Book Review: How to be Rich

Every year there are lots of new business books, often on trending topics. Occasionally, I like to go back and read an old business book. Sometimes I’ll do this because the book is a classic and worth revisiting. Other times, I like to read an old business book to see whether the book’s advice or premise has stood the test of time.

This review is of How to be Rich by J. Paul Getty. That name might not be familiar to you, but J. Paul Getty was named by Fortune magazine as the richest man in the world in 1957. As a result, Playboy magazine asked him to write a series of articles on how to get rich, his business and life philosophies, his ‘secrets,’ and his belief system and values. Note the name of the book is How to be Rich, not How to get Rich.

Some of the book is terribly dated. There are only businessmen, no businesswomen. Women in business were secretaries. But other parts are surprisingly relevant to today. Getty believed and encouraged dissent. He believed that labor unions were good. He always treated his employees well and liked to ask the front-line people for their opinions.

Getty was a very successful oil man. He started wildcatting in Oklahoma but soon was in the oil business worldwide. He also made a lot of money during the Great Depression of the 1930s and invested in stocks when prices were dirt cheap. Eventually, he donated most of his fortune to the museum that bears his name in Los Angeles. I’ve been there many times and recommend you visit when you are in LA.

Below are some nuggets from the book.

How You Can Make a Million

Getty addresses perceptions that it was hard to make a successful business (this was in the 1950s or earlier) because of tough competition, taxes being too high, high labor costs, foreign competition, creeping socialism, etc. In other words, nothing has changed. Getty’s sense was that at the point he wrote the book (1965), there were plenty of opportunities.

He lays out the rules for making money:

1. Go into business for yourself. Find a business which you know and understand.
2. The aim of all businesses is to produce more and better goods and services at lower cost.
3. A sense of thrift is essential.
4. Legitimate opportunities for growth should never be overlooked.
5. The owner must run his own business as employees will never have the same self-interest.
6. Always be alert to new ways to improve products and services and increase production and sales.
7. A businessman must be willing to take risks.
8. Constantly seek untapped or underexploited markets.
9. Nothing builds confidence and volume faster than a reputation for standing behind one’s goods and services.
10. Wealth is a means for improving living conditions everywhere.

What Makes an Executive

The key to all business management is directing human activities. A good executive can think and act for himself. He should have the intelligence and ability to originate ideas, develop plans, implement programs, solve problems and meet situations without running constantly to his superiors for advice.

Leadership lessons:

1. Leading by example is the best way to instruct or inspire.
2. Good executives accept full responsibility for the actions of people under him.
3. The best leaders never ask someone to do something they are unable or unwilling to do themselves.
4. A good leader needs to fair but firm with subordinates. They treat subordinates with patience, understanding and respect.
5. Praise should be delivered in public while criticism should be delivered in private.

The Psychology of Sound Personnel Management

Getty used what he called applied psychology based on common sense. He mostly learned this as a hands-on boss in the oil fields when he was a wildcatter. Put another way, the definition of management is getting results through people. Sound management uses motivation, encouragement, and at times, inspiration. The most important tool is example. The executive must demonstrate what he wants others to do.

Getty says that money is the principal motivator. But after that, workers want to feel that they are participating responsibly in an enterprise the overall objectives of which they understand. In other words, purpose. Getty says that he has always asked subordinates for ideas, opinions and advice. Often, the rank and file have had ideas or solutions that he and the other executives hadn’t thought of. Fairness to all employees is another very important element; no playing favorites.

Difficult Situations

Getty’s general advice for difficult situations:

1. Don’t panic. Panic prevents clear thinking.
2. When things go wrong, pull back temporarily to evaluate the situation.
3. Give some ground at first, give up the least important things.
4. Examine all factors carefully. Consider alternative courses of action.
5. Countermoves must be planned with the greatest care and in the greatest of detail.
6. Action should be taken when ready. That action should be taken confidently, purposefully, aggressively and with enthusiasm.

 A Sense of Values

Getty says that to be truly rich, a person must live by his or her own values. Getty laments the loss of values in post-WW2 society and the desire for status:

“I’ve found that, to establish his identity, to feel that he is a fully participating member of society, an individual must have purpose and feel that what he does has some enduring value well beyond the limits of his own personal interests. In order to achieve any contentment in life, he must derive genuine satisfaction and an equally genuine sense of accomplishment from his work. These are considerations at least as important as the size of the income he receives from his job, profession or business.”

Recommendation

Would I recommend this book to you to read? No. There is too much that is just a slog to get through. The best parts are above.