Cristian Mitreanu's Blog

Create a Compelling and Comprehensive Story

This is a re-post of my guest column at Edtech Handbook.

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Success is an important part of the human condition. It is important because it shows us where the limits are and what can be achieved. Witnessing success helps us craft our goals and dreams. Success permeates all aspects of our lives. And when it comes to business, the idea of success is even more critical. There, simply staying in business means being successful. Business as usual in an ever-evolving environment means running to stand still. So, there is no wonder that we are always looking for what might cause success in business. And it’s one thing that most often comes up -- the visionary leader. The vision. 

But vision is just a story.

Visionary leaders use stories to mobilize and energize people, bringing internal stakeholders and customers alike behind their companies and products. These are stories of a better world, in which the listener sees himself or herself better off. Their potential for mass appeal is directly determined by their easiness of being integrated into the listener’s overarching personal story. Some stories are simple, focusing on one easy-to-describe need and a new, better way of addressing it. Others are more complex, providing an explanation that includes the past, the present, and the future. And these are the most powerful ones, as they provide a far-reaching rationale for the company.

Now, the efforts of tying together the past, the present, and the future by explaining how things evolve over time more often than not leads to the development of an explanatory model. And there is a reason for that -- models provide deeper insights. As Henry Mintzberg, a renowned management thinker, explains in his article “Developing Theory about the Development of Theory:”

“I am interested in explanation, and don’t much care what it’s called, theory or otherwise. When I think about it, however, I see explanation along a continuum, from lists (categories), to typologies (comprehensive lists), to impressions of relationships among factors (not necessarily ‘variables’: that sounds too reified for many of the factors I work with), to causations between and patterns among these relationships, to fully explanatory models (which interweave all the factors in question).”

It is typically through models, then, that we create powerful stories that exhibit two essential characteristics. They are compelling, having a tendency to pull people in without much of a push effort. And they are comprehensive, offering clear and long-term guidance. While the first characteristic refers to the perceived value of which the story talks about (in this respect, venture capitalists have a favorite saying: “painkiller, not vitamin”), the second one is more important and it refers to the level of clarity with regard to how the idea will be turned into reality and, subsequently, make the customer and the business successful. In fact, there is a causal relationship between the two attributes that becomes more apparent as the complexity of the offering increases -- you cannot make something compelling, if you cannot articulate what it is and where it sits.

Some industries or business spaces tend to have more comprehensive models than others, and in most cases the difference stems from the way we set the boundaries for the space itself. Ed-tech or educational technology provides an interesting case here. Its very name reveals the fact that the space is generally seen as separate from, but at the same time supporting of, the education space. And that has long kept ed-tech captive to models and principles that have been generally underlying the education space since the Industrial Revolution. As a result, the space has been teeming with point solutions that address one or a small number of needs -- solutions that won’t bring about any major revolutions. Moreover, this state of affairs has also been encouraged by the short-term interests of those who typically back technological innovation. But things have begun to change.

In the recent years, the very foundation of the conventional education system and its value to the society has been increasingly coming into question. So, if you are building a business in this space, start to think broadly -- think learning, not education. Then, while keeping in mind that technology is inseparably intertwined within the process of learning/teaching, begin crafting a compelling and comprehensive story. Build a new or use an existent explanatory model that brings clarity at each of the three basic levels of the story -- worldview (How does the world work, without your product?), product (What is and where does your product sit?), and strategy (How is your business going to capture value?).

For inspiration, you could read the great story of Vittra, the Swedish school that has eliminated the classrooms altogether, creating an environment that stimulates the children's curiosity and creativity, as Principal Jannie Jeppesen explains on the school’s website. And, as I wrote in the summary of the presentation “Unlocking Innovation in Education through Meaningful Technology (A General Model for Ed-Tech)” (a framework that you might find useful), always remember:

“Innovation in education is hard. It is hard because the what must stay relevant in an ever-changing world. It is hard because the how and the when directly affect the value of the what. And it is hard because education instances range widely from informal day-to-day interactions with the environment to complex activities, conventionally associated with what we call ‘formal education’.”

