Back to B-School

Over the weekend, I had a chance to check out the recent CNBC program Warren Buffett and Bill Gates: Keeping America Great, which documented the pair’s recent appearance at Columbia Business School.

In a town-hall style meeting, Gates and Buffett fielded questions from Columbia MBA students. Not surprisingly, many of them asked two of planet’s most successful people for career advice. Among Gates and Buffett’s responses:

• Buffett advised students to put passion ahead of perceived financial gain when considering a career path.
• Gates told them to stay inquisitive and keep up with research on their topics of interest.
• Gates also helped students identify sectors in the U.S. economy that are continuing to grow, including information technology, health care and clean energy.

Buffett and Gates also shared their optimism about the future of the U.S. and our economic system. When moderator Becky Quick asked if there was ever a time that the pair had doubts about capitalism or America’s way of life, Buffett responded, “This country works, we’ve got 200 years of proof, and it’s going to continue to work.”

Gates added, “We have a complex financial system, and we’ve proven that we can make mistakes, but more fundamental than that is the innovation, the fact that you can create new companies, that people are willing to take risks and invest.”

Even in the fall of 2008 when the financial meltdown was at its peak, Gates said that there were “inventions that took place; even in our darkest hour, people were working on new drugs, new chips, new robots and things that will make life better for everyone in the decades ahead.”

A response to the criticisms lobbed at MBA programs for producing flawed business leaders has been for programs to ramp up their ethics offerings. But according to Roger Martin, head of Canada’s Rotman School of Management, what future business leaders really need is an education in multiple fields, including design.

In Martin’s new book The Design of Business: Why Design Thinking is the Next Competitive Advantage, he argues that MBA programs focused solely on analytical thinking have made business managers lose their creative and intuitive sides. A blend of “design thinking” and analysis, Martin argues, could help MBA grads emerge as more complete managers.

So how can you integrate design thinking if you’re already in the business world? Fast Company blogger Dev Patnaik recently participated in a lecture with Martin, and shared a few tips from their conversation:

• 1. Think of yourself as a designer when working out business strategies: Coming up with business strategies should emphasize possibilities over existing information and frameworks. Patnaik writes, “You can’t analyze your way to real strategy. You have to create it from data, guts, empathy, creativity and a little thin air.”
• 2. Make your leadership style a blend of analysis and intuition: Patnaik brings up the often-cited Steve Jobs to illustrate this point. While Jobs’ intuition has produced great innovations like the iPod, his lack of business analysis has led to flops like the Power Mac G4 Cube. Business leaders need to work on developing both skills.
• 3. Throw out your templates: True “design thinking” happens when managers try to solve a problem or create a product that hasn’t been seen in any form. However, Patnaik writes, “Most people, whatever their background, are more comfortable reapplying a formula that has worked in the past than at generating new possibilities. They just try to use a template from an existing success, which is the chief reason we see so many copycat products and copycat strategies.”

Eames chair image courtesy of Flickr user geraintandkim, CC 2.0.

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For the past two weeks, I’ve posted highlights from my recent conversation with Tuck School of Business at Dartmouth professor Ella Edmondson Bell, author of the forthcoming Career GPS: Strategies for Women Navigating the New Corporate Landscape, about the challenges that women face in today’s workplace and what women can do to better succeed in business. In this third and final installment, I gave Bell the chance to respond to a question raised by my fellow BNET Insight blogger Sean Silverthorne. 

BNET: A recent post citing Sylvia Ann Hewlitt’s research that 84 percent of executive women compared to only 40 percent of men have seriously considered leaving their jobs in the past year sparked a big discussion about why women are unhappy at work. I was curious if you agree that women are often more unhappy at work than men, or if you had any other comments on this.

Bell: I’m not sure if women are unhappy or if they feel they’re not being given the same opportunity. If they feel that they aren’t being appreciated and aren’t being heard, and if they feel that their contributions aren’t considered important, I don’t call that unhappy. I don’t like that particular framing. I think unhappy needs to be really, really unpacked. It’s the fact that [women are asking], “Am I being appreciated for what I bring to the table? Am I being heard? Am I being solicited? Am I being challenged?” That’s a lot deeper than being happy. Happy is far too simple for me. (more…)

A question for all of you MBAs reading this: remember how great it felt when you finished the GMAT test? After you got into an MBA program, you probably never thought about the test again.

