Stuck in the Middle

Published on January 16, 2012 in Uncategorized. 1 Comment

Clowns to the left of me,
Jokers to the right, here I am,
Stuck in the middle with you.
– “Stuck in the Middle with You” a song by Stealers Wheel

The “middle” seems to be what every executive wants to avoid these days. There is ample research on business strategy that suggests the middle is to be avoided for fear of being stuck in it. The conventional view is to see the “middle” as the problem. I see things slightly differently: the problem is not the middle; it is allowing your firm to get stuck at all. How you see the problem has big implications for taking action.

Closer to home, a recent article, “Trouble in the Middle,” which appeared recently in The Economist, suggested that time may be running out for business schools that “aren’t quite elite.” The Economist uses its rankings to segment the market (readers of this blog will be familiar with my reservations about rankings.) The author argued that the value proposition of mid-ranked schools has worsened and presages a “shakeout…which could be nasty.” Thus, the problem of the middle is relevant beyond the boundaries of the for-profit sector.

Michael Porter of Harvard Business School originally discussed the problem of “stuck in the middle.” He said that the profitability of firms depends not only on the typical rates of return in an industry. It depends more importantly on the firm’s position and competitive advantage in that industry. And he argued that competitive advantage derives from one of two strategies: cost leadership or differentiation of products or services. Across most industries you can find firms and products that aim for advantage based on either cost or differentiation.

The problem, Porter said, was in trying to do both and thus doing neither very well. He seemed to be saying, “find what you are good at and stick to it.” This focus on competencies is very sound. Porter wrote, “The firm stuck in the middle is almost guaranteed low profitability. It either loses the high-volume customers who demand low prices or must bid away its profits to get this business away from low-cost firms. Yet it also loses high-margin businesses — the cream — to the firms who are focused on high-margin targets or have achieved differentiation overall. The firm stuck in the middle also probably suffers from a blurred corporate culture and a conflicting set of organizational arrangements and motivation system.” (Competitive Strategy, p. 41-42)

The following table gives some examples from various industries. The firms in “the middle” have felt or are feeling a severe contraction.

  Differentiators The Middle Cost Leaders
Retailing Nordstrom, Banana Republic, J. Crew K-Mart, Sears, Woolworth WalMart, Target
Beer Microbrewers Pabst, Blatz SAB Miller, INBEV
Airlines Singapore, Cathay Pacific American SouthWest, Peoples Express
Cellphones Apple, Google Nokia Commodity Manufacturers
Autos BMW, Mercedes Chrysler, GM Japanese Auto Manufacturers
Soft Drinks Coke, PepsiCo Dr. Pepper Private labels
Orange Juice Tropicana, Minute Maid 100 small brands Private labels
White Goods Sub-Zero, Viking Maytag, Whirlpool Korean Manufacturers
Motor Scooters Aprilia Piaggio Honda, Yamaha

American Airlines recently filed for bankruptcy. Chrysler and GM required a government bailout in 2009. Piaggio acquired its way into the differentiated end of the market by buying Aprilia. Dr. Pepper was acquired by Cadbury Schweppes. As these examples seem to suggest, the middle is not a place to become stuck.

Porter’s characterization eventually spawned opposition, arguing that the middle may not be all that bad or that it may be entirely sensible for managers to test the middle for the sake of discovering possible new segments of demand. After all, demand can be defined on numerous dimensions, well beyond cost and difference, such as convenience, style, and location. Then too, there is the pesky problem that consumer demand keeps changing over time, which necessitates constant experimentation by firms to discover where the new demand is. Today’s single-minded focus on cost or difference may be tomorrow’s business graveyard.

I was a student of Porter’s in the 1970’s when his iconic treatise, Competitive Strategy, hit the business world. I recall that his readers quickly absorbed his thinking about competitive positioning and generic strategies. But it struck me that they often ignored another aspect of Porter’s work, the dynamic “jockeying for position” among firms. Firms and markets are not static. They continually change as firms try to best one another. And periodically, new technologies come along that completely upset the competitive field. Another great economist, Joseph Schumpeter, described the competitive turbulence of capitalism as the “gale of creative destruction.”

Being stuck in an unattractive business without a viable exit is one of the worst situations for a firm. For instance, a diversified firm that I studied owned a coal tar refinery that had operated for over 100 years. The facility was inherited in an acquisition many years earlier. The plant was antiquated and inefficient. Furthermore, the market had turned highly competitive, making the refinery very unprofitable. The firm wanted to exit the business, but couldn’t, because doing so would trigger environmental clean-up obligations from chemical leakage over the years. Eventually, the company appointed a new manager who immediately opened negotiations with the environmental authorities, and eventually negotiated a “workout” program in which the refinery would be closed immediately and environmental remediation would be conducted over time, rather than all at once. This was an enormous success for the company and the manager, who recognized that not only was the company stuck, but so were the environmental authorities, who had been stymied by the inaction of the company.

Nuclear power plants, petrochemical plants, and many manufacturing plants face exit costs that can ruin the economics of a business as it approaches its end. Another example of being “stuck” is encountered by a minority investor in an underperforming private firm—even if a minority investor wanted to exit, his or her investment could be stranded if the securities are illiquid. Such would be the case until the majority investor decides to sell the entire firm. An airline can become stuck by virtue of an aging fleet of airplanes, uneconomic union contracts, and/or landing rights that don’t fit the more profitable segments of demand. Retailers can become stuck by virtue of stores planted in neighborhoods with the wrong demographic trends. A technology company can become stuck because of a commitment to obsolete technology.

Irreversible strategic positions entail commitments that expose the firm to risks. In contrast, flexible positions can be altered as conditions change. You can think of flexibility as a call option on an alternative strategy–it is enabled, for instance, by holding excess manufacturing capacity, excess inventory, or excess cash. Management techniques such as lean manufacturing grant strategic flexibility.

An illustration of the creation of flexibility is apparent in the trend toward “modularization” of manufacturing. Complex business processes and products can be organized into sub-units, called “modules,” that permit specialization, encourage greater innovation, and promote efficiency. The innards of any personal computer and the success of Dell Computer illustrate the fruits of modularity: architectural flexibility pays.

Too often, MBA students and executives think that “risk management” means the active avoidance of risks. But societies need business managers to take sensible risks—to seek risk—because that’s where opportunities lie. The best executives understand that the great sin has less to do with risk-taking (such as exploring the “middle” of a market) and instead has to do with failing to develop flexibility—such as a sensible “Plan B”—if the dice turn against you.

I agree with The Economist that the field of b-schools is in for some turbulence. And if other industries are any guide, the turbulence could hit the middle hardest. But The Economist says little about the possible ingenuity of leaders of those schools or of the agility those schools might show. The next few years will be very interesting. As Yogi Berra said, “It ain’t over ‘till it’s over.”