What Have You Learned from a Mistake?

This essay was part of my application to the Harvard Business School MBA program, submitted on March 6, 2009. Answering the question "What have you learned from a mistake?" in 400 words or less was one of the required essays.

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In general, identifying a mistake is not as easy as it may appear. One reason is the fact that the difficulty of such a task tends to increase with the impact of the action taken – the more life-changing the action’s impact, the longer the timeframe necessary to clearly categorize that action. What may initially seem to be a mistake can turn out to be an action with an overall positive impact. And these are the kind of actions that provide the most valuable lessons.

The less obvious reason for the general difficulty of categorizing an action stems from the fact that everything is governed by a principle of cause and effect. In short, the past determines the present, which further determines the future. So, even if an action’s outcome may have seemingly played out, the analysis should not be bounded by the action’s immediate context. Whether a past action was a mistake, or not, should be determined in relationship to one’s desired future, which is a rather fuzzy system of reference.

One example of an important and hard-to-categorize action relates to my approach to learning English in the years preceding my permanent relocation to the United States. Specifically, it is the decision to assign this task a relatively low priority. Although the decision has the makings of a mistake, its outcome is still playing out, so I would rather refer to it as something that I would have done differently. Nonetheless, the lessons are valuable and plentiful.

Moving to America was one of my major goals since early on. For me, this was the place where the future happens, and where I could attempt to “change the world.” Yet, in spite of the “advance notice,” the opportunity caught me unprepared. Not only that I had no realistic idea of what it takes to become fluent in English, but I had never been to the United States before, let alone lived there. Consequently, the assumption underlying my relocation – experience and education matter most, language will catch up – was flawed.

What followed was a nine-year journey peppered with valuable lessons, ranging from general (i.e., “take nothing for granted”) to specific (i.e., local culture). Nonetheless, the most important gain is a deeper knowledge of self, which might have never been possible without that “mistake.” Furthermore, it is an insight that confirms and strengthens my long-held values and career objectives.

Powerful Quick-Fix for the MBA

Criticism of the conventional MBA program is nothing new. For years, Professor Henry Mintzberg of McGill University has arguably been the champion of this movement. In the 1992 Harvard Business Review debate “MBA: Is the Traditional Model Doomed?,” he describes the product of such programs as “people [who] are committed to no company and no industry but only to personal success, which they pursue based on academic credentials that are almost exclusively analytic, devoid of in-depth experience, tacit knowledge, or intuition.” Later, in his 2005 book “Managers, Not MBAs,” he writes, “Using the classroom to help develop people already practicing management is a fine idea, but pretending to create managers out of people who have never managed is a sham.”

Some may disagree with this stance. And considering that the demand for MBA degrees continues to remain high (as illustrated by the New York Times article “Bank Crisis Shifts Demand for M.B.A.'s” and the Graduate Management Admission Council’s own records “Total GMAT Tests Taken by Testing Year”), it does appear that employers do value these graduates. So, could it be that the conventional MBA program has become more of a recruiting tool that supplies employers with strong employees rather than future managers? Hard to tell.

On Harvard Business Review’s blog, in early 2009, several thinkers discussed problems and potential solutions on the forum “How to Fix Business Schools,” followed later by more posts on the same theme. Things are moving, nonetheless. Most schools seem to be hard at work refining their MBA programs by either tweaking their respective curriculums or their approaches to teaching, or both. A group of Harvard Business School faculty has even documented some of these developments in their 2010 book “Rethinking the MBA: Business Education at a Crossroads."

Unfortunately, the biggest problem, as it was articulated by Prof. Mintzberg (you can’t create managers in the classroom), is inherent to the conventional MBA program. In general, a lower graduating age means more time available to advance up the corporate ladder, which further means an increased probability of a successful business career. In addition, an increased number of success stories means a larger applicant pool (which also tends to push the average age lower, where managerial experience is low). And so, as long as schools can show some sort of causality between the MBA degree and a successful career, this cycle becomes self-reinforcing.

