First week of classes, leaders of consequence

We're right in the middle of our first week of classes in Global Institute, the pre-term all Duke MBA first years go through. Our courses are Global Institutions and Environments, a survey course looking at the role of institutions in promoting or diminishing commerce, and Leadership, Ethics, and Organizations, a course focused on, well, leadership, ethics, and organizations. So far we're all having a great time.

I don't have a ton of time to write, but I did want to mention something that has stood out to me so far. A lot of time at orientation this weekend was spent on what many would call "soft skills" -- leadership, self-awareness, ethical groundedness, and teamwork. Some MBA programs spend a lot of time on these skills, while others give them short shrift. For some functions in some industries, they may not be that valuable -- but I am inclined to think they're critical just about everywhere.

Our dean, Blair Sheppard, said this weekend that he believed much of the present financial crisis can be blamed on people who were deeply skilled but insufficiently broad. Folks were making decisions that seemed smart from the perspective of a finance guy on Wall Street, or a lender, or a CEO, but which were actually pretty dumb if you considered the wider context. Blair stressed that Duke wants to produce MBAs who care about this context, who want to go very deep into their subject area but also maintain a broad vision, understanding where they fit in.

He actually went so far as to say that the only kinds of grads Duke will be proud of and feel represent us well are the ones who care about this context, who want to lead, who choose their career based on where they will do the most good rather than following a crowd. Blair singled out the folks who want to do finance in this climate as very attractive to Duke — precisely because in this adverse environment they must know that's what they are most passionate about, they must believe very strongly that's where they can do the greatest good.

Lots of folks play soft skills and hard skills off one another as if it were a zero sum game — pay attention to leadership and you can't be as good at finance, delve deeply into the whys and hows of ethical lapses and you won't be as good a consultant, etc. I'm proud to be part of a community that demonstrates that's not true. Duke makes personal development, leadership, and ethics a central part of the curriculum — and I do believe that will make us better bankers, consultants, marketers, general managers, and entrepreneurs.

The countdown begins

The MBA Class of 2011 at Duke is already swinging into gear. Orientation is just a few days away, and a lot of activities have already started. The Health Sector Management folks started boot camp yesterday, the Program for Entrepreneurs had its kickoff last Friday and Saturday (with a huge growth in interest and ideas over last year -- watch out for this program), and math camp and language camp having concluded in recent days.

I'll do my best to check in now and again with observations from the journey ahead. I'm as busy as everyone else starting an MBA this fall — trying to tie up loose ends, get my career targets settled, and spending what seems like hours a day in front of Facebook planning outings and meeting new classmates online. But I definitely want to share a bit of what the Duke MBA experience is like for those who are considering applying.

All that Facebook networking has served us pretty well, incidentally. I'm curious what the situation has been like with other schools. A huge chunk of the class is on Facebook and seeking out classmates, so our friendships have really taken off from the springboard in face-to-face meetings the last few weeks.

Best of luck to everyone who's starting this fall, and for all those applying for the class of 2012 — think blue and apply to Duke!

Sprint: an example of how not to do corporate culture

I've been suffering a customer care nightmare with Sprint that is simultaneously very frustrating personally and quite revealing from a business perspective. Previously I'd been a pretty happy customer, impressed with how much their customer service had improved since I was a customer years and years ago in college. In fact, since we got a proactive call from customer care helping us avoid a ton of overage fees, I'd been spreading the word about how Sprint had improved to all and sundry.

Then we got a mailer inviting us to join Sprint Premier, a program for long-standing Sprint customers (10 years plus) and those who spend a lot of money each month on expensive plans. We qualified, since we have a family plan plus a data plan for my BlackBerry.

Or so I thought. I spent several hours talking to 13 people in various departments at Sprint, none of whom knew about the program or its details — they just kept forwarding me around to other people. Poor training.

But the real kicker is that when I finally got a supervisor who knew about the program, he said we didn't qualify, because my BlackBerry data plan was not considered part of my "monthly recurring charge" (MRC), and thus we didn't spend enough money each month to qualify. Nevermind that data charges are included in their MRC calculation for other plans — just not ours.

I've now spoken to several folks in VIP care, including a supervisor — none of whom are empowered to give me a program that would cost them about $125 in order to retain us as customers. Their customer acquisition cost is more than twice that number, so it's a no-brainer — but no one in the five or six levels of hierarchy that deal with customers directly is empowered to amend their policies or even grant an exception.

I'm not just complaining here. Middle management bloat is a big problem for large companies, though there's always tension between keeping the hierarchy as flat as possible and keeping spans of control reasonable. But if you're going to let your company's hierarchy grow lots of levels, you must empower lots of line people to make smart decisions.

