What The Entrepreneur And The MBA Taught One Another
Two topics that I frequently see discussed in online forums, blogs, and articles are entrepreneurship and MBA degrees. In such venues, perspectives and responses are often very polarized, and it would not be unusual to see different camps characterizing the relationship of entrepreneurship to MBA training as either highly relevant or highly irrelevant to one another.
Rather than taking an argumentative approach to distill relevancy, one of my former colleagues (Paul Brown, an entrepreneur & founder, PhD degree) and I share a few things below that we specifically learned from one another (with Steve playing the role of non-entrepreneur, MBA degree). The context is during an enterprise software startup that went from Seed financing to Series A corporate venture capital to Deloitte Rising Star to sale/merger over a period of five or so years.
Some key things Paul got or learned from Steve (my notes taken from discussion and correspondence with Paul):
- Level of professionalism added – Having an MBA-trained person on the team changed professionalism not so much in demeanor but in the total approach to business. The MBA perspectives complemented a very technical, software R&D organization that sold highly technical products.
- Concrete methods and processes added – As opposed to piling receipts in the corner of the room and calling the pile "our accounting books", having an MBA on the team introduced discipline and methods in finance, sales, competitive intelligence & benchmarking, Board meetings, etc.
- Business literacy added - Perhaps an understated item but by adding an MBA competency to the team it helped to make a difference in key company situations as to whether we were taken seriously or not by others (e.g., partners, investors, customers).
Key lessons that Steve learned from Paul:
- Business experimentation is part of the entrepreneurial spirit and approach – Although I may have paid lip service to this in the past, I recalibrated myself away somewhat from business role models where managers are expected to "know the right answer" a priori. When you are paving new ground as in an entrepreneurial venture, there is tremendous value in conducting safe tests (such as floating an idea with another entrepreneur or an industry veteran, presenting a new pricing plan to a niche distributor).
- There is value in tapering the need to make hasty decisions – Something that has always stuck with me for many years was something that I remember reading about the Harvard Business School training method. Students were pressed to make decisions and calls based on information (however limited) in a case study. In reality, this type of mentality is reinforced in many business school and business settings. The mentality is that one will always have incomplete information whether in a managerial, case study, etc. setting, and one needs to make decisions as a manager. Boom, boom, boom, done. Although I have not fully formulated my thoughts in this area, what I believe I learned from Paul was that the entrepreneur may benefit not from procrastination but by delaying critical decisions as long as there is time to either gather additional information, see activities play out, or let management team emotions clear. (I know – my idea is a bit convoluted in its current form, but I am onto something and will revisit).
- If you want to appreciate entrepreneurship truly, you must witness someone with total willpower, drive, and endurance – I don't think I need to say more here, other than Paul has these characteristics.
Paul, thanks for the lessons!
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Collecting My Favorite Multimedia Clips and Exhibits For Marketing Course
Starting to collect my favorite videos and photos on my new posterous site (marketing section at http://steveshu.posterous.com/tag/marketing) for teaching business school classes (e.g., marketing, brand management). Folks may find some of the videos and photos entertaining.
I am still trying to find the best way to organize the videos in the context of what part of the marketing or brand management framework is being covered. I may also find a better way to include more detailed marketing notes on each video or photo. In any case, please feel free to send me links of your favorite videos. I may extend the posterous site to include organizational behavior topics, depending on my fall teaching load.
As background, I am using my posterous site as a scratchpad space separate from this blog and Twitter streams.
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My Experience With Teaching Ethics Session As Part Of Core Marketing Course
This past week I had a chance to teach an ethics session as part of a larger, core marketing course that I am teaching at Irvine University. I write this post to share my experiences on what worked and what didn't.
Now as context, about four years ago in 2005 I wrote a post on covering ethics as part of business school curricula, and to make a long story short, back then I didn't have a very comfortable opinion on how effective that type of training would be and whether students would want to pay for such training. I have since that timeframe (and based on comments from folks) augmented my opinion a little bit in that while I feel that ethics is something that should not be exclusive to business schools, it is something that leaders need to work with, and as such, is a fundamental topic for business schools to address.
That said, I am not quite comfortable with how I addressed ethics in this past week's session. Setting my effectiveness and student perceptions aside for the moment, here's the basic path that I took:
- Though I'm no business historian, I characterized the history of the revitalization of ethics in the business schools as falling into two mini-eras in recent history– One of these mini-eras started on the order of five to ten years ago and was driven by a lot of the corporate scandals, executive fiascoes (e.g., Enron), and need for better financial reporting (e.g., Sarbanes-Oxley). In this first mini-era, business schools introduced ethics into their curricula with some of them incorporating ethics into leadership courses with others taking ethics and spreading a little bit of those ideas into all courses. Waving my hands a lot, I cited Michael Lewis' piece, "The End" (Of Wall Street), the role of credit default swaps, and failure of ethics (among other things) being at the heart of the cause of the economic downturn. So I concluded that business schools can still do more. Mini-era two is taking place with MBA graduates taking part in the student-led MBA Oath, which has been going viral.
- I indicated that leaders need to be concerned with ethics – basically what I said above in that it is not the sole responsibility of business school students, but that we can further the practice of ethics.
