Category Archives: Business

Environmental Neurosis and the Irresistable Seduction of Money: How I Learned to Forget About Climate Change and Love Louis Vuitton

Last fall, shortly after I started my INSEAD MBA, I had a prolonged debate with a classmate who was actively involved in a student club called INDEVOR which is affiliated with Net Impact, an international group devoted to promoting corporate social responsibility (CSR). Like other members of INDEVOR, this MBA participant was fully brainwashed in the rhetoric of global warming, sustainability, and social entrepreneurship. I had a lot of fun poking holes in the ‘Holy Grails’ of CSR such as carbon trading and climate change.

Having spent the last 5 years before my INSEAD MBA in a small Middle Eastern country, I had been completely sheltered from the whole CSR bandwagon. It might seem hard to believe for some people, but all of these environmental and ‘do-good’ issues are really not on the radar screen in most places. Until I moved to France, I really had no idea how big this issue was in Europe. Most rapidly developing countries (including the one I worked in before coming to Fontainebleau) have more pressing economic and security issues to deal with. ‘Saving the world’ is not high up on the agenda.

As I debated CSR issues with my INSEAD classmates, I was shocked at the dogmatic nature of CSR adherents. They were unwilling to accept any critique of carbon trading or even entertain the idea that global warming might not be man-made. At the same time I was fascinated by the cognitive dissonance which these students exhibited. Many of them seemed deeply troubled by their presence in a business school and deliberately voiced ‘conciliatory’ messages intended to resolve their troubling anxiety. These messages usually involved professing a desire for a post-MBA career in social development or non-profit work. And for some strange reason, my fellow MBA participants would eat up this crap and provide positive reinforcement for these do-gooders. Any expression of wanting to spurn the corporate world and save the planet was met by my fellow classmates at INSEAD with that crazed permanent grin endemic to schizophrenic people. When I shared my own rather traditional post-MBA career goals with my classmates, I was rewarded with scorn!

Of course, I thought that these CSR types were complete flakes and really needed a psychologist to treat their neurosis. If someone genuinely believes in saving the world, they join the Peace Corp, become a social worker, or join a monastic order. Yet for some reason, these people choose to come to business school where they proceed to put on a show of being seriously disturbed by capitalism, global trade, and pollution. And like Al Gore, the carbon trading huckster who buys Ponzi Scheme pollution credits from himself, to magically neutralize his private jet flights, many of the loudest do-gooders at INSEAD live anything BUT ascetic lifestyles.

Surprisingly, rather than being challenged and called on the carpet for their immaturity, these students were further encouraged by companies who have also been infected by the delusional CSR sickness. Companies come to campus spewing the same CSR drivel and trot out dog and pony show speakers to share their wisdom on sustainable development and climate change. In their colorful recruiting material, they haul out the correct buzzwords and rhetoric to show that they too have joined the cult of CSR. I have yet to meet an oil company during OCR, talk about oil, or a consulting firm talk about corporate restructuring projects which involve ‘downsizing’ companies. It’s all touchy feely Kumbaya stuff. One company which I interviewed with during the recruiting season boasts on their website that they are now officially “carbon neutral”. Ironically, sometimes the marketing pitch is out of sync with the recruiting team and many of my classmates have to their surprise been unceremoniously dinged for spewing the CSR rhetoric during interviews, only to be politely told, “Err, we don’t do that kind of work!”

And so I must confess a certain Schadenfreude when one by one, the INSEAD CSR devotees went for the most evil capitalist corporate jobs imaginable. One student who had received multiple offers for corporate jobs made a nauseating show of parading around campus to elicit sympathy for his predicament. He wanted to save the world, but someone forced him against his will to write the GMAT, apply to business school, suffer through the year, apply to corporate jobs, and now he was being forced against his will to accept the offer! And once again, rather than slap this student into reality, everyone was sympathetic. Well not everyone– I certainly won’t be shedding crocodile tears for this particular neurosis.

