MBA in a Box: Practical Ideas from the Best Brains in Business - Hardcover

JOEL KURTZMAN is global lead partner for thought leadership and innovation at PricewaterhouseCoopers. Mr. Kurtzman has been an editor and columnist for the New York Times, the editor of Harvard Business Review, and is the founding editor of Strategy + Business magazine.

INTRODUCTION

When I was the editor of the Harvard Business Review, I had a recurring fantasy (no, not that kind of fantasy). In my fantasy the dean of the Harvard Business School–my boss–would call me into his dimly lit, book-lined, wood-paneled office. He would sit me down, draw the shades, and lock the door. He would pace. In some version of the fantasy he would wring his hands, shrug, hem and haw. In others he would offer me a glass of port and a fine cigar. (I liked the second version better.)

In that fantasy, the dean–an enormous man with a raspy, conspirator’s voice–would say to me that my job at the Harvard Business Review was to make business appear difficult to the readers. “Don’t publish any smart-aleck articles about how Andrew Carnegie or Henry Ford never finished grammar school or how Bill Gates dropped out of college. Publish articles that talk about how difficult business is, how complicated it is to read a balance sheet, how many times you have to run a regression analysis to really understand your market, how the problems of strategy are intractable. Make it all seem hard,” he would tell me with a scowl.

“Hard? Why?” I would ask rather meekly.

“Why? Why?” he would repeat, eyes narrowed into tiny slits. “Did you really ask me why, you nincompoop?”

“Yes,” I would say, clearing my throat. “I did.”

“Because it is. And besides, what would happen to our business if your readers thought business wasn’t all that difficult? That any imbecile could do it? What do we do then?” the dean would bellow. “We sell business education, business books, business magazines, online business content, business videos, business case studies, lectures, degrees, research, class notes. The whole shebang. If people thought business was easy, we’d be wiped out. Finito. End of story.”

My fantasy did not go on much after that. And in truth, I have great admiration for the dean, the school, the students, and the faculty. The Harvard Business School is a tremendous institution, and it has done an enormous amount of good for thousands of people and institutions on many, many levels. Even so, as I think about business, I have come to understand that my fantasy was in some ways right as well as wrong.

It was wrong because business isn’t easy. At least it isn’t at the moment. The forces governing competition today are very difficult to navigate. They are global, technological, financial, and human. The cycles of growth and decline–which many pundits in the 1990s said were no longer applicable–are back in full force. In fact, the same items–globalization and technology–that people said had ended the business cycle are now being viewed as making it worse. Globalization and technology, it is now said, have destroyed the ability of many companies to price their goods and services at a premium, which is hurting profits globally. (In the ’90s, the same phenomenon was viewed the other way around. Globalization and technology would check inflation and keep prices low so that cost-conscious consumers would continue buying, fueling what some people at the time called the “long boom.”)

But that’s not all.

The forces governing business are large–very large. They range from sudden, short-term shifts in consumer buying habits–a two-season-long denim craze, a two-year Hula Hoop frenzy, a four-year-long cigar fad, for example–to slower, medium-term changes, such as the decade-long shift from conservative business attire to clothes for casual Fridays and then to clothes for (as my children might say) whatever.

And then there are the longer-term changes on top of these shorter-term shifts. In many countries since the 1960s there has been a slow growth of citizen movements (nongovernmental organizations, protest and pressure groups, business-oriented religious groups, human rights groups, antiglobalization groups, animal rights groups, and so on). Over the last three or four decades, these groups have become very sophisticated, professional, and well organized. Many are well funded and highly strategic in their approach. Many of their leaders have degrees from elite business and professional schools. These groups employ carefully thought-out strategies to achieve their overall goals. They ally themselves with political parties and labor groups.

