5 Important Things You Cannot Learn From Business School
“Failure is our most important product”, says Robert Johnson Jr. co-founder of Johnson and Johnson, who was worth $1 billion at his death in 1968. To this day, J and J, a 400 billion dollar company, consciously encourages trying a lot of new things, keeping what works and quickly discarding those that don’t. This approach promotes an environment that encourages individual initiative and allows people to experiment on new ideas. Businesses that do not evolve die. This is the typical kind of lesson you learn from business school.
At graduation from school, you felt on top of the world. You survived all the cramming, testing, projects and exams. You are officially ready to take on the world. Suddenly, you realize that what you did in school and the real world are two different things. How often do you experience something in real life and say, “yea, I remember we were taught this in school?” The school has its benefit in some use cases and professions. But if you are learning about the business world, there are many important lessons you cannot learn from school. You have to experience them to learn from them.
I’ll share with you 7 important lessons you cannot learn from business school. Before we get to it, be sure to subscribe to this site for more insightful articles like this one.
1. How to adapt with change
The best plan fails at first attack with the enemy. Because the reality is different from theory. The success of Wal-Mart is frequently taught in microeconomics textbooks and MBA strategic planning courses. But Jim Walton, son of Sam Walton the founder of Wal-Mart finds what they teach rather amusing. While these outsiders viewed his dad as a grand strategist who intuitively developed complex plans and implemented them with precision, Jim said his dad worked on the principle of change; trying out a lot of ideas, discarding the ones that fail and keeping those that work. What people see are the few things that worked, not the many that didn’t work. According to Jim, the corporate strategic courses totally fail to capture how Wal-Mart arrived at its competitive advantage. They study what works for businesses, but often fail to capture how the businesses arrived at what worked. As a Wal-Mart executive described, “We live by the motto, ‘Do it. Fix it. Try it.’ If you try something and it works, you keep it. If it doesn’t work you fix it or try something else.”
2. How to Innovate
Let’s take one more lesson from Wal-Mart. At business school, you could learn about Wal-Mart’s famous ‘people greeters; as a genius idea of customer service coming from a grand plan or strategy. But the story is rather less dramatic. What happened was that a store manager was having trouble with shoplifters. So he tried an experiment. He put a friendly older gentleman by the front door to ‘greet’ people on their way in and out. The people greeter made honest people welcome and send a message to the potential shoplifter that someone will see them if they tried to walk out with the stolen item. This odd experiment proved effective and eventually became standard practice across the company and a competitive advantage for Wal-Mart.
Sometimes, and note the word, ‘some times’, the best ideas and innovation come from common sense and not from some strategic corporate brainstorming. It may feel more intelligent to look at all successful businesses as primarily a product of brilliant foresight and strategic planning. But that is not always the case. You will often find that it’s largely a result of trying a lot of experiments, seizing opportunities, keeping what works and fixing or discarding what doesn’t. For instance, no business training could have prepared you for the 2020 pandemic and its economic effect. It then takes a creative imagination to innovate new ways to stay afloat and thrive.
3. Having a clear vision
I’ve mentioned experimenting, trying out new things and discarding what doesn’t work as a requirement to adapt, innovate and grow. How can you do all these and still stick to your vision? The simple answer is this; once you know what you stand for and where you are going, it easier to function within these core values.
Jack Welch at General Electric has a management strategy labeled ‘planful opportunism’. The idea is that instead of directing a business according to a detailed, strategic plan, Welch believed in setting only a few clear goals. Then, when necessary, his people were free to seize any opportunities they saw to further those goals. It takes standing for something and having a clear vision to be able to experiment and adapt without losing your direction.
Nothing is stable and the past isn’t a perfect window into what’s going to happen in future. Models and textbook theories can play a role in building your knowledge base, but you need to have a clear vision to navigate the uncertainties of life.
4. Hunger for real world knowledge
If we put aside political correctness, many of the textbooks we bought in school were a waste of money and time reading them. It’s not that you cannot gain valuable knowledge from textbooks, it’s just that your consuming them was not driven by a hunger for knowledge but a requirement to pass an exam. There are many great and interesting books out there on business, investing, economics, history, leadership, psychology, negotiation and marketing that cost a fraction of what these textbooks cost. And contain far more useful and practical information.
The majority of my learning experience happened from reading books outside the context of academics and from real-life experience. The danger of this emphasis on uninteresting textbooks is that it steals away the students’ hunger for knowledge. Students are meant to be hungry to learn about the world around them, not forced to learn. Seth Godin calls this enrolment – you can’t teach someone against their will. They have to enrol their attention to learn willingly. If you want to succeed in the world outside school, you must continue to be a student at heart; you must continue to be hungry for knowledge in the real world.
5. Behavioral Psychology
Isn’t it amazing how schools lay so much emphasis on theories and knowledge and academic intelligence but barely focus on the most important skill every one of us needs to master; how to deal with other people. Human interaction is the hallmark of our existence.
You cannot survive in the business world without selling. To get ahead in your career, you will have to learn how to sell your skills and achievements to other people. Effective selling and marketing is all about understanding how people behave. But most people have a negative attitude towards selling. Most people will prefer to deal with a C student who has good interpersonal skills than an A student who has no idea how to communicate or work with other people.
Also, to lead people effectively, you have to understand why people behave the way they do, and how to persuade them to help achieve your vision. All these boil down to your understanding of human behavioural psychology. You have to get into the real world to learn them.
Many of what you will learn in the economics classes may be disproved by the time you leave school. What you learn about monetary policy, interest rates and inflation may be wrong in the real-world context. But it will all sound intelligent in classroom.
In business schools, you will learn case studies about successful businesses and they’ll always be interesting to listen to. But what they fail to mention is the number of companies that tried the exact same strategy and failed. Successful businesses usually have a wonderful product, leader or strategy, but also a reasonable size of luck. No one tells you about luck when you are going through business school because it’s not quantifiable. So moral of the story is that learning the important skills in life requires real world experience. So if you want to learn about business, start one or work with one. While at it, study success as well as failures; you can learn from both.