Business Careers

Recently I posted my reactions to a new book about Harvard Business School called "Ahead of the Curve," by recent alum Philip Delves Broughton. Philip thought I had misintepreted his reflections in the book, and he was kind enough to elaborate on his experiences as an HBS student and let me pick his brain. Here's our email exchange about the value of an MBA for career changers, the HBS culture, teaching leadership and ethics in the classroom, being a humanities guy in an Excel world, and more:

AI: I got the sense from your book -- I think you even say so expressly -- that you weren't terribly clear in your own mind about what you were hoping to do with your MBA before you embarked on business school. It sounds as if you went to business school hoping to take more control over your life, and you assumed you'd be able to work out the specifics of a career change while you were there. That didn't seem to come together as neatly as you had hoped -- by the end of the MBA program, you were still trying to sort out what you wanted to do, and you were finding the job search harder than expected. In hindsight, do you wish you had done more planning or soul-searching before starting business school?

PDB: No, I was pretty clear about why I was going. I needed to be. I left a great job to go to business school. The challenge was remaining clear about it under the kind of peer pressure you find at a business school. I wanted to be able to pursue my own interests while controlling my own P&L. I didn't want an employer. I wanted control over my time. Now this is pretty different from a lot of people at b-school. I didn't want a "career change" so much as more power to decide my own personal and economic fate. It's different. The book is not about my failed job search. It's about my struggle to remain on the path I set out on while pulled in various directions.

AI: I've been somewhat skeptical about the value of business school, even a top business school, for career changers, for some of the reasons you mention in the book, and also because the recruiting schedule starts so relentlessly early that you don't really have any time to navel-gaze about your career once you get there. I'm thinking in particular of the hiring interview you did with the Washington Post (pretty dispiriting), and the following:

"But I was not alone in struggling to change my career. Luis, the Franco-Argentine, complained to me that many people felt HBS failed in its promise to give people a new start. 'They say this is your chance to change industry, but very few are succeeding. You see, the problem is that the path of least resistance is to do banking or consulting. Now, if you wanted to do either of those, you probably could. But if you wanted to get out of them, you really have to fight.... If you don't have experience in an industry, they don't want you, so you end up going back to the industries you do have experience in."

Do you think career changers should go to business school? If yes, what can they do to make their time there, and the job search process, less difficult?

PDB: Career changers need to do a couple of things. The first thing, as you say, is to start thinking early about what you want to change to. Even if you're not sure, you must have a vague idea. Then use every resource - especially alumni - to help you do that. The second thing is to regard your first job out of b-school as a bank shot. You go into one of the standard b-school professions - banking/consulting - in order to drop into the career you want in a couple of years. Lots of people do that successfully. But simply hoping the MBA magic dust will transform you into the dream candidate in the career you're after is delusional. The final thing I'd recommend, is to go to places where people know you already, your home town for example - then your career to that point, plus the MBA, plus trust and familiarity will make a career change easier.

PDB: I wasn't so much naive as ignorant of what HBS would be like. I didn't come from a profession where lots of people went to business school. I wasn't surprised that people were like they were - but given all that we heard from the most successful business people, Buffett/Paulson/Whitman, about work-life balance, I thought people should have taken that stuff more seriously. As I say in my book, I made a lot of very good friends at HBS and admired a lot of my fellow students. Anyone reading the book as a whole - and not just the reviews - will see that. I think the best thing to do to educate yourself is find people who have been to business school and ask them. Also ask people you admire - would I benefit from this? Match only really matters if you're fortunate enough to get into a bunch of schools. Otherwise, you go to the best one you can.

AI: You write about some of the difficulties you had as a humanities guy with no quantitative or business background. How can other humanities or liberal arts types best prepare themselves if they think they want to pursue a management or business education?

PDB: Oh, this is just practice. I hadn't done math since I was 16. I had never opened Excel. You have two years to figure this stuff out, which I did. It's a hassle at first, but short of taking an Excel course before getting on campus, there's not much you can do. You pick it up pretty fast once you're there - but just have to swallow your ego while you're trying to catch up.

AI: HBS says its mission is "to educate leaders who make a difference in the world." In your book, Ben asks, "I wonder why the school can't just admit that its job is teaching people how to run profitable businesses? Why does it even think that leadership is best taught through courses on business? I mean, if it is really leadership they want to teach, why don't they have us taking history or religion courses or spending the weekends with the Marine Corps?" Do you agree? Do you think leadership can be taught in a classroom?

