The Outsiders

In The Outsiders: Eight Unconventional CEOs and Their Radically Rational Blueprint for Success, William N. Thorndike Jr. investigates the thinking, behavior, and decisions of eight CEOs who quietly produced some of the highest returns in modern business history. These leaders—Warren Buffett (Berkshire Hathaway), Henry Singleton (Teledyne), Tom Murphy (Capital Cities Broadcasting), Katharine Graham ( The Washington Post), Bill Anders (General Dynamics), John Malone (TCI), Dick Smith (General Cinema), and Bill Stiritz (Ralston Purina)—didn’t rely on charisma, luck, or innovation. Instead, they succeeded through calm rationality, disciplined capital allocation, and a long-term view that defied conventional corporate thinking.

Thorndike’s study reveals that these CEOs achieved returns exceeding their industry peers and the S&P 500 by an average of more than 20-fold. They were not empire builders or public icons but pragmatic thinkers who treated every dollar of capital as an investment to be maximized.

Capital Allocation: The CEO’s Most Crucial Job

For the outsider CEOs, capital allocation—deciding how to deploy money—was the essence of leadership. Rather than obsessing over operational minutiae, they prioritized decisions that compounded shareholder value over decades.

Henry Singleton of Teledyne exemplified this principle. In the 1960s, he built Teledyne into a diversified industrial and technology conglomerate through strategic acquisitions. But when the stock market overvalued his company, Singleton stopped acquiring and started repurchasing Teledyne stock instead—when it was deeply undervalued. Between 1972 and 1984, he repurchased 90% of the shares outstanding, shrinking the share count from 40 million to 4 million. This radical strategy caused Teledyne’s per-share earnings to soar, turning modest operational profits into enormous shareholder gains. Singleton once said, “I only want to buy when it’s cheap and sell when it’s dear.”

Similarly, Warren Buffett, who took over Berkshire Hathaway in 1965, recognized that the struggling textile mill would never produce high returns. Instead of trying to save it, he diverted capital into higher-yield assets like insurance (GEICO), food (See’s Candies), and utilities (MidAmerican Energy). Buffett famously described his approach as buying “wonderful companies at fair prices” rather than “fair companies at wonderful prices.” His capital decisions turned a failing manufacturer into one of the most valuable conglomerates in history.

Tom Murphy of Capital Cities Broadcasting also exemplified capital discipline. In 1985, he made headlines by acquiring the much larger ABC network for $3.5 billion—a bold move financed through debt and cost discipline, not reckless expansion. Within a few years, he had paid off the acquisition debt through operational efficiencies, setting new standards for media profitability.

The outsiders were willing to buy back stock aggressively, reduce debt when markets turned risky, and resist dividends when reinvestment offered better returns. They treated every capital decision as an investment puzzle, balancing risk, timing, and opportunity cost.

Measuring Success by Per-Share Value

Most CEOs chase size—more employees, more offices, more acquisitions. The outsider CEOs rejected this thinking. They measured success by increases in per-share value, not total size or revenue.

Katharine Graham inherited The Washington Post after her husband’s death in 1963, despite little prior business experience. Instead of chasing circulation numbers or flashy expansions, she focused ...