being viewed. Users of this website are therefore assumed to have the knowledge and experience in business and financial matters to enable them to evaluate the merits of, and risks of, investing in the investment funds referred to in this website. Persons of any other description should not enter this website nor rely on any of the information contained therein. If you are uncertain about your position under the laws of the country in which the website is being viewed then you should seek clarification by obtaining legal advice from a lawyer practising in the country of your residence or in the country in which the website is being viewed before completing this question.

Risk warnings

Investments may fall as well as rise and investors may lose a substantial portion or even all of their investment. Past performance is not necessarily a guide to future performance.

Investments denominated in foreign currencies can result in the risk of loss from currency movements as well as movements in the value, price or income derived from the investments themselves.

Investment in emerging markets involves risks which may not be typically associated with investing in more developed markets. Investment in small- and mid-cap stocks may also involve a higher degree of risk as these markets tend to be more volatile than their larger capitalisation counterparts.


To the extent permitted by relevant law and regulation, ODAM expressly disclaims any and all liability which may derive from this website or any other information provided by ODAM in connection with this website, and any errors therein or omissions therefrom. The description of the investment management services and processes provided by ODAM in this website is written in general terms. The services and investment funds referred to in this website should not be regarded as an offer nor solicitation for such services or investment funds in any jurisdiction where such offer or solicitation is unlawful. The terms and conditions applicable to individual investors investing in investment funds managed by ODAM are set out in each relevant fund’s offering document. This website contains information designed only to provide background material for determining whether or not to consider investment. This website should be read in conjunction with the relevant offering document for each fund. All potential investors must carefully read the offering document which will contain significant additional information needed to evaluate investment in the fund and important disclosures regarding risks, fees and expenses. The offering document is the sole document upon which potential investors should rely. Recipients in any doubt about the content of this website should seek advice from an independent professional adviser.

This website is based upon information that is considered to be reliable but ODAM does not represent or warrant that it is accurate or complete, nor should it be relied upon as such. Views and opinions expressed within this website including comments on sectors or individual stocks or companies are those of ODAM and its Mumbai based affiliated company Ocean Dial Asset Management India Private Limited (a company incorporated in the Republic of India) as at the date of publication. Subsequent events may cause these views to change. The investment policies and procedures described are guidelines and not rules. Occasional deviation from the parameters given may result.

Use of links
The ODAM website may contain links to websites operated by other parties. ODAM does not control the content or accuracy of information on such websites and does not in any way confirm or endorse the material placed on such sites. The links are provided for your reference only.

The copyright and all other rights in all of the material on this website are owned by the company listed on the web page or the material is included with the permission of the rights owner. You may review and copy material on this website for your own private or domestic use only. All other copying or use is prohibited.

Governing law
You agree that in the event of any dispute of any nature that may arise between you and ODAM, these terms and conditions shall be governed by and construed exclusively in accordance with the law of England and Wales and you agree to be subject to the exclusive jurisdiction of the courts of England and Wales.

Privacy policy
Any personal information that you supply ODAM via the website and other means will be held in accordance with the General Data Protection Regulation – please see our privacy notice for more details . If you would like to be removed from our database at any point, please email your request to

Use of cookies
For the purposes of gathering data to measure traffic and patterns of usage on our website, we need to use your IP-address. In addition, for example, we use cookies to ascertain as to whether you have agreed to our disclaimer.
A cookie is a small file held on your PC. If you do not want to accept cookies, you will need to alter the setting on your internet browser. We will not use your IP-address or any cookie to identify you personally.