There was a great article on the Harvard Business Review site yesterday that said that companies that have a founder’s mentality deliver returns to shareholders that are three times higher than in other companies. It goes on to say that a founder’s mentality has three traits that are insurgency, an owner’s mindset, and a frontline obsession.
The article that goes on to show that as a company gets bigger, it loses its founders mentality. While I was reading it, I suddenly thought that there is another thing that happens as companies get bigger; they hire more MBAs.
Now before I get jumped on for inventing a correlation between the number of MBAs that a company has, the loss of its founder mentality, and inevitable slow decline to irrelevancy let me say that I have an MBA. Not only that, I actually taught MBAs at York’s Schulich School of Business for seven years. And what did I learn and what do we teach?
Well there certainly isn’t much in an MBA about insurgency. We’re more likely to teach students how important it is to understand and develop process and ensure it is followed so that we can have a consistent level of quality. I don’t remember any courses on insurgency, just frameworks like Porters Five Forces, the BCG Matrix. Lots of analysis and risk reduction instead of radical wild ideas.
As to an owner’s mindset, students are more likely to learn about accounting, finance, and driving shareholder value through short term profit maximization. I just checked Rotman’s site and even in their specialization in Innovation and Entrepreneurship, there is no course that looks like it focusses on ownership thinking.
As to a frontline obsession, an MBA will spend a lot more time understanding the concept of materiality and how to look at the big picture than to obsess over operational details. In fact people who obsess over frontline details are told they are too operational, not strategic enough and they don’t get promotions.
The article says that owners “abhor complexity, bureaucracy, and anything that gets in the way of the clean execution of strategy. They are obsessed with the details of the business and celebrate the employees at the front line, who deal directly with customers.” That doesn’t sound very MBA like to me. MBAs celebrate process and analysis, not details.
So my hypothesis is that MBAs are being taught the wrong things. They are taught the things that make businesses predictable and safe instead of dynamic and bold. And when companies hire too many of MBAs, they begin to lose their founder’s mentality, they become predictable and safe, and they begin a slow decline to a merger (aka death).