How to Avoid Business School

One thing you do not need to run your own company is an MBA- Master of Business Administration – or indeed, a degree of any kind. It may b helpful, but it is certainly not necessary.

Of the top 50 entrepreneurs in Britain, according to a recent survey, only two had a pukka university degree. Some highly successful businessman struggled even at high school. One was James Goldsmith, the international banker and retailer. Another was Kerry packer, the Australian media magnate. Both had difficulty reading, never mind passing exams, because both had undiagnosed dyslexia. Both were taunted at school for being a bit dumb. Both became billionaires.

Or maybe take example from the worker’s of Ah Thad’s uncle, that particular worker is just used to be lorry driver of his uncle’s company. And that company had hired some Master Degree holder to manage the worker of the company. Just one particular day, to be exact, something changed. The worker who used to drive lorry is able to earn money for the company and manage the company even much better than the master degree holder. Since then, the fate had turn around the table, The worker who used to drive lorry, manage the Master Degree holder instead.

Or how bout Uncle Lim (Lim Goh Tong) for example? The founder of Genting Highlands resort.

He was only have few bucks in his pockets when he was first arrived to Tanah Melayu.

He used to be a vegetable farmer but decided to switch to pretty trading for a better living. Later on Lim ventured into scrap-metal and hardware trading. When the Japanese Occupation ended, there was an urgent demand for heavy machinery for resumed operations in mines and rubber plantations, Lim seized the opportunity and engaged in second-hand machinery trading, making his first fortune. From used machinery trading, Lim strayed into iron mining fortuitously. Lim joined as a partner in an iron mining company which couldn't settle the outstanding payment of two bulldozers with him, and this proved to be a successful venture as he earned a substantial amount of profit from the mining industry, including forming a joint-venture tin mining company which was one of the first Chinese tin companies to utilize dredges in mining tins. While dealing in heavy machinery, Lim accumulated a wide range of reconditioned machines as well as a substantial amount of cash to move into construction and related industries. In the name of his family construction company, Kien Huat Private Limited, Lim began taking on several contracting jobs with help and guidance from his uncles. Kien Huat won accolades and became recognized as one of the leading construction companies after successfully completing many major projects. Among the biggest projects completed was the Ayer Itam Dam, the first time a local contractor had been given a construction job of such magnitude.Lim faced the brink of bankruptcy when construction work was facing problems in the Kemubu Irrigation Scheme, but managed to overcome the obstacles and completed the project.

And I m sure that time, Uncle Lim doesn’t know anything bout business at all.

Some even rate an MBA as a negative. Here is Anita Roddick, the founder of The Body Shop:

“A great advantage I had when I started The Body Shop was that I had never been to business school. As I didn’t know how things were supposed to be done, I didn’t know the rules and I didn’t know the risk… I honestly believe I would not have succeeded if I had been taught about business.” – from Body and soul

Goldsmith was another who firmly – no, emphatically – believed that people who rose through the rank made better managers than business school graduates. So was Lee Iacocca, who rose from truck salesman to become president of Ford Motors and later rescued from oblivion a much-troubled Chrysler. Why? The word “administration” in the MBA’s title is the giveaway. “Administration” is what civil servants do. Companies need proactive management - creating events, not reacting to them. What an MBA degree does is to equip you to sit in a boardroom pontificating while the real managers run the company. When you have a brand-new business to get off the ground, boardroom skills are irrelevant. It’s management skills you must have. Too many external advisers come to small business with this ‘big company’ perspective which is not relevant and at times, highly damaging.

Fortunately, there is a way for the would-be entrepreneur to get a first-class business education without going near a business school. You can even be paid while you learn. But you do need to categorize the kind of company on which you are setting your short-term sights.

To explain: there are basically only two kinds of company: bureaucracy and autocracy; every other kind is simply a compromise between these two. It is important to distinguish between them because the lessons they teach are quite different.

I will explain more detail bout bureaucracy and autocracy in detail on the next post.

For Whom the Penny Dropped

The skill of spotting an opening is one that the famous entrepreneurs through the years have had in plenty.

For many, the key point has simply been price. Sam Walton, owner of a couple of five and dime stores in rural Arkansa, did not actually invent the discount store: some sizeable people like K-Mart were already in business. But he perfected it by not just marking down a few leaders, but by selling every item cheaply, everyday. That’s how the Wal-Mart Chain made Sam and his family the wealthiest in America.