Another INSEAD CSR adherent shocked me a few weeks ago during a marketing case about Louis Vuitton, when he said, “Wouldn’t it be cool to work for Louis Vuitton?” Huh?! Why would he want to devote his career to convincing women to buy overpriced purses with ugly letters on them? I mean, there’s nothing wrong with trying to get people to buy expensive handbags with ugly letters, unless of course you publicly espouse the mantra of social change. I’m not faulting my classmates for taking these corporate jobs, I just wish they had the maturity to stop whining about wanting to make money and succeed in the business world.

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The Blogger Prepares For His Drug Test

The Ultimate Job Test

“Give me a little drink from your loving cup.
Just one drink and I’ll fall down drunk.”

-LOVING CUP by the Rolling Stones

My fellow INSEAD bloggers have described some of the demeaning experiences they’ve had to endure during the employment recruiting process. I thought that nothing could top the stress-test interviews of investment banks and consulting firms– I was wrong. I’ve been asked to submit to a drug test. When I told my classmates at INSEAD, the European MBA participants were really shocked. The Americans on the other hand, were quite familiar with the practice. It seems that asking potential employees to urinate into a cup is an accepted business practice in the U.S. And so for the last week I’ve been stressing out– Should I take allergy medicine when I start sneezing? Should I eat that poppy seed bagel? Do I risk being dinged because some inaccurate test labels me a drug addict? In a country where the sitting president is a former cocaine user and alcoholic, does it seem fair to screen out job candidates who occasionally use marijuana? Or maybe drug testing is employed precisely because of the President’s past affinity for Bolivian Marching Powder.

The Blogger Comments on the Société Générale Affair

No! Don’t Jump!

I never dreamed this day would arrive. I’ve never been considered witty or clever… but now, how the tables turn! Look at me: the life of every social function in Paris. Paris? Why be modest? My fame has spread to Amsterdam, London, New York. Listen to them! In the world’s smartest parlors. I’m the one who lifts their spirits!

-Rene Gallimard in David Henry Hwang’s                                                                          1988 Tony Award winning play M. Butterfly

Our P2 Finance class was taught by a Belgian with perfect hair who owned a sweater collection that would put Mr. Rogers to shame. I can’t say that I understood everything in his class, but I remember spending a lot of time discussing sports cars and hockey sticks. I won’t go into details about the sports cars, but hockey sticks served as graphical payoff diagrams for the potential profit or loss inherent to various options and futures positions. A northeastward pointed hockey stick handle represented an unlimited upward profit scenario, while a southeastward pointed hockey stick represented unlimited potential loss.
And so (we were lead to believe that) banks and responsible traders never expose themselves to the vulgar risk of having a unilateral risk exposure. They always cover their positions with offsetting counter positions in the market, scraping out razor thin profits on temporary arbitrage spreads between the buyers and sellers. Well at least it makes for a good story.
Société Générale’s jaw-dropping $7 billion dollar loss has been linked by the bank to Jérôme Kerviel’s market activity, where it seems that the hockey sticks all conspired to point in the wrong direction. As the war of words between lawyers, PR reps, and even the French President continues, I am struck by the failure of the bank’s risk management department to appreciate that Kerviel’s department could potentially generate such a large loss. A month ago if anyone had suggested that a unit which generated $20 million in profit a year could wipe out the entire bank’s annual profit, if the stars (or hockey sticks) aligned correctly, they would have been ridiculed. Their failure to appreciate the true risk was caused by an overconfidence in the control mechanisms. Did the risk managers assign a probability to the chance that the bank’s passwords and trading limits could be circumvented? I can only assume that they valued this risk as zero, preferring to obsess over more technical market trading threats even though humans are invariably the weakest link in any system.
But for now the ridicule has been directed at the bank’s management, and the media campaign for and against Kerviel… Modern day folk hero, or parlor conversation fodder.

The Blogger Reflects on his First Two Periods at INSEAD

Guggenheim Museum in Bilbao
The photo above shows the Guggenheim Museum in Bilbao, Spain. I’m back in Fontainebleau after spending the break in Barcelona, Lisbon, Madrid, and of course Bilbao. Despite being in close proximity, each city has a completely different aesthetic, culture, and language. Barcelona had an intimate Mediterranean feel. Madrid was the only city that felt like a world-class metropolis, with skyscrapers and traffic. Lisbon was a welcome surprise on my wallet, with 50 Euro cent espressos and surprisingly cheap clothes, despite the 21% VAT. Zara, Springfield, and all the other European clothing chains sell their wares in Portugal for 20-30% less than they charge in France or Germany. Being unable to speak Spanish, Catalan, Basque, or Portuguese, I found Portugal to be the most welcoming spot. Everyone I talked to in Lisbon spoke excellent English and perhaps more importantly, I found that I could understand written Portuguese.

