MBA rankings are bogus for a very simple reason

Ah, it’s that time of year again. US News EMBA rankings have come out and it’s really interesting to watch the discussion, debate, accusations, the scorn, the wringing of hands… Sheer entertainment, really.

Someone inevitably loses out, someone else gains a notch or two.

But the truth is that MBA rankings are completely pointless because they depend quite heavily on metrics based on either starting salary or, in some cases (i.e. for the executive programs), change in salary.

This is dumb for three reasons:

1) Although most of the top-tier business schools have a fairly broad student catchment, they are not all equal. Therefore, to an extent, relative salary ranges are somewhat weighted by either geographic labour market characteristics or sector dynamics (i.e. some schools have stronger recruitment from particular business segments). Especially certain programs like evening/weekend EMBA programs.

2) If your employer is sponsoring your MBA, salaries don’t tend to dramatically increase before/after B-School. In fact, that’s usually the whole point. You sponsor someone for business school, you put in some kind of a lock-in/payback obligation and you keep the salary as flat as you can (perhaps inflation adjustment only). Maybe even for a couple of years. If you have shucked out the best part of somewhere between $60,000 and $100,000 for an employee to get an MBA – that investment is part training and development, and part “holistic view of compensation.” Especially in this day in age where balance sheets are being run in conservation mode and plenty of firms are saying no to big education investments.

3) A lot of people take MBAs to try and get a better pay check (and we all know that this is mostly a false hope). A lot of people pursue an MBA to get into “richer” industries in the hope that long-term, they’ll have a more financially lucrative career. Whatever… However, I personally believe that a lot of people take MBAs simply to change industry, at least this is my experience of business school both as a student and as a ‘professor’. In this scenario, the diploma may be the key to resume reinvention or repositioning yourself, but you might still take a pay cut or a fairly flat salary adjustment in order to move to a new industry even with your shiny new Boy Scout (or Girl Guide) “business survival” badge. This is obviously going to impact the numbers.

The bottom line is that education is not just about getting a bigger pay check but this is ultimately how we substantially (not entirely, but certainly significantly) benchmark the impact factor of an MBA. My question is this – how are business schools ever going to transform into more powerful, creative and diversified learning environments that embrace design, human factors, social entrepreneurship and philanthropy if the thing that matters most is the pay check students get at the end?

It’s not clever to put “Silicon” in front of your local landmark… and call it a tech hub

I’ve been enjoying a fair amount of blowback from a recent entrepreneurship article I wrote for Business Review Weekly. I’d like to clarify my stance for the avoidance of doubt.

It’s very simple.

There are dozens and dozens of examples around the world where the word ‘silicon’ has been put in front of some kind of geographic landmark or cultural icon in order to denote a tech hub.

Here are a few of my favorites:

Silicon Alley (New York)
Silicon Roundabout (London)
Silicon Allee (Berlin)
Silicon Flatirons (Colorado)
Silicon Glen (Scotland)
Silicon Beach (LA and Australia)
Silicon Harbour (Hong Kong)
Silicon Taiga (Novosibirsk, Russia)
Silicon Sauna (Finland)

Obviously, these are important communities and the spirit of what is being created cannot be faulted (and is not the focus of my criticism). What irritates the crap out of me is the lack of imagination and the obvious throwback to Silicon Valley that comes from chucking the word “silicon” in front of your regional or national landmark (like London had nothing more interesting to suggest than one of about 10,000 roundabouts…).

There is no doubt that everyone admires Silicon Valley as a leading innovation hotspot but the mere act of prefacing your local innovation “cluster” with ‘silicon’ just means you don’t have an original idea about how to define yourself or build a network of entrepreneurs, services and investors that are locally relevant. Besides, 9/10 times it was a goofy politican (usually limited imagination comes with that particular territory) that came up with the brand to begin with.

Australia’s “Silicon Beach” irritates me the most.

Firstly, it was not the first place in the world to come up with “Silicon Beach” so it couldn’t even get that right. Even worse, it completely fails to elucidate a vision for how Australia might strive to differentiate itself against all the other Silicon Valley wannabes around the world. The sheer lack of thought and imagination just means that nobody asked the question “what’s unique about us?” and it irks me. As a consequence, I argue these “hubs” lack relevancy and clear strategy around how to grow something that is uniquely adapted to a particular innovation landscape. Moreover, this is a classic example of where Australia tends to cling to US and European culture rather than simply turn and face the miracle and opportunity of Asia in its backyard.

I’ll reiterate – I love and support the sentiment, the implication, the intent. What I would really like to see is some vision in the brand.

