Thursday, March 27, 2008

An MBA Mentality

As I dive into this topic, please don’t mistake my attitude toward education. I believe an educated society is crucial to the proper operation of our government, to the advance of society, and to a civil public discourse. However, through my years in business I have found that often, there are attitudes which come with a formal education that are counterproductive to business productivity.

A large portion of my career has been spent in sales or sales related activities. My formal title has never been salesman – it has been manager. Managers should be fully engaged in the sales activities of a business or it is likely the business will fail – whether it is retail, wholesale or a service business.

Many organizations – especially large ones – believe that the best managers have MBA’s (Master of Business Administration). From a logical perspective it makes sense. Find someone who has been formally educated in how to run a business and let them run your business. The problem comes when the MBA manager has no practical experience in the day-to-day function of the business itself. They have the head knowledge, but lack the heart knowledge. They know the tools but they don’t know the business – at least not from the hands-on level. Generally their understanding is conceptual in nature – not practical.

Why do I bring this up? Because it seems that I often spend an inordinate amount of time educating my suppliers on the realities of agriculture.

The MBA manager mentality is often one that is focused on the numbers or benchmarks. It is focused on “objective” measurement of factors which indicate progress in the business. This can be things such as the number of sales calls made, the number of contacts at a Trade Show, the percentage of gross margin -- both average and per sales, and similar easily measurable statistical indicators. They have been taught techniques for handling particular situations that regularly occur in business – like competitive pricing issues – and respond according to the “book” answer. The problem is that they have never walked in the shoes of their sales force or of their customer.

The last item is the key. The most successful people that I know understand their customer. They have either been involved in a business similar to what their customer does, or have spent enough time with their customer to understand their business or situation. They look at their own business through the eyes of their customer. They take time to see what their customer sees and adjust their business accordingly.

Do we do this in agriculture? Do we see ourselves from our customer’s point-of-view? When was the last time you spent time examining your operation from the outside? When was the last time you walked through the grocery store and took a hard look at your product – whether it is beef or cotton or wheat – from the consumer’s perspective? How does the quality of your product compare to competing products? What about price?

We are seeing a number of fundamental shifts in our economy. Fuel prices will soon drive dramatic changes of behavior in how we conduct business and in how consumers allocate their dollars. Transportation costs will force many things to be produced locally that have historically been shipped long distances – such as produce. Are we in agriculture merely riding the tide of the ethanol boom or are we preparing for the inevitable changes that the energy economy will drive?

We are good at managing the numbers. In today’s business environment, if a farmer or rancher can’t manage the numbers he’d better have a second job to support his habit. But, are we good at seeing our industry from the perspective of non-farmers and ranchers? If we educated the public to our business and educated ourselves to what the public truly wants, could we do a better job at providing for their wants and needs? When we can do that, there will be plenty of rewards for the effort. Don’t just focus on the numbers of your business; understand your customer and adjust accordingly.

Also published on Common Sense Agriculture, Conservation and Energy.

9 comments:

The Hermit said...

I personally don't give a tinkers damn about some piece of paper somebody got at a college when it comes to their qualification to do a job. I didn't learn a whole lot worth knowing that way. Give me somebody who worked his way up through the ranks anytime. They know the business, whatever it may be, stem to stern. A degree may be a nice thing to have, and it doesn't mean you can't be good at what you do, but it's more a ticket punch than anything else as far as I can see.

Sue said...

So true. If I remember my business history correctly, a bunch of MBA's were responsible for the disasterous "New Coke" experience at Coca Cola!

WomanHonorThyself said...

true true..just look at all the libs with their degrees and yet they are the most ignorant irrational on the face of the Earth!

Sandy Kessler said...

paper vs practicality and common sense however I have a lot of young bosses who know "everything" ahahahhahahahahahah

Anita Zimmern said...

Interesting article. I want to run a business soon, and I don't have an MBA. Sure it can teach you book smarts, but I feel a lot of the success from a business comes from actual experience. I want to buy a business (a nursery in particular) instead of starting one from scratch, but I haven't had much luck finding a business to buy. Do you have any suggestions?

Chris McClure aka Panhandle Poet said...

Anita: There are services available to help you find a business -- for a fee. Are you willing to relocate? If so, what part of the country?

One good place to start is your Small Business Administration office. Also, many colleges and universities offer services for helping people get started in business.

Be cautious. One thing to always keep in mind...."BUYER BEWARE." There are unscrupulous people out there trying to unload problems on someone else. I strongly recommend that you seek professional advice.

Anita Zimmern said...

Thanks for the advice, Chris. I know there are a ton of scams out there so I'm proceeding with caution. I am willing to relocate, but I'll only go so far. I want this to be like a quasi-retirement for myself. Something to keep me busy and bring in a little money.

Anyway, I did do more research (still have to contact the Small Business Administration) and found a website called Biztrader.com. It's one of those sites where you can buy and sell a business, but I was able to find a potential business. It looks legit, and I'm pretty excited.

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