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Why can a top executive with an MBA or PhD “kill” your company or startup?

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Do you think a company or startup needs ultra-qualified managers with advanced degrees or an MBA (Master of Business Administration)? At first glance, the answer is quite obvious. Of course we do. Indeed, the more knowledge and experience an employee has, the more he can do for the company. However, not all so simple. Elon Musk, founder of Tesla, Space X and PayPal, says:

“As much as possible, try not to hire MBA holders. MBA programs don’t teach you how to start a company. The position of my companies is to hire not because of the MBA, but in spite of it. “

Scott Cook, founder of the world-renowned innovative business products company Intuit, agrees with Elon:

“When MBA graduates come to us, we have to seriously retrain them – nothing we have learned will help them succeed in innovation.”

Nathan Ferr and Jeff Dyer, co-author of the world bestselling DNA of Innovators, decided to explore the issue in depth in their new book, Creating Innovation. Creative Techniques from Netflix, Amazon, and Google ”, and understand why graduate degrees and MBAs are often a barrier to innovation in companies and why company leaders have to retrain these employees.

There are several reasons for this:

The business schools teach mainly the classical school of management.

This knowledge is sharpened to a greater extent for the implementation of managerial activities in large corporations, the products of which are already understandable to the audience and do not require the introduction of any innovations.

Employees with an MBA degree feel great where they need to manage personnel, collect data, analyze, and work out the company’s strategy for many years. But they turn out to be absolutely powerless when the company needs to introduce innovations, work in markets in which the product has not yet been formed, the so-called “blue oceans”.

The human factor also plays a role. People who have completed an MBA elevate themselves to the level of gods. It is very difficult to reach them and they are very often closed for obtaining new knowledge. Perhaps this is why the introvert and optimizer of his working hours Elon Musk tries not to hire managers with MBA degrees. Obviously, too many resources will be spent on retraining such people and “fighting” with them.

Nathan Ferr and Jeff Dyer write that the traditional school of management is completely unsuitable for startups and companies in which innovation plays a large role. In such companies, a flexible management approach should prevail. For example, in the same world-renowned company Intuit, not so long ago, they began to introduce the principles of design thinking and sprint techniques (a technique that Jake Knapp John Zeratsky writes about in his book Sprint: How to Solve Big Problems and Test New Ideas in Just Five Days ”, the sprint of which is in our library), which gave simply impressive results. The company empowered many employees to develop ideas and then validate them in the field. To understand how all this works, here’s a small example.

How are decisions usually made in many companies? The director calls a meeting with top managers and they begin to offer their ideas for improving the business in the company. One says: “Let’s do this, it will sell our product even better.” The director thinks and says: “No, this is all nonsense, it seems to me that this will not work. Who else can suggest something? ” Another manager proposes, then a third, then a fourth, and everyone gets rejected by the director: either there is no money to implement the idea, then this idea seems to the director “sheer nonsense.” Finally, the director issues: “Let’s do this, I think it will make our company better.” And everyone agrees.

If you are familiar with this situation, then you understand how exhausting such meetings are and how useless they are in terms of efficiency.

Companies that use the principles of design thinking, Sprint and Lean Startup (developed by Eric Rees) hold their meetings in a slightly different format.

How Steve Jobs applied the innovation method. Print and hang on the wall!

Let’s imagine the same situation as at the beginning of the first example. Employees and the director get together and begin to offer their ideas for improving the product or service. The director and each member of the team listen to suggestions very carefully. As a result, they come to the conclusion that it is necessary to test ideas. Ideas are tested by creating minimal versions of products and attracting focus groups of potential customers who answer objective questions and evaluate innovations. A very short time passes and the company understands whether to continue working on these products or not and need new ideas.

Someone will say that this is a waste of company resources. However, with the help of similar techniques, Intuit, Amazon, Elon Musk’s companies have created many innovative, breakthrough and, importantly, profitable products.

So, back to our very first question: is there a place for MBA employees in an innovative company or not? The answer is “Yes” if you adhere to the four principles detailed by Nathan Ferr and Jeff Dyer in their book, Creating Innovation:

You should be the main experimenter, not the decision maker.

You must remove all bureaucratic and other barriers to ensure fast experimentation and minimal versions.

You must be able to set big and ambitious goals.

You must develop broad and deep skills in the innovator’s method: continuous training and empowerment of employees to make decisions and test their ideas.

About the book “Creating Innovation”

I would like to note that the book by Nathan Ferr and Jeff Dyer is a real textbook for managers and founders of companies that develop and implement innovative products. In addition to the important role of the innovative leader in the company and the principles that he must follow, the book covers almost all aspects of the activities of innovative companies. Drawing on the experience of world renowned companies such as Amazon, Netflix, Intuit, Google, eBay, PayPal and many others, the authors talk about how:

  • – create insights using 5 key skills;
  • – work out the idea and prototype, and what tools will contribute to this;
  • – create business models, and what components need to be defined before a full-fledged product launch;
  • – to reorient the company from one product to the completely opposite one, and what is “pivot”;
  • – to motivate the team to create innovations and make the innovator’s method work where bureaucracy and conservatism reign.

The book is literally filled with cases and real examples of the successful application of all methods. Reading is a pleasure, but putting it into practice is a joy.

….. more info can be found here «Road to 100k Instagram Followers»!

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