Are MBAs becoming irrelevant?

by Idris Mootee

Are business schools preparing students for a flat world where organizations and national boundaries are becoming blurred?

Looking at this year MBA rankings by Financial Times, there aren't many changes in the Top 10 list. The surprise is that #10 is a Hong Kong Business School and #12 is an Indian Business School. Other top schools (some are more local) in the rankings: IMD (Swiss) ranks 15, HEC (French) ranks 18, CEIBS (Chinese) ranks 22, Haas (American) ranks 28, Cornell (American) ranks 38, Ivey (Canadian) ranks 49. Here's the latest FT Global Top 10 MBA Rankings for 2010:

1. London Business School
   
2. University of Pennsylvania: Wharton
   
3. Harvard Business School
   
4. Stanford University GSB
   
5. Insead
   
6. Columbia Business School
   
7. IE Business School
   
8. MIT: Sloan School of Management
   
9. University of Chicago: Booth
   
10. Hong Kong UST Business School

There are a lot of criticisms around MBA programs on different fronts. I was advising some folks that this is still the best all round business education. The last three months, I have written 4 recommendations for some folks. One was accepted by London Business School, one by Stanford Business School, one by Chicago Graduate School of Business and one by MIT Sloan. I am happy for all of them. I still think it is one of best paths to change the world.

There are arguments around whether it needs to be two years and almost all European MBAs are one year with only exception of LBS. The traditional two-year MBA curriculum, grounded in the core functional disciplines — strategy, marketing, organizational behavior, accounting, finance etc. — has been in existence since it was first pioneered in the US in the late 50s. MBAs were very much an American thing. US companies placed more value in an MBA than European companies. In the UK, a general management program combined with solid work experience is generally accepted to be sufficient.

The world of business is on the verge of transformation, a transformation, and so should business education. Where technological advance, geo-political forces, rapid globalization are all putting pressure on the business education system. I attended an event a while back at the Yale School of Management; there were 20 education institutions from around the world all struggling with the relevance of the MBA to 21st century organizations. Everyone sees the need for transformation but not many knows what and how to transform. Asking any B-school's Dean the question how their business schools must change to better prepare our students for the challenges that they will face in a hyper competitive and uncertain world is a good start.

Yes the world is flat. Organizations are becoming increasingly flat, and social technologies are blurring the boundaries of a corporation. Leaders of modern enterprises competing in the global economy need to look for truly global managers who are capable of leading and managing across the boundaries of function, geography, and organizations and industries. Are business schools ready for this? Or should we change the old paradigm that an MBA is an elitist qualification which can enable the holder of the degree to fast-track his/her career to power and fortune? An MBA should mean less as a qualification. It is a sense of empowerment and commitment for an individual to take on big challenges, transform oneself and create win/win strategy for shareholder, employees and societies.

Check out the lively discussion that has broken out in our Continuous Innovation group around this article - http://ow.ly/16hTy (join the group and see the 30+ responses)


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Idris Mootee is the CEO of idea couture, a strategic innovation and experience design firm. He is the author of four books, tens of published articles, and a frequent speaker at business conferences and executive retreats.

Which Countries Are Losing Their Innovation Capabilities?

by Stefan Lindegaard

I recently discovered reasons to take my innovation perspective to a national rather than a corporate level. The questions that went through my mind were like this:

• What if the behaviours of the citizens in a country determine the corporate ability to innovate?


• What if such behaviours directly hurt the corporate ability to innovate?


• A capability that is so important for the future of companies as well as countries.


• Or what if the behaviours hinder the chances of taking innovation to the next level?

The country I have in mind is my own, Denmark. I have long argued that Denmark does very well on innovation. Danes believe in flat hierarchies and that authorities and common beliefs should be challenged.

This is a good outset for innovation and we have always been pretty good at taking existing technologies or ideas, give them a little twist and then come up with new ways of using this.

This has worked very well for many years, but things are changing so fast and innovation is becoming an open and global process. Being open to new input and being tolerant towards other cultures and perspectives are keys to future success.

