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Event Review

Why do MBAs take so long to complete? Richard Reeves and John Knell know the answer. They’re acclaimed business authors, speakers, consultants, researchers and former directors of the Work Foundation, and they haven’t got a single MBA between them. “The real industrialisation [of the past few decades] has been in business books, most of which are crap,” Reeves explained to the London Business Forum, at the BFI IMAX Cinema, Waterloo. “There are now five books on leadership published per day.” The process of getting an MBA is, therefore, increasingly about sorting wheat from chaff.

The objective of the 80-Minute MBA is not to supplant traditional courses, Knell explained. After all, there’s a lot to be said for analysing case studies, role-playing business crises and all the other engaging aspects of a full masters degree. Nevertheless, he argued, the essential precepts of the modern MBA can be summarised very quickly. And you don’t need formal education to put them to practical use. “We’ve done the reading so you don’t have to,” was the core message of the event. That and its official motto, “Citius est Melius”, or “Quicker is Better.”

For the most part, this was a light-hearted affair. Whenever one speaker used a buzzterm such as “co-opetition” or “commitment dividend”, the other would shake a rattle to alert the audience. And although many of the modules were genuinely informative, some were simply entertaining – the language module, for example, which consisted of nothing more than learning how to ask “How do you speak English?” in Mandarin Chinese (in case you’re wondering, the rough phonetic translation is knee hoy shure ing wen ma); or the supply chain management module, which consisted of a single highly complex diagram captioned: “Hire someone who understands this.”

Nevertheless, the event’s key raison d’etre was a serious one: business education contains a great deal of time-wasting concepts that can usefully be forgotten, or at least have their priority downgraded. For example:

• Charisma. “There’s no evidence that charismatic leaders are more successful than uncharismatic leaders,” Reeves said. And besides, “if you ain’t got it, you can’t get it.”
• The Balanced Scorecard. This management tool, developed in the early 1990s to align individuals to corporate strategies, is “a terrible thing,” Reeves suggested. “We’re all rubbish at certain things. Leaders are bound to be absolutely rubbish at certain things.” How can any of us hope to attain a balanced scorecard if we’re all inherently unbalanced?
• Authenticity. The idea of being an “authentic leader” may be in vogue, but “great leaders are quite often inauthentic,” Reeves pointed out. “In 1940, Winston Churchill’s strategic assessment was that the Americans weren’t going to [intervene in World War Two], the Germans were going to overwhelm us and we were probably going to go down… He did not stand up in the House of Commons and say this.”
• Coaching. This is a brilliant way to get your company to pay for your therapy, the speakers suggested. But there’s no evidence it will make you a better employee, and even less that it will make you a better leader. Moreover, Reeves said, “Great leaders are not great coaches.”
• Strategy. According to Reeves and Knell, great leaders don’t really worry about strategy. This is not to say it’s unimportant, “but the real truth about strategy for most organisations is that they spend far too much time on it.” MBAs in particular tend to overplay its importance, Reeves said. If they want to spend three days at a country-house hotel discussing strategy, as a kind of self-congratulatory break, then that’s fine. But problems will arise if they “think they’re changing the world [at the same time]… it’s what we call a ‘silver-bullet delusion.’” (Needless to say, this term was met with furious rattle shaking.)

Organisations often think they could differentiate themselves from their competitors if only they pushed a little bit harder and spent a little more to achieve the perfect strategy. But there’s actually “heaps of good business-school research to show the similarities between the strategies of [companies] in the same market sector are greater than the differences.” A company’s real differentiator is its ability to execute.

To illustrate this point, Reeves quoted Richard Kovacevich, CEO of Wells Fargo, the US financial services company: “I could leave our strategy plan on a plane and it wouldn’t make any difference. No one could execute it. Our success has nothing to do with planning. It has to do with execution.” So, Reeves concluded, “next time someone in your organisation starts talking to you about the absolute centrality of strategy, smile, be a bit sceptical and realise that the real question is actually, ‘Can we execute it?’”