The advent of the Internet has made this causal relationship increasingly elusive. Not only that the knowledge taught in school has a lower value due to its widespread availability, but the limitations of our general understanding of how businesses work is becoming more apparent. And this, as one of the main drivers behind the value proposition of the conventional MBA program, will prevent the current revamping efforts undertaken by many schools from having any meaningful impact. A true overhaul will only occur when the business management body of knowledge successfully makes a significant leap forward.

However, as we wait for a new theory that would allow us to integrate currently disparate concepts and generate a more realistic business big picture, there is one easy and powerful solution for the MBA program: introduce a mandatory class of history of business and economic thought.

In spite of the underlying implication of the word “history,” this class should be more about thought and historical circumstances, than about the completeness of the record. If developed and implemented in harmony with the rest of the program, the “history” class could have a significant impact on three dimensions. First, it would help students acquire not only a dynamic perspective of the business world, but also a better understanding of how various concepts are related or fit together. Second, the class would provide a platform that would “nudge” students into thinking critically about existing concepts, and further into creating their own. Lastly, the new capability of providing students with the more advanced skill of understanding the big picture could be a significant source of competitive advantage for any MBA program.

UPDATE 3/15/2011: This idea was also submitted as a "hack" at the Management Innovation eXchange (http://www.managementexchange.com/hack-67).

My Human Nature Article Gets "Must Read"

My article "A Business-Relevant View of Human Nature" has been recently recommended by Stephan Zimmermann, professor and former department chair for economics, whose blog "No Widgets Here" is part of the online economics magazine Amateur Economists. In the comments section of his post "Dominant Economic Views in Western Society, Part II," Professor Zimmermann says (bold type is mine):

"Cristian - your article should be a "must read" for all of our "Amateur Economists" readers. Obviously I agree with your concept of "successful existence," which really cannot (or should not) be reduced to a pat formula, economic or otherwise. This might even, as you suggest, include maximizing, as long as the inherent dangers of such maximization are considered."

In his article "Turning Bright Lights on the Dismal Science," Prof. Zimmermann explains one of the reasons a deep insight into human nature is important:

"Economics is just another method of trying to solve the age-old question of what, how and to whom to distribute finite resources. [...]

Ever since Adam Smith, the foundations of economics have been presented as scientific fact. The facts presented as economics are really two: an assumption regarding the nature of man as well as a strict belief and usage of logic. Unless someone can show an alternative to thousands of years of developed logic based on fact, we should be able to live with that assumption. More difficult, of course, and subject to endless debate is the assumption regarding the nature of mankind. [...]

Too many would-be economists in graduate school or beyond may never really have had asked themselves about the fundamental nature of man.

Once we understand and accept the essentials of mankind, bolstered with valid facts, we should be able to look at the "dismal science" with a much brighter perspective."

Waking Up the Business Nation

What if the world of business has been stuck in the wrong mindset for the past half century? Here's a quote from my new initiative "A Wake-Up Call for the Business Nation:"

“Keynes's impact on the business world was even more profound. His view that an economy, as a whole, does not necessarily abide by the same laws as do individual transactions has created a lasting rift between business thought and economic thought. While the field of economics has continued to search for a more insightful economic worldview, generally focusing on a macro perspective, the business world has remained trapped in the post-war mindset. The apparent perfect fit of the discipline of corporate strategy, backed by Keynes's macro-micro divide, has gradually diminished the importance of an historical perspective, ultimately leading to a business world in which few question the discipline's very existence, and even fewer see the Keynesian underpinnings.”

Make sure you join the discussion.

UPDATE 7/24/2009: The essay/manifesto quoted above was part of a proposal sent to several potential investors for the first time on March 9, 2008 in an attempt to raise capital for one of my business ventures. For the public at large, it was first published on September 11, 2008 as part of the initiative announced here. And later, it was published as a RedefiningStrategy.com article on June 19, 2009.

UPDATE 6/21/2010: The discussion "A Wake-Up Call for the Business Nation" was deleted. Nonetheless, the essay/manifesto remains available at RedefiningStrategy.com/WakeUpCall.pdf.