So how would you feel if you had to re-take the GMAT… after receiving your MBA acceptance letter?

That is exactly the situation some new MBA students are finding themselves in as their schools advise them to retake the GMAT to better position themselves with job recruiters.

As BusinessWeek recently reported, “For a select group of companies, mostly top consulting, finance and banking firms, employers routinely look to MBA graduates’ GMAT scores as a reliable standard measurement of academic prowess.” (more…)

Don Sull of the London Business School spoke with me recently about his new book, The Upside of Turbulence: Seizing Opportunities in an Uncertain World.  In the first installment of our conversation, Sull defined “turbulence,” and in the second post he discussed how Nokia took advantage of turbulence to redefine itself as a company. Today he explains how managers at all levels of a company can take advantage of opportunities that arise from turbulence.

BNET: The are other books out there about surprising event and how they can affect business, including The Black Swan by Nassim Taleb.  What specific new angles does The Upside of Turbulence bring to the discussion?

The bulk of my book talks about “what do you do?” in turbulent markets. Taleb’s focus is: As an investor, how do you deal with turbulence?  The focus of my book is: as an executive or a manager or an entrepreneur, how do you deal with turbulence?  The thing about stock market trades is that you can reverse them overnight; there’s no stickiness.  But imagine if you are, say, Micky Arison running a cruise line.  Your cruise ships last 35 years.  Your brand takes you decades to build. You can’t reverse your decisions so quickly.  When you have long-lived assets like brands, technologies, patents, physical plants, and employees, it’s a very different dynamic.

There have been a lot of books about how you manage risk — how you cope with the potential downside of unstable markets.  But I don’t think there have been quite as many that focus on the opportunities that arise from turbulence.

BNET: How can a midlevel manager — who can affect company practices but is not necessarily “helming the ship” — take advantage of turbulence he sees?

Sull: I wrote this book to make it scalable to folks at different levels of an organization. Some lessons are focused on people in the C-Suite, but there are a set of things that you can do if you are running a business unit, a function, or a region.  One of the points I raise in the book is about the need for agility. There are three different types. The first is operational agility. Within your business unit there are steps you can take to seize opportunities to grow revenues and cut costs. The second type is what I call portfolio agility. That means pulling resources out of less productive or promising ventures and putting them in more productive opportunities. The third is strategic agility. Periodically the environment throws golden opportunities your way — to acquire a competitor or enter a new market, for instance — and you need to be able to see and seize those opportunities.

You see those opportunities at all levels of an organization. Even with portfolio agility, which some people say is a headquarters responsibility. But every manager is making portfolio decisions of some sort; they’re just smaller.  And you’d be surprised at how mid-level folks can affect strategic agility. They can often start the ball rolling for some type of acquisition when they see, say, a competitor on its heels.

If you rely on only the CEO to drive agility in your organization, you are dead. You’re not distributing both the responsibility and the decision-making to take the actions to thrive in turbulent markets.  And, if you’re a big, complex organization, you are dead.

When I teach these concepts in a boot-camp format, about one-third of the attendees are CEOs or managing directors of organizations — but two-thirds aren’t.  You can apply these tools at any level of your business quite productively.

We’ll conclude our discussion with Sull next week as focus on how managers can adapt their organizations to take advantage of turbulence and the role of luck in business.

The world’s population can be divided into two groups of people: the satisficers who find suitable options and quit searching, and the maximizers who may search indefinitely for that perfect option.

At least, that was the idea political scientist Herbert Simon came up with a half century ago, and according to the Columbia Ideas at Work article “The Pursuit of Happiness,” it recently informed research on job-seeking behavior by Columbia Business School professor Sheena Iyengar.

By studying graduating college seniors who were looking for jobs and classifying them as satisficers and maximizers, Iyengar found: (more…)

This post has been updated since it was originally posted.