Having dealt with the information overload of the modern MBA course, Reeves and Knell turned to its genuinely useful elements. First, leadership. As business author Jim Collins proved in his “excellent” book Good To Great, the right kind of leadership can make a dramatic difference to a company’s fortunes. Specifically, Collins argued, a leader needs five types of knowledge:

1. Where the organisation is going. Great leaders have a great sense of direction for their companies, and the courage to drive through radical changes. Between 1951 and 1971, US paper manufacturer Kimberly-Clark saw its performance trailing that of the general market. Then Darwin E. Smith took over as CEO. In the 20 years that followed, its performance overtook that of the general market by about 350%. Why? The main reason was that Smith decided, within a few months of taking over, to sell all the company’s paper mills and move into derivative products such as nappies and paper towels.
2. How people feel. “If you don’t know the emotional temperature of your organisation, you really are in trouble,” Reeves said. Businesses often fail because the leader becomes detached from the mood of the organisation. Equally, research has shown that “saying thank you once a week outperforms all other HR interventions” in terms of boosting staff morale.
3. What’s going on? “One of the most unhelpful things that’s happened in business scholarship over the last 20 years is the separation of leadership and management,” Reeves argued. If you need to spend time in five-star hotels with expensive strategy consultants to get a “helicopter view” of your organisation, you probably have very little idea of what’s actually going on. “Great leaders manage as well,” he said. “They look at management information, they know what’s happening to cash flow, they don’t take their hands off.” When Darwin E. Smith announced that Kimberly-Clark would sell off its paper mills within five years, he had a countdown clock put on the wall of the company’s headquarters to ensure the deadline didn’t slip.
4. How to build great teams. Research shows the most successful leaders are those who know how to build great teams. Often, they’ll assemble the right people first, then decide where to go.
5. Humility. One of the best predictors of failure for a leader is that “they consistently overrate their own performance versus the rating given to them by peers and colleagues,” Reeves said. “So if you think you’re much better than the people who work for you, you’re terrible.”

In addition to these individual qualities, Reeves and Knell also advised the LBF audience to commit a few universal business principles to memory. Traditionally, MBAs learn about the four Ps: product, place, promotion and price. But today they should really be learning about the four Cs: conversation, customisation, community and co-creation.

“Companies and markets are increasingly built on conversation,” Knell explained. The advance of networked communications technologies has made it increasingly difficult for brands to talk down to their customers, while making it easy for individuals to circumvent the wiles of traditional marketing techniques. Today you must engage your customers if you wish to hold onto them.

At the same time, consumer expectations of choice and control have risen, and with them demands for greater customisation. Many companies are scared of putting such options into the hands of their consumers, but the most progressive in this area have found that dedicated communities of brand-followers are actually willing to contribute innovations voluntarily – to co-create the next generation of products and services.

The final, most important, thread running through the 80-Minute MBA was that of sustainability, which Reeves argued would be a core issue for every company on the planet within five years.

If you’re wondering who in business should care about rising sea levels then consider the world’s leading hotel chains, he pointed out. Their boards are becoming increasingly worried about the long-term value of beachfront property. The knock-on implications for insurance companies are obvious, and for banks with significant investments in tourism.

We have to assume that governments will soon intervene on a national and international level to tax carbon more rigorously, he added. And that’s before you consider the potential effects of consumer boycotting, which has become a much more powerful force thanks to the Internet.

There was recently a demonstration in the US against the building of a coal-fired power station in Texas, Reeves reminded us, in which “successful campaigners targeted not only TXU [the energy company] but the investors in it, especially Merrill Lynch and Citibank.” For example, Citibank cash machines were covered with yellow strips of sticky tape bearing the slogan “Global Warming Crime Scene!” The result was that TXU was pressured into adding carbon-capture and storage facilities to its new plants.

Ten years ago, the archetypal eco-warrior was Swampy, the dreadlocked tree-dweller whose direct action held up construction of the Newbury Bypass. Today, it’s Stuart Rose, the CEO of Marks & Spencer, whose “Plan A” sustainability commitments have played a significant role in his brand’s revival. No matter what line of business you’re in, you won’t be able to ignore issues of sustainability for much longer, Reeves warned. “Even if you aren’t motivated by moral indignation, you’re going to find it impossible to ignore ethical issues.”