MBAs vs. Entrepreneurs: Who Has the Right Stuff for Tough Times? - Bill Taylor - HarvardBusiness.org
MBAs vs. Entrepreneurs: Who Has the Right Stuff for Tough Times?
2:39 PM Monday May 4, 2009
Excerpts:
... the fascinating research of Professor Saras Sarasvathy, who teaches entrepreneurship at the Darden Graduate School of Business at the University of Virginia. It's been a long time since I've encountered academic research as original, relevant, and fascinating as what Professor Sarasvathy has done, in a series of essays, white papers, and a book. Her work revolves around one big question: What makes entrepreneurs "entrepreneurial?" Specifically, is there such as thing as "entrepreneurial thinking" — and does it differ in important ways from, say, how MBAs think about problems and seize opportunities?>
The answer, Sarasvathy concludes, is an emphatic yes — and the differences boil down to the "causal" reasoning used by MBAs versus the "effectual" reasoning used by entrepreneurs.
Causal reasoning, she explains, "begins with a pre-determined goal and a given set of means, and seeks to identify the optimal — fastest, cheapest, most efficient, etc. — alternative to achieve that goal." This is the world of exhaustive business plans, microscopic ROI calculations, and portfolio diversification. >
Effectual reasoning, on the other hand, "does not begin with a specific goal. Instead, it begins with a given set of means and allows goals to emerge contingently over time from the varied imagination and diverse aspirations of the founders and the people they interact with." This is the world of bootstrapping, rapid prototyping, and guerilla marketing.>
The more Sarasvathy explains the differences in the two styles of thinking, the more obvious it becomes which style matches the times. Causal reasoning is about how much you expect to gain; effectual reasoning is about how much you can afford to lose. Causal reasoning revolves around competitive analysis and zero-sum logic; effectual reasoning embraces networks and partnerships. Causal reasoning "urges the exploitation of pre-existing knowledge"; effectual reasoning stresses the inevitability of surprises and the leveraging of options.>
The difference in mindset, Sarasvathy concludes, boils down to a different take on the future. "Causal reasoning is based on the logic, To the extent that we can predict the future, we can control it," she writes. That's why MBAs and big companies spend so much time on focus groups, market research, and statistical models. "Effectual reasoning, however, is based on the logic, To the extent that we can control the future, we do not need to predict it." How do you control the future? By inventing it yourself — marshalling scarce resources, understanding that surprises are to be expected rather than avoided, reacting to them fast.>
Ultimately, she says, entrepreneurs begin with three simple sets of resources: "Who they are" — their values, skills, and tastes; "What they know" — their education, expertise, and experience; and "Whom they know" — their friends, allies, and networks. "Using these means, the entrepreneurs begin to imagine and implement possible effects that can be created with them...Plans are made and unmade and revised and recast through action and interactions with others on a daily basis." >
Read full article: http://blogs.harvardbusiness.org/taylor/2009/05/mbas_vs_entrepreneurs_who_has.html?cm_re=homepage-041409-_-lede-_-headline
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This posting was made my Jim Jacobs, President & CEO of Jacobs Executive Advisors. Jim also serves as Leader of Jacobs Advisors' Insurance Practice.
Thursday, May 7, 2009
Tuesday, May 5, 2009
What's Next for the Big Financial Brands — HBS Working Knowledge
What's Next for the Big Financial Brands — HBS Working Knowledge
Published:
May 4, 2009
Author:John Quelch
Excerpts
Financial brands today must address the most basic of consumer concerns: Will my money be safe with this company? So long as they are not triumphalist, large banks like JP Morgan Chase and Wells Fargo that were less involved in chasing too-good-to-be-true subprime returns have a differentiating advantage. But it's hard to rebuild consumer trust based on the fact that as Jamie Dimon, JP Morgan's CEO, has stated: "We suck less." Especially since the reward these banks and their consumers and shareholders earned for being prudent was being forced by the United States Treasury to absorb the failed banks, Washington Mutual and Wachovia, respectively.
In any recession, consumers focus closer to home. They become more local and less global in outlook. So these are times of opportunity for the thousands of conservatively run community banks that have never held any exotic financial instruments and continue to assess accurately the risk profile of each local customer seeking a loan. As advertising for PNC Bank states: "Now more than ever responsible lending is everything."
When consumers are uncertain, they need to have their hands held. They need to feel that the brands they use identify with their predicament. They consult their friends and neighbors more than ever. Advertising that captures these mood shifts is more effective. Thus, in Kansas, billboards use the first person to proclaim "I trust Intrust." Charles Schwab's two-year-old advertising campaign focusing on retail investor pain points is perfect for the recession. In one recent ad, a consumer says: "I've got a lot less cash and a lot more questions." The voiceover then invites the consumer to "Talk to Chuck." Investors are also searching around longer before making a purchase decision. That leads a niche player like TD Ameritrade to extend a similar invitation: "Why not talk to TD Ameritrade? There's never been a better time for a second opinion."
The turmoil and distrust in the financial services sector is an open invitation to other non-financial companies to exploit the brand vacuum created by the demise of the likes of Merrill Lynch and RBS. Look to Tesco, the leading retailer in the United Kingdom, to extend further its reach into financial services. Look to trusted brands like Wal-Mart and even Google in the United States to do the same. After all, the financial services industry is crying out for a brand that promises to "do no evil."
