Today, I spoke to Josh Kaufman, who is an independent business professor, education activist, and author of the Personal MBA: Master the Art of Business. Prior to developing the Personal MBA, Josh Kaufman worked as an Assistant Brand Manager in Procter & Gamble’s Home Care division. In this interview, Josh talks about if it’s worthwhile to go for your MBA, how business school can’t make you a leader, and more.
Is it worthwhile to spend money for an MBA these days? What are the benefits and drawbacks to this choice?
As with all investments, the answer is “it depends.” It depends on what you want out of life, and what you value. On the whole, unless your primary goal in life is to work for a large corporation that requires an MBA as a cost of entry, you’re usually better off skipping the degree and learning the essentials of business on your own.
Getting an MBA, particularly from a top school, will make it easier to land an interview with a large company that uses the degree as an HR screening criteria. If you want to work for Goldman Sachs or McKinsey, you may have to pay $150,000+ to get the interview. (Even then, there are exceptions – I landed a management-track job at Procter & Gamble without getting an MBA. It always pays to look for alternative ways to get what you want.)
An MBA is not a good investment if you’re interested in starting your own business, or if you value freedom and flexibility. Everyone needs fundamental business skills, but business schools typically do a poor job teaching skills you’ll actually use in the actual practice of business.
In addition, top business schools are ruinously expensive, and student debt is not your friend if you graduate into a poor job market or if you’re trying to keep Overhead low while starting a company. In order to go to business school, students are increasingly asked to mortgage the next 20+ years of their flexibility and future earnings for the privilege. Based on my research, that’s rarely a good trade.
What inspired you to write “The Personal MBA”?
I wanted to teach myself the fundamentals of business – so I started reading, researching, and talking to successful business professionals. As I learned more and more about business, I began isolating a few important themes and patterns – the 1% of business concepts that provide 99% of the value.
I call these ideas “business mental models.” They’re fundamental and universal – they apply to every business, from the largest Fortune 50 to the smallest micro-venture. If you master these ideas, you’ll have a solid working knowledge of what businesses actually are and how they actually work.
Business is a subject that everyone should master if they want to do well in the world, but most people find business intimidating and confusing at first. That’s why I decided to write this book – I want to help people learn what they need to know to succeed. My job as a business teacher is to help people learn these fundamental concepts as quickly and effectively as possible.
Can going to a business school make you a leader? Why or why not?
Credentialing programs don’t (and can’t) create leaders. You choose to become a leader by deciding you want to accomplish something, defining success criteria, gathering a group of people who are willing to work with you, and making things happen.
The secret is that credentialing programs don’t give you anything you don’t already have – you can choose to step up and lead right now. You don’t need permission or anyone’s approval to get started.
What are your “4 Methods to Increase Revenue”?
Believe it or not, there are only four ways to increase the revenue of any business. Accordingly, the Four Methods to Increase Revenue is a simple checklist you can use to generate ideas about how to bring in more money. Here are the four:
- Bring in more customers.
- Increase the average transaction size by encouraging each customer to purchase more.
- Increase purchase frequency by encouraging customers to purchase more often.
- Raise your prices.
Think of these methods in the context of a restaurant. If you want your restaurant to make more money, you can (1) find more new customers, (2) sell each customer more items, including appetizers, drinks, and dessert, (3) encourage existing customers to come in more often via specials or events, or (4) raise the prices on your menu.
This is an example of a business mental model – it’s a simple way to describe a universal truth about how businesses work. Learn the general idea, and you can apply it to any specific business.
Why did you decide to leave P&G to start your new venture?
I value freedom and flexibility. While I learned an enormous amount at P&G, working for a large, bureaucratic company doesn’t suit me. Communication Overhead is a very real drag on getting things done, and I prefer being able to experiment, plan, and act without needing the approval of a committee.
Now, I’m essentially a business professor – but I don’t work at a university. My job is to help people who want to learn about business master the essentials as quickly as possible. I prefer to work with entrepreneurs and small business owners who can test and implement quickly, so they see results immediately.
I optimize my business for freedom – the ability to choose who I work with, what I work on, and how I go about making progress. I set my own schedule, make my own decisions, and have full responsibility for the consequences.
One of the primary reasons I started my own business was to be able to spend more time with my children. While working in the corporate world, I saw how many people sacrificed their family life for their career, and the pain that situation caused on a daily basis. I decided very early in my career not to follow suit.
My daughter, Lela, was born a week ago. Owning my own business allows me to spend every morning with her, and to take a very active role in parenting as she grows up. I wouldn’t trade that for the world.
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Josh Kaufman is an independent business professor, education activist, and author of the Personal MBA: Master the Art of Business. Prior to developing the Personal MBA, Josh Kaufman worked as an Assistant Brand Manager in Procter & Gamble’s Home Care division, where he was responsible for projects that encompassed P&G’s entire value chain, from new product development to delivering in-store marketing campaigns for key customers like Wal-Mart, Target, and Costco. Before leaving P&G, he spearheaded the development of P&G’s global online marketing measurement strategy. His work has been featured in BusinessWeek and FastCompany, as well as by influential websites like Lifehacker, Cool Tools, HarvardBusiness.org, and Seth Godin’s Blog.