You’d like to think that even under pressure, your moral compass would keep you from doing anything unethical at work. Only unscrupulous types get caught up in things like backdating stock options and peddling subprime mortgages — right? But Babson College scholar Mary Gentile says acting ethically isn’t as easy as wanting to do the right thing; it’s about knowing how to do the right thing even when the stakes are high. Practice helps.

More than 80 business schools around the world are pilot testing a new approach to teaching ethics developed by Gentile, along with the Aspen Institute and Yale School of Management. The idea is simple: Teach MBAs to anticipate how they will be tempted to rationalize unethical behavior, and get them to practice countering the impulse. The goal: to make ethical choices come naturally, even in difficult situations.

Here are three case studies from the curriculum that are based on real-life dilemmas. In each case, the real subject successfully managed both the ethical issue and the internal politics. Vote for how you would handle each one and then click below for the real-life answer.

Situation #1:

You’re a rising executive just promoted to corporate controller. Shortly after you land the new job, several senior executives pressure you to distort the company’s restructuring charges in a way that would be misleading but not criminal.

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Situation #2:

You join a nonprofit firm in a junior accounting role. As you review the year’s corporate donations, you quickly realize that no standard procedure exists to determine the value of in-kind donations (gifts in the form of goods or services rather than cash). Some of your most prolific donors inflate valuations to deceive the IRS. Your overworked executive director makes a point of emphasizing relationships above data.

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Situation #3:

You’re a junior employee at a large investment bank. Hours before a client meeting, a portfolio manager tells you to review the portfolio of one of the bank’s smallest customers and find a new benchmark that will make it look like the portfolio had performed better than it really had. You know that the client remains with the bank as a favor to a friend who works there.

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Click to the next page to find out what really happened in each scenario.

I’ve come to the conclusion that the bloggers at the Huffington Post aren’t big fans of b-school. This summer, a post referred to b-school graduates as “menaces,” and more recently, in his post “Why B-schools Don’t Change,” Pablo Triana attests that despite talk of revamping, b-schools remain unchanged because:

1) In many cases, the negative aspects of inexperienced professors and theoretical dominance are conveniently ignored by both students and recruiters, thus effectively becoming harmless; 2) The positive aspects presented by (good) schools continue to be attractive enough to compensate for the disappointments.

Triana’s second point is valid. Despite the finger-pointing b-schools have endured for producing flawed leaders, a large number of business aspirants still see the b-school brand as a desirable one, and many are waiting out the financial crisis in b-school classrooms. According to a recent article in BusinessWeek, many of the top b-schools admitted their largest classes ever this fall.

It’s his first point, then, that deserves closer scrutiny. Triana is certainly not the first to criticize b-schools for focusing too heavily on theory instead of real-world practical business knowledge, and this is a discussion that needs to had both inside and outside of business schools. (more…)

What’s the difference between two consumers who embraces new products and technology, one of whom lives in the United States and one of whom lives in India?

Not a whole lot, according to new research from Gerard Tellis, a marketing professor at the Marshall School of Business at the University of Southern California, Eden Yin of Cambridge University and Simon Bell of the University of Melbourne.

The research set out to study customer traits such novelty seeking, risk taking and variety seeking in order to figure out who would be most likely to buy new and innovative products. In “Global Consumer Innovativeness: Cross-Country Differences and Demographic Commonalities,” they report that gender, age, wealth and education levels are significant predictors of what types of new products consumers buy in all of the 15 countries in which they polled people.

Among the results: (more…)

If you’re thinking about striking out on your own with a business idea that could be a great success as long as you procure the funding to back it, you may want to wait a bit longer to proceed.

John K. Paglia, an associate professor of finance at Pepperdine’s  Graziadio School of Business and Management, recently wrote in VentureBeat about the Pepperdine Private Capital Markets Study. The report found that “private capital lenders and investors may not engage in a meaningful volume of lending for another two to three years,” he said.

High expectations for returns on investments are part of the reason. Paglia reported that venture capital firms expect an annualized 42 percent ROI; private equity groups expect 25 percent. (more…)