‘Nuff said…

PS …. I lie. I do like Silicon Sauna. To me that evokes the image of a bunch of bearded computer geeks hanging out with beautiful blonde (naked) Nordic women in a vast network of makeshift plastic sheeting steam rooms on the edge of some majestic Scandanavian lake. If someone could turn that into an event with 5-6,000 people, “in the buff” coding marathons, live entertainment, strategically placed vodka ice sculptures and private sauna tents enabled with high-speed wifi and shisha pipes, I think I would dust off my Java and Ruby Rails manuals…

Business and Friendship Don’t Mix

Over the years I’ve been involved in launching a fair number of start-ups, either as the innovator or as a financing partner. Entrepreneurs are naturally attracted to each other and it’s not unusual, plotting away after the 8th beer, to come up with a new idea. Sometimes those new ideas don’t look completely stupid the next day and a new enterprrise is born.

I’ve had the great privelage of working with some really fantastic people along the way – and some of those individuals are people that I would walk across burning coals for. I guess that means that there is more than just the opportunistic element of a business relationship, there must be some kind of friendship involved. There have also been people along the way that I have met that I just simply liked. Some of those relationships continue long after the venture has expired and I derive great happiness from those relationships.

On the whole, however, I would say that mixing friendship and business is exceedingly difficult. There are five scenarios that I have seen along the way that will be familiar to many entrepreneurs.

Scenario 1. You start a venture with a good buddy thinking he is going to be fantastic to work with. He’s smart, he shares your values, he someone you are going to enjoy the long-haul with… and then he turns out to be a prick with limited vision, a short-term viewpoint and penchant for causing carnage all around him. Yep, friendship is a kind of myopia and it’s amazing sometimes how everyone will tell you after “we could never understand why you would start a business with person X.” Gee thanks for telling me…

Scenario 2. You hire a friend that you completely trust – but they turn out to be incompetent. Not just a little bit, but a lot. OUCH. How do you turn around and dismiss someone who is loyal to you? I’m sorry, it’s a betrayal – but a necessary betrayal and you just have to bite the bullet. The sad thing is that your friendship will probably not survive unless the other person is truly miserable … but things have to get pretty bad for misery to set in. Not fun and this is your penalty for making a bad decision.

Scenario 3. You hire someone you really like and admire and then they screw you. I had this happen to me once a few years ago when an executive joined the team that I had always felt a strong affinity toward. We’d been through a lot together over the years but I didn’t realize that the person didn’t want to help me, they simply wanted my job. Turns out I didn’t know that person or what motivated them at all. Crocodile smiles.

Scenario 4. You have a member of your team or workplace that you grow to like over time. In a lot of organizations, people unfortunately get promoted because they “fit in” well, they might good HR reviews because they are likeable and everyone else responds to their social ethic. They are “glue.” But then one day you realize that despite the positive ambience this person brings, they are mediocre at their job and may actually be responsible for counter-productive behavior. How do you get rid of someone everyone likes to have around without causing a mutiny and demoralizing he team?

Scenario 5. You really like someone and they are setting up a new business. They need capital and you have some spare cash. You loan it to them on “loose” terms. They either never pay you back or they pay you back under such protracted circumstances that the time-value of money kicks you in the teeth and you are tempted to send in either a debt collector or a hit man. All I can say is, never loan money to friends and family. By all means gift it, but never loan it. I should point out though, that I did loan a friend of mine money once and we did it under a notarized contract – and he paid me every cent back plus agreed interest. Being formal and not loosy-goosey about money (i.e. treating it as a business transaction) actually made me respect and like him more (you know who you are big fella…). This is the rare exception.

It is due to these kinds of situations that I have finally decided that business and friendship don’t mix. It doesn’t mean that you can’t work with people you like. I consider myself to be very lucky – most of the people I have to interact with every day, I personally like a great deal. I strive to hire / work with people I like and want to work with. In fact, we should all aspire to work in organizations where we like 90% of the people we have to spend 40+ hours per week with and if we don’t we should quit ASAP. Otherwise life is pretty oppressive.

But true friendship and business seldom work together.

At some point, in order to deliver a successful business and respond to change, all relationships get strained. Friendships create expectations of people that are not derived from performance or outcomes, and hence there is a natural incompatibility.  Of course, there are some people in the world who take a performance-based approach to friendship, but I am not one of them. For my friends, I will do things for their interests ahead of my own – in business, you have to defend your own fort first.

Marissa Mayer Should Step Down from Yahoo!

I’ll start by saying that I don’t know Marissa as a person, I’ve never met her – only seen her at a “distance” at conferences. She strikes me as incredibly bright … and incredibly self-involved. So maybe her current public image problems are just a natural extension of her own personality characteristics.

