The candidates for president have already raised more than a hundred million dollars. After only three months. Every single one of the top five candidates demolished the record set eight years ago.
The reason is simple: once a market gets understood, the desire to be the winner in a winner takes all event encourages people to up the ante.
Imagine playing poker with a bunch of kids. If you give each kid $200 in fake chips and play no-limit, they start betting with $1 or maybe $5 bets. Pretty soon, though, one of the kids will figure out that if he bets all his money, he can make an impact, and perhaps eliminate the other players. Without the risk of losing real money, he instantly goes to 11 on the impact meter. Everyone else follows suit. Hypercompetitiveness.
During the first dot com boom, it became clear after a year or two that the company that could lose the most money the fastest (while attracting some metric… traffic, customers, whatever) would be deemed the winner by Wall Street. Hence the rapid success of theglobe.com, the debacle of pets.com and the insanely high price paid for bluemountainarts. It’s not rational, but it’s true.
As the internet makes it easier for people to keep score of market share, bestseller lists and more, the benefits to being seen as #1 continue to increase. Which means that this trend to being hypercompetitive, whether or not its rational, is going to get more and more common.
The long term hasn’t gone away. Not at all. Winning in the long run is far more important. At the same time, it’s essential to note that many markets have set up short-term screens that make it impossible to survive in the long run if you’re not seen as a possible market leader (the best in the world) early on.
April 5, 2007
A friend just sent me a book he worked on. It’s a terrific book, but it has an astonishingly mediocre (if that’s possible) cover. I can just see how the cover came to be. There were proposals and meetings and compromises and a deadline. As the deadline loomed, the compromises came more often, until they ended up with a cover that didn’t match the power of the book.
They should have just shipped a cover that was blank.
Knowing that you need to ship a blank cover if you can’t come up with something great focuses the mind and takes the edge of the conversations about compromise. If ‘good enough’ isn’t good enough, and if the alternative is certain failure, people will dig in and come up with something better.
It’s not just book covers, of course. Ethanol is the equivalent of this book cover. It feels like it might be a good enough solution to a range of energy problems. And once embraced, it serves as a bandaid, making the problem less urgent, "oh, we already took care of that," and allowing people to move on to something else.
Every quarter, your company ships new products or services. And every quarter, someone says, "under the circumstances," or "given the deadline" or "with the team we had available"… it’s the best we could do. I say ship nothing.
In a few of my seminars, I’ve encouraged marketers to refuse to market mediocre stuff if that’s the best the folks in R&D and production can bring you. The first time, they’ll be shocked. Your job will be at risk. But then you’ll notice something… the stuff gets better. Fast.
In Japanese car factories, this is called kanban. You trade production efficiencies for quality. If a part isn’t perfect, the worker refuses to install it. And the entire assembly line stops. Detroit was horrified by this idea. Keeping the assembly line going is the holy grail. Guess what? The line doesn’t get stopped very often. Things get better, fast.
[Ralph Bernstein, at Productivity Press, knows his stuff about Kanban. He writes:
In your posting, In praise of a blank page, your use of the word kanban is incorrect. Kanban refers to a type of visual control that signals an upstream operation to deliver what is needed. (The Wikipedia description to which you linked touches on aspects of the concept, but doesn’t get it exactly right.)
What you probably meant was andon.
An andon is a device that calls attention to defects, equipment abnormalities and other problems, or reports the status and needs of a system by means of colored lights. Typically, when a worker on a line encounters a problem, he or she will pull a cord that lights up the andon board and stops the line.
Also, it’s a little misleading to say that in such a system, you trade production efficiencies for quality. It’s a lot more efficient to stop and eliminate a defect immediately than to repair a finished product (or dozens of finished products) containing the defect. But you are right about one thing: with this kind of system, things do get better fast.
You may want to obtain a copy of the LeanSpeak dictionary, available on our website.
My response, which you’ve probably already guessed, was that this is what they taught us at business school!]
[Seven years ago (!) I wrote a column for Fast Company about a different kind of MBA. I’ve gotten tons of email about it, most of it positive–but I did get one particularly desperate/angry note from a validation-seeking student last week. Coincidentally, I just received this beautiful diploma, suitable for framing, for Dan Limbach, who volunteered to share it with you.]