Stealers Wheel characterize “stuck in the middle” as being caught between clowns and jokers. These may be weak competitors to your firm and therefore may present a great opportunity to serve markets and create value. If so, is the middle that bad? Yes it is, if you are stuck in some important way. The inability to respond flexibly and appropriately to new competitive conditions is the grave threat.

“Drum Major” vs. Servant Leader: An Appreciation for the Life of Martin Luther King

Published on January 15, 2012 in Uncategorized. 2 Comments

Tomorrow is Martin Luther King, Jr. Day, an opportunity to reflect on his ideas and their relevance to Darden’s mission, to “improve society by developing principled leaders for the world of practical affairs.” Events are planned at Darden, the University of Virginia and the City of Charlottesville to observe the holiday. See especially Darden’s event on January 24th. Let me offer one reflection to help set the stage.

The recent controversy over the “drum major” quote that appears on the side of the new Martin Luther King memorial in Washington, D.C., sent me back to read the original. The source is a sermon titled, “The Drum Major Instinct,” preached by King on February 4, 1968, a couple of months before his assassination. In it, King addresses the person who seeks to lead for the recognition, importance, power and glory of it. He said, “And there is, deep down within all of us, an instinct. It’s a kind of drum major instinct—a desire to be out front, a desire to lead the parade, a desire to be first. And it is something that runs a whole gamut of life.”

King acknowledged that the drum major instinct is universal to humanity. But the problem is that left unharnessed, the drum major instinct can become destructive: egotism, boastfulness, narcissism; the world is all about “me.” The drum major instinct can lead to feelings of exclusivity, and policies of segregation and racism: trying to push others down in order to push yourself up. King said, “the great issue of life is to harness the drum major instinct.”

Surely, the drum major instinct is a problem for the development of leaders. So much of what we understand about the development of effective leaders in 2012 is not about the leader’s attitude of “me,” but rather the attitude regarding “them,” the people one leads. So much about achieving success in business is about leading diverse teams, promoting collaboration, and gaining extraordinary results through the work of many ordinary people. This suggests a very different attitude on the part of the leader.

Back in 1968, King offered some insights into the nature of this different attitude. True leadership is not bestowed, rather,

“You must earn it. True greatness comes not by favoritism but by fitness…If you want to be important—wonderful. If you want to be recognized—wonderful. If you want to be great—wonderful. But recognize that he who is greatest among you shall be your servant. That’s your new definition of greatness. And this morning, the thing that I like about it…by giving that definition of greatness, it means that everybody can be great. Because everybody can serve. You don’t have to have a college degree to serve. You don’t have to make your subject and your verb agree to serve. You don’t have to know about Plato and Aristotle to serve. You don’t have to know Einstein’s theory of relativity to serve. You don’t have to know the second theory of thermodynamics in physics to serve. You only need a heart full of grace. A soul generated by love. And you can be that servant.”

In short, King was an early champion for the concept of servant leadership. And the notion that “everybody can serve” is relevant today in the notion of “leading from where you are”—that is, we can think of leaders as occurring at all levels of an organization. Leadership is not an attribute simply of the CEO. High performance organizations see leadership in teams at the customer interface, on the assembly line, and in the design studios—anywhere employees come together to strive for results.

Business schools at non-secular universities are not likely to say much about leaders needing to have “a heart full of grace” and a “soul generated by love.” But the manifestations of love and grace are qualities such as respect for the dignity of others, positive engagement with those around you, delegation of responsibilities, attention to the growth and development of one’s employees, and a sense of stewardship for the enterprise: you are not merely operating the business, you are strengthening it for the next generation. I do think that these are qualities of some of the greatest leaders and are often forgotten in the lingo that b-schools use.

Above all, I appreciate King’s notion that true leadership is earned, not bestowed. I have seen leaders founder in the mistaken belief that their move into the corner office meant that their followers were always right behind. I think you win followers through trust and integrity. Authoritarian or laissez-faire leaders eventually stumble because they don’t earn their followers.

For all these good reasons, Martin Luther King, Jr. warrants an annual remembrance. Through his deeds and words, he reminds us of important lessons relevant to our own growth as individual leaders and as a society.

The Grasp of Integrity at Darden

Published on January 3, 2012 in Uncategorized. 1 Comment

 

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Ethics was all over the place at Enron. When Professor Sam Bodily and I visited the company in 2000, we saw the company’s code of ethics posted in elevators, hallways, and cafeterias. The company’s CEO, Ken Lay, was the son of a Baptist preacher and annually urged the employees to be ethical. Yet all the words, signs, and exhortations couldn’t prevent Enron’s spectacular implosion in the fall of 2001 in reaction to revelations of fraudulent bookkeeping, market manipulation, conflicts of interest, and an avaricious trading culture—Enron’s trading counterparties simply deserted the firm. Of all the arresting aspects in the story of Enron, the disparity between words and deeds is one of the most astonishing. They didn’t walk the talk.

Cynics will say that we should expect nothing else: people are susceptible to all kinds of temptations; incentives, power, and pay are corrupting; and talk is cheap–it is easy to say things just to make yourself look good. Ultimately, you can’t force people to believe in a set of values. Others will point to the latest Gallup Poll, which shows that business executives rank relatively low in honesty and ethics and just ahead of telemarketers and Members of Congress. The cynics will say that imposing a culture of ethical dealing on business people is like putting lipstick on a pig.

Most people recoil from the thought of working in that kind of environment. We want to be proud of our place of work. Fortunately, the business world offers a host of counterexamples, companies that talk openly about the importance of ethical behavior and then walk the talk. You can find examples of these companies in published lists of trustworthy companies at Forbes/Audit Integrity, Ethisphere, and at Trust Across America (TAA). Smithfield Foods (which, as they say here in Virginia, is “just down the road a piece,”) ranked #1 in the 2011 TAA listing. Leaders of such companies are not shy to discuss the importance of ethical dealing: John Mackey (Whole Foods), Tom Linebarger (Cummins Inc.), and Indra Nooyi (PepsiCo). A truism in management and family life is “if you can’t talk about it, it won’t get done.” Making progress on anything important is not a matter of giving orders: one must communicate, engage, enlist, and inspire others. So it is with creating a community of integrity. The best leaders get this and use plenty of opportunities to talk about integrity in the workplace.

To be a community of integrity is not a once-and-done decision. It is an every day choice that we must make. Here, at the start of 2012, I am writing to ask you to reaffirm our vision and our commitment to walk the talk.

