“Fannie Mae grasped the subtle denominator of profit per mortgage risk level, not per mortgage (which would be the obvious choice). It’s a brilliant insight. The real driver in Fannie Mae’s economics is the ability to understand risk of default in a package of mortgages better than anyone else.” Page 105, Good to Great by Jim Collins.

Errrr right! It’s a tricky thing boiling down a whole business into one bite size truth. Most of us in business know it is a little more complicated than that. Despite this pedantic nit-picking, Good To Great is a fabulous business book. It’s based on a huge amount of research and dispels pearls of wisdom in a homely fashion. One of my favourite examples is the Stockdale Paradox, named after Admiral Jim Stockdale: “Retain faith that you will prevail in the end, regardless of the difficulties AND, at the same time, confront the most brutal facts of your current reality, whatever they might be”.

A top read and lots of lessons applicable for those of us running enterprises much smaller than Fortune businesses. Thanks to Paul Mackender for recommending it. The book web site is here.

[tags] Good to Great, Fannie Mae [/tags]