Beyond the Balance Sheets: The Other Side of an MBA

As the halfway point of my MBA rapidly approaches, I have been very reflective of how influential this experience has already been. Yes, there are the usual suspects: I know my way across a balance sheet and can understand how it relates to an income statement. I know how to apply tools and read information that have in the past just been part of the “noise” in life. I can read a business article or hear a report on NPR and truly understand the finer points of the conversation. These are all immensely valuable and why I thought I should get my MBA.

So it got me asking, when I started this journey, what did I expect from an MBA? I realized that I did not know. I just knew it was something I needed! (side note, now that we are analyzing risk, I realize that maybe committing to an MBA program without more concrete expectations was a pretty big risk! I wonder how Bert would calculate that!)

In a quest to retrospectively unpack my expectations for an MBA, I stumbled upon a very interesting article in Forbes: The 10 Most Under-Rated Reasons Why You Should Get an MBA. The article was exactly what I needed. As coursework unfolded over the first few quarters, I was frustrated, struggling, still hanging on to a different set of expectations carried over from a rigorous undergraduate program. I was challenged by the lack of “material” in my MBA, and questioned if I was getting enough out of it. Reading this list helped me to appreciate how much more there was to this education, and how much I truly was gaining from the experience. Here is the list, but the article is worth a read too.

1. The chance to stop and reflect on some big business issues.

2. The chance to make some lifelong friends who will accomplish great things over their careers in business.

3. The chance to realize how little you understand about the world.

4. The chance to learn about how to get a bunch of high-strung, Type-A personalities to work together as a team.

5. The chance to think about the global economy and not just your little world where you used to work.

6. The chance to interact with Professors who will really challenge you.

7. The chance to go listen to as many accomplished executives when they come to talk at your school.

8. The chance to refocus yourself.

9. The chance to learn about managing people.

10. The chance to learn how to get up and string a few sentences together.

But there is so much more.

BGI is a truly unique community, and the foundational structure that this institution brings to the world of business is truly striking. A classmate Emily wrote about it beautifully last week. As work and life and school collide, the path to going back to school has rocked each member of our cohort differently, but many of us have found solace in the fact that we are not in it alone. We are supported by an amazing network of people trying to make the world a better place through business.

The value of my MBA has come out in obvious and not so obvious places in daily life. I find myself surrounded with opportunity to take academic lessons and apply them directly work or personal life, but have also found a new sense of myself as I tackle decisions. My personal sense of responsibility and commitment to values in my work has been endorsed by BGI. I feel that the examples of real world thought leaders has legitimized my personal drive for doing things the right way, and gives me confidence, and now a language, to stand up for my beliefs. When I talk to clients or discuss business or sustainability or the future with friends, I feel confident in defending my perspective.

Now that is a bonus that I never expected from an MBA.

OlyKraut Kaizen

Kaizen: Japanese for "improvement", or "change for the better" refers to philosophy or practices that focus upon continuous improvement of processes in manufacturing, engineering, and business management.

Sauerkraut: directly translated: "sour cabbage", is finely cut cabbage that has been fermented by various lactic acid bacteria

OlyKraut: Awesome, locally owned sauerkraut business in Olympia, Washington owned by one of my BGI classmates

This was the extent of my kaizen and sauerkraut knowledge at the BGI benefit auction last fall. However, it did not stop me from joining forces with two other classmates and bidding on a “training day” to learn how kaizen works when applied to a real world business. After our day long analysis at OlyKraut, I can now confidently say I know much more than I did at the auction.

Before ever setting foot in the OlyKraut kitchen, we heard an in-depth presentation where the owner explained her process and workflow, and how she viewed the critical tasks. It was great to get her perspective on what the challenges and opportunities were, and also develop a mental picture of what we might find. By going into the operation with a rough understanding of the process, it was much easier to plug in and observe.

And boy did we observe! Our awesome coach Megan gave us some tips and best practices of how to effectively observe so that we would actually be able to derive value from our observations. Initially, we all walked the facility, drawing out the physical layout of equipment, people, storage, and well, EVERYTHING. We drew out things that were not even part of the OlyKraut process/materials, but since they were in the space, they indirectly impact the process that OlyKraut can use.

Our observations started when the sauerkraut process started. With 5-7 people working in the warehouse, we had our hands full with observation opportunities, so Megan split us up to divide and conquer. There were two main tasks associated with observation of the first full batch being made. First was movement tracking (where does a worker physically move in the space and when), and second was timing. Armed with stopwatches and sketches, we were ready to go. However, as we watched the workers, it became apparent that it would be impossible to individually time each movement and how long it took (time to weigh a box of cabbage, time to move the box from the cart to the scale etc), so Megan threw us a tip: just start the watch and record the time a new action takes place. This way the time runs for the entire process, and recording becomes your main priority. It also takes away the chance you will forget to start/stop the watch.

So off we went. As we timed and mapped movement, Megan circulated around asking us for observations. We discussed a few items here and there, during the observation, but then really worked through change suggestions after we all came back together. Our main focus was identifying waste.

Waste: Any action, process, or product that adds cost without adding value, as perceived by the customer.