Personally, I travel a lot and I try hard to stay open to other cultures and perspectives. However, I might not be as open-minded as I think I am and perhaps it is even worse with many of my countrymen. I was told this by a German friend who has lived in Denmark for many years. Danes are not open and tolerant. On the contrary, Danes are viewed as being quite self-sufficient.

My German friend made me think and I now begin to see some answers to questions that have puzzled me for a while.

• Why are Danish companies not on the forefront of open innovation?


• Why do Danish media not cover open innovation better than they do?

I have always believed that Denmark has all what it takes to benefit from the shift towards open and global innovation. Could I really be so wrong? I am sad to say, but I think this is the case.

Nevertheless, I want to thank my German friend for opening my eyes and getting a new perspective on open innovation. This also raises other important questions.

• Which other countries stand to lose just as Denmark might do?


• Which countries stand to win on this?

I view countries such as France, Italy and Japan to be quite inward-focused. Will they lose out on innovation? If my perspective on this holds true, the U.S. definitely will be a winner. China? Not sure. They have a little of everything in them, but I believe they will come out as a winner as well.


Enough for now. Your thoughts?

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Stefan Lindegaard is a speaker, network facilitator and strategic advisor who focus on the topics of open innovation, intrapreneurship and how to identify and develop the people who drive innovation.

Happy 60th Anniversary China!

When Are We Seeing A Parade Of Chinese Global Brands?

by Idris Mootee

Happy Birthday China! China celebrated its rise to a world power over 60 years of Communist rule recently, showing the world their capabilities in its biggest-ever parade of state-of-the-art military hardware. It has come a long way and still has a long way to go. I attended a cocktail party this evening and talked to many China observers on what this means to the world. And for multi-nationals?

This week I've been busy working on developing our China footprint or more precisely Shanghai is our beachhead office. I am excited but at the same time well aware of the challenges operating in that environment. Everything you know can be wrong overnight. No experts can tell you what's your market is like today and how it is changing tomorrow.



China's rapid urbanization will further change the social architecture of the country and causing pains. According to some McKinsey research, in 2025-2030 one in five of the global city dwellers will be in Chinese cities. Based on current trends, China in 2025 will have 221 cities with more than one million people compared to Europe with 35. 25 of China's cities will have more than 5 million people China's cities in 2025 will generate about 95% of its GDP (versus 75% today) Of the 350 million people added to Chinese cities by 2025 (about the population of the USA) 240 million will be migrants

Asia's emerging economies are already leading the way for a recovery, or was there a recession at all? It depends on how you look it at. Chinese societies are just taking a baby step to transform to a consumer society. As many US consumers are transforming out it (not sure if it possible at all). Are the largest global consumer companies ready for this momentous shift?




McKinsey's advice is that even the most sophisticated multinationals must change significantly to realize Asia's growth potential. The region is as diverse as it is vast. Its markets come in a bewildering assortment of sizes and development stages, and its customers hail from a multitude of ethnic and cultural backgrounds. Their tastes and preferences evolve constantly. The speed and scale of change in Asian consumer markets can surprise even experienced executives. To meet the challenge, global companies will have to organize themselves regionally to coordinate strategy and use resources in the most efficient way while at the same time targeting the tastes of consumers on a very local level.

The structural changes required by China's entry into the World Trade Organization (WTO) and the broader demands of economic globalization and the information revolution will generate significantly new levels and types of social and economic disruption. China has proven politically resilient, economically dynamic, and increasingly assertive in positioning itself for a leadership role in Asia. And becoming a global power.




For those Chinese brands, they are all gearing up to play the global game and most are not well prepared. China's domestic market is becoming ever more crowded and a strong domestic market will power up Chinese brand for international expansion. There is an urgent call for Chinese companies to master new skills that traditionally reside with non-Chinese multinationals such as marketing, branding, talent development, customer service, M&A management etc. It is not an easy path.

