Archive for August, 2012

3 Ways Reading Creates Effective Business Leaders

It’s that time of the year again: the air’s getting cooler, the nights are getting longer, and eager MBA students are starting another semester of business school.  And each new semester brings with it lots of MBA-related reading.  It can be easy to think that all that reading is tedious (for me, it takes away from watching football), but reading is an important part of MBA students’ development into future business leaders.  Don’t believe me?  Well I’ve got a Harvard Business Review (HBR) article by my side for support.

John Coleman recently published “For Those Who Want to Lead, Read” on HBR.  For all its potential benefits, the article doesn’t paint a rosy picture about the current state of reading.  Coleman writes that despite nearly 84% global literacy, people are reading (what he calls) “less deeply”.  The average person’s daily reading might only consist of a few magazine or internet articles.  In fact, less than half of the U.S. adult American population reads deep, challenging literature.

Ok, that may seem slightly alarming to some people, but in the grand scheme of things why does this matter?  We have greater access to information than at any other time in human history.  Plus, people are busy; they don’t have time to read like they used to.  Surely this lack of reading can’t be all that bad.  We can find whatever we need on the internet and we’re filling that time we’d normally spend reading doing other activities, right?

According to Coleman, reading less (both in quantity and in quality) is something we should definitely worry about.  And MBA students in particular need to take note.  Coleman states that reading deeply about a variety of topics can help aspiring businessmen and women develop into tomorrow’s business leaders: “Deep, broad reading habits are often a defining characteristic of our greatest leaders and [that reading] can catalyze insight, innovation, empathy, and personal effectiveness.”  Just look at Steve Jobs, one of this past decade’s greatest innovators.  He loved the English poet William Blake’s work, despite it having nothing directly to do with Apple or iphones.

Deep, broad reading can be a magical experience.  Not hocus-pocus magic, but magical in the sense that it can positively affect MBA students’ development into business leaders.  But how, you might be asking, can reading possibly help make someone an effective business leader?  Well I’m glad you asked; here are three rewards MBA students can reap through broad, challenging reading:

1.      Emotional Intelligence.  Reading a variety of authors about a variety of human experiences can help improve aspiring leaders’ empathy.  This characteristic is especially important when managing employees.  Effective managers must understand their employees’ motivations, needs, dreams, and challenges.  And they must understand how to employ those factors in ways that motivate and inspire their employees.  That can only come about through well-developed emotional intelligence and empathy for other people.

2.      Problem Solving.  Reading helps solve complex problems.  In today’s world, more and more parts of our lives are interconnected.  Business problems grow larger and more complex as more data gets recorded and the world continues to shrink.  For that reason, MBA students need to possess knowledge on a variety of people, places, subjects and ideas in order to develop effective solutions for challenging, global business problems.

3.      Networking.  This may sound strange, but broad reading can help with business networking, too.  Being well-read allows you to engage others in a variety of conversations about a variety of topics and make genuine contributions to those conversations.  It gives you small talk ammunition, and it even provides gift ideas you can get for business clients and partners.

These are only a few ways reading helps MBA students develop into effective leaders.  My second year in CSUF Mihaylo’s MBA program starts on Monday, and I know I’ll have lots of reading to do.  But I’ll continue to try and supplement my business reading with broad reading on other topics, in order to help myself develop into the best possible business leader I can be.

Need some inspiration for broad reading material?  Check out one of my favorite non-business books below:

What are your favorite non-business books?  Share your favorites in the comments section below or on Twitter @OrangeCountyMBA.  I’m always looking to add more reading material to my bookshelf!

Learning Leadership in the Face of Rising Tuition

A recent comment on Orange County MBA brought to light the challenges prospective MBA students face trying to apply and enroll at CSUF.  Matias shared a recent experience from the Mihaylo MBA Prospective Student Information Session, and had learned there that CSUF won’t be accepting new MBA applicants for Spring 2013 due to California’s budget constraints.  The sad part is that this is only the tip of the iceberg.  The outlook for prospective MBAs won’t be improving anytime soon.

