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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When a business gives away its products for free and sustains itself through advertisements alone, how can rivals that charge for their products and services compete? This is one of the questions addressed in new research by Ramon Casadesus-Masanell, an associate professor at Harvard Business School, and Feng Zhu (pictured), an assistant professor at the Marshall School of Business at the University of Southern California. Through an email exchange, Casadesus-Masanell and Zhu discussed with me some of the concepts covered in their study “Strategies to Fight Ad-Sponsored Rivals.”

BNET: Your research looks at ways that companies charging fees for products and services can compete with other companies offering those things for free. This is a problem that has famously affected the entertainment industry and old media; what other sorts of businesses are being affected?

RCM & FZ: Ad-sponsored products and services are increasingly prevalent in many industries. In addition to traditional media industries such as newspapers and television, today we can find many free products and services in many different industries such as online services (e.g., social networking sites such as Facebook, content sharing sites such as YouTube, email services such as Gmail and Hotmail, and online searches such as Google and Microsoft Bing), software applications (e.g., many of the iPhone applications), paper cups from FreePaperCups.com and free phone calls (e.g., Blyk). (more…)

Remember when people used to make it a Blockbuster night, and the lines at your local video store snaked all the way back through the foreign film section? Chances are, if you’ve visited a video store lately, it’s been a lot less populated. In fact, according to a recent Knowledge@Wharton article, Blockbuster plans to close 40 percent of its stores over the next two years to focus on its digital rental service.

The culprit behind Blockbuster’s woes, not to mention the closing of many a beloved mom-and-pop video store, is Netflix, the subscription-based DVD rental service that delivers movies to our mailboxes in ubiquitous red envelopes. In “Netflix: One Eye on the Present and Another on the Future,” the Wharton community weighs in on the company’s past and present successes and the challenges it faces from competitors such as iTunes and digital streaming channels like Hulu.

No matter how Netflix fares in the future, the article points to a few keys to its successes so far that are worth studying, no matter what line of business you’re in. (more…)

If you’re worried about whether or not your employees behave ethically, a pair of MBA professors have come up with a simple solution: spray a little citrus-scented Windex in their work environments.

TIME reported recently about new research finding that clean smells promoted good behavior. The research was conducted by Katie Liljenquist, a professor at Brigham Young University’s Marriott School of Management, and Adam Galinsky of Northwestern University’s Kellogg School of Management.

The researchers conducted experiments testing subjects’ honesty and generosity. One group was tested in a room cleaned with citrus Windex, and one group was located in an unscented room. In one experiment, each group was given a set of tasks to complete. In their packet was a flyer asking for charitable donations. Of those in the clean-smelling room, 22 percent said they wanted to donate money; only 6 percent in the other room agreed to give.

“Economists and even psychologists haven’t been paying much attention to the fact that small changes in our environment can have dramatic effects on behavior. We underemphasize these subtle environmental cues,” Galinsky said in TIME.

As someone who can’t concentrate when my desk gets too messy, to me this makes a degree of intuitive sense. However, others are skeptical that clean smells specifically trigger more moral behavior. TIME also spoke to Brown University psychologist Rachel Herz, who said that participants who liked the smell of citrus might have simply been in a more positive mood, not necessarily a more ethical one.

What do you think?

Image courtesy of Flickr user zsoul, CC 2.0.

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In a recent interview with Ross School of Business professor Jeff DeGraff posted on the University of Michigan’s web site, DeGraff urges companies to consider downtimes the best for pursuing innovation, even if that means spending more money than on the surface seems wise during a recession.

He shares three key reasons why this is the case:

• Investing in innovation when costs are low will pay off in the future: “At some point, U.S.-based firms are going to come out of the recession. And there will be a shakeout of those who have invested in the last development cycle and those who have cut back,” says DeGraff. (more…)

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In the previous decades, most large corporations have practiced glocalization: developing products in rich countries, then distributing them around the world, adapting the products slightly for different local markets.

According to Tuck School of Business at Dartmouth professor Vijay Govindarajan, these days of glocalization may be drawing to a close. He wrote in the recent Harvard Business Review article, “How GE is Disrupting Itself“:

Glocalization worked fine in an era when rich countries accounted for the vast majority of the market, and other countries didn’t offer much opportunity. But those days are over — thanks to the rapid development of populous countries like China and India and the slowing growth of wealthy nations. (more…)

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When it comes to rules for mixing work and social networking sites like Facebook, we’re currently in the wild west. One manager may think nothing of “friending” his employees, while to another this may seem like overstepping a boundary.

According to a recent Knowledge@Wharton article, “Available All the Time: Etiquette for the Social Networking Age,” it’s unlikely that someone is going to emerge as the “digital Emily Post” to issue rules for the intersection of your professional life and your social network. At least for the time being, managers are responsible for setting their own company rules for social networking.

The article makes clear a few questions you should consider: (more…)

Just as a marriage needs commitment to survive, so do relationships between partnering businesses. Try to partner with too many businesses, and it will be far more difficult to achieve a meaningful relationship, according to “The Benefits of Commitment,” a recent article in the MIT Sloan Management Review.

Authors Andreas B. Eisingerich of Imperial College Business School in London, Matthias Seifert of IE Business School in Madrid and Gaia Rubera of Michigan State University interviewed 152 managers in several countries to study how service businesses were affected by their number of partnerships.

They found that companies with more collaborations were less profitable, less innovative and less skilled at communication efforts.

On the other hand, companies with a small number of committed partners reaped the following benefits: (more…)

When Starbucks unveiled plans to launch its instant brew Via, the reaction seemed to be a nearly unanimous HUH? Why would a company responsible for turning so many people into gourmet coffee disciples promote a down-market product that seems to be the antithesis of its brand?

Not to imply that Starbucks won’t pull this one off. I recently spoke with David Rogers (pictured), executive director of Columbia Business School’s Center on Global Brand Leadership, about the key steps that companies must take when trying to rebrand an unpopular product category, such as instant coffee:

• 1. Decide on the brand name: Rogers says a crucial decision is keeping the brand name or creating a new one, whether going up or down from your price point: “When Toyota went into the luxury car market, they created Lexus. They didn’t call it a Toyota car. Similarly, when you’re going downscale, so to speak, you have to decide if you want to use the same name or create a new name, and just use your organizational assets for distribution and so forth.” (more…)

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