[here’s the original article, with a few updates in brackets]
I thought maybe I’d open a business school. This is particularly ironic given my past: No student in the history of the Stanford Graduate School of Business has ever come closer to not receiving an MBA than yours truly.
When I was at Stanford (it seems like decades ago — probably because it was), I thought that the environment there was terrific, and I truly enjoyed some of my classes. But before the start of my second year, I got an irresistible job offer — which prompted me to try to go to school and work at the same time. I soon realized that the classes were in Palo Alto, and the job was in Boston. But, thanks to some help from TWA and a bizarre willingness on my part to fly on the red-eye, I managed to commute for a semester. After that, a kindly professor decided to stop the madness and just give me the rest of my credits, so graduate I did.
Despite my less-than-stellar attendance record at business school, I’ve since found that teaching business is a blast. I taught a class to second-year students at NYU this year and discovered that aggravating 90 soon-to-be-graduating students is great fun. I had so much fun, in fact, that I started thinking about what business school is, what it’s good for — and what it’s not good for at all.
As far as I can tell, there are only three reasons to apply to business school. My [imaginary] school, the New Order Business School (NoBS), will focus on excelling at all three.
First, business school provides a tremendous screen for future employers. If you go to Harvard Business School, for example, you are doing a tremendous thing for your personal branding, and you are guaranteed a job interview — at the very least — virtually anywhere in the world. When it comes to business, Columbia, Stanford, Wharton, and a few other schools aspire to Harvard’s level. And in some industries, they even surpass it.
Just as Internet investors have successfully trained themselves to look past the present and to invest in companies that have a wonderful future, some employers have realized that waiting for someone to graduate from one of these august institutions is a waste of time. Instead of hiring students after they finish classes (which, after all, don’t teach why the brand is so valuable), why not just hire people as soon as they’ve been accepted to business school?
The student who drops out of school after getting in but before beginning classes saves about $55,000 in tuition — as well as another $180,000 in opportunity cost. Add to that the stock options and a chance to change the world that much sooner, and you can see why this is a no-brainer for all involved.
At NoBS, we offer a special program for just this sort of student. Basically, it’s the most exclusive business-school admissions program in the country. We guarantee that only one out of every 1,000 applicants will be accepted to our school. And we guarantee that upon being accepted, every single person will receive at least three job offers — each with a minimum salary of $65,000 a year.
The fee to have your application considered is $300. After all, as an admissions-based institution — actually, as an admissions-only institution — we have to do a great job, so it’s $300 well spent.
There are few classes. There is no degree. You apply. You get in (or, more likely, you don’t). That’s it. We’re done. (Oh, and by the way, the profit margins are huge! But you figured that out already.)
Think about the prestige associated with being the one in 1,000. Think about the pride in knowing that you are one of the few people smart enough, motivated enough, and crazy enough to apply to a school that exclusive. Stuck in a dead-end job? Work like crazy on your GMATS and your essay, and you too may be able to break through the clutter of applicants and become a NoBS standout.
The second reason that people go to school is to build a network. This is another way of saying that there’s a social insurance policy among students. If someone in your class actually becomes successful or lands a powerful job, the rest of you have someone to go to for favors or even cash.
It’s sort of astonishing how powerful networking can be. One investor I know gives preference to companies whose staff includes an alumnus of Camp Tahigwa. Employees don’t necessarily have to have attended Camp Tahigwa at the same time that the investor did — so long as they know the same camp songs.
At NoBS, we offer a concentrated program, half of which focuses on just this sort of networking. Rather than waiting for networking to occur through random osmosis — through unpredictable events like working on a project together in Cost Accounting 101 — students at NoBS gather for two weeks every six months to engage in some intense team building. They row crew. They play chess. They build houses for the disadvantaged. They stay up all night putting a VW Beetle on the roof of Larry Ellison’s home.
The third (and least important) reason to go to business school is actually to learn something. And this is where traditional business schools really fail. The core curriculum at business schools is as close to irrelevant as you can imagine. If you and I were trying to create a series of courses that would all but guarantee that upon graduating, students would have no useful knowledge about how to do business in the new economy, today’s business-school curriculum would be a great model for us.