(I do know your thinking process changed, and that you found that valuable: "Despite my frustration at being so far behind my classmates technically and in my basic knowledge of business functions, I knew that my intellectual apparatus had toughened. I saw things in the world that I had not seen before. I looked at facts and numbers a different way" -- but that's arguably different than leadership skills.)

PDB: Yes, leadership can be taught. Not in the sense that you're teaching people how to be Churchills or Roosevelts or Napoleons even. Just in the sense of helping people think about managing organizations. Every CEO we heard from said that people management was the biggest part of their job. And this didn't mean making big speeches. It meant hiring and firing, establishing a culture, setting the right incentives - and there is a large academic component to that, in addition to any personal qualities a leader might have.

AI: You took a somewhat dyspeptic view of the HBS culture, which in parts of the book sounds like a cross between American Pie fraternity antics and some kind of EST/Maoist reeducation camp. Do you think that's unique to HBS vs. other business schools? And was perhaps your age a factor? Your non-American-ness? I got the impression throughout the book that the other non-Americans were similarly nonplussed by those parts of the HBS culture. Thoughts?

PDB: Yes, being older made me look at it differently. I was married with a child - therefore not going out to Boston nightclubs midweek. Yes, I'm British, but I've lived in America since 1998, except for 2.5 years, and my wife is American, and my grandfather, aunt and cousins are American.... so I'm not entirely "not American." Yes, I think the foreigners did find it strange. American college culture is somewhat startling to foreigners. I know it's not unique to HBS. But perhaps the contrast between the seriousness in the classroom and the frat-ishness of much of the social life was more glaring. But again, I think this exists in business culture more broadly - you have companies preaching corporate social responsibility in the morning and then doing quite irresponsible things the rest of the day. Would the more exotic nightlife of Las Vegas exist, one wonders, without business expense accounts? I think people outside business are more sensitive to this hypocrisy.

AI: In your book, your classmates come in for quite a drubbing on the ethics front. I'm thinking in particular of the "financial aid BMWs" and the large proportion of the class (3/4 or thereabouts) who thought it ethically permissible for applicants to seek access to an admissions server that they knew to be unauthorized. There seems to be a big disconnect between the values of Dean Clark and his students. Thoughts on that? And do you think ethics can be taught in the classroom?

PDB: Ethics can certainly be discussed in the classroom - but can the ethics of students in their mid-late 20's actually be changed? Not so sure. I did find the discussions thought-provoking though. I'm not sure I give my classmates a "drubbing" about ethics. I'm in no position to do that! What I do discuss, however, is the contrast between what I describe as the rather excessive - and unrealistic - piety of business ethics as we discussed in class and the reality of how most people, business students included, actually behave. HBS took ethics extremely seriously - and kind of sets itself up to be beaten up when its alumni cause the collapse of Enron, and now have their fingerprints all over the current financial mess.

AI: You write in the start of the book that it was not intended as an "inside raid." I hear that some people at HBS nonetheless took it that way. One could argue that you wanted the upside of the brand and the network, but then violated a tacit compact with the HBS community by writing an exposé. In the book you express a lot of appreciation for the power of the HBS network. Do you think you've compromised the value of that network (to you) because you've written the book? Has there been any other kind of fallout? Am I wrong entirely -- perhaps it has increased the value of your network? Why did you write the book?

PDB: I wrote the book because I thought it would be interesting and useful to do so. And because I was offered an advance by a publisher. I knew elements of my experience were shared by many of my classmates. And I think at both HBS and many big firms, one is expected either to be a 100% booster, or a bitter critic. The truth is one can be ambivalent. I say that HBS was about 80% great and about 20% weird. Most people I know who went there agree. I know some people are upset. That's fine. I don't think I violated any compact. I didn't become a Free Mason when I went there. I attended an educational establishment and paid handsomely to do so. And I wrote a book that is honest and true. For every attack I've received from the school, I've received messages from classmates and other alumni thanking me for being so honest about the experience. So I'm ok with that.

AI: You acknowledge that "the Harvard Business School classroom is a safe learning environment, a place to experiment and make mistakes...." and that's why you cloaked the identities of your classmates. You decided not to do so for professors, because you think that they have a "public role." That's not as clear to me. Don't they experiment and course-correct as well? Aren't they entitled to some expectation of privacy in the classroom?