Increasing tuition is nothing new, but in recent years certain state university systems have imposed greater tuition increases than others.  California is one of the worst examples.  The average tuition increase for in-state students around the country was 8% last year.  Compare that to California’s increase of over 20% for that same period.  And public tuition has been increasing at a faster rate than private tuition.  Granted, the average private university tuition still exceeds the average public university tuition ($24,000 vs. $8,000 per year on average), still arguably making the public degree an excellent value.  But that may not last for long; California public tuition nearly doubled over the last 5 years!  At that rate, it won’t be long before public and private educations are similar in price!

CSUF faces its own budget challenges.  Tuition could increase again next year, and it all depends on whether Governor Brown’s November tax initiative is approved.  If the tax initiative is not approved, students will face an additional 10% tuition increase for Spring 2013.  The increase will help cover a budget shortfall estimated to be between $250 to $375 million.  The shortfall may force the university to slash salaries and benefits, reduce enrollments, and eliminate jobs.  Since 2007-08, California budget deficits have cost the CSU system approximately $1 billion in budget funding.

Here’s the major problem, and it was highlighted in Matias’ comment.  CSUF announced at the Information Session that it would not be accepting applications for Spring 2013.  Now folks either have trouble getting into CSUF, or once accepted they face the risk of paying ever-increasing tuition.  The CSU system administrators aren’t showing they feel their students’ pain, which only worsens the situation.  Just recently, the Board of Trustees approved pay raises for 3 university presidents.  The initiative raised salaries by as much as 10%, and were approved on top of the car and home allowances the administrators are already receiving.  CSU administrators say the raises come from funding sources separate from the universities’ operating budgets.  And that’s where the problem lies – these actions (whether warranted or not) send mixed messages to students.

How are students and prospective applicants going to believe CSU administrators when they say they “feel their pain” and “have their best interests at heart?”  The pay raises and tuition increases don’t seem to be affecting those administrators.  Now it may be true that the money for the raises came from sources outside the CSU system operating budget, meaning it couldn’t be spent on services or tuition reduction anyways.  But that’s beside the point – it’s sending a mixed message.  Students see their tuition increasing and the universities’ services diminish.  They need someone to blame, and who better to blame than the mixed-message administrators receiving pay raises while cutting enrollment and increasing student fees?

Despite this heated situation, this mixed-message issue can serve as a lesson for MBA students.  Leaders need to lead, and leading often requires sacrifice.  Students are sacrificing their finances; prospective students are sacrificing their education plans.  Administrators need to demonstrate that same level of sacrifice.  Some of the firms that survived the recent economic downturn had executives who cut their own pay and curtailed their perks in order to save employees’ jobs.  I’m not saying leadership is easy, and I’m not saying I have all the answers for this education challenge.  But times are difficult, and leaders need to demonstrate they are fighting for their employees (or students) while keeping those peoples’ best interests at heart.  The solutions to the CSU system’s budget woes won’t appear overnight.  So maybe the politicians and administrators should toss these challenges to the MBA students at these universities.  Maybe the students can offer some solutions the administrators hadn’t even considered, while learning lessons about the challenges of leadership in the process.

Can MBA Programs Teach Entrepreneurs?

Entrepreneurship is a hot buzz word right now.  The idea of working for oneself and creating a successful enterprise from scratch has been a dream of individuals around the world.  In fact, America was founded by frontiersmen and adventurers who embodied the entrepreneurial ideals of creating something out of nothing and building it into a success.  It should be no surprise then that modern-day Americans have brought those same qualities to the business world in the form of successful start-ups and small businesses.

It’s hard to talk about entrepreneurs without thinking of giant tech firms like Google and Facebook.  These companies were once only ideas that their founders grew into gigantic, multinational firms.  But I am more concerned about how entrepreneurship relates to an MBA degree.  Specifically, what are the challenges in teaching entrepreneurship?  What schools have successful conveyed the important start-up lessons to their students?  And how does CSUF’s MBA program stack up with other universities’ when it comes to teaching entrepreneurship?  These questions are important, because students are still going to business schools and earning MBA’s and entrepreneurship is on the rise.  Therefore, it’s worth exploring the challenges is teaching business school students entrepreneurship, and how successful programs have circumvented these challenges.