Surely we can agree on the values that will shape Darden to be the community of our aspirations. UVA and the Darden Mission Statement call us to do so. We share expectations that create a community of trust. Three years ago, the faculty reaffirmed the Darden Mission Statement. It commits us to graduate “principled leaders.” The Board of Visitors of the University endorsed the University Code of Ethics. It states that, “We do not condone dishonesty in any form by anyone.” Why should we rally behind the values embedded in the Mission and Code? I can think of at least three reasons:

· We want to create a sustainable legacy for Darden. To incorporate ethics into our workplace mindset is to think about the kind of community that we would like to live in, and that succeeding generations will inherit.

· Ethical behavior builds trust and dividends of trust are valuable. The foremost dividend is an unimpeachable reputation. Equally important, ethics and trust build strong teams and strong leadership. Stronger teams and leaders result in more agile and creative responses to problems. Ethical behavior contributes to the strength of teams and leadership by aligning employees around shared values, and building confidence and loyalty.

· Darden can’t afford the costs of doing otherwise. We cannot afford to lose one shred of our reputation; we cannot afford to lose one talented member of our community, applicant, or corporate partner over an ethical lapse; and we cannot afford to lose our self-confidence and self-respect.

Here’s the bottom line: we expect each other to manage, study, lead, and work with integrity. To animate this expectation, (and to address the cynics) I ask two commitments of you in 2012.

First, encourage others around you to do what’s right. We are not an “anything goes” community. We have mutual expectations for exemplary behavior. No number of messages from the Dean can top the impact of peer expectations. A community is only as strong as its most vulnerable link. Help those who may be headed in the wrong direction. Speak up for our values.

Second, if you see something, say something. The UVA Honor System provides representatives with whom students and professors can share their concerns on a confidential basis. Similarly, faculty and staff members can share concerns with senior leaders, me, Brad Holland, University Ombudsman (434- 924-7819, ombuds@virginia.edu), and/or Barbara Deily, Chief Audit Executive of the University (434-924-4110, deily@virginia.edu). The mark of a good organization is not that it never has ethical lapses, but rather what it does about them. At Darden we must get the facts and take appropriate action as fast as possible.

High-performance organizations take integrity seriously—they talk about it regularly, often starting with the CEO. It is never too early or late to talk about integrity. People get distracted, confused, or forgetful. We can all use conversational reminders about what is important. Darden is, and aspires to remain, a high-performance organization; for us, striving to be a community of integrity is not an afterthought; it is where that high performance starts from.

The handshake is a sign of trust. Let us grasp hands with one another in a commitment to integrity in all we do at Darden in 2012.

And Happy New Year!

Sincerely,

Bob

New Year’s Aspirations

Published on January 1, 2012 in Uncategorized. 1 Comment

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A journalist tracked me down to ask for my New Year’s resolutions—not just any resolutions, but resolutions for the entire field of management education. I concluded that it had to be a really slow news day.

The tradition of making New Year’s resolutions is well-intentioned but poor in outcomes—some 88% of resolutions end in failure (see this). Trying to fulfill generalized resolutions (such as “lose weight”) tends to succeed much less often than trying to fulfill specific measurable goals that might achieve the same outcome (such as “walk 30 minutes per day and drink water instead of soda.”) The U.S. Government catalogues the 13 most-frequently made resolutions; one is struck by their banality and negativity (quit smoking, drink less alcohol, etc.) I’m more motivated by positives than negatives. For all these reasons, I don’t do resolutions.

Then I learned that what the journalist really wanted were aspirations for management education in 2012. This is a different matter: aspirations help to set a vision. My answer to the journalist was easy: get ahead of the forces of change with which educators and business executives are contending.

1. Extend the "reach" in educational content and engagement beyond the borders of one’s home country.    I led a task force sponsored by the AACSB that critiqued business schools for having an overly-strong "home bias"—the task force published its findings in a report in 2011.  Even if a new MBA runs a business that he or she thinks is purely local, the odds are good that a supplier, customer, or competitor has activities that extend far beyond the locality.  I don’t think that business is as global as Thomas Friedman argues in The World is Flat. Rather, business has strong local and regional elements—it is “semi-global” in the phrase of Pankaj Ghemawat–which means that MBAs need to be prepared for big variations in business practices as they cross borders. Whether or not students plan for a purely local future, they must be globally confident and competent. For more, see this.

2. Accomplish more with fewer resources.  The rate of increase in tuition charges in higher education has not escaped the attention of critics and regulators.  Some of the increases were driven by the Global Financial Crisis and Great Recession: as funding from donors, governments, and endowments dwindled, colleges and universities have had to sustain themselves by increasing tuition charges. But the rate of increases is not sustainable indefinitely. Current-day values of austerity and sustainability encourage us to practice “less is more.” I have described Darden’s efforts and commitments in this regard (see this and this.) Universities may have no alternative; after governments get through "fixing" health care, I predict that they will come after higher education.  Business schools probably understand the importance of efficiency and effectiveness better than other divisions of universities.  Let business schools show the way for higher education.

3. Innovate.  Excellence in management education is a moving target. Simply repeating what has been done in the past may be familiar and convenient, but probably does not serve students or the business profession very well.  The best service derives from continuous experimentation with new approaches and ideas: more effective use of technology, moving didactic learning material online and devoting class time to genuine high-engagement learning activities, more experiential activities such as field visits, simulations of new product innovation and prototyping, and so on. Our approach to innovation at Darden has been to emphasize continuous improvement (see this for discussion of our processes.)

4. Speak up for what’s right.  The Global Financial Crisis and Great Recession have taught us that laws and regulations cannot prevent corporate misbehavior.  Capitalism has taken some very sharp criticism as the misbehavior came to light. And critics have claimed that schools have been too silent on such behavior. The critics argue that if business schools aren’t part of the corrective, then they must be part of the problem. At stake is the ability of b-schools to retain the public’s trust and to serve our educational missions. Schools can best “speak up for what’s right” by encouraging research, discussion, reflection, and learning on the nature of an ethical business climate. Darden’s Olsson Center for Applied Ethics and our Business Roundtable Institute for Corporate Ethics are leading research centers; Darden offers a required course in business ethics; and the University of Virginia has a strong student-directed honor system that helps to create a community of trust.

We laugh at Calvin, the little boy in the cartoon, for his sheer hubris: “I need to change? Well, buddy, as far as I’m concerned, I’m perfect the way I am.”  New Year’s Day is a great opportunity to reflect on aspirations and new possibilities. Not all schools have the resources (talent, social capital, financial capital) to stretch in the four ways I suggest.  And from a standing start, any one of these could take years to act upon. But the schools and nations that grow along these lines will fulfill more effectively their educational missions for MBA students.

Happy New Year to all!