PDB: No. They are paid extremely well for their work at HBS and earn even more from outside gigs linked to their role as HBS professors. Most professors come off well in the book. I'm only actually critical of one. They can experiment and course-correct, fine, but I was paying the school $100 per class. I think I'm entitled to do what I did with the experience.

AI: How would your wife reflect on your MBA? Is she glad you went? Any advice she would give prospective business school spouses?

PDB: My wife enjoyed it, I think. We met lots of interesting people and I was around a lot when our second son was born. The only challenge was going back to a student life and budget after living like grown-ups for so long. But that was pretty easy, and rather refreshing. Advice? Be prepared for your other half to become a navel-gazing egotist while going through the process.

And a nice bonus for people working on their Round 2 HBS essays right now: Philip also had some advice for people writing the "career vision" essay (optional this year, but in my opinion still highly recommended):

PDB: I don't think HBS wants to hear "I want to make VP at 30 and MD at 35 and partner at 40." They want to hear that you have some sense of where you want to go: do you want to be in finance, do you want to manage a factory, do you want to be entrepreneurial? Or in my case, do you want to take your proven skills in writing, journalism and being a foreign correspondent, add on some business know-how and go write your own pay check - somehow. Anyone applying to business school should be able to come up with something which is consistent with their life and professional ambitions.

US News has some timely tips for aspiring MBAs. (While I'm not a huge fan of their rankings, I'm happy to pass along good content when I see it.) The article also has a little shout-out to AIGAC, on whose board I serve.

I've decided that I need to be posting more of the discussions I have (largely by email) over the course of the day. I yak all day long about things that might be of interest to readers of the Ivey Files, and I need to get over the fact that reproducing things I've written in an email will by necessity offer up writing that is less than polished (although Lord knows that's true for blog postings as well).

So, just today, I was chatting with some people who were commenting on the habit of finance employers to ask job applicants for their SAT scores (as well as LSAT or GMAT scores, as the case may be). On the one hand, we laughed our butts off -- we're in our mid-thirties and can't imagine that a test we took back in, oh, 1989 (!!) could possibly say anything meaningful about us. Can SAT scores say anything meaningful about someone who just graduated from college? Maybe yes, maybe no. Some argued that SAT scores do say something about raw horsepower under the hood, while others argued that good SAT scores just prove you're good at taking the SATs. Either way, to people who aren't routinely dealing with recruiting practices in the the finance world, it seems weird to ask for the scores.

However, if employers are asking for the scores, then employers obviously see some value in that information, and I'm very curious where that value comes from.

From one of my emails:This is, I suspect, also a reflection of the fact that college grades, and college transcripts  as a whole, don't really mean squat [to the interviewer].Unless you have very inside-baseball *and* recent knowledge of a school's grading practices, as well as knowledge of the grading practices and substantive difficulty of individual courses and professors, transcripts really mean nothing. When I look at a transcript, I have no idea whether PHYS 325 is string theory or "Physics for Poets" (as the gut physics class was called at Columbia in my day). And when I was still on the job market, I was bummed that my law school transcript didn't say who taught my Financial Accounting class at the business school -- it was Roman Weil, and that actually means something to some people, but I never got the benefit of that on my transcript.

The uselessness of transcripts also leads to over-reliance on the name brand of the school to signal something about the applicant.We went on to discuss grade inflation more generally, and I recalled a Boston Globe article from the early 2000's about the fact that 91% of Harvard undergraduates had graduated with honors that year. (The rest of the ivies are pretty inflationary too, so I'm not just picking on Harvard, although it has seemed to be the worst offender.)

So I throw that out there, because transcripts are so unhelpful not just in the job hiring process, but also in the graduate school admissions process.  When applicants complain about the seeming over-reliance on standardized test scores, understand that most transcript are in fact very, very hard to interpret in any meaningful way.

In other news... I'm excited to welcome a new member to our team. Jennifer Lee will be offering career coaching to college students and graduates who are considering business careers (finance, consulting, etc.) and/or MBA degrees. Below is her bio, which gives a sense of the interesting twists and turns one's career can take. Jennifer spent eleven years as a cello student at Juilliard before attending Harvard College, where she played varsity lacrosse, founded a conductorless orchestra and double majored in Music and Anthropology. She earned her M.Phil. in Musicology and Performance at Oxford (Lincoln College) and currently attends Harvard Business School for her MBA. She spent a year at a music conservatory in Freiburg, Germany, and her solo and ensemble performances have taken her to France, Germany, Italy, Switzerland, Japan, and South Korea. Prior to HBS, she worked as both a for-profit and nonprofit management consultant. Most recently, she has worked at JP Morgan in London as an investment banking summer associate in the Technology, Media, and Telecom Group. Jennifer is conversant in German and Korean.

