A lot of people ask what I think about people getting their MBA. For me, while I learned a lot, as one of my best friends says of an MBA, it was just a tour of the library. If you don’t go back and read all the books and keep learning, you will have gained very little. In this post we could talk about the cost of education (it’s incredibly expensive). We could talk about the value of education (it depends on why you took it). But instead, I want to share the best lesson I ever learned.
An MBA is predominantly taught through case studies. You read, you contemplate and then you discuss in class. It was our first week. The professor assigned a theoretical case. United Airlines and Southwest Airlines had merged and the professor wanted to know what they should do. A few students put up their hands and weighed in, I don’t remember what they said. I put up my hand and I said - “Who bought who?” She said “United bought Southwest.” I said “Then they bought it for the planes and I would fire 100% of the Southwest employees, post the jobs I needed and then interview any Southwest employees who applied to make sure they fit the United culture. A consistent culture is more inportant than “a good one.” Having lived through the Anadarko-Kerr McGee merger, I’m sure many would say something similar from their own experience.
The professor then asked “should the combined United get into the cruise ship industry?” and Scott, a guy sitting in the back row, answered.
I had chatted with Scott briefly at the opening ceremony happy hour. He was an investment banker. He was arrogant and he was smart AF. I don’t remember anything else about him. He put up his hand and said “that’s the stupidest question I’ve ever heard. Companies exist to make profit. They survive because they are best at what they do. They should somewhat they are best at. An airline knows nothing about cruise ships. If they feel like they should buy a cruise company, they should sell themselves to another airline and close the company. You live. You profit. You die. You don’t pivot. That’s just dumb.” He dropped out about 3 weeks later.
I’m not going to lie, it was the best lesson I learned during my 16 months in school. It also explains why oil and gas companies shouldn’t invest in renewables and why I don’t own bp. Stick to your knitting. Reward your shareholders. And let them allocate capital when you give them back more cash than they started with.
Great stuff my friend! I remember those days fondly. I vaguely remember Scott. Home run on the case studies. We certainly did a lot of them. Some classes more than others. I guess the one thing I'd say is that one of the biggest takeaways I had was the network I gained and long term friendships, as well as access to the professors. I still keep in contact with a great number of my classmates and teachers. It was very cost prohibitive, even back in 2006. You pay for the prestige.
Interesting. A senior engineer that I respect said that as soon as you get your MBA or JD you stop becoming an engineer… so I never pursued either even though I was interested.
I like hearing these case study anecdotes though. Sometimes the “smartest guy/gal in the room” needs to be heard but oftentimes (as illustrated) it’s kind of a wasted commentary. Providing value to shareholders is basic. Don’t really understand how this was profound insight. Maybe as the world enters the devolution death-spiral, common sense statements like this will be interesting…