Read full article: http://hbswk.hbs.edu/item/6174.html
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This posting was made my Jim Jacobs, President & CEO of Jacobs Executive Advisors. Jim also serves as Leader of Jacobs Advisors' Insurance Practice.
Published:
May 4, 2009
Author:John Quelch
Excerpts
Financial brands today must address the most basic of consumer concerns: Will my money be safe with this company? So long as they are not triumphalist, large banks like JP Morgan Chase and Wells Fargo that were less involved in chasing too-good-to-be-true subprime returns have a differentiating advantage. But it's hard to rebuild consumer trust based on the fact that as Jamie Dimon, JP Morgan's CEO, has stated: "We suck less." Especially since the reward these banks and their consumers and shareholders earned for being prudent was being forced by the United States Treasury to absorb the failed banks, Washington Mutual and Wachovia, respectively.
In any recession, consumers focus closer to home. They become more local and less global in outlook. So these are times of opportunity for the thousands of conservatively run community banks that have never held any exotic financial instruments and continue to assess accurately the risk profile of each local customer seeking a loan. As advertising for PNC Bank states: "Now more than ever responsible lending is everything."
When consumers are uncertain, they need to have their hands held. They need to feel that the brands they use identify with their predicament. They consult their friends and neighbors more than ever. Advertising that captures these mood shifts is more effective. Thus, in Kansas, billboards use the first person to proclaim "I trust Intrust." Charles Schwab's two-year-old advertising campaign focusing on retail investor pain points is perfect for the recession. In one recent ad, a consumer says: "I've got a lot less cash and a lot more questions." The voiceover then invites the consumer to "Talk to Chuck." Investors are also searching around longer before making a purchase decision. That leads a niche player like TD Ameritrade to extend a similar invitation: "Why not talk to TD Ameritrade? There's never been a better time for a second opinion."
The turmoil and distrust in the financial services sector is an open invitation to other non-financial companies to exploit the brand vacuum created by the demise of the likes of Merrill Lynch and RBS. Look to Tesco, the leading retailer in the United Kingdom, to extend further its reach into financial services. Look to trusted brands like Wal-Mart and even Google in the United States to do the same. After all, the financial services industry is crying out for a brand that promises to "do no evil."
Read full article: http://hbswk.hbs.edu/item/6174.html
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This posting was made my Jim Jacobs, President & CEO of Jacobs Executive Advisors. Jim also serves as Leader of Jacobs Advisors' Insurance Practice.
Are B-Schools To Blame? - Forbes.com
Are B-Schools To Blame? - Forbes.com
Intelligent Investing Panel
Are B-Schools To Blame?David Serchuk,
05.04.09, 04:00 PM EDT
Business schools are catching a lot of flak during this financial meltdown. But did the schools fail, or was it the fault of the firms that took these students?
Excerpts:
not everyone accepts the idea that business schools are to blame. Anant Sundaram, a professor of finance at Dartmouth University's Tuck School of Business, says that in his classes and the school, real, useful fundamentals are not only taught but emphasized. "What we witnessed in the capital markets violates Finance 101 ideas," he says. "Things like value comes from real assets, not shuffling pieces of paper. If you think arbitrage opportunities are to be had, think again. We teach a lot of skepticism."
If this is so, how can Sundaram account for the spectacular failure of so many former B-school grads? He says that once they graduate, students often get sucked into the murky world of Wall Street, where risk and reward are divorced, and no one cares about anything as long as assets rise. "This is a Wall Street crisis," he says. "It's not chief financial officers that have caused this crisis, this is a small group of paper shufflers." Of course this fails to address the issue of where these paper shufflers came from.
Read full article: http://www.forbes.com/2009/05/04/business-School-wellington-intelligent-investing-rankings.html
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This posting was made my Jim Jacobs, President & CEO of Jacobs Executive Advisors. Jim also serves as Leader of Jacobs Advisors' Insurance Practice.
Intelligent Investing Panel
Are B-Schools To Blame?David Serchuk,
05.04.09, 04:00 PM EDT
Business schools are catching a lot of flak during this financial meltdown. But did the schools fail, or was it the fault of the firms that took these students?
Excerpts:
not everyone accepts the idea that business schools are to blame. Anant Sundaram, a professor of finance at Dartmouth University's Tuck School of Business, says that in his classes and the school, real, useful fundamentals are not only taught but emphasized. "What we witnessed in the capital markets violates Finance 101 ideas," he says. "Things like value comes from real assets, not shuffling pieces of paper. If you think arbitrage opportunities are to be had, think again. We teach a lot of skepticism."
If this is so, how can Sundaram account for the spectacular failure of so many former B-school grads? He says that once they graduate, students often get sucked into the murky world of Wall Street, where risk and reward are divorced, and no one cares about anything as long as assets rise. "This is a Wall Street crisis," he says. "It's not chief financial officers that have caused this crisis, this is a small group of paper shufflers." Of course this fails to address the issue of where these paper shufflers came from.
Read full article: http://www.forbes.com/2009/05/04/business-School-wellington-intelligent-investing-rankings.html
***********************************************************************
This posting was made my Jim Jacobs, President & CEO of Jacobs Executive Advisors. Jim also serves as Leader of Jacobs Advisors' Insurance Practice.
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