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This is the key takeaway from the business classic Bill Gates and Warren Buffett say you need to read
Billionaires Warren Buffett and Bill Gates agree that the best business book they have ever read is "Business Adventures," by financial journalist John Brooks.
The 1969 classic, which Gates read years ago on Buffett's recommendation , explores, in incredible detail, some of the biggest moments in the history of American business and finance.
"More than two decades after Warren lent it to me — and more than four decades after it was first published — 'Business Adventures' remains the best business book I've ever read," the Microsoft co-founder writes on his blog. "John Brooks is still my favorite business writer."
Brooks, a former staff writer for The New Yorker, compiled the book from articles that originally appeared in the magazine. Each chapter is a deep dive into what key business figures did right, and what they did wrong.
The book details lessons from the 1962 "flash crash," the Texas Gulf Sulfur case of 1959 and other pivotal moments in business. But one story featured in the book is particularly relevant to companies today.
The book's account of the rise and fall of Xerox is a cautionary tale for entrepreneurs and executives alike.
After Xerox achieved huge success in the early 1960s, the company lost momentum, Brooks writes. Executives at Xerox passed up opportunities to release new products and as a result, competitors quietly outpaced it in the 1970s.
The lesson? Innovators need to keep innovating or their businesses will fail. It's clear the account left its mark on Gates.
"Because Xerox executives didn't think these [new] ideas fit their core business, they chose not to turn them into marketable products," Gates writes on his blog. "Others stepped in and went to market with products based on the research that Xerox had done."
"I know I'm not alone in seeing this decision as a mistake on Xerox's part," he adds. In fact, Gates says that staying innovative is one of the main reasons for Microsoft's success.
"Most of our competitors were one-product wonders…" he told BBC in 2008. "They would do their one product, but never get their engineering sorted out."
"They did not think about software in this broad way," he said. "They would therefore do one product, but would not renew it to get it to the next generation."
Businesses today just might want to take a page from the book Gates calls a "neglected classic."
Check out 4 public speaking lessons from the class that changed Warren Buffett's life
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