MBA Thunderbird Stress: Cash Lifeline and Dissention
July 9, 2013
I don’t think too much about MBAs. In my experience, I have found the exercise somewhat troublesome. I suppose I should be more open minded, but learning to do business and then getting a job telling folks how to run a business is not my cup of tea.
I prefer folks who are frustrated scholars of medieval literature or even a home economics major. These backgrounds offer some intellectual traction. I have learned a great deal by watching Martha Stuart, for example. I also enjoy working in references to the Analecta Hymnica Medii Aevi into my analyses of search, analytics, and content processing.
I read with considerable interest two stories about the financial challenges facing the esteemed Thunderbird School of Global Management. The first item was a Businessweek story titled “Board Members Quit after Thunderbird Vote on For-Profit Partnership.” The notion that a team could not reach agreement on the hook up with an institution called laureate Education was fascinating. I thought the notion of rational decision making and consensus were part of the MBA tool kit. Since I am not an MBA, I am delighted my misunderstanding has been corrected by this case example.
I then noted the hard copy Wall Street Journal story in Marketplace called “Struggling Thunderbird Business School Finds a For-Profit Lifeline.” The July 8, 2013, was online here on July 9, 2013 but may not be soon.
The point of this story is that management of the world class institution seems to have suffered from the winds of change in the economic ecosystem. Enrollments are down so Thunderbird hooked up in a joint venture which will yield $13 million in cash and involve some pretty fancy forward looking cash. The number is pegged at $100 million.
This sounds like a good business deal. However, several questions crossed my mind:
- Does Thunderbird offer training in analytics related to cash flow? If not, perhaps the institution may want to beef up that part of the curriculum? If Thunderbird does offer this instruction, perhaps the methods should become part of Thunderbird’s own planning process? What if the methods don’t work, which seems to be supported by the crisis referenced in the news stories, maybe some hard thinking should be done about teaching flawed methods?
- Will the future $100 million actually turn up? Desperation can trigger what I call “spreadsheet fever.” The disease triggers some number fiddling which can make almost any set of assumptions do the hockey stick curve thing on an Excel generated chart. Without prior experience in for profit hook ups, should that $100 million be viewed as a best case scenario. Education is undergoing some changes, and many of the shifts like new lawyers suing law schools and a shortage of jobs for newly minted MBAs may put the brakes on some future earnings. The projections, on the other hand, are stimulated by spreadsheet fever.
- Does the apparent dissention on the Board suggest that the collaborative methods often included in the management journals not working too well? It seems that picking up one’s football and going home is more of a elementary school tactic. I am probably incorrect in forming this hypothesis. What is the lesson of this use case? Flawed Board selection process, failure to communicate, a built in reluctance to compromise?
What does this have to do with search, analytics, and content processing? Three possible relationships:
- Vendors with MBA CEOs may not be equipped to deal with real world problems. I see this often and I have just completed updating a case example of an MBA leading a once promising technology into the Sea of Red Ink. Sorry, I won’t mention the firm in a reflective blog post.
- Companies which do survive with MBA leadership often demonstrate a “rats fleeing the ship” behavior on the part of senior management when an opportunity presents itself. There are some spectacular examples, including one major database vendor’s experience with a business intelligence acquisition. Why did the MBAs depart? My hunch is that the MBAs knew they dodged a bullet. Therefore, time to mosey on down the road.
- The number of start ups with a technical founder and an MBA “manager” is increasing. These outfits are not building a business. Many of them are in the business of raising money and then finding a way to exit before the revenue short fall becomes known by the investors. Is this cleverness? I don’t know.
Net net: Some search, analytics, and content processing vendors are struggling with their own MBA challenges. The “thunderbird” of interest may be the hope that a higher power will intervene or that solace may be found in a low cost beverage. Are licensees of the software systems invited to the party? Probably not.
Stephen E Arnold, July 9, 2013
Sponsored by Xenky
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