On Changing the World...

"[I]t ought to be remembered that there is nothing more difficult to take in hand, more perilous to conduct, or more uncertain in its success, than to take the lead in the introduction of a new order of things. Because the innovator has for enemies all those who have done well under the old conditions, and lukewarm defenders in those who may do well under the new. This coolness arises partly from fear of the opponents, who have the laws on their side, and partly from the incredulity of men, who do not readily believe in new things until they have had a long experience of them."

That's Machiavelli in his famous book "The Prince" (circa 1515). The full text of this English translation by W.K. Marriott is available here.

A New Take on the Business Cycle

The concept of the Business Cycle, or Economic Cycle, is one of the most important topics in economics.   It represents the quest to understand why an economy tends to alternate between periods of growth and periods of decline, or recession (a subject all too common these days!).   Expectedly, this is a fiercely debated subject, and thus there are several related theories out there -- check Wikipedia's "Business Cycle" for a good introduction to the concept.   As I mentioned in the past, the business theory that I developed recently has the potential to provide novel explanations for broader economic phenomena; including the Business Cycle.   Since I just published the article "A Business-Relevant View of Human Nature," which details (as opposed to the more abstract explanations from BizBigPic or my book "Spointra") the basis of my fundamental theory of business, it is now possible and timely to elaborate a little on the new perspective on the Business Cycle.   Despite my efforts to keep this simple, though, you should read the article.

... Done? ... Let's move on, then.

As you know now, all business transactions can be represented on the continuum of problem-solving behaviors.  At any given time, a transaction occupies a particular position on the continuum.  Furthermore, over time, that position tends to move lower under the effect of commoditization.  Now, if we think of a national economy as the totality of business transactions that take place within that particular country, the economy can be seen as a collection of positions, or dots, that are moving lower on the continuum of problem-solving behavior. In addition, dots are continuously added (i.e., new offerings) or discarded (i.e., irrelevant offerings).  (For some help with visualizing these dynamics, you can check the second part of my video "Strategic Vision a la Spointra," with the note that: (1) it is a two-dimensional representation; (2) it refers to a firm; and (3) the continuum is placed horizontally, as opposed to the vertical orientation from the article.  So, instead of a top-down movement, you will see a right-left movement.)

We know that each of these dots has an associated stream of revenue that grows larger as the dot moves lower (a.k.a. commoditizes).  We also know that during its continuous evolution, the collection of dots tend to form a cluster, where a majority of the revenue is generated.   I will refer to this cluster as the Center of the economy.   Due to the continuous downward movement of all transactions in an economy, the Center will typically emerge at the lower end of the continuum of problem-solving behaviors.  Now, there are three general areas on the continuum, each associated with a particular business environment.  At the lower end, the environment is characterized by commoditized offerings, high levels of standardization, high levels of competition, low margins, etc.  All this implies that practices like consolidation through mergers & acquisitions, business-process outsourcing, and personnel reduction due to process automation are very common.

 

I will conclude for now with some thoughts.   It is clear that the Center's formation or migration to the bottom of the continuum is natural, being driven by human nature.   The way down is characterized by increasing revenues, and thus economic growth.   But once there, the conditions tend to worsen for most participants.  Moving up or dispersing the Center can be caused by technological revolutions (which would create a multitude of new high-level offerings).   However, it can also be caused by widespread divestures of irrelevant offerings, and profound social and political change (which would cause many transactions to be repositioned on the continuum), among others.   That is why it is often that we see recession, or economic contraction, being associated with these sort of events.

So, there you have it -- another view of the Business Cycle, or a general pattern for economic fluctuations.   I will come back with more thoughts in the future, but in the meantime let me know what you think.

Puzzled by Diagrams?

Here's what Prof. Henry Mintzberg writes in his paper "Developing Theory about the Development of Theory:"

"My work is loaded with diagrams, seeking to express every which way how the ideas I am trying to make come together. Aristotle said 'The soul...never thinks without a picture.' I try to help my soul think. [...]

