Jack Covert Selects - The Soft Edge

The Soft Edge: Where Great Companies Find Lasting Success by Rich Karlgaard, Jossey-Bass, $28.00, Hardcover, April 2014, ISBN 9781118829424

When you see a book has a foreword written by Tom Peters, and an afterword penned by Clayton Christensen, you pay attention. When the author of that same book is the publisher of Forbes, you get your wallet out. And the return on the investment of time and money you put into Rich Karlgaard’s new book, The Soft Edge, will be well worth it.

Karlgaard begins The Soft Edge by describing a “triangle of long-term company health.” The first two edges of that triangle are the “strategic base” (which includes your market, customers, competitors, substitutes, and disrupters) and the “hard edge” (your speed, cost, supply chain, logistics, and capital efficiency). These edges are by no means easy to master, but they are at least measurable, so managers and organizations tend to give them the most attention. The last edge of the company health triangle is the “soft edge,” which includes trust, smarts, teams, taste, and story. These elements are harder to measure and are, therefore, as Karlgaard says, the most “misunderstood and maligned,” “neglected and underfunded.”

Describing why he wrote this book, he writes:

I believe the business world is at a crossroads, where hard-edge people are dominating the narrative and discussion. For example, Wall Street is about the hard-edge. It’s driven by speed, execution, and short-term capital efficiency. It dominates the way we think about free enterprise and capitalism today. … Also dominating the discussion are trends like big data and analytics. These are tremendously useful tools. But they are the brain, not the heart and soul, of your company.

He sets out to combat this by supplying readers with the tools for the heart and soul, and he devotes a full chapter to each of the five pillars of the soft edge (again: trust, smarts, teams, taste, and story), and describes the benefits, challenges, and practices around each one. Speaking of the foundational element of trust, and how these seemingly “fuzzy” concepts create real-world returns, he tells us:

In any economic climate, building trust is not just a nice thing to do—it’s a strategic thing to do. You can make a strong business case for investing in trust. Trust underlies effective working relationships. It improves group effectiveness and organizational performance. It underpins organizational credibility and resilience. All these factors contribute to creating a lasting competitive advantage—because trust attracts talent, strengthens partnerships, and retains customers.

Strategy and execution will always be paramount in business. But Karlgaard explains in great, almost scientific detail, how your company’s values are, in the end, what allow you to create the most value.