I recently read an article in which the author discusses the number of people who came out of the woodwork to offer unsolicited advice when he started his business. He characterized these people like television news pundits: noisy and seemingly passionate, but made of flimsy stuff.
The article resonated with me. I suffered through a similar experience while deciding to get an MBA. Many’s the time I was told that I could get my MBA just by working; that I would learn nothing I hadn’t already learned in starting two companies; that the MBA was all just networking and common sense.
At the time, of course, a lot of it seemed plausible. “What can I really learn,” I thought, “about entrepreneurship?” I’d already taken that plunge, and had developed a business instinct that had more or less taken me down an exciting path. True, it was not a famously successful path (although breaking even has its merits), but it was certainly an unconventional one, and I dug that. So as I began to apply to programs, I harbored deep misgivings about the whole thing.
Those misgivings were fed by a single insecurity: I’m not a numbers guy. More often than not, I follow my gut and rarely evaluate things on a strictly quantitative basis. Numbers are cold, rational, and unforgiving. My gut has feelings and other mushy stuff mixed in. I like my gut. I’m my gut. Numbers? Not so much.
Since starting at Babson, I’ve learned two important things in this family of thought. First, your gut absolutely matters. It can take the context of a choice into account and reach conclusions that are appropriate for the environment in which you are operating. Second, your gut, by itself, is utterly useless, like a flapping sail with no sheet anchoring it to the wind. Numbers will tell you the right decision. Your gut will let you double-check it.
An example: I was doing a capital budgeting problem for our finance class. I was asked to determine at what stage, if any, to install acid rain scrubbers on a coal-burning plant. My gut told me that the right choice was to install scrubbers immediately and sell credits to those who did not. Behind that instinct was the assumption that meeting EPA requirements – rather than exceeding sulfur limits and buying credits – was the right thing to do for the environment.
The numbers, however, told a completely different story. They wanted to buy slightly less polluting coal, and buy credits from the companies that did install scrubbers. They didn’t care at all about my sense of environmentalism; instead, they told the barest story there is to tell, and left the rest to interpretation. My gut’s path would have cost my company $436 million. The numbers’ best choice would cost us $177 million. Both choices would reduce acid rain by exactly the same amount, but my gut cost my company nearly 2.5 times more than an alternative.
Were the numbers right? On paper they certainly were, but in a broader context, how did they stack up? Is hurting the environment around our power plant preferable to preserving it? Will consumers in our area prefer cleaner energy providers? Do consumers even know the difference between energy providers?
These are all questions for the gut. In the end, most people will make different decisions for different reasons. But the numbers are there to tell you, first and foremost, the best choice on paper.
So ignore the pundits who tell you your gut knows best. You can always use it to make a decision, but getting an MBA will teach you the numbers. And the numbers are the only way to know which decision you’re really making.