So eliminating the curriculum may be a great idea. But sooner or later, the illusion of a thriving, useful institution will fade if a business school doesn’t offer any courses. Ask people who are thriving in today’s economy to name five things that helped them succeed, and they’ll probably come up with a list like this one.
1. Finding, hiring, and managing super-great people
2. Embracing change and moving quickly
3. Understanding and excelling at business development and at making deals with other companies
4. Prioritizing tasks in a job that changes every day
5. Selling — to people, to companies, and to markets
There are other skills that might show up on the list — for example, balancing a life for the long term, working with venture capitalists and other sources of funds, being creative, and understanding the impact of new technologies — but this is a good starting place.
Now take a look at the core curriculum for a $55,000 MBA. You’ll find virtually no focus at all on any of these five issues. My MBA students at NYU had never taken a selling course, they had never been taught how to give a presentation, but they were experts in cost accounting, in understanding manufacturing efficiencies, and in applying the Black and Scholes Option Pricing Formula.
People in the real world buy how-to books to figure out how to succeed. So the NoBS curriculum includes only courses that are worthy of being the subject of a best-selling book. And whenever possible, the authors themselves teach the courses. (In fact, my facetiousness aside, you can learn 100% of the MBA curriculum at home, in a month, just by reading books. I’ll go one step further: I can condense an hour of class presentation into 10 book pages. If you can discipline yourself to read, you can free up two years of your life for the good stuff!)
The last thing to consider about business school is that in many cases, precisely the wrong people attend. Instead of filling their classrooms with people who are too kind to go to law school, business schools ought to find people who are already in the business world, but who are panicking because they don’t know as much as they want to know. Instead of looking for people who are working two mind-numbing years at a bank while waiting to get into a top institution, schools ought to seek out entrepreneurs who are champing at the bit to get their businesses started.
There are two kinds of people who don’t belong in business school: the talented folks who are in too much of a hurry to spend time studying and the dull ones who don’t have anything better to do.
The paradox, of course, is that the best people aren’t prepared to leave their life behind for two years. They’re in a hurry.
So at NoBS, students only need to attend classes for four weeks every six months. The rest of the school runs online for two hours every day. And the MBA is completed in less than a year.
During the four weeks of live stuff, we all fly to some off-season ski resort with excellent food, decent rooms, and an Olympic-sized swimming pool. Classes run from 8 am to midnight, three days a week. The rest of the week, students teach one another from real-life anecdotes. Sharing life experiences prepares people for the arrival of unexpected events.
The “faculty” isn’t really a faculty at all. There are no PhDs in the bunch — not one. Instead, our teachers are compelling public speakers, the kind of people who get standing ovations. People like Zig Ziglar on selling, Tom Peters on embracing change, or Regis McKenna on public relations.
Sound like a powerful experience? Totally nonaccredited. No bureaucracy. One dean. Drop out if you want. Do it for the learning, not for the grades. Everybody is as motivated as you are. Get it over with in just nine months. Walk out with a great credential and 100 lifelong friends.
Is NoBS yet another bizarre thought exercise on my part? Probably. [for the irony-impaired: yes]
NoBS is worth considering. Before you go to business school, before you decide that a fancy MBA is the one thing standing between you and success, you ought to think really hard about why you’re going and what you’re going to learn.
And that, of course, goes double for any company itching to hire the latest freshly minted MBA. Perhaps instead of letting a 300-year-old institution do your screening for you, you should start your own business school. Bring in 100 kids. Put them through the real curriculum in four weeks. Keep half, and pay the other half a year of severance (or have them lick envelopes until they find another job).
It’s easy to forget that business school is a thoroughly modern phenomenon — that it’s not rooted in the ancient canons of Shakespeare or even Madame Curie. Most modern business schools were founded in the 1960s. Their time has come and gone.
[Updated in 2020, twenty years after I wrote this original rant. Since then, the altMBA has turned into a legitimate life-changing institution. 5,000 graduates from more than seventy countries. From companies large and small. From non-profits, educational institutions and government agencies. From age 16 to 80.
The altMBA is now independent of its founder, part of a B corp. organized to work in the public interest, owned and run by a passionate team of change-makers, and most important, attended by people who know that there’s something more to work.
No gurus, no tests, no focus on scarcity. Instead, it’s a chance to learn together and to make a difference.]