Sometimes, nationalism is the key, especially in smaller countries. General Motors swept Australia in the 1950s with a Six-cylinder car bearing the name of a local body-building company, Holden; it was years before they were seriously challenged, and then by Australian-built Fords and Chryslers. An Aussie called Kevin Weldon also cashed in on rising nationalism. He built his Sydney publishing business with a string of titles like the “Australian” book of this, or the book of “Australian” that – even when the skills involved, like crochet or photography, were actually international.

But the biggest operators down the years haven always seen the widest picture:

· Henry Ford saw the potential of mass production with a car made cheaply enough to sell to millions, including his own workers. Inspired by the production lines at Thomas Alva Edison’s core crushing mills, he developed the assembly line technique which made the US the world’s greatest industrial power.

· Away back in the 1890s, Frank Robinson was another who saw the potential of mass marketing. A brewer, then salesman and copywriter for the coca-cola company, he saw the limitation – too few potential customers – of promoting mineral waters as medical restoratives, as was then the vogue. Instead, he focused his ads on “delicious and refreshing!”, featured pretty girls with Coke bottles, and watched sales boom as coke became the fashionable drink across America.

· John D.Rockefeller saw the power of a cartel in controlling a market. Through manoeuvres which would be illegal today, he combined railroads and oil refineries to manipulate freight rates and squeeze rival refiners out of business. His Standard Oil Company also used predatory pricing – selling below cost in target areas to destroy smaller competitors.

· Marcus Samuel, founder of Shell Oil, saw the only way to compete with Standard: Globalization. He secretly bought Russian oil, built over-sized tankers and used secretly-built distribution depots to take on Standard at its own game. Nearly a century later, the Saatchi brothers saw a similar point: if many clients were world-wide, an advertising agency that was also global would amass much business. It did.

· Steelmaker Alfred Krupp spotted a novel way to get repeat business. Making armaments in an era when hostile alliances glowered at one another without actually going to war, this year he would sell a gun whose shells would penetrate any known amour. Next year, he would unveil an armour that was proof against any known shell, including last year’s model…

· Bill Gates saw a different route to a captive market. When desktop computers were introduced, he realized that the more popular a disk operating system was, the more software writers it would attract. And the more software that was available for a particular system, the stronger that system would become. He set the ball rolling by selling his MS-DOS operating system cheaply to IBM, then licensing it far and wide to IBM imitators. So Microsoft’s rather clumsy system became the industry standard. Most other systems, starved of software, vanished. And Bill Gates was on his way to conquering the world.

· Of course, new technology has opened the door for many inspired marketers. A very early one was W.H.Smith, who saw the potential of the 19^th century railway boom. Not to invest in railways, which mostly lost money(a point later lost on Eurotunnel investor), but to open bookstalls on the busy stations where commuters were. A century later, several innovators saw the same light: they cashed in on the computer, not by manufacturing it, but by using it to revolutionise the marketing of financial services. Hence the world –wide explosion of telephone banking and insurance. And in Australia, Kerry Packer became billionaire by spotting how the new color TV transformed televised sport, compared with the old black-and-white; world series “pyjama” cricket was just one result.

· Laura Ashley built her empire on a social trend. Leading a 1970s revolt against what she saw as the excesses of swinging 60s, her clothes, furnishings and wallcoverings precisely matched a mood of nostalgia for an earlier era. Aniata Roddick of the Body Shop did much the same – although her cosmetics industry – and cleverly exploited an underlying public revulsion against the cruelty of testing cosmetic on animals.

· Taking almost the opposite tack, James Goldsmith founded his fortune by seeing the potential of a product alternative – generic drugs. The owner of a tiny French pharmaceuticals company, he scoured the world for drugs to make under licence and tackle the know brands head-on. His banking and retailing empire was the ultimate derivative.

· Aristotle Onassis founded his shipping empire on the fortune he made importing tobacco into Argentina. His breakthrough; steering a men’s product into a woman’s market. Instead of the strong Cuban leaf tobacco which men then smoked, he imported the milder Turkish tobacco, then persuaded fashionable women to smoke – and promote his brand.

What can be learned from the successes of the pioneers? Just one thing: whatever business you set up, look for the way to do things differently. Once you have established the features that set you apart from the competition, you must, in Anita Roddicks’s word, “emphasise them, contantly restate them, and never be seduced into watering them down.”

But if you do have an innovative idea, do not expect instant applause. Akio Morita saw people struggling with heavy ghetto blasters on their shoulders and thought of a compact alternative. His, marketing people were sure that his innovation, based on the shell of a tape recorder and a pair of tiny headphones, would be a failure. His accountants couldn’t see it being produced for the price he insisted on. For a while, Morita felt quite lonely. The kudos only came later, when his sony walkman swept the world.

There may be a lesson here – persist.