Can entrepreneurship be taught in the classroom? Many business schools (both undergraduate and graduate) seem to think so, and they are booming. In an article in the current University of Cambridge alumni magazine, some entrepreneurs weigh in on what makes them successful.

I wouldn’t have guessed that I’d finish out the year 2007 by giving a talk at an event headlined by Jack Welch, but that’s what happened last week when I was a panelist at the Massachusetts Conference for Women, talking to thousands of women who came to hear about career choices, entrepreneurship, and all kinds of other goodies.

Welch was one of the keynote speakers, and while I overheard quite a bit of grumbling from attendees about the fact that a man was giving the keynote address at a women’s conference, I personally couldn't care less if he were a man, a woman, or an alien sex. A chance to hear what's on Jack Welch's mind? Sign me up. Here are some of the highlights.

What makes a great leader?

Welch says there are 4 E’s and a P of Leadership.
(More on the four E's here, here, and here.)

Energy – Leaders are people who love to "go, go, go." They possess boundless energy and get up every day ready to attack the job at hand.

Energizers – Leaders know how to spark/motivate others to perform. They outline a vision and are able to direct other people to carry it out. Energizers know how to get people excited, and they are able to give credit when due and accept responsibly for mistakes.

Edge - Those with edge are competitive types. They know how to make the really difficult decisions, such as hiring, firing and promoting, never allowing the degree of difficulty to stand in their way.

Execute - The key to the entire model. Without measurable results, the other E's are of little use. Executers recognize that activity and productivity are not the same, and they are capable of converting energy and edge into action and results.

Passion – You’ve got to have passion in your work. If it’s not making you wake up happy every day, don’t do it.

Networking is Secondary

“Networking is nice, but the key is to OVERDELIVER and make your boss smarter. Show your boss you have what it takes.” “Delivering the goods” is huge. Go the extra mile if you want to move up. Do not look for other reasons or ways to get promoted – DELIVER.

Work-Life Balance

“Work life Balance? Who made up that term? There’s no such thing! There are work-life CHOICES.” Then he told a story of how he pretty much never saw his kids when they were growing up because he made the choice to run GE.

How to Recruit Talent – Things to Look For

1. Authenticity – Are they real?

2. Resilience – Not “if” they get back up on horse, but “how well.”

3. See Around the Corner – What’s next? Keep your superstars.

Closing tips from Jack

1. Boredom is deadly. Get pushed by your mentors and peers to the next level.

2. Never be satisfied – keep reaching and stretching.

3. See yourself where you want to be. Jack says: “I see myself as 6 foot tall, with hair.”

There has been much wailing and gnashing of teeth after the LSAT this past weekend, so I wanted to share this story abut Sara Blakely, who founded a $150 million company after she choked on the LSAT. The company is called Spanx (cheeky, right?), and they make the insanely popular footless hosiery sold in fancy-pants stores like Neiman Marcus and featured on Oprah's "Favorite Things." Not a bad outcome for someone who "failed," although I'm sure she felt pretty crummy in the days after the LSAT. It's a great reminder not to let one test define who you are or what you're capable of in life.

From the BusinessWeek article: Q: You've said that failure was a huge part of your success—how so?

A: Because I failed the LSAT. Basically, if I had not failed, I'd have been a lawyer and there would be no Spanx. I think failure is nothing more than life's way of nudging you that you are off course. My attitude to failure is not attached to outcome, but in not trying. It is liberating. Most people attach failure to something not working out or how people perceive you. This way, it is about answering to yourself.

Enjoyed this article in today's WSJ about a Harvard Business School graduate and former investment banker who now works as one of the country's few female high school football coaches, in Texas no less. An excerpt:This spring, Ms. Myers interviewed for a job at Bishop Lynch High School in Dallas where she had served as the tight ends coach in 2003, the year the team won a Texas state championship for private and parochial schools. She said the team's new head coach, Bill Persinger, told her he couldn't hire her because there are too many people who doubt that a woman truly understands the physical and aggressive nature of football -- or could be capable of imparting it to the players.

Mr. Persinger said he mainly wanted to hire someone with more experience in his offensive system, but that Ms. Myers's gender, and the likely protests that would come from parents if she was hired, were factors in the decision, too.

