Lightbulb Capital’s 2016 reading list: Innovation (in Finance)

It has been an interesting year for everyone in Finance & Investment Management. Especially for people involved in Innovation in our industry. I can only guess that 2017 will be even more impressive… and challenging at the same time.

In 2016 we also saw the first book on FinTech being crowdsourced and published.Thanks again to Susanne Chishti and Janos Barberis who have done an awesome job on this project:

As this year is coming to an end…

let me share about 12 books (in no particular order) that I read in the past 12 months. These books stood out for me!

As you would expect they all fall into at least one of my favorite categories:

  • Innovation,
  • Design
  • Finance &
  • Entrepreneurship
  • Technology

So without further due:

This is my 2016 reading list on Innovation (in Finance):

Innovation Equity: Assessing and Managing the Monetary Value of New Products and Services by E.Offek, E.Muller & B.Libai

Admittedly I have only started reading this book last weekend but I have a feeling that I will consume it very quickly… therefore it has to be on this list. If you know me you can already guess why: My passion lies in assessing Innovation capacity of companies for investment purposes (which is why we also built and launched an Innovation Index that is now licensed to New York Stock Exchange under the name of NYSE US Equity R&D Efficiency Index with the Ticker Symbol NYINOV8). The language of the book is simple and easy to understand: No one (at Uni) explained concepts like the Innovation diffusion model so simply to me before:

Competing against Luck by Clayton Christensen

Christensen’s new book explaining the “Jobs-to-be-done” way of looking at Innovation opportunities is not only insightful but as always a fun read by one (if not the) leading academic(s) in the field of Innovation. Bottomline: We hire products to get a job done. If we want to innovate we have to understand what jobs people are trying to get done deeply to build solutions for them. The Milkshake example is not only entertaining but simply gets the point across:

Innovating for People by LUMA Institute

A practical book describing the Design Thinking methods of LUMA Institute. According to our “Design Thinking in Financial Services” report – these guys are popular in Finance and I have seen the tools in action at a client promoting out-of-the-box thinking and collaboration between the very different stakeholders – if you are in the DT space this might as well become your new workbook:

The Founder’s Dilemma by Noam Wasserman

Noam Wasserman is an academic, every statement he makes is empirically proven. All of the difficult decisions Founders have to make are tackled and if you are in the process of building a #fintech or other startup business I highly recommend to read the book rather earlier than later to take all the crucial decisions together as soon as possible (thank you, Samir Rath, for the recommendation):

The End of Accounting by Baruch Lev & Feng Gu

Baruch Lev & Feng Gu make a compelling case: The current financial reports such as Income Statement & Balance Sheet have been developed in the early 20th century (when businesses built factories, bought commodities, created a product and sold it at cost plus margin) need to be (at least) complemented with what they call the Strategic Resources & Consequences Report. This report will help create much-needed transparency on the current state of the business, especially for asset light platformssuch as uber and Airbnb… and insurance firms actually as well as many business types:

Platform Revolution by G. Parker, M. Van Alstyne & P. Choudhary

Great read on the platform business model touching on all angles: regulation, monetization, governance, metrics, strategy, policy to name a few. I found that it is very important to understand network effects, also in terms of equity valuation:

The Outsiders by William Thorndike

This book describes the success stories of 8 CEOs including Warren Buffet that all followed a very rational, rule-based approach to value creation. With this approach, they managed to outperform even the finest corporate leaders: Including the one who ran GE for a long period of time. All stories are somewhat outdated. Are these concepts valid in today’s world of business still? Either way – totally worth the read:

Elon Musk by Ashlee Vance

In stark contrast to Outsiders (you might want to read Outsiders first as per Steve Monaghan‘s recommendation – thanks for that Steve) the book about Elon Musk shows that the path to business success and the creation of really new value may be completely chaotic, volatile and always at the edge of everything – hold your breath:

Startup Communities by Brad Feld

Brad Feld tells the story of how Boulder became a start-up hub. Not published in 2016 for sure but in times where every major financial center is competing to become the #fintech hub a well worth the read. Rule number one: The the ecosystem has to be built by entrepreneurs, everyone else can contribute but is not allowed to drive:

Sprint by Jake Knapp & Braden Kowitz

The google ventures folks describe their way of doing Design Thinking in 5 days. I call it Design Thinking on Steriods. A useful gameplan to make progress on an idea fast, including putting a prototype in front of real customers on the last day of the week. A must read for anyone in the Design Thinking space that values execution speed and empathy for future clients:

No Ordinary Disruption by R. Dobbs, J. Manyika & J.Woetzel

Written by experts in the field this book describes the macro picture of our current, global environment. Four trends: Urbanization, Accelerating Technology Change, Aging Population & unprecedented Global Connections offer unique challenges to the world’s population as well as unique opportunities for Innovators. It is easier to swim with the tide than against it so being aware of the trend details has big value:

Misbehaving – The making of Behavioral Economics by Richard Thaler

I am missing words for this one actually (if I have a favorite book on this list it is this one). If you want to learn about Behavioral Economics then this is the book to start with. Thaler cites famous colleagues like Kahneman and Shiller and enriches with his own experiences and research results. He also shares what life is like as a Behavioral Economist AND Professor at the one school on the planet that is known to defend efficient markets the most – Chicago Booth:

I hope you enjoyed looking through this list.

  • Perhaps there is a book on here that you also have on your kindle or next to your bed?
  • Was there one that you read and thought was horrible?
  • Or have you found one that you also want to take a closer look at now?

It would be great to get a bit of a discussion going on the back of this blog post. Always keep reading and have an innovative year in Finance & Technology during 2017!

Dan Liebau

Founder at Lightbulb Capital
- Create Innovation capacity based smart beta equity indices for investment management
- Help Financial Services firms to "do" Innovation using Design Thinking and other methodologies
- Research Innovation and create benchmarking products
Dan Liebau

Latest posts by Dan Liebau (see all)