K-12 Education Reform and Business School

Published on December 11, 2011 in Uncategorized. 4 Comments

Darden and UVA’s Curry School of Education announced recently the launch of a new joint degree program, the MBA/M.Ed. in Innovation in Education Reform. I support this enthusiastically, which veteran readers of this blog will find unsurprising (see this and this.) You might ask why a business school should get involved with education reform. Here’s my reply.

In 2009, after the nadir of the Global Financial Crisis, I was invited to participate in a panel discussion before a large audience about the causes and remedies of the crisis. The very last question was from a woman in the back row of the large auditorium who asked, “You’ve talked a lot about the global economic system, but what can WE in this room do to respond to the crisis?” My colleagues on the panel responded in lofty and rather patronizing tones about tax policy, federal regulations, and the Fed’s discount rate—their tone was that “this problem is bigger than you, so just let the experts worry about it.”

When it finally came to my turn to speak, I urged the gathering to fix the public kindergarten-through-12th-grade (K-12) education system in their community and generally in the U.S.

This brought an ovation from the audience. Whether or not the experts get it, certainly the people understand the gravity and urgency of the crisis in public education.

I explained that no amount of government regulation or wealth transfers (taxes on the rich, social safety nets, etc.) will bring back prosperity or restore the jobs that the financial crisis destroyed. We must grow our way out of the malaise. We must create value through entrepreneurship, innovation, and new product development. The greatest barrier to growth is the development of entrepreneurial leadership, and that depends on foundational education. Growth derives from disciplined investment, hard work, and a certain amount of luck. But the odds of success are vastly influenced by training: a founder of microbiology, Louis Pasteur, famously said, “fortune favors the prepared mind.” Our ability to rejuvenate the economy depends on educating the rising generation of talent so that they can invent, renew, and reimagine.

The crisis in K-12 education in the U.S. and in many countries of the world is the demon of the hour. The roots of this crisis are numerous and predate the global financial crisis by decades. Some analysts attribute the crisis to underfunding. Others claim that the educational system is adequately funded but underperforming. Either way, the results are not pretty. The United States ranks 14th among nations in K-12 spending as a percent of GDP, yet spends more per capita on K-12 education than all but one or two other countries. For this, we gain mediocre results (see this for an overview of recent reading and math test results for U.S. children.) Thirty percent of American students drop out before completing high school—and for minority students, the dropout rate is fifty percent. The present system performs worst for the most vulnerable segments of society, the poor and disadvantaged. The crisis in education contributes significantly to the widening income gap and worsening social mobility in the U.S. Whether you come from the right or the left of the political spectrum, if you aren’t angry yet, you aren’t paying attention—see this, this, and this, for starters.

The crisis in public education is a business problem. In my meetings with numerous CEOs and human resources executives, I hear their frustration and anxiety with the preparation that job-seekers bring to the hiring halls: usually the absence of a high school diploma; but even those with diplomas show slow reading, poor comprehension, inability to perform simple arithmetic and algebraic functions, poor mastery of digital technology, inattention, poor work ethic, and so on. Executives complain that they are being taxed twice over: once when they pay taxes to the government (in part to support public education) and again when they must pay to instill basic educational preparation for the employees they do hire. The failures of the educational system drag down the economic competitiveness of America relative to its peers. Iconic business leaders such as Andrew Grove, Jeffrey Immelt and Henry Schacht, Bill Gates, and John Akers and the Business Roundtable have bemoaned the state of K-12 education for years.

The crisis in public education is also a moral challenge. The provision of sound K-12 education is vital to our values as a society, particularly regarding equality of opportunity. Education is the cornerstone of the ability to live the American dream of creating a better life for one’s self than one’s parents or grandparents had. And education is crucial for good citizenship; it is the way we socialize our children into the responsibilities and expectations of members of a democratic society. Thomas Jefferson had this in mind when he founded the University of Virginia and advocated universal primary education. He wrote, “I know no safe depository of the ultimate powers of the society but the people themselves; and if we think them not enlightened enough to exercise their control with a wholesome discretion, the remedy is not to take it from them but to inform their discretion by education. This is the true corrective of abuses of Constitutional power.”

Business schools should rally around the K-12 education crisis because this is a business and social problem. Darden is doing so and with this new joint program, is raising its commitment. Darden and Curry already collaborate in sponsoring the Partnership for Leaders in Education (PLE). This joint venture brings teams of public school administrators and teachers to UVA where instructors from Darden and Curry team up to teach best practices in school turnarounds. PLE has served 82 school districts in 12 states. A business school has useful insights to contribute to the development of leaders in K-12 education. These range across a host of topics, such as: management acumen, the turnaround of failing enterprises, leadership development, forming high-performance work teams, measuring success and using metrics to promote investment and development, and promoting entrepreneurship and innovation within large organizations.

The mission of the Darden School is to “improve society by developing principled leaders for the world of practical affairs.” Our new joint degree program with the Curry School and our Partnership for Leaders in Education are tangible expressions of that mission.

This new joint degree program is the right program at the right time. It marries the capabilities of two prominent schools in an effort to fight one of the largest problems facing contemporary society. The fields of education and business have considerable intellectual capital to offer in response to the crisis. And each field can learn from the other. Complicated social problems tend not to come neatly packaged for easy remedy by any particular professional field. The partnership of Curry and Darden is exactly the kind of collaboration that the public should demand from professional schools within a major research university.

The (In)-Compleat MBA

Published on December 1, 2011 in Uncategorized. 1 Comment

“It’s what you learn after you know it all that counts.”

– attributed to former President Harry S Truman.

I get a lot of unsolicited advice, to which I listen carefully because it gives me clues about things that might really matter. Here’s a recent example.

I called on the CEO of a major enterprise, a man of no scarcity of opinions. He is a scourge of business schools—and yet I respect him and count him as a friend of over a decade. It had been a while since we talked, so I should have guessed that he had bottled up quite a rant about management education, which, when uncorked, went something like this:

New MBAs can’t do anything valuable like start or run a company, invent the new iPad or search engine, or reorganize a dying business to make it successful. They are focused too much on frameworks, theories, and abstractions about how the world works. They just re-hash ideas from anthropology, economics, psychology, and sociology. Why can’t they just focus on business directly? B-schools aren’t doing their job.

So, this is a case study and here’s your assignment: stop reading and reflect for a couple of minutes on a question: Where is the “noise” in this rant and what is the signal—that is, what might be a clue here to something that really matters?

* * *

I’ll guess that you’ve read or heard some of the same things—often from a talk-show pundit or embittered investor looking to incriminate the scoundrels who caused the Global Financial Crisis. The CEO’s sweeping indictment glosses over some huge variations within the b-school field, a problem that I’ve written about before (for instance, see this and this). A great university education teaches one to beware of generalization from a heterogeneous sample and of stereotyping, especially based on few observations. For instance, at Darden we don’t just teach theories and frameworks; we also emphasize their application and usefulness. I don’t want to turn this posting into a reflection about statistical inference, so I’ll move on…but if you want to change anything (especially b-schools) it is vital to be well-grounded in facts. In my view, this is the “noise” part.