To let line-level supervisors or managers make decisions like this, you've got to hire smart people you can trust, which is expensive. Unless you're the cost leader, which Sprint is not, you have no choice but to hire good people and provide good customer service. Mobile voice and data is a competitive industry, so it's hard to do this and keep margins healthy. No one said business was easy. But other carriers are making it work, and Sprint is not. That's why it's losing millions of customers a year.

I offer this advice free to Sprint's executive team — now they can repay me by giving me my token membership and a faster upgrade. :-)

UPDATE: It occurs to me that my little analysis of Sprint's position in the wireless industry could be seen as overly simplistic. But even if you bring in Porter's nuanced "focus" options, I don't think Sprint is following a sound strategy.

They're not the cost leader — that's T-Mobile or perhaps the prepaid providers (depending on how you want to carve up the industry). They're not a cost focuser, either, because they're not cheaper for some large sub-section of the industry's customer base — business, for instance. I think they believe they're either a differentiator or a differentiation focuser — on network strength — but if they think the strength of their network will let them have terrible customer service, they're wrong. They're also frequently behind the curve on handsets — which is a problem, because you have to differentiate on something customers care about, like bleeding-edge handsets or good customer service.

Good network strength feels very subjective to customers, and it varies from place to place. A lot of factors contribute to good or bad network performance, and there might be something to be said for the idea that Sprint's network does well in some benchmarks largely because it doesn't have many users. AT&T, conversely, has suffered in this department precisely because the iPhone has been so popular and data usage on that platform has overwhelmed AT&T's network.

Customer service, on the other hand, can quickly make or kill a customer relationship, and it feels a lot less subjective to customers. Rightly or wrongly, a few bad experiences shared among friends can cement the idea that a company's customer service is Bad with a capital B. Sprint is desperately trying to dig out of that hole, which they created years ago with horrifically bad service in the early 2000s. Clearly they have not solved the underlying problems, because for anything beyond run-of-the-mill questions, their staff are not empowered to fix problems. There's no culture of trust and problem solving that drives good customer service.

When you don't fall into any of the four quadrants of Porter's general strategies matrix, you fall through the cracks and fail as a company. It's that simple.

Signs of the times

One of the coolest things about starting b-school for me, especially since I don't have a traditional business undergrad background, is looking into areas of the business world I haven't had much exposure to at work — for instance, consumer products marketing.

Working in the strategic and operations sides of hospitality, marketing for me is basically revenue management, the process of dynamically setting rates to maximize revenue. I've never had to worry about drawing people to our clients' hotels (just making sure they're charged the best price and treated right when they get there), and our offerings don't sit on a shelf for direct comparison to competitor brands like the situation CPG brands have to work with.

But the CPG world is fascinating, especially now, with unprecedented changes occurring throughout the economy. Check this out:


It's a pudding cup. But there are a couple of things that are interesting about this pudding cup. First, it's branded Jelly Belly. Odd because Jelly Belly doesn't make pudding -- obviously someone else is making it for Jelly Belly, OR it's a co-branding situation.

That's the second interesting thing about this pudding cup. It's co-branded...with Kroger, a supermarket chain in the South and Midwest. It's a generic, store-brand pudding cup cobranded with a national gourmet candy brand!

There are probably other precedents for this kind of thing, but it was weird enough to make me do a double-take (and buy the pudding). Who knows why Jelly Belly passed up Jell-O and Hunt's to co-brand their pudding with a house brand, but my guess is it says a lot about the difficulty branders are going to have communicating brand value to consumers even after the recession is over. New, lower price points are getting set in consumers' minds to such an extent that name brands are at a significant disadvantage in some cases -- and other name brands are targeting cost-conscious buyers with weird generic/name-brand partnerships like this one.

It's a fascinating time to be in business!

Are we there yet?

Long time, no post... :-)

In the three months since I've posted last, quite a bit has happened. At work, I've gone from an engagement with a non-profit client where I was the day-to-day lead to one in a new industry working under the partner I'm usually assigned to. The new gig is definitely a challenge -- if I pull off half of what I'm supposed to get done this summer it'll be a great way to go out.

I will admit to experiencing some "senioritis", though. When I'm at work (esp. when on site at the client) I'm engaged 110% on work stuff -- it's fun and pretty challenging thus far -- but once I get home, my mind drifts off to think about Duke. I find myself clicking through the 2011 Facebook group, or building endless spreadsheets of employers to target or classes to ask current students about. My courses spreadsheet is filled with strategy courses and related stuff -- I'm excited about the chance to dig into stuff I've only touched on at work, like valuation and CRM. Despite a brief flirtation with marketing, I think there's no doubt I will be staying in consulting if I can, whether at another boutique or at one of the big league firms.

