MBAs running companies
A few years back, a friend used to tell me that he would start his own company one day. However, his idea was to learn how companies work by doing an MBA, work for a while and then start. He did his MBA, found a well paying job and apparently is as clueless as back then. There are some things which cannot be learnt without actually doing it. Of course, you may say that business schools can teach you how to start a company. But my understanding is that business schools only put you in the right path and they can never teach you how to do it for real. Starting a company can only be learnt via experience and requires hard work. You can’t have a high salary job and simultaneously learn how to start a company.
Stay hungry stay foolish, written by Rashmi Bansal had documented 25 MBA graduates from IIMA who had started their own company. Almost each of them had struggled to build their company and many of them didn’t get it right the first time. The MBA itself was not enough for them to start a company. It gave them a lot of confidence though. The reason I am talking so much about this point, whether you can learn from books how to run a company right is because of the fact that so many companies are failing during this recession. So many big company CEOs such as Rick Wagoner of General Motors, Stanley O’Neal and John Thain of Merill Lynch were held responsible for the doom of their respective companies. The interesting fact about these people is that they reached the top of the corporate ladder with one single instrument, a degree from Harvard!! Something which is above all common-sense but is the truth. One of these people even went to the extent of furnishing his office with expensive carpets and antiques while his company was on the verge of bankruptcy. If these people had built those companies themselves, would they have led their companies into the state they are in now? Seen Warren Buffet’s company website: http://www.berkshirehathaway.com/? Even the website isn’t furnished. As long as it serves the purpose, it is OK. Resources need not be wasted on unnecessary things. That is how a company can survive bad times. People who know how to run a tight operation and who know the real meaning of money.
Bloomberg columnist Kevin Hassett’s article about Whether Harvard killed Wallstreet has some more things to say. He says that learning business from schools helps those students acquire an enormous amount of self-confidence. So much so that they think that they are the best and are immune to making wrong decisions. Such narcissistic leaders tend to have volatile and risky decision-making performance and can be ineffective and potentially destructive leaders. Even entrepreneurs have this risky decision-making behaviour. However, an entrepreneur learns his mistakes even before his company is large enough that risky decisions do not cause much harm. On the other hand, the Harvard MBAs know they can’t be wrong and hence won’t correct themselves. When you start and run a company without learning it in a book, you know that you can be wrong about everything and hence are modest enough to change. You learn that there is a chance for everything to be wrong, including you. That is the kind of proper skepticism required to run a large company.
Recessions are good. At least, some things get corrected. The best part is that it may require thousands of MBAs itself to correct this situation. Thousands of good MBAs. MBAs ready to learn things by experience and not just from books. MBAs who understand that even they can be wrong sometimes.