The signal I detect regards a gap in expectations about what the world expects of newly-minted MBA’s. Are they supposed to do the heaviest kind of lifting from day one? If so, are b-schools producing such graduates? If not, what kind of lifting should the world expect? I think that MBAs should be prepared to have impact quickly after graduation. The CEO seems to set a very high expectation about the extent and kind of impact.

Humans are always in some stage of becoming. Our reach (or aspiration) always exceeds our grasp, especially in education. There is always more to be learned. It is unrealistic to expect that MBA graduates will spring full-blown into professional life ready to perform the most difficult tasks, like an Eric Schmidt, Bill Gates, Steve Jobs, or Jeffrey Immelt. We need learners, not know-it-alls; we need people who ask questions very well more than we need people who answer questions precisely. It is quite possible that the Foundation CEO had in mind some image of an MBA education frozen in time. Yet the reality is that the target field of mastery keeps changing, in response to changes in the business world. We need people who can learn and adapt very well in response to a changing field.

Running a company, inventing new products, and reorganizing a dying business require talents that one ordinarily grows into. To remove a brain tumor, we all want the neurosurgeon who has done thousands of similar operations; we want airline pilots who have flown in all kinds of weather; we want meals from the restaurant with an ‘A” rating from the health department. The common theme among these is high reliability. Organizations that produce high reliability have employees who show consistent attributes, such as critical thinking, high mindfulness, and careful diligence. You learn these kinds of attributes. And by learning you grow in wisdom. Walter Wriston, the iconic former CEO of Citigroup said, “Good judgment comes from experience; experience comes from bad judgment.” My response to my friend, the CEO, was to ask, “when did you start to demonstrate these abilities?” His reply after a lengthy pause was “about 10, 15, or 20 years after college. “

This challenges the notion of what it means to “complete” one’s preparation in business. Are you ever really done or fully completed? In 1653, Izaak Walton published The Compleat Angler, a book about fishing. His spelling of the adverb, “compleat,” is the archaic version of “complete” but has acquired a broader meaning than “to have all the necessary parts.” The Free Dictionary defines “compleat” as “characterized by a highly developed or wide-ranging skill or proficiency…Being an outstanding example of a kind; quintessential.” To be “complete” says you have the necessary and sufficient business training; in contrast, to be “compleat” says you are a hot shot. I think the CEO is using the “compleat” business person as the standard for judging the impact of new MBAs. My point is that to be “complete” in preparing for business, you should get an MBA. But to become a “compleat” person of high impact requires both education and experience.

The other aspect of the CEO’s signal has to do with the content of an education. His rant echoes a very American orientation toward useful knowledge. American MBA students are prone to ask “So, what can I really do with this new concept you’ve just taught me?” It’s a great question. But teaching a student some skills (know how) in the absence of context (know what) or character (know why) is dangerous. To a child with a hammer, everything looks like a nail. We know that a narrow focus on profits and financial engineering brought ruin to Enron and Lehman Brothers. After the Global Financial Crisis, I have met no one who thinks that simply teaching the tools of business is sufficient anymore. We need socially aware MBA graduates, who understand the wider context and impact of their actions. Also, Aristotle said that character is destiny. Shall not b-schools aim to develop graduates with attributes such as integrity, determination, and social awareness?

Increasingly the “know what” stuff is migrating from textbooks to the digital medium. You can download tutorials to teach you bookkeeping, discounted cash flow, and the IS/LM model in macroeconomics. But once you have memorized all those tools, are you any wiser or more capable? The business profession needs people who can use that objective knowledge in creative and critical ways: What are the limitations of those models? Are the assumptions valid? Have we thought of all possible alternatives? Given that we have imperfect information and that the future is uncertain, what shall we do?

Signal versus noise. Complete versus compleat. Abstractions versus useful knowledge. These distinctions are important for all observers of b-schools. And the CEO’s rant echoes in my mind for one additional reason. The meme about Darden—the word on the street and the idea in our promotional material—is that Darden prepares you to be “Ready for Anything.” The rant challenges all b-schools to consider what we mean by professional readiness. How much do schools actually care about readiness? I don’t think the CEO knows; but he surely has views. I am confident that Darden well prepares graduates for all the kinds of challenges they will face upon graduation—and more importantly, for dealing with a world that is changing at an accelerating pace. At Darden, we think that an MBA program should build a blend of knowledge (“know what”), skills (“know how”) and attributes of character (“know why”). The feedback from our stakeholders—both the rants and raves—is always valuable because it helps us continuously to improve our programs. The CEO is right that MBA graduates need to deliver clear skills to the world of practice. But skills alone are not sufficient. The capabilities that we most value grow with experience.

Gratitude for Slow Food

Published on November 25, 2011 in Uncategorized. 1 Comment

“Man ist, was man isst.” — German proverb.

“You are what you eat” is a slogan that socialists around the world used to highlight the class differences in society: if you ate bad food, you were part of the lower classes; if you consumed the good stuff, you were obviously rich. The problem is that what Americans eat is no longer a great distinction of economic class: nutritionists remind us that we all don’t eat very well. The 99% and 1% at least have that much in common. The Thanksgiving Day feast at my house prompts two reflections:

· In regard to what to eat, we have an immense range of choices, some of them wonderful. The issue is this: are we making wise and informed choices?

· Too much of the debates about eating is focused on the what. Thanksgiving reminds us to focus as well on the how of eating—particularly the how of preparation.

Maybe the German proverb should read, “You are how you eat.” Or better yet, “you are how you prepare what you eat.” I think that the how of eating and preparing food is an overlooked and often misunderstood source of difference and lifestyle in the human experience.

What You Eat

If you have not connected with the critique of modern American eating, see Michael Pollan in his classic lecture about his book, The Omnivore’s Dilemma. America enjoys the highest per-capita income in the world and yet the highest rates of obesity and other eating-related threats to our health. We are a fast-food nation. Increasingly, we outsource our cooking to restaurants and producers of packaged goods. An alternative, advocated by the chef, Alice Waters, is the slow food movement that favors locally-produced and seasonal foods—as the founder of a leading restaurant, Chez Panisse, and writer of numerous cookbooks, she has popularized this new approach to cooking and eating. Even the Abbott Center Dining Room at the Darden School emphasizes environmentally sustainable food production and the sourcing of locally-grown foods.

