Three lessons that made my MBA worthwhile – Part 1: Confidence to not screw up badly

Three lessons that made my MBA worthwhile – Part 1: Confidence to not screw up badly

 Photo: Bigstockphoto.com, copyright Zerbor

Photo: Bigstockphoto.com, copyright Zerbor

I have not yet been very successful in monetizing my MBA degree. Nevertheless, I consider my decision to invest a severe share of my savings and two years’ worth of spare time into the HKUST Part-Time program and an exchange semester as a full-time student at Cornell’s Johnson Business School, one of my best ones.

Stephen Nason, professor at the Hong Kong University of Science & Technology, was asked once in an interview to summarize the MBA program in a single word. His choice, “confidence”, would also be my one-word summary of my own experience.

While I enjoyed almost all aspects of my two-year MBA journey, a few experiences stood out as particularly confidence-building. I would like to introduce three of these experiences. This is part I.

 I. Confidence to not screw up - A simple exercise in decision making

One of the most powerful lessons in my MBA was delivered in the business ethics class I took at my exchange school, Johnson Graduate School of Management at Cornell. Ethics classes in business schools generally do not enjoy the best reputation. The classes were added to most MBA curriculums in the early 2000s, after Enron and other scandals suggested that an elite education did not prevent managers from horrible moral judgments. Ethics classes are now compulsory in most MBA programs and are typically known for being quite a chore.

I, however, was lucky to enjoy an ethics class by Cornell professor Dana Radcliffe that defied common stereotypes and provided great discussions and deep insights around the leading question of, “Why do good people do bad things?”

My favorite takeaway from the course was a simple but powerful reminder: “Keep your decision baskets clean!”

Almost all questions that you encounter during your career can be allotted to one of three “decision baskets”:

Basket 1: Commercial / Managerial / Entrepreneurial questions

Examples: investment decisions, staffing decisions, pricing decisions…

 Photo: Bigstockphoto.com

Photo: Bigstockphoto.com

This basket leaves full freedom to the decision maker. Target is to maximize the profit of the decision. Decision making is primarily an optimization exercise.

Basket 2: Compliance questions

Example: taxation, compliance with labor law, product safety requirements…

This basket does not leave much freedom for decision. Target is usually to comply to all regulation at the lowest possible cost. Decision-making process is a careful interpretation of all relevant norms and regulations to assure compliance, even if non-compliance would be commercially more attractive.

Basket 3: Moral / Ethical questions

Example: staff welfare, legal and commercial beneficial decisions which negatively impact on third parties.

This basket is the most difficult one. It leaves a great amount of decision freedom, and opinions can vary widely among different people.

While surely being a simplification, the simple exercise to pause for a moment before making a decision, to consider to which of the free decision baskets it belongs, is extremely beneficial and has the potential to be career saving.

Managers constantly go wrong with commercial decisions; legal judgment is a world of its own and moral considerations are often a fine line.

However, the really big screw-ups happen, when decisions are sorted into the wrong basket. No matter how good a manager is, if a compliance question is sorted into the commercial basket, there are immense risks looming, and the chance to get the decision right is close to zero.

Wrongly approached compliance questions are one of the major reasons of corporate misbehavior.

Doing “bad things” is often not an intentional effort, but the unintended consequence of misallocated questions.

“Good people” do “bad things”, when they try to maximize for value what is essentially a legal consideration or a moral judgment.

Sticking to this simple exercise, what I learned in the Cornell ethics class has given me an immense level of confidence to never screw up too badly. It will not prevent me from making wrong decisions, but it definitely protects me from a lot of potentially dangerous judgments.

How about you? How do you prevent inadvertently acting morally or legally wrong? Have you ever experienced situations in your career where a legal or moral decision was made primarily on economic arguments? 

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