Read an Excerpt
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 The cycles of growth and decline–which many pundits in the 1990s said were no longer applicable–are back in full force.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.
Still, because business is played with only the barest of safety nets–at least in the United States–successes, when they occur, are that much sweeter.
Every business is built on Big Ideas. What do I mean by Big Ideas? I am not necessarily talking about complex ideas, flashy ideas, complicated ideas, or mathematical ideas, although they certainly have their place.
What I mean by Big Ideas are concepts that are practical, down-to-earth, and appropriate, and which in the end reduce the fog of complexity into something simple, solid, tangible, and most of all workable. Big Ideas are practical ideas. They are ideas that help people achieve their dreams, that serve as the pathways from one success to another. They help one group fulfill another group’s needs.
You do not have to be the proverbial rocket scientist to be successful, unless your business is building rockets. A century and a half ago Levi Strauss founded the clothing company that continues to bear his name when he realized that miners in the California gold rush needed trousers far more rugged than anything they could buy at the time. True, it wasn’t exactly the theory of relativity, and denim pants don’t exactly cure cancer. But Levi Strauss’ idea was imbued with great utility and–as we know–longevity. His idea was sufficient to support the development of a company that over time provided the livelihood of tens of thousands of workers in factories and in stores, all the while covering, protecting, and in some cases enhancing the bottoms of millions of customers. To put it in the vernacular, it was an idea with legs.
But that’s not the end of the story, as we know. The wonderful and simple idea that begat the world’s first blue-jeans maker, Levi Strauss, also begat a host of rivals worldwide. Many of those rivals had very short lives. But many found their own niches, taking away market share from the once-dominant player. What is the point of this story? Simply that the game of business is not just played on the offense. There is a defensive game as well. Great companies–and great business leaders–play both games equally well.
In this book I have asked some of the best minds in business to put down some of their best thoughts. I have asked them to be candid, open, and opinionated. I have asked them to tackle the subjects they love from perspectives that they know work. I have asked them to give readers a glimpse of how they think about what they do.
There are a number of different types of contributors to this book.
First, there are people we used to call “business practitioners” when I worked at the Harvard Business Review. This group includes people such as Dean Kamen, the inventor of dozens of high-tech medical devices, the developer of the Segway human transportation device, and the founder of many successful companies; Michael Milken, one of the world’s most important, brilliant, and controversial financial minds, who raised hundreds of billions of dollars through the high-yield bond market to fund new and emerging companies worldwide; and James Champy, inventor of the term reengineering and author of the first book on the subject.
In addition, a number of journalists have contributed to this volume–people such as Glenn Rifkin, a frequent writer for the New York Times, and Victoria Griffith, a reporter for Europe’s Financial Times.
And there are academics. Among this group are Harvard’s Michael Porter and Benjamin Shapiro, both leaders in their respective disciplines of strategy and marketing, and Yale’s Jeffrey Sonnenfeld.
And finally, there are the brilliant thinkers who defy categorization because they do so many different things. These include Sam Hill, whose understanding of “branding” is without equal; Adrian Slywotzky, who has developed new theories about profits and how to get your fair share; and Robert Eccles, one of the world’s most profound thinkers on financial reporting and measurement. There are dozens more.
The aim of this book is simple–to help readers become more accomplished at what they do. Its goal is to help readers shift their vantage points, shake up their thinking, and stretch their minds. Its aim is to help people look at the world from new and unusual points of view.
But it has another aim as well. While this book is serious, thoughtful, and deep, it is also supposed to be fun. Consider this book a friend at the ready, one who is always there with something to say–sometimes analytical, sometimes opinionated, but rarely equivocating. Consider it to be a tool to freshen up your thinking whenever you come to a seemingly intractable problem. It is a book filled with big ideas, but it is also a book whose aim is practicality. It is a book you can open up at random or read all the way through. If you enjoy this book as you are being informed by it, it will have served its purpose.
How to Use This Book
Like almost everyone in the late ’90s, I had an idea for a business-related Internet start-up company. The company would gather together great business content and organize it from the perspective of a business user. It would make that content easily searchable and accessible.
The idea was that when people get a new job, decide to start a company, are moved to a new division, or simply want to do their current job better, they need access to high-quality, highly focused information. In addition, teams, whether they’re inside a company or are a group of consultants, are composed of people with different backgrounds and skills and need a way to quickly understand each other’s disciplines and points of view.
To use a little jargon, the idea was that since so many companies are trying to become flatter and leaner–less hierarchical and more matrixlike–with fewer silos, people need to get a better understanding of how everyone thinks about life and business. To do this, they need knowledge that is not only deep and specialized but also wide and general.
