MBAs, Innovation and Disruption

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I read a fascinating article in today's WSJ, available here, about how AOL was the first Facebook, that really understood the value of community. Unfortunately, as they became a public company, a "Taliban" of MBAs came in, focused on short term profit and their own reputations, and killed the real long term value of AOL.

In many ways, I can appreciate his perspective. Many companies have been killed by naive MBAs who think the formulae and theories they learned in business school can "save" any company, in fact all companies are just waiting to be so saved. At the same time, even when they do have value to add, they haven't learned how to communicate with the critical producers in the company.

For those very reasons, I have always preferred MBAs with strong operating experience


going to B school, and schools that emphasize those with experience in their program along with a tight focus on what works in the real world and how to communicate with real people. That is one of the key reasons I went to Duke's GEMBA program, where the minimum experience was a decade.

I believe Kornbluth's discredit of MBAs on principle is wrong, for the very reasons that he unwittingly makes aware in the article. AOL definitely underemphasized community, a serious management mistake. But AOL also made three major mistakes, ones that creative content types would also have made, but experienced creative business types might have found.

1. Intense focus on dial up, completely missing broadband.
2. Short term revenue focus, confident that customers would continue to pay $23.95 per month for their service, when alternate revenue models were becoming available, notably the Google model of free supported by advertising, exactly the Facebook model.
3. Control. AOL loved their walled garden, but the Internet is much wider than that. People didn't want to be walled in.

Business fail because they kill their creative people, creative edge, but also because they miss the creative business foresight to pivot with changes in the market.