These diagrams really help me a great deal: I can see it all at a glance, even if outside my head. But not always into other heads. I have been puzzled to find that some people are puzzled by these diagrams. They don't think in such terms, nor are they even able to see it in the work of others. Even many of my own doctoral students, sometimes including the best, when urged by me to express their ideas in diagrammatic form, have not gotten past a 2x2 matrix or two. Maybe this has to do with my education as a mechanical engineer -- probably the only thing left of that -- or at least my predisposition to do that kind of education, because I like to see things altogether, at a single glance, to quote a famous composer."

My book "Spointra and the Secret of Business Success," as well as the related initiative BizBigPic, is quite heavy on the graphic side. However, this blog and BizBigPic, which uses a blog technological platform, are perfectly suited for discussions. So, if you have any questions, please don't hesitate to start a discussion.

Feels Like 1871

Carl Menger wrote in the Preface of his 1871 book "Principles of Economics," which later became the foundation of the so-called Austrian School of economic thought:

"Never was there an age that placed economic interests higher than does our own. Never was the need of a scientific foundation for economic affairs felt more generally or more acutely. And never was the ability of practical men to utilize the achievements of science, in all fields of human activity, greater than in our day. If practical men, therefore, rely wholly on their own experience, and disregard our science in its present state of development, it cannot be due to a lack of serious interest or ability on their part. Nor can their disregard be the result of a haughty rejection of the deeper insight a true science would give into the circumstances and relationships determining the outcome of their activity. The cause of such remarkable indifference must not be sought elsewhere than in the present state of our science itself, in the sterility of all past endeavors to find its empirical foundations."

It makes you think -- it was written 136 years ago, and yet it remains so relevant today. Indeed, it feels like 1871!

I tried to say the same thing in my earlier post "Does the Long Term Matter?" but I could not be as concise as Menger. So, if you have not read this relatively short book yet, you should. Or at least, read the first chapter "The General Theory of the Good." The Ludwig von Mises Institute offers a free PDF version here.

Does the Long Term Matter?

In his post "The Long Term," David Maister notes that "our biggest barrier, as individuals and as organizations, is the difficulty in doing what is in our long-term best interest, not just what provides immediate gratification." Then he asks, "how DO you help people actually get on the program for what is their best interests?" Because I believe that his question touches a very important subject, I took the opportunity to comment. Here is a copy of my post:

"As it transpires from the post and from the previous comments, this is a big discussion. And, I think, that we need to narrow it down to what is relevant here: Assuming that a business leader's long-term personal success is directly dependent on her or his company's long-term success, why does she or he make business decisions that seem to go against the company's long-term success (and implicitly her or his own)?

In this case, the problem is a matter of perspective.  I am not referring to people's mental capabilities, but rather to the business' body of knowledge. The most popular and heavily employed business concepts are decades old. And, as is the case with any discipline in its infancy, they are based on assumptions that today do not hold true anymore. As a result, many of them have become obsolete and unfit to generate a realistic big picture of the business environment.

Every individual strives for a successful existence, whatever the meaning. Typically, as she or he grows older, this successful existence covers more space (impact on other humans) and time (impact over time). So, my view is that all people care about the long term. It is just that, if not provided with a compelling big picture, an individual will develop one on her or his own.

Now, there are many problems with the big pictures provided by the popular, mainstream business concepts.  Among the most important is the lack of a dynamic perspective. That is why most pictures of the future presented to business leaders are single-frame, still pictures. So, if the consultant's picture doesn't fit in the big picture (movie?) that the business leader already sees, it will be simply put aside. But, if the consultant's picture is dynamic, presenting an evolution that can be tested (read felt) as it unfolds, it will be much more readily accepted, even though it was not part of the leader's initial big picture.

In conclusion, people are not the problem; the discipline (body of knowledge) is. The world of business desperately needs new theoretical insight that would more accurately reflect reality, pushing the discipline forward in its transition from art to science."

UPDATE 6/7/2007: Also read "Feels Like 1871."