Top Learnings From the First Six Months of My INSEAD MBA
Halfway into my MBA, I am surprised by the power of holistic business knowledge the degree has brought me and my fellow 430 classmates in Singapore and Fontainebleau.
Its strength lies in fostering a deeper understanding of the complete business landscape, essential for cultivating effective future business leaders and managers.
As our operations professor rightfully pointed out, "you don't ever just have an operations problem - you have a business problem."
There is tremendous value in learning about all angles and aspects of businesses, no matter what industry, role, or geography you end up in. With that said, I wanted to share some of these key learnings with you, through very short summaries from each one of our core MBA classes.
Strategy
Effective business strategy is fundamentally about value creation: establishing a meaningful but responsible gap between willingness-to-pay and costs. INSEAD's notorious Blue Ocean Strategy being an effective tool to help drive innovation and strengthen competitive advantage to widen the value creation gap.
Uncertainty, Data and Judgement
As humans we are naturally biased. To mitigate our natural impulses, it is important to collect data and test hypotheses to inform business decisions – having a sample size greater than 30 often yields normal distributions that can accurately predict the likelihood of outcomes.
Financial Accounting
Return on Invested Capital (ROIC) is a more reliable indicator of a company's performance than operating income because it accounts for value creation rather than mere growth. One must be aware of the frequent balance sheet, statement of cashflows, and income statement manipulations when analysing financial statements.
Prices and Markets
Maximising profits is not about increasing prices or covering costs, but rather about the ‘art and science’ of setting prices based on the perceived value defined by the customers ‘willingness-to-pay’.
Financial Markets and Valuation
Financial business decisions require accounting for the present value of capital by discounting all future cash flows at time greater than zero through Discounted Cash Flow (DCF) analysis – typically investing in those with a positive Net Present Value (NPV).
Organisational Behaviour
Culture, with its pervasive power over influence, routines, motivation, and values, often outweighs business strategy in driving organisational change and generating business value – ‘culture eats strategy for breakfast’.
Operations
Operational decision-making relies on navigating the cost-service trade-off, strategically picking a point between customisation and standardisation and reflecting this through the supply chain.
But more importantly, in an evolving world where AI and innovation are transforming operational efficiency, it's essential for managers to remember they are dealing with real people on a planet with finite resources.
Corporate Financial Policy
Capital structure is an imperative aspect of business strategy as it affects free cash flows and influences decisions made by managers, boards, and stakeholders. It's important to note that under-leveraging may lead to missed opportunities in value creation, while offering equity-based compensation to employees is advisable to align incentives between shareholders and employees.
Managerial Accounting
For an objective and independent evaluation of business units, tools such as absorption or activity-based costing can help effectively allocate overhead costs, accurately linking them to direct cash flows, and thus better informing managerial decision-making.
Business Ethics
In a world with limited resources, the ethics of relentlessly driving shareholder value needs to be critically assessed. When manoeuvring grey areas, ask yourself questions such as 'would you want these decisions to be written about in the newspaper?' to avoid falling in the trap of 'justifying' or 'externalising'.
Managing Customer Value
Map and utilise insights from the marketing funnel to pinpoint and refine customer engagement strategies that drive more customers to purchase intention, while also employing artificial intelligence to innovate and elevate the customer journey at each stage of the funnel.
Leadership Communication
The effectiveness of your leadership depends much on your communication style; it’s vital to be aware of your dominant style and actively develop the areas where you’re less adept, as few individuals naturally embody all four key styles.
Personal Leadership Development Programme
Fostering a culture of vulnerability can significantly strengthen team dynamics; prioritise open, even if sometimes uncomfortable, feedback to enhance collaboration and team performance.