I have had direct experience with several of these groups in the United States and in Europe. The leader of a French antiglobalization group told me that his organization would never compromise with business on their aims because they have a greater political agenda. The group–whose leaders include some well-respected French journalists and university professors–told me they will not negotiate. Their aim was to restrict outbound French investment (keep French jobs in France), create tougher environmental restrictions, and limit non-French cultural imports (movies, music, and books), among other things. The leader of the group said he was against markets and against American-style capitalism. When this group plans a demonstration, tens of thousands of people show up. As a result, the politicians listen and companies must cope.

Another group, an American environmental organization, explained to me why it had mounted a boycott against a certain Japanese automaker. The carmaker, the group’s leader explained, was actually innocent when it came to the environmental offense in question. It did, however, have significant investment from, and shared directorships with, another Japanese company that was clear-cutting hardwood forests in Indonesia. By putting pressure on one company it could exert influence over the other due to their shared governance structure, the environmental leader explained. Over the last twenty-five years this organization has come to know as much about business as the best stock market analysts and investment bankers do.

There are other large, long-term changes as well–new technologies (broadband, for example) where the business case has been obvious for decades but the correct business model has yet to materialize.

In this category, difficult, long-term problems increased competition from nontraditional corporate and/or global rivals–the three-decade-long rise of China from economic backwater to high-tech manufacturing giant, the nearly three-decade move by several European governments to develop Airbus Industries into a powerful rival to Boeing for passenger jets, the growing threat to Microsoft from the so-called free (you still have to pay experts to install it and customize it) Linux operating system.

Competition from the margins moves to center stage in a familiar pattern written about by Harvard’s Clayton Christensen, author of The Innovator’s Dilemma. In this work Christensen recounts the story of Digital Equipment Company (DEC), which, until the late ’80s, produced a market-leading minicomputer–the VAX–whose dominance was overturned by the PC, which began as an inferior product that wasn’t even on DEC’s competitive radar scope. He also recounts the story of how Big Steel suddenly found itself supplanted by the rise of mini-mills that produced far cheaper steel from scrap, while the big players were forced to smelt ore using higher-priced technologies and processes.

There is no question that business is complex. On that point, I have to hand it to the dean. But difficult does not mean hard, which I take to mean something akin to joyless toil. From my point of view, doing business is not the emotional equivalent of a sentence to San Quentin or Rikers Island. Nor is it drudgery. Business is one of life’s great games, and it is exhilarating. In fact, calling business business is demeaning. I much prefer the words the French use for business, les affaires, which imply (at least to me) that the subject, in one way or another, applies to nearly everything; that it is encompassing, vast, integral to what we are and even who we are. Business is not just a job. It is so much more–goods and services, folly and delight, wealth and power, value and loss, money, dazzle, hype, dread, and exuberance, and of course exchange.

In the end–or rather the beginning–business is about exchange, which means that it is a game that cannot be played alone. A farmer can grow food enough for himself and his family, but it is not business until someone takes that food to market to trade it for something else. Business is a networking event. Business has no equivalent of a baseball pitching machine. It is not bowling alone, nor is it hitting a tennis ball against the garage door. Business is played with others and without a helmet.

The beauty and enticement of business is not just that it is so broad. People make a living from overseeing pharmaceutical research that takes decades and will save lives, just as they do from printing custom T-shirts with pictures of your dog. The beauty of business is that no part of it–from the gigantic pharmaceutical company to the little T-shirt entrepreneur–is ever risk-free. Big companies fail just like the little ones.

It is not exactly fair to say that people find business exciting for the same reasons that deep-sea divers or aerialists like their areas of endeavor. Yet the potential for a business washout does focus the mind. And if business is a game–as I believe it is–it is all the more exciting because the stakes are so high.

I don’t mean to sound flip or inhumane in this short introduction to this big book. People losing their jobs, their savings, and their retirement accounts are not subjects to laugh about. When Enron, WorldCom, or Barings Bank failed, thousands of people’s lives were devastated. Not only were their bank accounts lightened, their dreams were dashed, and worse.

...