I recorded a podcast this week with a senior finance professional who had also ran his own business and it got me thinking that nowadays in most large enterprises finance managers and leaders also supplement their accounting training by undertaking an MBA (Masters of Business and Administration).
Interestingly whilst on this course you learn the skills required to run a business successfully, the fact remains that most MBA graduates will not go off and start a business of their own, they instead take up middle to senior finance positions in existing companies. So what’s a better course of education for a finance professional an MBA or experience of running your own business?
Administrator versus Alchemist
Both can be useful however the difference between the two comes down to making a choice of two paths: one is an administrative journey, the other, an entrepreneurial one. The education from an undertaking an MBA is akin to becoming an administrator who focuses on how to get the most out of existing models, tools and techniques. Whereas an alchemist is like an entrepreneur who starts with a mindset of combining various approaches into creating more value for customers. In effect:
Administration involves sweating existing approaches whereas Alchemy is about conjuring up something of value and in effect creating new ways of doing things.
Deconstructing the Numbers
Approaching our Finance world with an MBA mindset would most likely involve attempting to deconstruct an organisation’s value chain into its component parts (i.e. value drivers) to examine them in more detail. This might involve:
- Applying an End-to-End SIPOC, Value Chain or Business Model Canvas of the key suppliers, inputs, processes, outputs and customers of your organisation and how they drive value;
- Analysing the value added at each stage and how it contributes to overall shareholder margin/value
- Identifying any bottlenecks, throughput challenges and sustainability of the various parts of the value chain.
Crafting Insights from the Numbers
The Alchemist on the other hand would transform and craft financial and sometimes non-financial data into increasingly more valuable and productive insights by:
- Pushing outwards the Insight Productivity Frontier to create increasing value from the data generated across the value chain.
- Performing Pareto (80/20) analysis to identify areas of asymmetric returns and challenge existing stakeholder assumptions.
- Toying with the Power of One thinking to distil biggest bangs for buck.
- Choosing to compete on analytics by moving from descriptive to predictive to prescriptive analysis.
So which is the better mindset in Finance: MBA or Entrepreneur?
As someone who has done both I can see pros and cons of bringing such mindsets into Finance. In the real world where we work Entrepreneurs develop ideas and assets that can deliver value for customers, i.e. they create a customer for a product or service, whereas an MBA would help deconstruct, optimise, maintain and commercialise their value over time. Similarly in our Finance departments we would all benefit from having some of us with an alchemist mindset, crafting better, more novel, leading edge insights that allow us to become more influential and deliver more impact for our organisations. An then, if you think about it, over time these newly crafted insights that financial alchemists produce could be handed over to those with a more MBA-type mindset to further optimise and maintain.
And this is why we bring on guest mentors to our Strength in the Numbers Show, both alchemists and MBA types, to share with you their stories and hard won lessons and practically figured out how create new approaches or sweat existing ones to contribute even more value in and for their organisations. And ultimately help you learn how to leverage your strengths in the numbers faster so you can have a more fun, rewarding and successful career as a finance professional.
So what do you think is a better approach to have: An MBA mindset or an Entrepreneur mindset?
The author Andrew Codd is the producer of the Strength in the Numbers Podcast which interviews real finance practitioners to break down their hard won lessons and deconstruct their practical methods that work on the job and which you won’t typically find in textbooks or exams so that we create more influential finance professionals worldwide who solve meaningful problems for their organisations and in return have fun, rewarding and successful careers in finance.