M.B.A : Master of Business Analysis

Let me acknowledge that 3 weeks into the program is too early to size up what an M.B.A is all about . However, I refuse to let go of this opportunity , so here goes ! [ Disclaimer : I plan to revisit this blog entry after the course to validate my lemmas ]

So, I was initiated into thinking this up in my class on Managing Oraganizations ( "OB" as it is popularly known ). A question we posed in the course was this : " Should organizations follow a model where much of their product is developed in-house or should they follow a model where most of the development ( including core competencies ) are outsourced ? "
[ Some examples of the latter are Toyota, Bharthi Telecom . ]

Here's the problem :-
How do we answer the above query ?

Wait , let me make it glamorous :- Say you are the company executive who needs to take this decision tomorrow . Will the learnings from your b-school give you the answer ?

My Answer : Not really.
And that is exactly what I am trying to drive at in this post on the three letters M, B, A.

To me, an MBA is a course on Business Analysis ( not Administration ) . By analysis, I mean that the course teaches you exactly two things :-

1) Tells you how to analyse a given problem.

2) Hammers into you that you need to consider ALL possible options and evaluate them before making a decision . ( In this specific case, our Prof told us interesting things on how you need to account for a zillion costs - Costs of Production , Transaction Costs etc etc let me not get into those details... )

Anyway, my point is , What an MBA *does not* tell you how to do is - the vital 3rd step :

3) Making the decision !

Why ? Simply because this last step is entirely situation dependent. Had it been formulaic, somebody might have come up with a cool idea to replace Managers with slick computers already. Fortunately for the manager-types, of the several variables which go into decision making , many can never be 'quantize'd and crunched into numbers.

So decision making is much much more than that.

Enter the X factor . Call it " Experience " , " Intuition " , " Gut Feeling " or whatever you want. You might have all your grand theories in place about the Auto industry , but if you have never worked in the auto industry - you can rest assured the decisions you make will almost always go for a toss!

Let me quote Henry Mintzberg who drives the point home about MBA programs , " It is plain silly to take people who have never been managers - many of whom have not even worked full-time for more than a few years - and pretend to be turning them into managers in a classroom.......stop dumping management theories and cases on people who have no basis to judge the relevance. "

Can somebody take a comment from B-schools that advertise themselves to be creating the "leaders of tomorrow " in their classrooms ?


In the end, what does this all mean ? Are MBA programs nothing more than a burden on the exchequer ?
Not at all. There is no need to be pessimistic about the whole thing.

All we need to keep in mind is the river-horse analogy :
If we are the horses , an MBA is that which can , at the most, take us to the river.

Nope, it CAN'T make you drink water. Period.

Illegal Economics

I decided to quickly document an interesting discussion that came up in class today.

Suppose you want to badly watch the Wimbeldon Final ,and you are unable to get a ticket for it. Lets say a tout comes to you with a $1500 ticket and, given the great demand, you agree to pay $3000 and have a happy viewing at the final.



As per law, selling tickets in "black" is illegal. Lets examine this a little more carefully. What illegal activity did the tout indulge in ?

1) He took the trouble of standing in the Queue and getting the ticket.

2) He did *not* force the ticket on you, it was entirely your decision to buy it from him.

3) He made profit by buying a good at a lower price and selling the same good at a higher price.



Isn't this exactly what "legitimate" businesses do ?

1) Get their hands dirty to provide you a service.

2) Sell that service whenever you require it.

3) Make a profit by charging you a premium for that service.



So, why is the tout a wrong-doer or a criminal ? [ Because he doesn't pay tax ? Assume the money he earns is within the tax-slab where there is complete exemption. ]

You might now argue that the Wimbeldon authorities have already fixed a price for the ticket, and we have no 'right' to change it. But wait, we are talking of a free market. Who are they to fix the price. In fact, no price can be disallowed in a free market . If prices are too high and ridiculous , rational consumers will automatically ensure that the price is brought down by decreasing the demand.



So, the tout's rebuttal to the Wimbeldon Authorities will be , " Look, you guys are free to increase price. Because you are ignorant of the PREVAILING value of that ticket , you fixed a lower price and sold it at that 'wrong' price to me . So, don't blame ME for YOUR incompetence ! "

From an economics standpoint, I don't see what is wrong with the tout's argument. Interesting. What we consider to be "illegal" is probably not so illegal after all !