To work in flatter organizations with less supervision, more individual responsibility is required. Organizations like these demand that employees make decisions about each other and about their customers with far less supervision. Organizations like these give each individual more freedom, but they also hold people to tougher standards of accountability. To function in organizations like these, people need to understand each other.
Enron and some of the other scandal-ridden organizations are very good examples of how this can all go awry. The Enron culture was built on loose levels of supervision, flat hierarchy, and a very tight adherence to revenue and profit numbers. One troublesome problem in a culture like that, as statements and testimony have subsequently shown, was that a lot of people in the company did not understand what their peers or even their subordinates were doing. As long as people were making money, they were left alone.
In hindsight, it appears that what was not understood by Enron’s employees, senior management, and even its board of directors contributed to that firm’s demise and to the subsequent destruction of so many people’s lives and fortunes. Had the board of directors had MBA in a Box on hand, its members might have made better decisions.
Because business is more complex and organizations are flatter, people need to acquire information more quickly and understand the way others think. They need to know each other’s areas of competence and business aims. They also need to develop–as an old Hollywood producer once told me–“world-class, bulletproof bullshit detectors.”
People need knowledge not to impress each other but to work together. More than ever, marketing people need to know the way financial people think, financial people need to understand the way the technical people work, and technical people need to know how the sales force does its job. More than likely, in today’s understaffed organizations, there is no in-house company guru with sufficient time to explain the lay of the land.
In the late ’90s the Internet business I devised was supposed to provide this information to people in a convenient, even fun format. But after I did what every budding entrepreneur does–populate a spreadsheet model with lots of detailed business assumptions about how much it would take to start and run the business versus how much it would earn in years one through five–I realized something I should have known all along: rather than invest millions of dollars in an Internet company, why not begin by making everything available in a book? Not only would a book be cheaper to produce than a big, overstaffed Web site, but you can bring this handsome product to the beach confident you will not damage any of its sensitive parts.
In addition, if you put this book on your bookshelf behind your desk, it will always be there to serve you. Web services and Web content are powerful and useful, but–to paraphrase that old advertisement for a certain precious stone–a book is forever.
MBA in a Box is designed to be used hard and frequently. It is organized to reflect the way normal people do and think about business. It is peppered with short excerpts from some very important books.
Each of these sections contains novel thinking but also common wisdom and ideas about how to do business better. Each of these pieces is written by a person who is a true source of knowledge.
There are three good ways to use this book. The first way is to read it from cover to cover. The second way is to keep it handy and thumb through it whenever you need a creative idea or a new concept. Use this book to jog your imagination and your creativity. The third way is to keep it handy to solve your problems or brief you on a subject at hand. The first two ways of using this book are pretty self-explanatory. But the third way requires understanding your problem or conflict first and then going to the relevant section in this book to find some advice.
As you can see from the headings, each section looks at a problem in business from what I hope is something akin to your own point of view. For that reason, I’ve chosen to use the vernacular:
* Innovation: How Breakthroughs Happen
* Sustainability and the Environment: A Business That Makes Nothing but Money Is a Poor Kind of Business
* Finance and Accounting: “We’re Not in Kansas Anymore”–Getting Real About Numbers and What They Mean
* Strategy: Make Sure You Take the Right Fork in the Road–On the Importance of Strategic Direction
* Managing Is Getting Paid for Other People’s Home Runs
* Human Resources: Why Brains Trump Brawn
* How to Be a Leader and Live to Tell About It
* Marketing: “Find Out What They Want and How They Want It and Give It to ’Em Just That Way”
* Communication: “A Fool May Talk, but a Wise Man Speaks”
* There’s Many a Slip ’Twixt the Cup and the Lip: Good Ideas Gone Awry
Let’s say your problem is financial. Look at Section 3, which deals with money. Then go through the chapters until you find the one that fits. Begin by reading that chapter, and then when you really have it understood, read another chapter. That way you’ll get at least two points of view on every topic listed in this book.
If you use this book in any of the three ways I have just indicated, I am confident that it will become your friend–augmenting what you know, providing advice, helping you become more creative.
If this book helps you in the ways I’ve just described, then it is bound to help you grow in business. If that is what happens, then this book will have fulfilled its purpose. And if this book helps you grow in business, then I will feel happy for having gathered together these contributions from such a brilliant, eclectic, talented, and insightful group of business thinkers. For once, it will have been gratifying to have “thought inside the box.”
From the Hardcover edition.