To get her current job at Prince of Peace, she disguised her gender by applying under the name S. "Chuck" Myers. Doug Pevehouse, who had just been hired to start a football program at the private Christian school in the Dallas suburb of Carrollton, said he had no idea what the initial stood for. "If it would have said Susan, I probably wouldn't have called," he said.What's next? Condoleezza Rice as NFL commissioner?

BusinessWeek is taking nominations here through September 10.  Note that they're looking for people running "real, fully operational companies," so a business plan on the back of a napkin, a slick PowerPoint presentation, and Uncle Joe's unbiased opinion won't suffice on their own.

It's rare that I hit on a topic that allows me to write about issues of importance to both MBA folks as well as law school/aspiring policy wonk types. You'd think that not many people would care about the special tax treatment received by partners in private equity firms and hedge funds (in particular, the capital gains treatment for their "carried interests"), but two opinion pieces in today's NYT demonstrate why the issue should matter to many more people, including many who read this blog.

First up: "The Under-Taxed Kings of Private Equity" by Alan S. Blinder, professor of economics and public affairs at Princeton, former vice chairman of the Federal Reserve, and adviser to Democratic politicians. His piece lays out in very understandable terms what that "carried interest" is, why it matters, and what kinds of dollar amounts are at stake for the public treasury.

Next up: "The Hedge Fund Class and the French Revolution," by lawyer, law professor, writer, actor ("Bueller? Bueller? Bueller?"), economist, and Nixon speech writer Ben Stein. Stein takes Blinder's argument one step further and asks about the policy implications behind a tax law that has hedge fund and private equity gazillionaires paying a much lower tax rate on their income than normal people:

We are in a war. We are apparently not winning the war. The military is desperately shy of funds, to the point where our fighting men and women are being shortchanged in training and equipment.

We also need more money for our soldiers’ pay, so their families do not have to live like church mice while their spouses are deployed in Iraq or Afghanistan. In these circumstances, is it fitting and morally right for the richest of the rich to be paying either very low taxes or no tax at all?

Is it right or even admissible in the human conscience that while teachers, emergency room technicians, police and firefighters are taxed at full earned-income rates — and often underpaid — that the highest-earning people in this country should pay at either very low tax rates or none at all?

Stein is no class warrior, so coming from him, this argument lept off the page (screen) at me.

Why does or should all this matter to a big chunk of my readership? For the following reasons:

1. For my MBAs and aspiring MBAs, so many of whom are itching to get into private equity: I've written before about how the economics of PE are very possibly about to change, and how that doesn't bode well for their career prospects, or at least their earnings prospects, in PE.

As Blinder puts it, "If we tax Activity A at 15 percent and Activity B at 38 percent, a free-market economy will give us more of A and less of B." If we start taxing private equity incomes at 38% rather than 15%, expect to see less capital and less top talent gravitating towards private equity.

(And the issue of capital gains treatment of their income doesn't even touch the problem of what happens to the buy-out market once interest rates rise, as they inevitably will. Could be a perfect storm brewing.)

2. For my law school types: I would guesstimate that a solid majority of law school applicants seek a law degree because they want to effect change on a policy level and make society better. (And they usually misspell "effect" as "affect," a spelling faux pas from which spellcheck won't rescue them.) In the same breath, when I ask them more specifically what kind of law they want to practice, they start rattling off the kinds of law they're certain they don't want to study. High on that list: tax law. That they don't realize how intertwined tax law is with the fundamental policy choices we make as a society and the give-and-take that happens through the legislative process suggests to me that most applicants have no idea what they're talking about.

Stein's article is a reminder that if you don't know anything about tax policy like carried interests and amortization of goodwill during an IPO, you're going to have a hard time making a rational or convincing argument about whatever activities you would rather have the government encourage, or what programs we should be funding over other ones, in a world of finite treasury resources.

Care about AIDS or cancer research? Global warming initiatives? More subsidized health care? Better life-saving equipment for our soldiers? Fancy technology for national security efforts? Those all take federal dollars, and if you want some of them for whatever your preferred cause might be, better that you start understanding things like the policy argument behind capital-gains treatment for carried interests.

Which leads me to my final point for law school types: Don't graduate from law school without having taken financial accounting and being able to read a financial statement. It could be the most useful class you take in law school, even if -- and I would argue especially if -- you're a policy wonk at heart. And if you retort that you're "just not a numbers person," you're not going to be as effective an advocate for your cause.