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May 2, 2005

The Three-Minute-Seventeen-Second MBA

In which I reveal all the big secrets about what one learns in business school (sort of)

I just finished business school.

(Huzzah!)

At some point in the not-so-distant future, I imagine that there will be time for me to reflect on the things I've learned, the people I've met, and the time/ money I've spent. I'm talking serious, sober reflection -- really deep shit. Meditation, in a trance, a me-and-my-journal-on-a-mountaintop sort of thing.

That time is not now.

Now I'm just happy to be done. And in the absence of deeper meditations on the subject, I'm at least going to ask myself if the time and money I spent were more worthwhile than just buying one of those "Twenty-Minute MBA" sorts of books (they were). Still, if I was putting together one of said publications, what would I include? Thus, in the absence of any Big Thoughts on B-School, I give you the Seven Big Classroom Cliches from my two years -- the people/ topics/ ideas that they just can't get enough of in the MBA curriculum. Here we go:

(1) Sky versus BSB: we spent at least three separate class periods hashing through the details of Rupert Murdoch's aggressive entry into the satellite TV market in the UK in the late 80s. They love this story because it's a nifty illustration of game theory writ large (that is, involving billions of dollars changing hands). So they get to draw little two-by-two matrices and talk about strategic entry deterrence and Nash equilibria and how the two parties engaged in an expensive war of attrition until they gave up and merged into what is now known as BSkyB. It's a cool story, no doubt, but I feel like another possible "answer" to this whole thing is "Rupert Murdoch just might be a stubborn greedy bastard." (Said answer was not discussed in class.)

(2) Jack Welch Can Control The Tides And Poop Ice Cream: as you might expect, the cult of CEO personalities is pretty strong at B-School. Everyone wants to be one of these mononym corporate titans: Rupert, Sumner, Gates, Jobs, etc. But no corporate titan looms larger than Jack Welch. What a leader! Look at how he motivates people! Marvel at his attention to detail! His skill in identifying and nurturing talent! Ugh. Enough. Yes, he was very clever, and he seems to charm the pants off interviewers, but the genius labels are a bit much. Or, at least, they get boring. If we wanted fawning profiles of CEOs, we could have just gotten a subscription to Fortune; or just bought one of said dudes' stupid management books.

(3) The iPod Is The Most Genius Invention Of All Time: it isn't enough that every student has an iPod, that they talk about their iPods and compare decorative carrying accessories. No. We also have to hear about how brilliant a product it is from professor after professor after professor. Steve Jobs is a genius! He's a genius! There isn't a small amount of "professors trying to get down with the young people" inherent in the praise; they think they're being "cool" and "with it" by complimenting a popular product. iPod is a beautifully designed and marketed product. It's best in class. And guess what -- it's storage. Storage is cheap and commoditized (and getting cheaper and more commoditized every day). Unless the iPod learns how to check my e-mail (Treo) and play video games (PSP), we're all going to forget about our iPods REAL soon.

(4) Satellite Radio Is The Next/ New/ Big Thing: this is something of a dark-horse entry, but the fact that it was the final exam case for one of my classes and that the CEO from XM came to visit vindicates its place on the list. And you can see why the b-school academics dig on it so much: new technology platform, tricky consumer proposition, gigantic capital investments, huge, well-funded backers, exciting strategic partnerships, market duopoly (which is just fantastic for drawing little supply-and-demand graphs) and charismatic CEOs. They love this stuff. Of course, none of it makes any sense to us at all because we all live in New York and don't have cars. But all that freakin money must mean they're doing something right -- b-schoolers of the future, enjoy the next ten years of the XM-versus-Sirius case!

(5) These Things Go Down! These Things Go Down! It's Too Big!: lots of cases on the airline industry, and lots of juicy topics to cover. You get to talk about pricing, capacity utilization, how they plan the routes, and the impact of deregulation. Pretty rich stuff. They also like to talk about how awesome Southwest is and how they're able to make their airline run so much better than all the others. I wish there was a more clever answer to that question, but there really isn't; the big "trick" in running a successful airline seems to be, AHEM, avoiding unions at all costs. That is, if you can screw over labor, you'll do just fine. (And it only took two years of expensive graduate school for me to figure that out!)

(6) Internet? Is That Thing Still Around?: repeat after me (your smuggest and/ or smarmiest tone is not essential but is encouraged): everything that happened in the late 1990s related to the growth of the Internet was a complete sham and smart people like business school professors (and people who worked at gigantic boring companies or in finance) knew that it was all bogus and that those smarty-pants dotcom people would get their comeuppance, which is exactly what happened when NASDAQ crashed so maybe you all should have listened to us in the first place. Never mind the businesses that did survive (and are now thriving) and the part where the Internet has transformed the way the world does business and consumes media -- anyone who's interested in learning about those companies (much less working for one of them) obviously wasn't listening when we told them that we told them so. NOTE: I want to return to campus and give a guest lecture about the nature of comeuppance and "telling people so" when the hedge fund and real estate markets implode. I don't think that's asking too much.

And of course, the granddaddy of them all...

(7) L-T-C-M: right, so we only went over this one in, oh, five different class modules. LTCM = Long Term Capital Management, this hedge fund that spectacularly exploded in the late 1990s despite having all sorts of rocket-scientist/ Nobel-prize-winning types involved (this is why the book about LTCM is called When Genius Failed). As bored as I was by the fifth class discussion of LTCM, I can't blame the professors for using this story: tons of the students go into finance, most would love to have their own hedge fund, and they all think that they're geniuses who are going to make gazillions of dollars by being smarter than everyone else (Look at me! I went to business school! I shall own luxury automobiles and have sex with high-end prostitutes!). The LTCM story is also very sobering for the finance professors, because it demonstrates that even the heavy hitters with complicated computer models and PhDs can screw up -- big time (and all finance professors secretly want to invent a computer model that corners the market). So, in general, it's a pretty good story, and one that's certainly valuable to this audience. I just didn't need to hear it so many times.

And Then The Things They Don't Really Talk About: remarkably little discussion of Wal*Mart, which would ostensibly be a great b-school sort of topic (cool supply chain, clever expansion, success in an industry where margins are slim). I think it's big-city/ blue-state/ liberal media bias. Also, no one really talks about the video-game biz, which you think would be pretty rich as a topic (competing standards, network effects, huge growth, etc etc); I would guess not many professors are gamers. And, honestly, I actually could have used more data about the QSR (quick-service restaurant) industry; perhaps that's a bit passe at this point? Essentially, I wanted to know more about why Taco Bell does so well.

Oh, and, right, just like at business school, I almost forgot the most important (wink, wink, nudge, nudge) part of the curriculum:

The Commitment to Values and Ethics: Enron was bad. Very bad. Don't go and do that or you might get in a lot of trouble, heaping shame and scorn on your family and graduate school. If it can at all be avoided, try to not steal from millions of innocent people. P.S.: only losers get caught.

Posted by thatkid at May 2, 2005 3:55 PM under MBAwesome!

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