This Forbes magazine article got my attention.
It may explain why you’ll only find one or two good church planters in most institutions of theological learning.
Five Reasons (Most) MBAs Fail At Startups
Startups Need Execution, Not Administration
Despite the proliferation of entrepreneurial courses within Business Administration programs, business schools are essentially vocational training grounds for consultants and investment bankers.
There are a variety of reasons many MBAs struggle at startups. The five most lethal challenges are as follows:
1. Tool Users - Startups often have a long gestation period in which the team is in discovery mode, defining the company’s value proposition, target market, pricing, business model, etc. Thus, startups need people who can identify and prioritize problems, not just solve those that are already defined.
MBAs graduate with an analytical toolkit that can be readily applied to solve known problems in a deliberate manner, especially when reams of data are available. Thus, it is no surprise that Harvard recently reported that 25% of its 2012 graduates accepted jobs as consultants, while 52% opted for careers in financial services.
2. Limited Entrepreneurial Experience – The admission process of top business schools emphasizes undergraduate grades and standardized test scores. As noted in Startup Advice From College Dropouts, successful entrepreneurs are often poor students.
Additionally, just as MBA graduates gravitate to consulting and investment banking, the majority of business school enrollees are also drawn from these industries (along with public accounting). Thus, relatively few MBA candidates enter B-school with meaningful entrepreneurial experiences.
3. Golden Expectations - Top MBA programs are expensive and their graduates have astronomical salary expectations. Per the 2012 Global Management Education Graduate Survey, the median debt of 2012 MBA graduates was $45,000, while the debt from top schools averaged $90,000 (e.g., Wharton graduates averaged more than $114,000 of graduate school loans).
This same report notes that MBAs will be granted a median starting salary of $90,000, plus an average signing bonus of $15,000. Unfortunately, the 2012 QS TopMBA.com Applicant Survey notes that, on average, MBAs expect to earn $153,000 upon graduation.
When I graduated from Wharton in 1989, I was one of the few in my class who shunned the investment banking / consulting path for the life as an initially unpaid entrepreneur. I was able to follow the startup path because I had no school debt and my wife had a stable, well-paying job. Sadly, relatively few entrepreneurially minded MBA graduates can now afford to accept a below-market salary at a startup.
4. Action vs. Analysis – Although its use is in decline, many MBA classes are still taught via the Socratic case method. This approach is effective when reviewing historical scenarios in which abundant data is available and a menu of potential decisions are readily evident.
Outside of the classroom, startups seldom have enough time, information or money to view the world through the rearview mirror. As such, much of the benefit derived from the case study methodology is inappropriate in an entrepreneurial setting where greater value is placed on execution, rather than analysis.
I recall a lengthy Harvard case from my days at Wharton that explored a large company’s convoluted decision process to move from wood to fiberglass skis. At the time we reviewed the case (the late 1980?s), the transition from wooden skis was nearly 20-years in the past.
5. Attitude - I have numerous friends who also happen to have earned an MBA. However, my friends notwithstanding, the reality is that many graduates from top Business Schools are tools. They are often more focused on building their careers, rather than building collegial teams. This proclivity for a cutthroat, rather than a collaborative culture, is detrimental to startups, which require everyone to row in the same direction with a low drama quotient, lest the startup boat will sink.
Look For MBA Outliers
Top business schools are effective at identifying intelligent, ambitious people. Entrepreneurs should leverage the screening performed by B-schools and not dismiss MBA applicants outright.
Thus, if you encounter an action-oriented MBA who has practical startup experience, is willing to accept equity in lieu of a market salary and exhibits a collaborative attitude, ignore their MBA handicap and hire them immediately.
UPDATE: Comment from someone who knows. Let’s call him William the Wise…
A key phrase is buried in the text, “greater value is placed on execution than on analysis.”
Looking for Strategy Coordinators who get to movement, my wife and I often said half the criteria for results was who the person was before they walked into the class room.
My first five minutes of conversation with Jeff Sundell, I knew that he knew how to run a business. It might have been an auto parts business.
Correct that last sentence. It was not that he knew how to run a business HE HAD RUN A SUCCESSFUL BUSINESS
Point is the only thing I remember from that conversation is that he had experience doing what is now called “execution”
People who do things make things happen and get to multiplication.
Too much analysis and too much looking at structure or future potential pitfalls never put the maximum energy in to getting todays job done.
Just as MBA are trained to look at data and predict problems most preachers are trained to find fault in doctrine, structure ecclesiology tradition etc.
Jesus said Those who have been successful executing stewardship over a few resources will be given execution authority or more resources and broader execution responsibility (Luke 16:10.