Take Lenovo for example, they are facing challenges both domestically and internationally. Lenovo is losing ground to rivals and Yang is replacing Amelio as CEO. Liu Chuanzhi, the company founder who stepped aside after the IBM deal, will return as chairman. It is a big setback. Despite a $93 million profit in domestic sales, overall results were hit by the losses in overseas sales and admitted that Lenovo was a "weak competitor" in the US and Europe. Weak is not a strong enough word to describe their marketing, pricing as well as distribution strategies. They still need to go global. Liu said in a press release. "But at this important time we want to pay particular attention to our China business as it represents the foundation of our global business and growth strategy."




The first problem is there is simply a lack of real global strategy and I don't mean just a product strategy. Lenovo's second challenge is a flawed sales and marketing strategies. They overrated their brand power and there aren't much outside China. Replace the Thinkpad logo too fast. Lenovo failed to understand that blurry branding and not giving enough thoughts to pricing strategy.

Going global is not so simple. It is even more complex today with the Internet making information transparent, geo-politics and diverging consumer tastes. The most common mistake is companies see globalization as taking a superior (usually by false assumption) business model, product platform, branding and quickly adapting to another country. Oh yes it is about scale and that alone is not strategic.




The right approach is to rethink your business model globally, not taking an existing business model and adapting it to China or India. First step is to identify key differences in customer needs (often opposite) and understand how to answer to those needs. Not stripping down of an existing product line and call it localization. The real strategic focus should not be on the tension between global scale economies and local considerations as it blinds companies to the very real opportunities. Instead, spend plenty of efforts to exploit the differences and in their rush to exploit the similarities across borders, multinationals have discounted the original global strategy: arbitrage, the strategy of difference and design your business around those differences.




As more and more companies like Lenovo are slowly emerging on the global stage, they should put more thoughts on what strategies are available (Chinese firms prefer to spend money on feng sui consultants and not strategy consultants) and what implications do they pose for their more-established competitors from developed markets? How are these companies building marketing talent (a big limitation), leveraging low costs, and market access in their home countries? How do they approach global market entry, organizational development, and mergers and acquisitions? What opportunities do such companies present to Western multinationals? A feng-sui man cannot really give you answers on those strategic questions.

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Idris Mootee is the CEO of idea couture, a strategic innovation and experience design firm. He is the author of four books, tens of published articles, and a frequent speaker at business conferences and executive retreats.

Innovate Your Way out of a Recession

How on earth can companies compete in a global economy where staff costs in India are a tenth of those in the West and where Chinese companies are now looking to outsource their operations to cut costs further? We can not continuously improve our way out of the current challenges, rather we must fundamentally change what we do and how we do it - in short we must innovate.

Some people think innovation is the generation of new ideas - but we would refer to this as creativity. Creativity is part of innovation but is not a substitute for it! Being creative and coming up with new ideas is all well and good but if no one puts them into practice then they are worth nothing to a business. For us innovation is the "commercial exploitation of ideas." It needs to be a planned and proactive process.

Innovation is also seen as being synonymous with the development of new products. Whilst this is true to a degree it is only one part of what constitutes innovation. In fact many businessmen and women are put off by the term innovation because they do not fully understand what it means.



There are five generic types of innovation as represented in this Product-Market matrix:

1. Process Innovation - Improving how you do what you currently do. The emphasis here is on making the process more effective and efficient rather than changing the end product or service. The aim could be to improve reliability, reduce costs, improve timing etc.


2. New Product /Service Development - The creation of modified or new products and services to meet a market need. This can be done through re-engineering existing products, licensing existing products, creating differing versions of present products, running incubator generation schemes etc.


3. Market Development - Breaking into extended markets or segmenting an existing market in a new way can often give insights previously overlooked. Market innovation could be as radical as moving into a new geographical market like opening a store in Japan or sub-segmenting your existing market by different age groups.


4. New Business Development - As you become more radical, the extent of innovation will increase, and it will become more and more likely that you will need to build or bring in new capabilities. New business may result from taking modified products or technology into completely new markets, or offering new products to extended markets.


5. Strategic Change (Business Innovation) - Possibly the riskiest approach to innovation - that of moving the business into a different, unrelated market to capitalise on a new product idea or technology. A strategic change might require a new business model, leadership, merger, acquisition or new branding.

Now is the time for businesses to embrace Innovation Management as a core business process. Link innovation to your business goals and overcome the barriers to innovation, and you stand a very good chance of not only surviving the recession but becoming stronger in the process.


