If I was eighteen, and clueless about what I wanted to do with my life, I would do business school all over again.
I’m not eighteen anymore, so I would not go back to business school. Not when there are many other ways of learning out there.
1. I’m not fit to give you any business advice
A couple of months ago, a friend of mine headed back to school in a remote community in interior BC. She wrote to me, excitedly about her new surroundings. She was also excited about a business idea she’s had: the campus was set up miles away from the nearest town, so why not start a grocery delivery service for the hungry students? I was the only person she knew with a business degree, so it found me.
I started to write back somewhat vague and non-committal, than I stopped typing, hit the ENTER key, and wrote the following: “The thing is, a business degree is probably the least helpful to someone that wants to start their business, because in business school, all we got trained on was how to service someone else.”
I wrote this to concede that I had little practical advice for her.
I was not wholly clueless when it comes to entrepreneurship – I did get my hands dirty on a business for a couple of years during university, and that has proven to be one of the biggest confidence-booster of my life. But whatever skills I had gained during this time became neutered in a classroom setting.
School trained us to become task-masters, one that is great at driving efficiency, expediency, and a razor-sharp ability to prioritize. We become extremely proficient at functional tasks, but terrible at matters involving creativity and imagination. It takes a smart and able person to answer a question correctly, but a non-conformist to re-phrase the questions posed in the first place. In face of the current crisis, I think that kind of out-of-the-box inquisitiveness might have been helpful.
But perhaps that was the plan all along with business schools and their generous donors. Just like the military, business schools are probably better at training problem solvers instead of thinkers. It didn’t profess to churn out Aristotles that philosophize. Equipped with plenty of discipline and normalized by years of standardized training, we marched into the corporate world. I then got into bed with Excel, let someone else worry about the bottom line, and became a cog.
2. Business school made us masochists
I was a mediocre student at best, struggling to keep up with endless lists of projects, papers, presentations. After four years of hard labor, I barely made it out with honors. Read more...
Given the present market bloodbath, there are many ongoing discussions on what the sensible investment strategy should be going forward, and whether one should still be investing in face of economic uncertainties at all.
Most solutions favour an old-school approach. Many personal finance writers have gone back to basic principles of investing such as dollar-cost averaging, diversification, looking at the long term, be calm when the market is fearful, etc. Many are viewing investment through a mostly unchanged framework as what we have become accustomed to. But my question is, in a time when the corporate world, government bodies, and media complex have abdicated or neglected to perform their roles, why aren’t investors moving towards a different paradigm?
Here are some ways that I see the rules of investing change in the coming decades.
Long-term sustainability. Once a successful business becomes a publicly traded company, the management team willingly subjects themselves to continual scrutiny by the market. Dozens of analysts pore over the company’s quarterly and yearly forecast and issue their own estimates. After each earning call, those whiz kids compare and contrast their estimate to the actual numbers and company forecast, and issue their “buy” or “sell” recommendations. The market then reacts, sometimes violently, if the quarterly numbers greatly exceed or disappoint the analysts.
As a system, we have a stock market that rewards short-term gains and profits. By doing so, we inadvertently create unsavory incentives for the management team to maximize short-term profits at the expense of pretty much everything else.
Remember Chainsaw Al? A self-proclaimed turn-around artist, Al Dunlop infamously presided over Sunbeam over a decade ago. Within three months of his installation as CEO, Sunbeam had cut over half its employees and eliminated 87% of its products. Employees saw working for him akin to trench warfare, many exhausted from having unrealistic goals imposed on them. Upon his firing, it became clear that massive accounting fraud had taken place. Revenues had been padded through various dubious or outright illegal revenue recognition techniques. The company was cash strapped. Share prices shot up from $12 to $53, before falling back to $11.
Dunlop was an extreme example from another time. More current incarnations of companies and individuals buckling under the market pressures of high performance are numerous. Enron and Worldcom all carried on the tradition of growing through accounting trickeries.
Looking forward to the investment environment, I imagine the investors would be very wary of overly aggressive CEOs whose claims to fame are quick turnarounds accompanied by massive restructurings. Maybe investors would be more interested in slower and steadier progress that are on par with the general economy, and have long-term, sustainable trends supporting their growth.
Shafeen Charania coined the term “Integrity, transparency, accountability (ITA)” as qualities that investors will place most value on in the new investment environment. He likened the corporate imperative to act with ITA to the initial challenges faced by the green movement. Read more...
Does the name Abby Cohen ring a bell? It does for me, and it broils my blood. Chances are, if you were at all invested during the tech bubble in the early 2000s, you would recognize the name too. Dubbed “perpetual bull“, she championed the rise of tech and telecom stocks all the way to the stratosphere.
At that time, she was the star analyst at Goldman Sachs. The companies she covered loved her (which should’ve been a warning sigh all by itself), the market loved her, as wave after wave of heart-stopping rises made her outrageous bullish calls nothing but prophetic. In fact, in the midst of the March 2000 sell-off, she was still lauding for another bullish run.
So it bugs me to no end that a few weeks ago, the name Abby Cohen popped up on my screen again. It seems like over the last few years, Ms Cohen was back to her old tricks, spreading her never-ending cheery outlook throughout 2007 and 2008 on any media outlet that would have her. Her standing at Goldman was seemingly undiminished till mid-2008 when she was finally replaced (or self-demoted) in her role as the chief strategist. Yet her name still pops up, ready to hypnotize another generation of ill-informed investors, eager for a quick buck in the casino of stock trading.
My question now is this. How could this happen? How can individuals like Abby Cohen not only survive, but thrive as an analyst, with consistently bad calls on the market? If a supermarket stocker routinely make mistakes while stocking, fail to input the right information into the computer and create nothing but inconvenience for the customers, he would be fired, right? So why can’t the same accountability be applied to a stock market analyst when it is her job to be, at least, be more right than wrong?
It might be negligence, ignorance, or outright incompetence. But the media, so keen on scrutinizing every piece of breaking news on its 24-hour network, seems to lack both the will and the ability to call out the inconsistencies.
And I can hardly imagine the conversations that would go on behind closed doors at Goldman (and undoubtedly many others) when it comes to dealing with puppet analysts such as Cohen. The thing is, the stock market can only go two ways, up, or down. So whichever way you call it, you are going to be 50% correct. I wonder if these advisory outfits divide their analysts into two groups, the uppers and the downers, each inextricably bound to their roles as surely as they are to their bonuses. And just like a traveling puppeteer workshop, they would whip one or the other out when the occasion calls.
Perhaps with the impending restructuring of the entire investment/banking industry, some level of scrutiny, accountability and integrity will be injected into the system. These basic human decencies should be demanded of our bankers as much as any service providers we pay for. Read more...
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