I recently took on one of the MBA’s favorite tools, discounted cash flow. You would have thought I was trying to kill everyone’s first born. I wasn’t, I was just trying to point out that DCF is too complicated and doesn’t work in most small business situations.
Now, let’s turn to reason DCF even exists in the first place. Let’s look at business training and whether we need to completely re-think how our educational system might have let us down.
I’m referring to the MBA degree and the way it’s used in American business. It’s not that people who have MBA’s are bad people and it’s not even the degree itself that is really dangerous. It’s the way they’re used.
If you’re curious about my reasons, then read on……If you’re not, then it’s OK to skip this one.
MBA’s are really smart.
This is the first thing one would notice. Getting an MBA requires a lot of brain power. There’s good and bad with this.
The good is you get someone who’s really smart to help with your business. The bad is when someone tries to apply what they’ve learned in business school it doesn’t work in many small businesses.
The most complicated solution is usually the worse one.
I find that really smart people like to come up with complicated solutions to problems. When this happens one of two things is often at play.
First, the solution is so complicated it can’t be implemented by mere mortals. Second, even though you might like the solution those working with you don’t understand it and don’t understand what they should be doing.
For many years I was in this school. Then I kept seeing the same thing happen over and over. My ideas weren’t implemented. The reason, my solutions were too complicated and my clients didn’t understand them.
Most businesses don’t have unlimited resources.
The next problem I see in smaller businesses with MBA’s is the solutions they come up with often require a huge amount of time and resources.
I can tell you one thing about resources in smaller businesses….there never is enough. When an MBA joins a smaller business the owner will usually give them permission to try out their ideas. At some point I see those ideas shut down once the owner realizes what has to be allocated to implement them.
Here’s a clue….owners want things simple and quick. It’s what they know works and it’s what they understand.
Most businesses owners don’t have the patience for complicated solutions.
I can tell you this is true from 3 vantage points. I hired some MBA’s to work with me in my food service company. I had to pair back what they wanted to do. I just didn’t have the money or time to let their ideas be implemented.
When I tried to implement complicated ideas with my clients, they balked. They never said no and at the same time, they never said yes. My ah ha moment came when I finally realized my implementation rate with my clients was terrible.
My third observation is watching my clients with MBA’s in their companies. The companies I observed stalled until the owners made their managers simplify what they wanted to implement.
Most business owners won’t take action unless they understand why you want them to do something.
Lots of what’s taught in MBA programs is theoretical and complicated. Owners like practical and simple. There is a real disconnect between the two.
You may have noticed that your business owner clients will nod their heads and then rarely take action on your ideas. My observation with this occurrence is because owners don’t want to look dumb and they aren’t going to tell you they don’t understand. They just don’t take action.
What you can do if you have an MBA…..
Here’s my suggestions for those of you who have MBA’s and want to be effective with your small business clients:
- Learn to simplify all of your complicated ideas. If you can’t translate your ideas to English, they just won’t be implemented very widely.
- Take all of the waste out of your ideas. Small businesses all have one thing in common….they’re resource starved. Don’t expect lots of resources to be thrown behind any idea.
- Show your owner clients and bosses that you really understand what you’re suggesting. Make it simple and easy to implement. You’ll find real appreciation from your clients.
- Get rid of all jargon. Just because you understand what complicated terms mean, doesn’t mean those you’re working with do. Assume that no one besides you understands jargon and find ways to explain what you want to do in plain English.
Remember, small business is about practical implementation. When you try to implement theoretical ideas you’re often going to see pushback if not outright refusal to budge.
Let me know what you think in the comment section below.