The Strategy Paradox - Book review

I got this book based on the recommendation made by one of Corporate Strategy professors at Ivey. Coincidentally, one of my friends invited me to this book's release event. Michael gave a very interesting and insightful speech and as the result I was left itching to grab the book and dive into his ideas deeper.

This book turned out indeed to be quite a treat. The Strategy Paradox is a "collision between commitment and uncertainty". Michael not only identifies the challenge that managers face everyday: in order for a strategy to succeed resources have to be committed to it, but at the same time future by its nature is inherently uncertain and therefore there is no way to know if the strategy that they have chosen to pursue is the "right" one. The example analyzed in the book is the famous Betamax vs. VHS bet that Sony made back in the days.

The idea developed in the book is a J&J strategy of hedging strategic choices by investing a small portion of resources into creating independent strategy options. Those new initiatives take on life of their own and become alternative realities. Moreover, if one of those options takes off it will get absorbed back into the main business, ultimately helping to shape the overall company strategy.

I do recommend this book as it not only has interesting ideas about selecting the "right" strategy but is also very well written.

Till next time,

George

Playing on a Seesaw vs. MBA experience

Have you ever played on a seesaw? I’m sure many of you have. As it turns out, it is not only a fun physical exercise, but it teaches us about important concepts in physics, statistics, and negotiations. And with any luck, I will try to illustrate that it also might teach us a lesson or two about MBA grades.
In one of my posts I mentioned that marks are probably one of the hardest ways to differentiate yourself in an MBA program. I’ve received number of emails from readers curious to find out why that might be the case.

Throughout our lives we are instilled with a notion that being great means being better than your peers. In high school we were happy when we got the top grade in class even though it might have been only 72%; it was all the same, as long as we were at the top of the hill. That is precisely why the question of whether one would chose a $10,000 bonus if it was the highest bonus in the company or a $25,000 if it was a lowest one becomes hard to answer. It is as true in an MBA as it is in any other environment, and probably even more so in the MBA as everybody here is a type-A personality and everybody is aiming for a win.

Let me make myself clear here, what I’m not trying to do is to prove that marks are not important, as they definitely are. Especially if you are targeting Top Five consulting and finance firms, they are going to be scrutinizing your MBA grades in addition to other quantitative pieces of information such as your Undergraduate marks and GMAT score.

What I am trying to convey here is that while concentrating on maintaining good marks there has to be a definite focus on trying to differentiate yourself though other means, such as extracurricular activities, your professional network, depth of knowledge about the industry, and the list goes on.

By now you are probably wondering why I threw in the seesaw analogy at the beginning of this post. The reason being is the intimate curve. It is near and dear to a lot of us here in the MBA program, even though it does feel a bit tight at times. Curve is a tool which statisticians refer to as a normal distribution, in reality you can think of it as a semi-flexible seesaw; the central point being the mean value. If the two people at sitting right at the opposite ends of seesaw they are two standard deviations away from the mean (central value). Interesting property of this type of distribution is that 68% of values fall within one standard deviation away from the mean and 95% fall within two standard deviations away from the mean. Furthermore, a lot of distributions of values in the world fit well under this type of description, and the ones that do not fit are sometimes force fitted.

And now the big secret that schools and majority of employers know about: mean value of MBA grades is 78% with standard deviation of approximately 2%. If we assume an average class size of 100 students that translates into 68 students being somewhere in the 76 to 80% range as far as their final marks, another 27 students being somewhere in the 74 to 82% range, one or two students around 72% and finally two or three in the 85-90% range. Combined with the fact that dean’s list is top 25% of the class, grades might mean that the difference between student on a dean’s list and the one who is not on it might be in the order of a tenth of a percent.

One thing that I didn’t mention when I introduced the concept of a curve is the fact that it has to balance on both sides of the mean. The seesaw analogy comes in handy here again, as similar to the game, if somebody is on one side there has to be somebody on the other side, at approximately the same distance from the center for seesaw to balance. You can think of a curve as playing on a seesaw with multiple people on each side.