Returning to Thomas Jefferson’s vision of a pastoral society where each family grows (or barters for) what each eats is too big of a stretch. “Industrial food” produced by Big Agribusiness and consumer foods corporations brings a richer diet at lower cost to a broader population than ever in history. Corporations get it: I’ve had conversations with CEOs of firms as diverse as Pepsico, Whole Foods, and Cargill that persuaded me they are keenly concerned with nutrition and wellness for consumers. Jacques Diouf, Director-General of the UN’s Food and Agriculture Organization reports that global food production will have to double by 2050 in order to feed a growing population and that mass production methods at distant farms will be indispensable to feed everyone. Still, low cost and convenience make it too easy for us to eat badly. The primary problem is with the choices we make.

How We Eat

So much of the nutrition of professional people is outsourced to restaurants, corporate cafeterias, TV dinners, processed foods, vending machine snacks, etc. Given the extent of my travels, I eat a lot of that kind of food. Preparing your own feast on Thanksgiving (or any other day) reconnects you with the process of creating the food you eat.

On Thanksgiving Day I’m grateful for the experience of preparing a feast. I feel connected to the ingredients of the meal. The house is filled with tantalizing aromas. Generally, I’m more present with the aims and enjoyment of the day. Then, too, there is the fellowship involved in preparing the meal: at our house, a big feast is inevitably a team-based exercise, lubricated with age-appropriate beverages. You work up an appetite across the day that is successfully slaked when the feast is consumed. This is literal slow food: it takes all day to prepare and a few hours to consume (with a walk outdoors to punctuate the meal.) In all, it is a great day.

This brings to mind the movie, Mostly Martha, about a compulsive and rigid chef at an expensive restaurant—for her, eating is all about “what.” She gets rave reviews about the dishes she prepares, but at a high cost of ruining personal relationships. Then she assumes responsibility for an eight-year old girl and hires an Italian sous-chef, both of whom teach her to lighten up and focus on the “how” of food preparation and eating. You are not simply what you eat; you are how you prepare and consume your food.

In Gratitude

Nothing beats home cooking. I’m grateful that Thanksgiving gets me back to the good stuff. The folksinger, David Holt, says it best in his song, “Slowfood”:

Everybody’s busy, runnin’ like crazy

Workin’ two jobs, on the go.

Eatin’ fast food from little foam containers,

I need a big bowl of somethin’ cooked slow.

Spend my life out on the highway

Eatin’airport and hotel food.

Always lookin’ for some good home cookin’

Just make me something that tastes like it should.

Slow food, come and get it

Slow food, all you can hold

Slow food, feeds the body

I need slow food to feed my soul.

The Legacy of Steve Jobs

Published on November 21, 2011 in Uncategorized. 2 Comments

The death of Steve Jobs on October 5th proved to be of such moment that it eclipsed headlines about wars, politics, and economics. The outpouring of grief rivaled the passing of Princess Diana, the assassinations of world leaders, and the loss of Edison and Einstein. Emotions surged because Jobs was so closely identified with techno-cool, the marriage of design and engineering. But cool and technology have short half-lives. There is more to the memory of Steve Jobs, that he heralded a new mind-set, that he was a secular messenger of the New Millennium. To Google on the words, “Steve Jobs prophet” summons up close to three million citations.

Why does Steve Jobs warrant our exaltation? Those whom we exalt today become the templates for our children, who watch and listen for useful examples for their own lives. For those of us who lead and teach, it is important to be caught up in positive examples. Was Steve Jobs a prophet? Did Jobs leave a business legacy that is both durable and original?

Perhaps, though not in ways that the cultural adulation might warrant. He was a complex guy who grew up in a nontraditional path: an adopted child, a college drop-out, an experimenter with drugs and Buddhism—all of this was the fertile soil of a nonconformist. What makes a dramatic personal tale perhaps obscures some valuable lessons about strategy and leadership drawn from Jobs’s career.

Jobs focused relentlessly on the experience of the end-user of a product. He was not trained as an engineer but he became an effective advocate for the intuitive use of engineered products. The vaulting popularity of Apple’s products is testament to their ease of use, delight, and sense of discovery of ways in which technology can enrich one’s life. This focus on the customer’s experience is a leading attribute shared by a range of high-performing firms in the global economy. A Fellow at the Darden School, Jim Gilmore, and Joseph Pine discuss the huge significance of this focus in their book, The Experience Economy. Jobs was one of the premier practitioners of focus, not merely on the customer, but on the customer’s experience.

Jobs was a champion for design. In most manufacturing companies there is a relentless competition among proponents of low cost, high efficiency, and winsomeness of a product. Corporate infighting and bureaucracy often grind the artful product ideas down to utilitarian size, worthy of the old Soviet Union. But a new school of thought suggests that all really worthy innovations gain their start through processes of design thinking. These processes tackle difficult problems by combining empathy, creativity, and rationality. Rationality gets you low cost and high efficiency; empathy and creativity help to ensure the winsomeness of the product. Business Schools are now adapting their curricula to include instruction in design thinking. My colleague, Professor Jeanne Liedtka, and Tim Ogilvie, offer more discussion of design thinking in their new book, Designing for Growth.

Jobs was a pro-active leader of consumer sentiment. One hears a great deal about how companies must listen to the market and respond to consumer wants. This leads to a reactive stance on product design. Also, a classic riff on capitalism is that it depends on selling consumers goods that they don’t really need, such as static-free socks or cheese-flavored pet food. Steve Jobs took a different view. In a famous statement, he said, “people don’t know what they want until you show it to them.” Jobs spawned a range of new products to test and spark the interest of consumers. Some products failed (the Apple III, and the Lisa, for instance). Jobs was willing to take risks in order to educate the consumer and ultimately find out what the consumer wanted.

Another lesson regards the sense of mortality with which Jobs regarded his own life. In his famous graduation speech at Stanford University in 2005, he told the students to “remember that you are going to die” and therefore have nothing to lose. This liberating mortality encouraged the students to stay hungry, be foolish, take risks, and fail often. He claimed not to be motivated by the love of money—indeed, his salary from Apple was $1.00 per year (plus stock options)—and he said that he did not want to be the richest man in the cemetery. But what is unusual is that this same sense of mortality did not prompt him with a spirit of philanthropy that would create a legacy like Rhodes, Carnegie, Ford, Rockefeller, and others.

Perhaps the memory of Steve Jobs will give license to incivility in professional life. Every prominent person has detractors. Jobs has more than a few who described him as: “despotic jerk,” “imperious,” “strong-willed contrarian,” “arrogant,” “combustible genius,” “control freak,” “abrasive,” “unapologetic brutality,” “temperamental,” “mouthy,” “tyrannical,” and “a great man, not a nice man.” Does successful innovation demand business leaders who behave this way? Is this an icon our students and children should emulate? I think not.

