3 Entrepreneurial Skills You Won’t Learn From Forbes

Not  content with teaching entrepreneurial lessons from everyday events, Forbes also wants to tell us about places where one cannot learn entrepreneurial skills. The obvious target is business schools. Any article you write that puts down formal college education (dropout and start a company already) or business schools (seriously? don’t you know you can’t start a company with spreadsheets?) is about garnering millions of page views. And the audience is only more than willing.

(Side bar: I went to business school. Proud to be a Haas Berkeley MBA. I did not do that for starting a company. Most who admit to having an MBA quickly add, “don’t hate me for it”. That is just shameful.)

This time Forbes wants to tell us about 3 entrepreneurial skills you won’t learn business schools. Let us look at  their logic

1. Business Schools won’t teach you – How to Code

Gasp! What a waste of tuition and opportunity cost of two years! All those GMAT, essays, two years of beer nights and $100K tuition and yet they don’t teach you coding.  For one thing you know there are only tech startups and another coding is not a hireable skill.

If one goes to business school to learn coding one’s reasoning and decision making need to be seriously questioned. Besides why the obsession with looking at everything through the lens of an App? There are other businesses you know? One of my classmates started a T-shirt company (MarineLayer) and another started a Cereals company (MojaMix) – while still at Haas. I am pretty sure both did not come to business school to learn  how to code or coded for their startup.

The point is not about giving two examples as proof. A business is not about writing code, making t-shirts or mixing cereals – it is about finding a customer segment with unmet need, offering them a compelling value proposition, doing it better than competition and getting your fair share of value you created for them.

2. Business Schools won’t teach you – How to Sell

Go to LinkedIn now and search all those sales professionals and see how many have MBA. See if there is bimodality in the data based on their level – fewer MBAs among frontline sales people  and a higher concentration of MBA among sales executives. (Note: I am not saying MBA is the causation for moving up in sales career, merely pointing out possible bimodality in data.)

Business schools don’t tell you they teach you how to sell. They can only teach you about sales process, sales structures, sales enablement, sales incentives and how to hire the right people. If your startup has a product (you know the one customers want to pay for) then shouldn’t you be hiring sales people?

If you want to learn how to cold call and how to close you might be better off going to one of those real estate workshops.

3. Business Schools won’t teach you – How to Hire

Now this is just a ridiculous claim based on the fact there are no courses titled

MBA-301 How to hire rockstar python coders

What is hiring? It is a strategic investment decision, especially for a startup with limited resources. (For a big enterprise a single hire may not matter much.)

You take stock of your venture, see what key skills are needed for it to be better everyday than the previous day, prioritize those skills based on the return on investment, hire  people who bring those skills and add more value than they take away. In other words it is a resource optimization problem under constraints. And you learn about decision making, opportunity costs, resource optimization and organizational behavior in business schools. All you need to do is apply that in your hiring process.

On the flip side, when you find a person you absolutely want to have on your team, you have to make a compelling and credible case with them on why it is more value for them to be with your venture than outside of it. That involves marketing, selective targeting, positioning and value communication. Once again these are other skills that you learn but need to apply in the context of hiring.

If you went to business school to learn wrong skills, should you be starting a business at all?

It isn’t ‘fair & square’ for consumers, it is ‘focus & simplify’ for JCPenney

This is a guest post by Praveen Rajasekar, an aspiring entrepreneurial product marketer pursuing MBA at GeorgiaTech.  This is his detailed analysis of pricing strategy change announced by JCPenney. See his full bio at the end of the article.

JCPenney (JCP) unravels a transformational plan attempting to change consumer retail experience.  Will its new ‘fair & square’ pricing strategy and month-long value promotions make it America’s favorite store? Perhaps, but it will depend on how effective these strategies are going to influence consumers in its target market.

Over the years, we as consumers have become accustomed to sales and discounts in retail stores. For some of us, buying a product on sale provides a sense of achievement. For others, it’s just common sense because you get used to the numerous sales and promotions. So the real question is will the new pricing and promotions at JCP change consumer buying behavior? An economist would say yes, with changes in price the quantity demanded changes. But as a marketer we are faced with irrational consumer behavior.

Marketers have long used pricing as a tool to signal quality. But with numerous sales and discounts, it may become counterproductive.  While prices ending in 0 are perceived to signal quality, based on the psychology of pricing, marketers have used prices ending in 9 to signal discount.  JCP has done away with $X.99 prices and has decided to round them to $(X+1).00 and has also limited the sales promotions to convey ‘We are a quality (not a discount) retailer’.

In addition, it has devised three types of pricing:

  1. Everyday prices - Regular prices, not everyday low prices.
  2. Month-long values -Better prices that change monthly based on seasonal needs.
  3. Best prices -Clearance-level rates on the 1st and 3rd Fridays of every month.

JCPenney Pricing Waterfall

It also promises consistent pricing strategy across all channels whether in-store or online.

What does this mean to us as consumers? Zero price discrimination. Wow, that sounds cool. But is it really enough to attract consumers? It depends.

Will we buy an IZOD shirt from JCP for $40.00 at their new everyday price or wait for it to be on sale at Macy’s for $34.99 down from $60.00 original retail price?

It depends on how quickly we need the shirt and whether we are willing to wait for a sale at Macys. Therefore JCP may not really win customers from its competitors overnight, using this pricing strategy. But, it has the potential to attract the customers who are in immediate need and are willing to pay the everyday prices. In addition, the new return policy allows customers to return any merchandise at any time for any reason and might provide JCP an advantage over its competitors.

Apparently for JCP, past promotions did not make a big impact on sales, as it ran 590 promotions in 2011 and the average number of customer visits was only four, which implies that 99% of the times customers ignored those promotions. Now, JCP has decided to simplify and provide month-long promotions instead of a plethora of other promotions provided thus far. This definitely provides a level playing field for all customers. But whether the price offered during that period is within the customers’ willingness to pay is something to watch out for, especially as retailers fiercely compete for market share by undercutting each other across both brick and mortar stores and online channels.

It is also critical to note the JCP with a slew of brands (including Martha Stewart® introduced at the launch event) is attempting to attract a wide range of customers. Some of whom might welcome the new changes while others still vie for more discounted brands. With such a broad spectrum of consumers in JCP’s target market it is unlikely to become America’s favorite in the near term. To do so would mean changing customer expectation of exclusive sales and deep discounts.

JCPenney’s ‘fair & square’ pricing strategy appears to be part of a bigger ‘focus & simplify’ retail strategy and logically doesn’t seem radical or game changing in isolation. But with the broad promotions and personality branding, along with the future suggested changes in products and retail stores, the strategy holds promise. Especially, if consumers start realizing that JCP consistently offers lower prices in comparison to its competitors, without the hassles of coupons. As Ron Johnson articulated in the conclusion of the launch event– ‘Every journey begins with a first step!

Related Posts:

  1. Price Realization – JC Penney Price Leaks
  2. Price Elevator – JCPenney on Loss Leaders
  3. Pricing starts with customer segmentation
  4. Price realization by GoodYear
  5. Black Friday Sale – Price Discrimination
  6. What if there were no price tags?

Bio: Praveen Rajasekar is an aspiring entrepreneurial product marketer. He has an undergraduate degree in computer science and engineering. After 6 years of IT consulting for Fortune 500 clients, he is pursuing full-time MBA at Georgia Institute of Technology, focusing on Marketing and Strategic Management. He is a Warren Batts fellow in the TI:GER® (Technological Innovation: Generating Economic Results) program, developing business plan and go-to market strategy for new research technology. He is an avid foodie and vivacious volleyball player.

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