Using this definition, few major recommendations were obvious:

·        Workers worked incredibly hard and non-stop, but the cabbage was just sitting there

·        A piece of critical equipment was being used for two jobs, one which was not adding any value to the process

·        Lots of movement, walking in the process (35 minutes of our hours long observation of one worker was walking!)

·        Inefficient use of space

·        Opportunity for batching

·        Timing all of these actions gave us concrete numbers to justify previously held design assumptions driving the timing and current process were incorrect

Observing the sitting cabbage was a great place to start our conversation with OlyKraut. It is also a great topic for company implementers to frame our feedback to workers to minimize discomfort that we are out to call out their inefficiency. By focusing on observable waste, and process oriented recommendations, it is clear that it was the workspace configuration and flow of work creating waste, not a lack of their hard work.

We left OlyKraut a short list of recommendations for implementation, and it will be exciting to see how they play out over the next few months, and if the team of workers on staff will come up with more efficiencies of their own.

In the end, we hope our help can give extra efficiency to OlyKraut and extra boost its profitability!

Publicly Traded vs. Private Companies

I have always been interested in learning more about fundamental difference between public and private companies. As second quarter of BGI rolled around, we were picking companies to investigate. Initially, my group selected a company that we thought was publicly held. It was not, which made our task of analyzing their financials nearly impossible. At the same time, I work for a company that is proud to be private. One of the first things I heard during new hire orientation was that “we do not have an exit strategy”…in other words, selling out was not on the table.

With public vs. private swirling in my head, I have been picking up on this difference in the news, and trying to figure out what role this distinction plays in how a company moves forward with sustainability.

This week, I heard a report on NPR regarding how a shareholder at Starbucks was outraged at the possible impact the company support of DOMA (the Defense of Marriage Act that supports same-sex marriage) had on it’s earnings. According to this shareholder, his profitability as an investor was tarnished by this “people” driven corporate value made public. Now, there is no conclusive evidence that this public support of homosexuality actually did have a direct impact on the stock price, but it made me think about the implications of other sustainability metrics, and how large (typically publicly held) companies can realistically move these items forward with shareholder opinion.

As we learned from Bob Willard, companies can be sorted into five stages of integrating sustainability into their daily operations. These range from the earliest and most reactive stage of pre-compliance, to the purpose driven sustainability companies that embody these values from the top-down and inside-out. I would say that Starbucks in relatively proactive in their sustainability goals, somewhere between stages 3 and 4 on Bob Willard’s diagram below.

As Starbucks (and other publicly traded companies) push towards more sustainable operations, they will be balancing the triple bottom line: people, planet and profit. In this delicate balance, where do owner/leader values fit in? We have learned from many examples (such as Ben & Jerry’s, Bob’s Red Mill) that when an owner founds a company with balancing these elements first, they are more likely to be in Stage 5, where these values permeate the company and all decisions. It seems possible that a company could move towards Stage 5 as they move up the ladder, but is it possible to achieve as a publicly traded company? I expect that this public vs. private ownership has much to do with a company’s ability to achieve top tier sustainable operations.

Why would this distinction be important? The example from Starbucks is a great one. Clearly the leadership values differ from some of those within their large group of shareholders. Since a key mechanism of publicly traded companies is responding to shareholder pressure, it sounds realistic that sustainability measures and values (of which “people issues” are a large part in the case of same-sex support) would be more likely to cave to shareholder values if they do not align with corporate values. This leaves an opening for influential decisions to be driven by outside people, potentially driving a company on a course different from it’s core values. I found it powerful that the Starbucks CEO responded to shareholders disapproval of company support for marriage equality can invest somewhere else. Schultz stated, “if you feel, respectfully, that you can get a higher return than the 38 percent you got last year, it’s a free country. You can sell your shares of Starbucks and buy shares in another company. Thank you very much.” It will take leaders with this personal drive to lead these publicly traded companies towards a value based, sustainable future.

I do make an assumption here, that companies will or do value sustainability, and are trying to push that agenda forward. For the purpose of this article, sustainability (people, planet and profit in balance) is the value proposition that I am hoping companies will protect. Clearly, not all companies value these things, but likely face challenges to whatever their value set when shareholders become involved once a public company.

In contrast to this is the company that I work for, which is privately held, and pursues direction based on the core values of our leadership team and CEO. These values have evolved over time, and are driving further and further to defining how we will embody sustainability in the future. Our mission has actually changed in the past two years to more specifically call out considerations for protecting the planet, a clause that had been missing in the past. 

We are not subject to shareholder input and responding to our values impacting profitability. Everyone with a stake in the company (as either an owner or employee) is reminded constantly that we answer to no one but ourselves and I believe that this will give us, and other private companies, more leverage to move the needle on a sustainable business future.

Over the course of the week, I considered the differences further, and came up with a possibility that perhaps the publicly traded companies may have an advantage as public perception continues to evolve. Public pressure can be incredibly powerful and could end up being the final push that move lagging companies to incorporate sustainable goals into their operations. Ultimately, I believe it is a societal value shift that needs to happen, and public and private companies will have their own paths to evolve with this shift.