So far, the best thing has been getting to know my future classmates -- at Blue Devil Weekend, at local get-togethers for the 2011 folks who live in the Triangle, and on Facebook. It's energizing to be hanging out with other career-minded folks my age (I'm the only 20-something to stick it out at my small firm the last few years). I definitely made the right choice in picking Fuqua, and I'm glad so many other folks who came to BDW undecided opted for Duke. (A few new friends who were considering Carolina and Duke decided to go for KFBS in the end -- but we are still talking to them anyway. ;-)

I hope everyone's wait for school is going well, no matter where you're going. I'll try not to be silent all summer -- I've been reading interesting stuff for one thing, and plan on sharing some thoughts on recent reads. And I look forward to sharing a little slice of my Duke experience come fall.

Fuqua prof Dan Ariely on WUNC radio

The other day, I caught the tail end of an interview with Dan Ariely, the Fuqua professor who wrote the bestseller Predictably Irrational: The Hidden Forces That Shape Our Decisions. It's definitely worth a listen, although if you've already read the book there's a lot of duplicated content. I was about halfway through the book when I heard the interview and have since finished it. It's well worth reading for insight into how consumers are guided not only by rational motives but by other, less rational factors.

One especially interesting part of his research relates to money and motivation. Ariely and his collaborators had test subjects do a variety of tasks, sometimes giving them gifts and sometimes giving them money. Those who were given small amounts of money did not work hard at all -- apparently resenting the idea of working for so little pay -- while those who were given (comparatively) lots of money worked hard. The subjects who were given gifts worked hard -- apparently for social reasons and because their effort was appreciated, etc. -- even when the gifts cost practically nothing. 

They tried the experiment again, this time telling those who received gifts how much the gifts cost. Unlike the previous experiences with gifts, the results actually mirrored those who were paid in the previous experiment. Those given a 10c candy bar, when told it was a 10c candy bar, did not work hard at all.

Ariely has applied these insights to executive compensation -- given that that's in the news today, this op-ed is rather interesting. I suspect in the case of banking and other prestigious, high-effort jobs, the issue is not so much whether person X works as well as person Y given different compensations, but whether you can get person X and person Y to choose that career/company at all. In which case compensation may work in a little more rational way than what was found in the study. But if that is true, you just need compensation to be appreciably higher than alternatives (management consulting, GM, marketing...) but not 10-20 times higher.

State of recruiting at Fuqua

From the keyboard of the Associate Dean for Career Management at Fuqua to your computer screen -- a post (with hard numbers!) on recruiting at Fuqua this year:

Most importantly, perhaps, is what it means to compare this year's recruiting to last year. Given the very robust MBA job market of recent years, activity levels in 2007-2008 were unsustainable over time for both our student and corporate stakeholders. Students were overwhelmed with the sheer number of recruiting events, and companies across all sectors were not experiencing expected participation in or yield from their on-campus efforts. While this year's difficult job market is undeniable, the decreases are somewhat less sobering than if the most recent prior years had been in solid equilibrium.

Overall, I think the news is better than I expected. I think all of us who are entering programs this fall are aware of the risks coming up -- this is not a stereotypical "ride out the recession in an MBA program" kind of choice we're making. Recruiting will be tough next January as the economy will likely not have recovered, and that will impact our post-MBA jobs in 2011 even if the economy is back at full speed.

However, the prospects are not dire by any means, except for finance, and the comment that the drops are less substantial if you realize previous years were unusually high recruiting years is very helpful for benchmarking how bad the next few years will really be. If we're in the worst recession of our lifetimes and MBA recruiting is only somewhat below equilibrium, it's still a sensible risk for those who don't have a clear alternative path to the careers they want post-MBA.

The critical thing, as I've been reading in a number of places from current students, career gurus, and deans, is to come into B-school with a very clear career plan. I can't find the post now, but someone (perhaps in the GMATClub forums) pointed out that coming in to recruiting season saying, "I want to do something in marketing," without a clear idea whether that means brand management, market research, ad agency work, etc., is insane -- much less thinking, "Well, I'm really interested in consulting, finance, and marketing." You can't interview without any focus and hope to be an attractive candidate.

I am in heavy research mode on this myself. I'm not sure anymore whether I want to stay in consulting, so I need to figure out whether I want to do GM (likely in my current industry of hospitality) or brand management. I am leaning toward the latter, as the engagement I'm working on right now has a heavy pricing strategy/marketing component which I find absolutely fascinating. Now it's time to do some informational interviews, read some books, and try to get a handle on whether I'd actually be good at this or not. Best of luck to other R1 admits who are figure out career stuff -- a little preparation now will be worth a lot come fall, I think.