The break has also given me time to reflect on what I’ve learned at INSEAD since August. Before I arrived in Fontainebleau, I set some very specific expectations of what I had hoped to derive from the MBA program. On the pedagogical side, I was hoping to: 1) Improve my ability to read and interpret financial statements; 2) Learn how to correctly value a company; 3) Learn how to make correct investment decisions in the financial markets; and 4) Learn how to make convincing business presentations. On the social side, I was hoping to learn from the diverse experiences of my fellow participants and make business connections that would help me in my career.

My experience during P1 and P2 brought into sharp focus the unchallenged assumptions which underlie business education. As someone who doesn’t come from a quantitative background, what struck me most about business school was the dogmatic use of quantitative models. Following the trail blazed by social sciences, academic business education has seized on quantitative finance models in a quest to bolster its perceived authority. Although mathematical approaches are useful for solving some business problems, I am always surprised when organizational behaviour or marketing professors attempt to counter the insecurity of their disciplines, by ‘dressing up’ their arguments with a quantitative shroud.

Even within disciplines like finance or economics, the obsessive belief in mathematical modeling as a cure-all, usually goes unchallenged. My favourite article about the current sub-prime lending credit crunch is “’Perfect Storms’ – Beautiful & True Lies In Risk Management” by Satyajit Das. Das does an excellent job of questioning the dogmatic use by Wall Street of the language of mathematics to obfuscate risk. According to Das, common sense went out the window when pseudo-scientific quantitative models were used to hide the inherent uncertainty and variability of both the capital markets and the business operating environment. Yet despite their vulnerability to manipulation and misuse, business schools continue to arm MBAs with quantitative problem solving tools without regard to the pragmatic skills needed to correctly employ such tools and to properly contextualize the results. In the classroom, I always tried to challenge these unspoken assumptions, although I was usually rewarded for such dissent with odd looks from my fellow MBA participants.

The Blogger Finds Humility Amidst the Chaos

Contemplation

“The desert monks were not moralists concerned that others behave in a proper way so much as people acutely aware of their own weaknesses who tried to see their situation clearly without the distortions of pride, ambition, or anger.” -Kathleen Norris

P2 is now in full swing and we’re swamped with group projects and commitments. We all survived the P1 grades, some of us more so than others, but I observed an interesting phenomenon. Because I have no background in statistics, economics, or finance, I fully expected the worst. I opened the envelope with my P1 grades and smiled, because I passed all my classes and performed better than I expected. In contrast several of my classmates were quite cocky about how they would perform and were quite upset at only earning average grades.

By way of analogy, recent cancer patient studies have shown absolutely no difference in survival outcomes between optimistic vs. pessimistic patients. So is performance unrelated to mindset? It’s tough to say whether my under-confidence helped my performance, and whether my classmates were harmed by their over-confidence, but I can’t help wonder if there might be a value in humility.

One of the themes I am trying to explore this year at INSEAD, is the value of humility vs. overconfidence and arrogance in leadership styles. I became interested in the topic when I observed the leadership styles of our clients at work.

I quickly learned that corporate politics demand a certain showmanship. Part of your value as a professional  is your ability to deliver the goods with embellishment. The trick I learned, is to avoid believing your own hyperbole.

The Blogger Takes The Career Leader Test

Post-MBA Employment

Yesterday I took the Career Leader test, and discovered that I am best suited for a career in marketing or as an advertising exec. I have some serious reservations about the Career Leader methodology which I will discuss below, but for the moment I will focus on being an ad man. A friend once explained to me that creative people work in theatre… slightly more talented created people work in film and television… but the most talented creative people work in advertising!