- I promoted two key frameworks for analyzing ethical concerns– Both of these frameworks are from Chapter 4 of the McGraw-Hill Irwin textbook, "Marketing", 9th Edition, by Kerin et. al. One framework was the standard, 2×2 consulting-like matrix that broke ideas into 4 quadrants with (Ethical-Not Ethical on one axis and Legal-Not Legal on the other). We spent time discussing certain scenarios and whether they fell into one quadrant or the other. I argued that the legal axis was, in principle, more straightforward than the ethics axis, where the degree of overlap and misfit between individual, company, general business, and international ethical principles are more fuzzy and can require reconciliation whether by management, ethics officer or other. I cited Transparency International as a data point and source for international practices and norms for ethical conduct. The second ethical framework that we covered conceptually balanced profit maximization and shareholder value against items like environmental, societal, and other factors. Here I feel that the best management practices for balancing things are not so well-developed, but I struggle a bit with how this area should be advanced.
- I talked about ethical codes of conducts (as documents that need to be affirmed by employees in many companies) and associated online training programs – although I did not have example references or documents to point to off-the-cuff.
With respect to the big picture, I was able to cite a number of cases where companies (e.g., Body Shop, POM, BP) have made ethical and social concerns an essential part of their business and/or marketing strategy, but I think my ability to cite, crisp quantitative information could have been better. What are the costs of being ethical? What are the costs of not being ethical? Where does being ethical add to the bottom-line in terms of revenues, sales commissions, shareholder value, reduced churn, etc.? The answers I provided to these questions were either a bit long-winded or not available at the tip of my tongue.
In any case, if folks have thoughts on ethics, teaching ethics, receiving ethics training, etc., please feel free to share your stories. I am interested in what works and doesn't work for folks.
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Adding Some Color (Blue Tone) To The MBA Discussion
David Maister has a great post entitled, "Why Business Schools Cannot Develop Managers". While I generally agree with what David says there, in that business schools can teach primarily only analytical skills, I think that it may be worthwhile to shed some additional light on that subject so that people who are evaluating business school (or those that come from business school backgrounds) can better appreciate the underlying value.
I view business as a bit of a craft and art, so to continue with the color theme, I see the business value of MBA programs as covering three primary color schemes:
- Blue – the cold hard facts, the analysis aspects, the language, and theory of business (learning WHAT to do)
- Yellow – knowing where the warning lights are, when something is good or bad, going to work or not, and going to incent parties (learning the HOW to do something)
- Red – the passion, the leadership, the drive, and the fortitude of business (WANTing to do something)
For now, I will concede that the MBA only works on the "blue tones", and one can’t create a business without other primary colors.
That said, when my one of my kids gets crayons at the local restaurant consisting of black, green, and orange, and my kids want to draw Captain America or Cinderella – I tell them to "please make the best of the situation". You be surprised how creative kids can be with even the wrong tools for the job.
So here’s some perspectives on the "blue aspects" of the MBA:
- MBAs Are From Mars and Engineers Are From Venus – Having both MBA and engineering degrees, I can see where parties can misunderstand one another in situations such as capital raising meetings, sales pitches, and executive presentations. The MBA provides a common communication language for business people. Sure there can be too much business-speak going on with MBAs, but I have seen many situations where engineers in start-ups are unable to pitch their stories to angels or venture capitalists because the two are speaking different languages. At the same time, I have seen MBAs better left out of the meetings with venture capitalists because they are just too shallow. All said, recognize that each type of participant has a different communication style and that MBAs add some value. When one tries to do business in Japan, one tries to speak Japanese and not French, right?
- MBA Training Is A Portable Skill And Can Facilitate Working Relationships – Just like C/C++/Java programmers follow conventions for putting things in reusable functions or libraries, apply different methodologies for avoiding deadlock or multithreading of executing code, and communicate using different diagramming techniques, MBA have toolkits too. Toolkits may include common frameworks for competitive analysis (such as the 3Cs), profitability analysis (such as 5 Forces), or operational process breakdown (such as ABC or "activity-based cost" analysis). Having these types of frameworks have helped me to quickly interface with other consultants (even ones from other firms), business people, and even overseas folks whom are outsourcing more straightforward MBA activities.
- MBA Frameworks As A Way To Make Sure Analysis Is Thorough – One of the common cases covered in business school is one that covers the pricing of a contact lens product for chickens. The purpose of having such an outrageous case is to teach students how to analyze business problems where they may have no prior business experience. Since students can’t leverage past experience and industry-knowledge, the case teaches students to use structured methods for attacking pricing problems. Students are trained to look for things such as cost data, competitive data (such as the market prices of alternative products being used to solve the real business problem at hand – in this case, perhaps the true operational problem is the cost to farmers of losing chickens in a cannibalistic world where chickens kill one other because they can see one another). In the end, students are supposed to get an in-depth look at how pricing can be addressed, e.g., in terms of cost, margin, value, and competition.
A good analysis foundation is invaluable. From that foundation, one can apply other skills to get business "street-smart" and to develop leadership skills. Although I have not pointed out some of the other aspects of the MBA that can help out in these latter areas, I do feel that there are some yellow and red tones to be found in the business schools too. David Maister even goes on to say in his post that the title of his post is perhaps "too pessimistic" on the value of business schools. On this point, I also agree. Perhaps I’ll post more on this subject at a later date if folks are interested.
New Blog For Me At BusinessWeek Online MBA Blog Community
This entry has been reproduced from my 21Publish blog.
I have a new MBA blog over at BusinessWeek Online here.
I’m not only a vendor but also a user and participant in the community.
I’m personally excited that the MBA blog community at BusinessWeek
(* a blog community just being launched this afternoon on the 21Publish platform*) has turned out so nice
looking! Also very happy to see Clear Admit (one of the influential blog sites in the MBA world) and other cool MBAs early in the process of
signing up at BusinessWeek. Stefan has some personal words over at his blog
which are quite visonary and address end-user generated content. Kudos
to both the BusinessWeek and McGraw-Hill folks we’ve worked with to get
this done!