When she was first recruited as Yahoo!’s CEO, I chuckled to myself and gave it a 1/10 chance she’d still be in the job in a year. Let’s face it, either there was nobody keen enough to take a job that would involve rolling up the sleeves and diving into a vat of muck … or the goal was to poke Google in the eye by stealing a key bit of talent. What else could it have been? She’s got absolutely nothing in her track record that suggests she’d be a suitable CEO for a distressed public company. You don’t want a glorified product manager for that role, you want someone who knows how to turn-around a business. It was just politics.

My personal opinion is that Yahoo! can’t be turned around by a technologist anyhow.

I read with a mixture of sympathy and irritation the saga around childbirth. Sympathy because it couldn’t have been very pleasant to have such a personal matter thrust into the spotlight – and irritation, because it’s not like it’s the first time an executive has had to simultaneously deal with having a kid and managing a job. Sure it’s bloody tough – but it’s far from novel. In fact, by making it so “novel” we actually take something away from what I believe is increasingly a desired societal goal – namely that people (and particularly women) can have both a fulfilling career and a family. I believe our workplaces are are wising up to the productivity and “team health” benefits of supporting family life.

My ire rose considerably when I read that Marissa had built a nursery next to her office so that she could work longer hours. Wow – what a tremendous privelage! While I think it is reasonable that if you have the means to improve your life you should, I also think that in an executive leadership role you have an obligation to think about what your actions really mean to others. It is a testament to her lack of maturity, gravitas and leadership that she chose to implement a personal-work life solution that could not possibly be replicated by any other female member of her staff. Or a male member for that matter. She actually missed a tremendous leadership opportunity to do something for Yahoo! that could have benefitted all women in her workforce but she chose not to.

Despite the reputation for only hiring millennials, tech companies like Yahoo! have an average workforce age of about 35. This means that Marissa Mayer (at 37) is roughly on par with her female colleagues. Clearly if there were insufficient child-minding facilities onsite for her, there were probably other employees who had the same problem?

What irritated me the most about the Mayer baby commentary was the idea that somehow only a woman could be affected enough by the emotional challenges of having a kid to do something like build a nursery in the office. In fact, many men who have children feel this same pang every day, myself included. When I am on the road, I miss my son incredibly and I constantly feel the guilt of the long hours my job demands. I am acutely aware of the fact that I am not, in many ways, ideally fulfilling my duties as a father.

Maybe we’re all just a bunch of wimps and Marissa did what any self-respecting executive would do if they had a true “set of balls,” but I don’t think this is about “executive privelege”. I think it is about setting a realistic example and being a role model. For a woman, it is probably harder because I do believe that women struggle more with the exeuctive/family life conflict, but it is no less important.

However, with this latest stupidity around telecommuting, I think she has demonstrated her complete lack of fitness for the role of CEO. There are three reasons for this.

Firstly, by tightening up the stance on telecommuting she essentially undermines a fundamental tenent of her industry – that of information dissemination, ubiquitous communication and integrating people everywhere. In a sense, by cracking down on distributed organizations, she’s sending the message that her talent pool is limited to those she can contain within the walls of Yahoo!’s Sunnyvale campus. This is so old fashioned and out of pace with our modern world. To me, this is a bigger failing than sending the message that it’s not ok to balance work/family life. There is a whole world out there of ideas and ingenuity and Yahoo! has basically excluded themselves from it.

Secondly, I do agree that she is sending the wrong message to people that may have legitimate reasons for needing to telecommute. I do think that, particularly in the IT industry, there is positive scope for talented employees who have kids or need to have a different type of working environment (i.e. disabilities, need to look after an unwell loved one) to take a more flexible approach. It’s a bit harder if you work in a molecular biology lab. In my experience, telecommuting does not exclude spending time at corporate HQ or the need to physically participate in key workshops/meetings. It’s also not necessarily true that telecommuniting is appropriate for all roles within an organization. If your function is business development or client-facing, it’s entirely reasonable. If you responsibility is to manage a production team, it may be less appropriate for longer periods of time.

But the biggest failing is cultural. The “punch in, punch out” mentality at Yahoo! has got nothing to do with telecommuting or homeworking, it has to do with a demotivated workforce. When people are looking at the clock to head home at night, it means that employees no longer see their job as anything more than the means to a paycheck. I have several very valued employees who leave the office at 5pm to pick up kids or beat traffic but I also know they are back on line for a few hours in the evening to chase a few items or take calls with business partners in different time zones. They’re perfectly entitled to hit the road at 5pm.

This is not what is happening at Yahoo! Besides, people who have low productivity while telecommuting will also have low productivity in the office.

In essence, Marissa is not a role model for her disillusioned workforce. She clearly doesn’t understand much about leading people (a recurrent theme in much of what is written about her) and as brilliant as she may be about solving technology and product-related problems, she probably lacks the “people solving” abilities that are really a fundamental part of leading a distressed business toward salvation.

Just because you’re a great technologist, doesn’t make you a great turn-around CEO.