Steve Jobs casted a very long shadow. He was not a prophet or messenger; he was a do-er, someone who implemented his own visions. He was a heroic figure, like a character out of an Ayn Rand novel. A tough guy who bent technology to human uses, not vice versa. In him, some fault lines ran deep. We should remember him for his virtues and adopt styles of leadership that avoid his flaws.

Reading to be a Full Person

Published on November 18, 2011 in Uncategorized. 12 Comments

“Reading maketh a full man, conference a ready man, and writing an exact man.” –Francis Bacon

A great university experience is all about becoming a “full person.” The American holiday season is approaching, and is a time for reflection, learning, and giving gifts. Reading is at the nexus of all of these good activities. By “reading,” I mean an effort more substantial than taking a glance at tweets, email, or Facebook pages. Good reading engages an argument of some kind, an argument that takes a while to unfold. Such reading deepens or challenges one’s point of view and often entails a surprise. The problem is that we don’t do enough serious reading. We’re awash in snippets of arguments, word-bites, and opinions that have no grounding in the facts.

How do you get the real gain out of reading?

1. Find a quiet time a place to read each day. Give a gift to yourself; even 20 minutes will do.

2. Watch your diet. A lot of junk reading will dull your mind. Read the healthy stuff.

3. Stay current. Read at least one daily newspaper a day—online or in print. You should learn to read a newspaper in 10 minutes, if pressed for time. If you’ve got more time, read the paper more thoroughly as a way to deepen your social awareness. In his forthcoming book, Coming Apart, Charles Murray argues that strata of American society are losing touch with each other. Do your part to stay in touch with how others live.

4. Start by following your interests and then branch out. Suppose you like finance: branch into psychology and risky behavior. Suppose you’re a partner in a big firm with lots of politics: read Machiavelli and the history of Renaissance Italy. Suppose you’re a public servant concerned with balancing the budget: read about the fall of Rome.

5. Read for depth and breadth. Set a goal for yourself to drill into a topic or set of ideas. Build a list of the best books in that area and work through them. But give yourself a breather regularly by leaping into some unrelated field.

6. Read a lot.

I read for 20-60 minutes a day, usually drawn from time at the start and end of the day. And I carry a book and periodicals in my briefcase all the time—the inevitable waiting moments while traveling become time for me to read. A lifetime project of mine is to read the best biographies of all the US Presidents, in chronological order. I’m up to Abraham Lincoln, who may be the President about whom the most books have been written—I’ve been branching out into a range of related studies about Lincoln and his time. Each day I read (or at least scan) four newspapers: New York Times, Wall Street Journal, Financial Times, and Charlottesville Daily Progress. As you can imagine, there is quite an overlap in the news content among these papers; but I value seeing how the editors treat the news and how the editorials and op-eds vary. I follow about a dozen blogs focused on investing, economics, and public policy. And I read the Economist, New Yorker, and Foreign Affairs as they arrive. My diet of serious reading is leavened with novels by Sara Paretsky, David Baldacci, Patricia Cornwell, and Charlottesville’s own John Grisham. In all, I’ve read 42 books in the past 12 months.

One of the regular questions I get is “what are you reading?” Last year, I began to spell out my top recommendations (see here). Continuing my annual recap, what follows are my “best bet” recommendations from the books I read over the past year:

1. Joshua Wolf Shenk, Lincoln’s Melancholy: How Depression Challenged a President and Fueled his Greatness. If you think mental illness is only for followers, think again. This is an excellent discussion of depression at the top and how it contributes to a style of leadership.

2. Howe and Strauss, The Fourth Turning. An exhausting presentation of a theory that America is entering a period of decline and extreme turbulence owing to a historical cycle of change. I seriously doubt the conclusions the authors reach, owing to their selective use of facts and historical analogies. Yet I recommend it as a stimulating representative of “declinist” writings. Sure to challenge your comfortable optimism.

3. Manfred Kets de Vries, Happiness Factor. I had the pleasure of teaching this book in a small seminar last winter. It is a succinct summary of research and writings on human happiness. Are you happy? Maybe the pursuit of happiness is not the best pursuit in life. Read this, and think further.

4. Matt Ridley, The Rational Optimist. A good pairing with #2. I mentioned this book last year as an item I was reading. Well I finished it and am glad to have done so. Well-written and buoyantly optimistic about the future. In the middle of all the other stuff we’ve endured this year, a book like this is a useful companion.

5. Sloan Wilson, The Man in the Gray Flannel Suit. A classic novel that every business student (and alum) should read. Conveys the story of a business executive who decides to chart a different course in the face of a strongly conformist corporate culture.

6. James M. McPherson, Tried by War. A book about Lincoln’s leadership of the Federal side of the Civil War. He matured into a genuine general manager. Simply excellent. A must-read.

7. Kim MacQuarrie, Last Days of the Incas. I read this while hiking in the Peruvian Andes. A very well written history of the Spanish conquest of the Incan Empire.  A bloodthirsty story; highly improbable that anyone would have survived.  In the wake of the conquest, the Inca civilization simply vanished, a startling outcome.

8. Laura Hillenbrand, Unbroken: A World War II Story of Survival, Resilience, and Redemption. A heroic story of leadership and the will to live in the face of extreme hardship.

9. Daniel Howe, What Hath God Wrought. A history of the United States from 1815 to 1848. If you think US politics are difficult today, look at what happened then.

10. Peter Sims, Little Bets: How Breakthrough Ideas Emerge From Small Discoveries. A delightful and provocative reading about the origin of innovation. It features the research of Darden colleague Saras Sarasvathy. Highly recommended.

11. Patrick Howie, The Evolution of Revolutions: How we Create, Shape, and React to Change. A good complement to item #10; a macro view of change and waves of innovation.

12. Jon Krakauer, Into the Wild. A gripping story of a college graduate who progressively stepped out of society—and died from naiveté and romanticism. I read this while hiking in Alaska. Big message: don’t assume that nature is forgiving.

13. T. Harry Williams, Lincoln and His Generals. A classic in the field and an excellent complement to #6. This is a carefully-researched illustration of the challenges a senior leader faces in managing a group of talented direct reports.

14. Edward Hess and Kim S. Cameron, Leading with Values: Positivity, Virtue, and High Performance. A book of readings co-edited by Darden colleague Ed Hess that helps to link corporate high performance to a positive and virtuous leadership style. In the age of the “toxic boss,” this book is a welcome antidote.