And finally one curious fact about the curve, let’s take a hypothetical situation: say Bob decides that his future depends on getting 88% in an ABC course, he works nights and days, doesn’t sleep or eat to get that grade. At the same time John works hard as well but tries to maintain some sort of a balanced lifestyle. The curious thing that John starts to discover soon enough is that even though he is putting solid effort into the course, his mark for ABC is starting to slide because there has to be somebody offsetting Bob’s outstanding results on the “other” side of the mean. At this point John gets scared as he also wants a great job which depends on him being on the dean’s list, so John decides to up his efforts and cut back on sleep for the next couple of weeks. To Jane’s surprise, her marks in ABC are suddenly sliding quite fast to “balance” both Bob’s and John’s increased contribution. But now comes the B-School reality, at the end of the day any school is faced with a choice: would they rather have Jane really upset despite the fact that she paid $xx,000 for the program and put solid amount of work into the course while John and Bob would be quite happy with their marks, or would the school rather have everybody not unhappy to various degrees. Hence a tight curve with a fixed mean and resulting need to differentiate yourself through means other than marks.

Please don’t hesitate to contact me if you have any questions or comments about this or any other posts on this blog.

Till next time,
George

Two months into the Ivey MBA experience

School is getting progressively busier with each week's passing. Now that we are more or less getting used to the rhythm of studying we are getting career stuff thrown into the mix.

First, I want to mention couple of words about the courses that we are taking as part of the second module. The courses are: Managing Financial Resources, Accounting Control for Managers, and Designing and Executing Strategies. I always thought Strategy to be quite interesting subject so I was definitely looking forward to that class. Moreover, I was always fascinated by financing activities of companies and as the result was also looking to forward to Finance course. Lastly, to be absolutely honest, I had mixed feelings going into the accounting course based on my undergraduate experience.

I remember taking the introductory accounting course as part of my management minor and having to spend hours figuring out if financial transactions were either credits or debits and then recording them in company ledger. So now you can imagine a bit of skepticism I had when David Sharp, our accounting prof, told us that he is going to make accounting fun... yet somehow in my mind fun wasn't the first synonym that came to mind when I thought of accounting.
We are now about a half way through the module two and my biggest surprise, so far, came from the fact that I'm actually finding accounting FUN. Let me explain myself here, before you think that George has finally lost it. The type of accounting that we learning is a managerial accounting, the type which looks at assessing health of businesses, whether or not banks should grant a loan to a business, and all kinds of other neat things that I can actually see being applicable to the real world. Moreover, professor Sharp has a unique ability to make accounting material seem much more interesting and indeed fun.
Strategy and Finance courses are even more interesting and informative than I originally anticipated. That is not to say that I'm finding either of them easy. There's lots of reading and studying for each one of those courses. So far I've been finding that the best way to stay on top of coursework is to spend 4-5 hours on a typical weekday, working on the next day's material, and 6-7 hours on each Saturday and Sunday to do some career related work and pre-reading for the week ahead.
As a closing comment I would like to leave you with a following thought: Trying to differentiate yourself in an MBA based on marks is probably one of the hardest ways to do it. More on this later.

Team as a functioning unit at Ivey:

In the first week of classes we all were assigned into learning teams of 6-7 people. Each learning team got a nice mix of cultural and educational backgrounds. On average each team has two international students, one female student, and the rest of composition is pretty random. Learning teams are designed to maximize learning experience in the program by helping to digest the material before the class.

As experience has shown, diversity in learning teams has both its strengths and potential weaknesses. The main strength of diversity lies in the ability to leverage individual strength to achieve results beyond just a simple sum of work by each member. (Ex: Think Bob and John can do a case analysis in two hours each. However, chances are that their case analysis results are going to be quite different because they made different assumptions based on their past experience. Now if they will work together, the result is going to be quite a bit more comprehensive as it will consider both of their insights but might not include some of the information that they would have included in their individual report) One potential weakness of diversity lies in the fact that the difference in backgrounds might make it harder to reach a common ground. (Ex. Lets think back to Bob and John example: if it takes them individually two hours to do the case it might take them now up to three hours to do it together as they will have to incorporate consideration for their join analysis into the report)

General rule of thumb: Each additional team member might add up to an hour for a team to reach consensus.

That being said, majority of teams gelled well together right from the start. Of course there was some natural tension during the first couple of weeks as teams figured out the best way to function as new learning units. It was interesting to see that over the first module each team adopted a unique working style. Some teams meet to brainstorm ideas and other teams meet for couple of hours a day to work through all the cases together.

To help each team bond better Ivey puts us through “trial by fire” by creating common challenges for each team. One of these challenges was the goal to win in team sport competitions during our orientation week. Our first module started to build team strength further by including two team presentations for the communications class. The biggest test of how well each team functions came during the 24 hour report at the end of Module 1. Read more about on this in an upcoming 24 hour report post.

Please don’t hesitate to contact me if you have any questions or comments about this or any other posts on this blog.

Till next time,
George