January 2010


As the excitement of learning new theories catches on, I feel the strongest challenge an MBA student faces is to remain defiant. Let me explain more. Within the first term at IIMA, I got emphatic answers for the question: “Why MBA?” Firstly, one learns concepts. For example I learnt quickly that higher fixed costs are risky for startups and one can convert fixed cost to variable cost through outsourcing; while evaluating options for investment, financing or any managerial decisions the best choice is to evaluate using ‘relevant’ cost of each option; Efficient ways exist to manage cash conversion cycle; Hero Honda and HUL have mastered negative working capital! Second, one learns the science aspect of management – how to use statistical models to derive meaningful insights from historical data, how to use decision models etc. Third, one gets the broad understanding of business. For example one is taught to use frameworks like ‘five forces’, ‘SWOT’, ‘five-Cs’, ‘four-Ps’, plethora of two-by-two matrices to understand a firm and its environment and then focus on solving a problem again using a plethora of tools.

But one must be vary of being dictated by theory. First reason, among the reasons for why one should be defiant, is that defiance is the only way for continuous improvement. I ‘wowed’ an article I read ( and thanks to Prof. Saral Mukherjee who delivered the punch message in his usual flamboyant style of delivery). Japanese were clearly the leaders in Quality with people like Taguchi spearheading implementation of classical quality concepts. In this context let’s look at this: When EOQ was the norm, Toyota went for smaller lot-sizes and JIT! Decoupling stocks made problems more visible at upstream (blocking) and downstream (starvation). Thus quality was under the scanner all the time. This helped in achieving higher quality and lower inventory costs. The point is: if one were to just go by classical theory one will never improve. Thus, remember, what is taught is not sacrosanct – question and hence improve to create cutting edge concepts/frameworks/tools.

I intend to write this as a series – that’s why the title says MBA traps -1!

Advertisements

As we enter into the placement season, one of my friends asked me this question – what is the difference between entrepreneurship and intrapreneurship? Here is an analogy:

Entre = I climb up the tree with risk of falling down and get my own ‘tender’ coconut and drink it up

Intre = Coconut in self-service mode with fickle just under the tree. Pick up the right coconut, open up without hurting yourself and drink up!

(c) lifewithmonkeys.typepad.com

How different is it really? Forget the end (upside / downside limits in intre), the means are just the same in Intrapreneurial activities and entrepreneurship.

Intrapreneurship is entrepreneurship with lowered risk – don’t the VCs have lower risk propensity than the angels? Don’t PEs have lower risk propensity than VCs – does it mean VCs and PEs don’t take risk or don’t need entrepreneurial spirit? Guess u got where I am getting to. What links all of them together are three things: thrill in identifying or generating opportunities, managing risk and creating value.