15. George Tenet, At the Center of the Storm. Tenet served as Director of the US Central Intelligence Agency up to and during 9/11, the invasion of Iraq, and search for weapons of mass destruction. The book is a memoir of his tenure at the CIA and the origins of the WMD debacle. A very well-written perspective on the response of government leaders to the rise of global terrorist activity.  I interviewed Tenet on stage at Darden’s recent University of Virginia Investing Conference.  He impressed everyone as a forthright and compelling judge of international trends and threats.

But Steve Jobs Didn’t Go to B-School…

Published on September 21, 2011 in Uncategorized. 14 Comments

 

In the past few weeks, I’ve had several conversations in which a prospective applicant said something like this:

“Are business schools really worth it? Mark Zuckerberg (Facebook), Steve Jobs (Apple), Bill Gates (Microsoft), Sergey Brin/Larry Page (Google) didn’t go to business school. If you want to start a company just do it! B-school turns you into a big corporate type and deadens the entrepreneurial spirit. Just hang out in Silicon Valley or one of the other rich entrepreneurial ecosystems and learn how to start companies there. Who ever heard of a company being started in B-school?”

And so on. Perhaps you’ve said or heard some of the same things—often at a lunch table or beer bash, loudly enough to gather a number of listeners. The combination of selective facts and romantic brio seem to make this an irresistible argument. But what is not acknowledged offers a compelling argument to go to business school if you want to start and grow a company.

The applicant’s first error is to lump all b-schools together. A task force that I recently chaired reported that some 12,600 institutions in the world award degrees in business. Ninety percent of these are unaccredited and largely unknown. Of the ten percent, a subset is selective, meaning that they admit less than half of the applicants. The accredited and selective schools tend to be better endowed, to have stronger alumni networks, more prominent faculty, and attract stronger students. And then within this subset are schools that have strong resources for entrepreneurs. For instance, Darden has one of the strongest centers for entrepreneurship and innovation—the Batten Institute—which operates a small business incubator, arranges venture internships, supports a range of courses, hosts conferences and competitions, and is the nexus of a network of entrepreneurs and venture investors. Our incubator has started some 60 companies and counting. Just this week, Princeton Review and Entrepreneurship Magazine ranked Darden #3 among the top 50 graduate entrepreneurship programs in the U.S. Schools like ours serve entrepreneurs very well. To paint all b-schools with the same brush is to deal in stereotypes. Don’t make that mistake.

The applicant’s second error is to generalize from a small sample of special cases. It is fun to summon up the names of a few famous and successful entrepreneurs, but are these representative of the whole population? For each case, it is possible to offer a counterexample of entrepreneurs with MBA degrees. Frank Batten founded the Weather Channel; Phil Knight co-founded Nike; Scott McNealy co-founded Sun Microsystems; Henri Termeer grew Genzyme from fledgling to major biotech firm; Meg Whitman grew eBay from a tiny startup to an online behemoth; Warren Buffett grew Berkshire Hathaway from a small failed textile manufacturer into a major conglomerate.

Plainly, one should not assume that entrepreneurship is only associated with founding a company. We know that many of the same qualities are associated with growing a company. Why should we expect entrepreneurs to toil only in fledging startups? Large companies, seeking to rejuvenate their cultures, want to hire people with entrepreneurial spirit. At Darden and its peers, most MBA graduates are hired by mature firms, but this does not mean that they are not entrepreneurs in fact or spirit.

Yet another error is to imply that once you work for a big company, you’ll always do so. In my MBA graduating class, about 95% of the students went to work for the S&P500 firms or equivalent upon graduation; by our 20th reunion, only a small fraction remained there. Among Darden alumni, I observe that by the 10th or 15th year after graduating, many alums will have made the leap to a small startup, a family-held firm, a firm they have bought, or a small professional services firm—these alums usually wind up in senior leadership positions, which affirms Darden’s strength in producing general managers. And they are also entrepreneurs.

Most of all, I challenge the applicant’s suggestion that “hanging out” or “just doing it” are always and everywhere more developing than a business education. Such arguments are variations on the virtues of the “school of hard knocks.” Mind you, I have enormous respect for experience as a teacher. But the school of hard knocks is loaded with, well, really hard knocks. The failure rate of small business startups is quite high. Census data suggest that about half of all startups are still alive after three years, and only 29% after 10 years. In that time, you can burn through a great deal of effort, relationships, and money (usually gained from family and friends). For every knockout success like Steve Jobs, there are hundreds of thousands of small business failures each year.

A great B-school education won’t guarantee success, but should improve the odds. It will accelerate your growth, compressing years of hard knocks insights into a short time. It will build your business acumen and help you understand the pitfalls and risks on which other businesses have foundered. It will leaven your romanticism about entrepreneurship with a very practical grasp of what it takes to succeed in business. Perhaps most importantly, a business education will disabuse you of the notion that entrepreneurial success is a matter of the great lone individual, the genius, the maverick like Jobs/Gates/Brin or whoever else you idolize. Instead, b-school will teach you that entrepreneurial success is substantially about teamwork, networks, and business relationships; success is not about opportunism but about living into a purpose for your life with intentionality and integrity.

Philippe Sommer, Darden’s Director of Entrepreneurship Programs says,

“If you know you want to be an entrepreneur you are already in a different place than many who come to business school. Entrepreneurs come from families that are entrepreneurial! Is it in the genes? No, it is the observation of the experience. These folks have seen the pros and cons of being an entrepreneur and understand that the failure of the venture is not the failure of the entrepreneur. If this is not your background, then it is incredibly scary to think about being an entrepreneur. Many of the students in our MBA program did not understand what are the real benefits and risks of being entrepreneurial. That is one of the things an entrepreneurship program like ours will teach you. You may find you love being entrepreneurial and now have an option in life you might not otherwise have had. I often say I don’t teach “entrepreneurship,” I teach “self knowledge.” We have many students who come to our program having started a business and sometime succeeded quite well and other times failed. What they all realize is if they had known more about how to run a business they would have avoided many of the mistakes they made. That’s a pretty good reason to get an MBA. After all if Mark Zuckerberg had started his business in business school he might have avoided the stupid things he did to his partners and not spent the rest of his career litigating with them and in the end paying them to correct his mistakes.”

Should you go to b-school or head off into the entrepreneurial ecosystem? I’ll let you decide, but you should consider some questions first. Do you have a clear business idea, including clarity about the product/service, the customer, the suppliers, and the investors? Do you have the grubstake of cash to sustain you through a long spell? Are you so impatient to get going that you can’t bear the thought of organized learning? If the answers to these questions are “yes,” then get going and good luck. But for most twenty-somethings I encounter, the answers are pretty hedged. They are eager to learn and glad to have the help of teachers and mentors. They hanker for more than they’ve been doing and want to have an impact with their lives. But they are still searching for the spark, the big idea, the project into which they can channel their energies. For them, B-school makes good sense. You decide.