Also by Andy Bruce - The Golden Rules of Innovation

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Andy Bruce is widely acclaimed as an authority in 'Innovation Management', the author of "Fast Track to Success - Innovation", and the Director of two specialist innovation companies: SofTools and Project Leaders International.

The World is Not Flat - Now What?

With rising fuel costs and inflation continuing to run in double digits in countries like India and China, the falling dollar, and rising oil prices pushing up transportation costs, is the world really flat as Thomas L. Friedman claimed in 2005?

With the cost of shipping a container from China to the USA nearly tripling by some reports from $3,000 to $8,000 and cargo ships dropping their top speeds by 20% during the crossing to save fuel (decreasing speed to market and just-in-time capabilities), will companies continue to globalize their supply chains?

Will some companies reverse the globalization of their supply chains?

And, of course, the most obvious question for readers of this blog...

Does this introduce new innovation opportunities for companies and advisors who can envision ways to profit from these new market characteristics?

Of course it will. Entire methods of production for different manufactured goods may be completely revised, only to be revised again if the price of oil and the dollar suddenly move in the opposite direction in a big way.

So maybe the opportunity here (if it has not already been implemented), is the transformation not from a global manufacturing process to one with fewer shipping points, but from a more rigid process to one that can be more flexible. Creating the ability for a manufacturer to switch between multiple manufacturing scenarios depending on what is most cost-effective. For example:


USA (raw materials) -> Vietnam (raw material processing) -> China (bulk assembly) -> Mexico (final assembly) -> USA (retail)

to

USA (raw materials) -> China (all processing and assembly) -> USA (retail)

to

USA (raw materials) -> Mexico (raw material processing) -> China (all assembly) -> USA (retail)

to

USA (raw materials) -> Mexico (all processing and assembly) -> USA (retail)

Thoughts?

Decreasing Standard of Living, Increasing Profits

We are at an inflection point in the developed world, and the fate of your standard of living rests either in the your own hands (if you are an entrepreneur) or in the wisdom (or lack thereof) of a few key politicians.

The question is will the direction be up or down?

Economic factors in our newly globalized world dictate that individuals in lesser developed countries like China and India will experience rising wages and an increasing standard of living while individuals in the developed world experience flat or declining wages and standard of living in a race to the middle.

This began happening some time ago, but has been buried under a pile of easy credit.

Housing costs have increased, food and fuel prices are surging upwards along with commodity prices as demand grows faster than supply. Meanwhile, real wages are declining. Sounds like a depressing situation, right?

Well, all is not lost. If we can't avoid the inevitable decline in the developed world, then as individuals--and even as states and nation--we can seek to slow its decline or reverse the trend completely.

How do we do this?

As states and nations, we must invest in improving our ability to efficiently provide the basics, while at the same time reducing our demand for scarce commodities.

Our businesses must move from being product-led or even customer-led organizations to maintain their lead by transforming into innovation-led organizations that can move faster than competing organizations overseas with lower costs that seek to copy their innovations.

As individuals we can either go along for the ride as employees and hope that our government and business leaders make these adjustments faster than foreign competition, or help to lead the charge as entrepreneurs.

The entrepreneurs among us must recognize this new reality in the world and identify ways to profit from it. We must uncover the new or amplified business and consumer pains and the solutions to them. These truths will exist across the developed world and thus will scale for entrepreneurs or businesses bold enough to pursue them internationally.

What does this look like you might ask?

Well, one example would be satisfying the need for consumers to increasingly downgrade from restaurants to other types of less-expensive prepared foods when time is scarce. UK supermarkets like Tesco and their ready meals offer a great example that could be replicated in fast-paced American cities like New York, Seattle, and San Francisco.

Another would be exporting used American SUVs to take advantage of their rapid repreciation in the era of $4 gasoline to places that benefit from the weak dollar and/or lower fuel prices.

There are a million more ideas and innovations out there for people to find and put to work even as developed economies crest.

So are you going to let this new wave pummel you or are you going to find a way to ride it?

That answer is up to you...