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Monday, May 11, 2009

My Proposed Reality TV Show

A Harvard blog post has been circulating the web for about a week called MBAs vs. Entrepreneurs: Who Has the Right Stuff for Tough Times? To summarize, it questions the new source of future business talent now that MBA-led Wall Street has been getting stoned for months (meaning people want to throw stones at them, medieval style, not getting stoned 60's style). That source is identified as entrepreneurs who, according to a Darden professor have an "effectual" thinking style that: "begins with a given set of means and allows goals to emerge contingently over time from the varied imagination and diverse aspirations of the founders and the people they interact with." This is the world of bootstrapping, rapid prototyping, and guerilla marketing."

The MBA training is causal reasoning which "begins with a pre-determined goal and a given set of means, and seeks to identify the optimal — fastest, cheapest, most efficient, etc. — alternative to achieve that goal." This is the world of exhaustive business plans, microscopic ROI calculations, and portfolio diversification."

As you can guess by the title of the blog post, the conclusion is that the effectual thinking of the entrepreneur is better for these recessionary times. The conclusion of the article is a disappointing since 1) there is a much more interesting conclusion that can be drawn 2) that is the same sort of chase the trend thinking that can plague the MBA world and 3) I have a better idea for truly determining whether the entrepreneurial or MBA approach is best.

The really interesting conclusion for me is that this helps answer the question of whether an entrepreneur should get an MBA. Since an MBA teaches a whole different way of thinking to an entrepreneur, I believe that demonstrates the value of an MBA. The effectual thinking helps with the start-up while the causal thinking helps when the start-up becomes a more established company. It shows that an entrepreneur can complement themselves very nicely with an MBA. I view this in some ways as how my social work background supplements my MBA work rather than contradicts it.

Now if the MBA comes at a cost of investing in the business, that's a personal issue decided by everyone. This conclusion leads me to my next question of whether entrepreneurship can be taught at an MBA program? Given the current orientation of MBA classes with providing case studies to build very causal frameworks, it's not likely. But there is a great opportunity that an entrepreneurial MBA professor could address.

The disappointing part of the article is that it chases the current trend of corporate America is a disappointment that is going the way of the Dodo bird. To use the conclusion that entrepreneurial thinking is better than MBA thinking in a recession looks at only about 2 months of history. Not all corporations will vaporize like Bear Stern and Lehman and they need a lot of people to run them and obviously, not run them into the ground by making risky decisions. An MBA is good training for working in a corporation even though both are dirty words right now. The article mentions that the effectual thinking is comfortable with risk and taking big bets while the causal side seeks to mitigate risk. An entrepreneur betting $50,000 of their own money is a very different situation than a corporation betting millions of shareholder dollars. With bets of that size, you want that predictive modeling, ROI calculation, and scenario planning that an MBA teaches.

It's really easy to paint Wall Street as a Kirstie Alley who ate themselves into oblivion and will likely succumb to an obesity-driven chronic disease before acting again. However, Wall Street is cyclical by nature. Popularity dropped during the dot.com period of the late 90's before rising again. Wall Street will figure out what level of bonus it needs to pay for the hours demanded. There will always be a need for financial service and the jobs have always ultimately been about the financial opportunity.

How do we determine which type of thinking is the best? The obvious conclusion is that it's best to be able to use both and I didn't see any research that indicates someone cannot learn both effectual and causal learning. Both are needed and the corporate toiler who can identify an entrepreneurial opportunity and than put together a business plan to sell it internally is in a better position than someone who can only think one way. However, in business, there has to be a #1! Ribbons for everyone is for social work! The best way that I have seen to handle any pseudo-competition is, of course, with a reality TV show.

Now this was already done in some form with The Apprentice Season 3. Donald Trump's reality show incarnation featured Street Smart (entrepreneurs) vs Book Smart (graduate degrees, corporate jobs) to see which approach was the best. The concept fell short since the Street Smart Contestants (half were in real estate) had the bladder control of a 4 year old let alone the attention span. They couldn't discuss a topic for more than 5 minutes without having to trash talk their teammates to the camera. The Book Smart contestants were not that representative either as none of them attended any schools that were ranked in the Top 20 in their fields. While I am using school rankings as a proxy, someone who is on the Book Smart team should be really book smart, right? The Book Smart team's main strength were that the could actually work together as team and listened to customers while Street Smart free lanced and fought with each other.

Ultimately, someone from the Book Smart team won, in this flawed casting. There is plenty of opportunity to do this reality TV concept better. Given no shortage of talented entrepreneurs and MBA's looking for opportunities, let's do the truly American thing and settle this debate with a reality TV show.

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