Managing Start-Ups

The major issue MBA programs face when teaching students about entrepreneurship is the perspective these programs take.  What that means is that an MBA is typically a “corporate” degree.  MBA graduates often aspire to work for Fortune 500 firms, and are taught corresponding lessons like how to calculate weighted average cost of capital (WACC) or develop a marketing plan.  The issues an established multinational corporation must tackle differ greatly from those a start-up faces, and this leads to challenges when trying to teach entrepreneurship to MBA students.

Right of the bat, start-up and established businesses approach success from different perspectives.  New ventures are often more concerned with survival than anything else; established firms worry about their next quarterly earnings report.  These factors require dramatically different skills from leaders from these organizations.  Instead of needing to calculate WACC entrepreneurs must learn how to attract investors and raise start-up capital.  Instead of knowing how to manage employees’ workflow, entrepreneurs often must learn how to constantly pivot their ideas and recalibrate them until they achieve a working product or service.  And instead of developing a new product marketing plan for international customers, entrepreneurs must learn to create buzz around their product and obtain their first few, important customers.  These challenges aren’t always addressed in MBA programs, but some US business schools are doing more than others to help MBA’s become successful entrepreneurs.

The Best Entrepreneurship Program – It’s Not Who You Think

Different schools take different approaches to teaching entrepreneurship.  Some emphasize contests, like Rice University’s annual Business Plan Competition.  Other’s emphasize hands-on experience.  I mentioned in a previous post that Harvard recently revamped its curriculum to emphasize entrepreneurship.  The school went so far as to require students to create a new business and even provided seed funding for the start-ups.

But Forbes recently declared Babson College the reigning king of entrepreneurship programs.  This small school in Massachusetts provides seed funding to students to start their own businesses, requires students to donate any profits they earn to charity, and then forces students to liquidate their firms at the end of each year.  The school wants students to experience entrepreneurship through its entire life-cycle in order for them to gain greater insight into the needs and struggles that go into starting one’s own business.  This program, and others like it that encourage and foster entrepreneurship, have gone a long way towards making some of the school’s graduates extremely successful entrepreneurs.  And the school tried something few business schools do in order to help this program succeed – it split its general business degree from the entrepreneurship degree, so faculty and resources can be devoted to this very different way of thinking about and approaching business.  These steps appear to demonstrate the entrepreneurship and a standard MBA curriculum should be taught using different strategies and techniques.  Perhaps more schools will begin adopting the Babson model in an effort to attract aspiring entrepreneurs.

CSUF and Entrepreneurship

So how does CSUF’s MBA program stack-up with other programs, from an entrepreneurship perspective?  The school offers several entrepreneurship programs, including this year’s first annual business plan contest and its Center for Entrepreneurship.  The course offerings include some entrepreneurship classes as well, including New Venture Leadership and Management which I will be taking this fall.  I was originally concerned CSUF’s entrepreneurship courses would be focused on textbook reading, and I hoped I might get lucky  and the class would involve some case study work.  I feel entrepreneurship learning should be hands-on, and was excited to find out I might get my wish this fall.  The New Venture Leadership and Management course description states the class includes case studies and hands-on work with local businesses.  If this ends up being true, CSUF may have found a way to incorporate some effective entrepreneurship lessons into its MBA program!  I’ll report back later in the fall with my personal opinion on how well the school presents entrepreneurship.

Entrepreneurship will continue to be an important part of MBA programs and the American economy, especially if jobs continue to be scarce and unemployment remains high.  MBA programs may have had difficulty in the past teaching a subject like entrepreneurship, which requires hands-on learning and a different perspective for creating and developing a business.  But several schools have made tremendous strides in developing exciting entrepreneurship programs, and I hope CSUF continues to make progress in order to position itself as a leader in West Coast (or at least Southern California) entrepreneurship.