I have always been reluctant to go into advertising for two reasons. As an optimist in the intelligence of mankind, I have always been skeptical that consumers will actually fall for pitches– are women so naive as to really believe that Shampoo X will give them silky soft hair that will make them more attractive, OR are men so naive as to believe that Shampoo Y will reverse the effects of baldness and give them richer, fuller hair? Moreover, assuming that consumers will buy the message, I’ve always wondered whether convincing people to buy stuff was really the best way to use my intelligence and skills.

Kalle Lasn’s Culture Jam and Naomi Klein’s No Logo vilified branding and marketing for an entire generation, but a truce appears to have been reached under the rubric of socially responsible marketing. Marketers have raised the bar on ethics and nowadays promise not to advertise sugary cereals to kids, tobacco to teens, or SUVs to drivers. (Just kidding about the last one!) But seriously, were I able to satisfy my ethical hangups about advertising, would I be happy with a career in marketing?

My best friend quit his job as a brand manager because as he put it, he got tired of trying to convince people to buy more salad dressing. Obviously there are enough people out there who enjoy spending their careers trying to convince people to buy salad dressing, beer, automobiles, and shampoo to sustain the marketing industry. But am I one of them? According to Career Leader, the answer is “Yes”!

For the uninitiated, Career Leader is the Frankenstein offspring of modern management science cross-bred with those ridiculous career interest surveys that your high school guidance counselor may have administered. I remember taking one such test in 10th Grade by filling in oval bubbles next to yes or no propositions such as, “I would rather be an airline pilot than an accountant.” Back then I was pegged to be a salesman, so I must have tempted fate in pursuing my current career.

My beef with Career Leader and other pseudo-scientific attempts to determine career interest or aptitude, is their ignorance of subjective preferences and qualitative aspects of different careers. One might express an interest in becoming a lawyer, without an appreciation for the fact that lawyers spend most of their days reading and writing legalese with little client interaction or time spent in court. Others might think they want a career in non-profit work without realizing the challenges of constant fundraising and the organizational politics involved in NGOs or charities. In Kitchen Confidential Anthony Bourdain bemoaned the CIA-educated newbie chefs (yes Virginia, the other CIA) who hadn’t appreciated the 10 to 10, 7 day a week schedule imposed by the restaurant industry.

Career Leader is a miserable replacement for Vault guides, networking, internet message boards, talking to alumni, and reading up on an industry. As I reviewed my test report, I was overcome with a nauseating recognition of huckster techniques such as the Personal Validation Fallacy. If I had wanted astrology and fortune telling I would have stayed up late and watched an infomercial.

The Blogger Quits His Gainful Employment

I quit!

“- What is this, your farewell speech?
-I’m going home.
-Your farewell to the troops?
-I’m not going home. I’m going to Wisconsin.”

Glengarry Glen Ross by David Mamet

I quit my job this week. I slipped in my resignation on the agenda of my weekly meeting with the company’s CFO, below a list of mundane topics such as insurance renewals. I guess I shouldn’t have been surprised when my resignation ascended to the top of the list and became the only topic covered in the meeting. I then phoned the CEO at his summer beach house and broke the news to him as well. I was almost frightened at how well everyone received my resignation! There seemed to be a consensus that the company could not provide a great enough mentoring opportunity or provide me with enough challenging work to further develop my business skills, and so the break seemed perfectly timed for both parties.

I have watched in amusement over the past 3 years, the various ways in which friends and colleagues have resigned from their positions. It never ceases to amaze me, the extent to which intelligent people are able to self-delude themselves into thinking that they are irreplaceable, and that their ill-timed resignation will somehow inflict irreparable damage on their company. “They’re going to regret not giving me [that promotion/enough money/enough respect etc.]!”, goes the traditional refrain, however I have yet to see such regret materialize. No tears big guy– face reality. No one cares if you leave, and the company will do as good (or as bad) as it had been doing, after your departure.

And so with that sentiment at heart, I approached my resignation lucidly, with appropriate solemness but without sentimentality. No farewell speeches or mawkish “Cake Party” for me. Heaven knows everyone will breathe a sigh of relief knowing that the manipulative secretary with her voluntary collection envelope will not make her rounds on my account. For this is not a goodbye, but rather a beginning…