On August 26, 2015, Professor Michael Roberto sat down for a live Q&A session with his fans from across the globe. The chat is over, but the transcript is posted below for you to enjoy.
ROBERTO: Hi everyone! I’m very glad to be with you today. I look forward to answering your questions about my courses, research, university teaching, and any other topics in which you may be interested.
VALERIE FLORE MBAIPOR: My question is how can I be a right leader of a multicultural Nonprofit working with United States and African staff? I am trying to use servant leadership however it appeared that I am may be too emotional, sensitive and have lost my confidence. What is your advice for me?
ROBERTO: Ask them what they care about, listen carefully, explain your thinking, ask for feedback. Help them understand each other & how they think differently. Be clear about what the shared vision is for the team. Ask for their input on that vision.
CHAKER ALGERIA: I am a DD (dentist) and a university teacher, also I am studying psychology (Human Resources). I want to start my own business as a professional speaker and trainer, everybody believes in my potential but I’m too careful and can’t make decision and do it. How can I be sure that my business can be a success and how to get started with confidence?
ROBERTO: You should conduct a small test or experiment. Pick an audience that will be friendly and give you good feedback. Try out a speech or training session. Then listen to the feedback and improve for next time. Test and learn. That’s the key to starting something new! Go for it!
JULIE: Hi Dr. Roberto– What is most exciting to you about business strategy?
ROBERTO: What Schumpeter called “creative destruction” – the emergence of innovative new companies that sweep away the old. It’s very difficult for the incumbents that do not survive, but it’s fascinating to see how new business models emerge over time.
KEN: Michael- if you had to choose one business book on leadership what would that be? Why? Thank you, Ken.
ROBERTO: I would start with Irving Janis, Victims of Groupthink. Terrific book. I also love Leadership without Easy Answers by Ron Heifetz. Awesome.
DAVID: How do you feel about entrepreneurship for young new business professionals vs working for established corporations to get started? Not necessarily talking about launching the next huge tech start-up here, but applying one’s MBA to starting a business right out of school versus taking up with a larger, established company to start.
ROBERTO: For most students, I believe that it’s very helpful to gain some practical experience first, whether that’s in a large firm or a smaller organization. You can launch a startup right after school IF you have more than a great idea… if you can build a great team, including some folks with more experience, and if you can get funding. Can’t go it alone. Team is crucial. Most young students think entrepreneurship is all about the idea…but it’s about much more than that. It’s about building an organization.
GREG: Michael, I have truly enjoyed your Great Courses. So enjoyable during a long drive instead of listening to talk radio.
ROBERTO: Thanks so much! I hear so many customers who listen while they drive. Glad to make your commute a bit more enjoyable.
LIZ BROWN: Hi Professor- I just recently was promoted into a new position with two people that report to me. What is the most important quality a good manager can exude?
ROBERTO: Attracting great talent and building a super team. In the end, managers can’t get anything done alone. They have to have the right team to lead. And building a great team is not just about assembling stars. It’s about selecting people who can fill certain key roles and can complement one another effectively.
SARAH: What is your favorite/most useful decision making technique?
ROBERTO: I love the devil’s advocate, provided that people use the technique properly. It has to be used to help generate new ideas and new perspectives, not simply to find all the holes in the existing ideas. You have to help the team generate new options, not just tear down the options already on the table. Too many devil’s advocates are always negative. They just tell you why certain things can’t be done. That’s not effective. They have to seek to generate new options.
IMEN: Hello Dr. Roberto. In starting a new business, is it better to risk all your money and all in, or play it safe and see the results and deciding after.
ROBERTO: The hot concept in entrepreneurship right now is the idea of the “lean startup.” The notion is that you do not make a giant expensive bet. You don’t try to build the perfect product. You launch what they call an MVP – a minimum viable product – and you learn from the market. Prototype, experiment, test, and learn/adapt. Don’t bet it all up front!
JULIE: There are so many pitfalls in business. What do you find to be the most detrimental mistake management commonly makes?
ROBERTO: Failure to communicate effectively. Managers often assume that they have communicated key messages clearly; that their messages have been heard and understood. Never assume that. Always over-communicate! Jack Welch once said, “You communicate, you communicate, and you communicate some more. Persistence, consistency, and repetition is what it’s all about.”
SARAH: How do businesses adapt their strategy in such an unstable market?
ROBERTO: First, they have to be vigilant, always scanning for and assessing outside risks. They also have to encourage experimentation and tolerate some level of failure amidst that experimentation. You cannot innovate without sometimes stumbling. The other key thing is to spend time observing your customers, not just surveying them. Go watch them in their natural environment. What are their pain points? What dissatisfies them? How are they using your products?
JOE: Many Americans, including yourself apparently, are dissatisfied with the “business acumen” of our national leaders. As a professor of business, what aspects of business and economics do you think politicians, and the people that cost for them, least understand?
ROBERTO: Most politicians have never worked in or run a business. Therefore, they don’t understand how decisions are made in businesses. They don’t understand the financial pressures entrepreneurs face and how government policy affects them. Many politicians also lack a basic understanding of economics. Consider tax policy. How will a new tax affect an entrepreneur. You can read studies, but if you have never worked in a firm, it’s hard to know how that shapes behavior.
AHMED: Is there really something called an academic brain and a business one, and those who study a lot can’t make business work because they know too much and can’t decide?
ROBERTO: I don’t think there are two types of brains. Some great academics have become terrific business leaders. Jack Welch and Andy Grove both earned PhDs, for example. However, I do think some academics lack the ability to build a team and an organization. They are solo artists in many cases. They are great individual performers. At most, they have perhaps co-authored papers or co-taught a class. However, most professors don’t have experience building large teams and organizations.
SAUL: What’s the best way to motivate and encourage your employees? How do I avoid using traditional “I’m the boss, you do what I say” logic?
ROBERTO: Great question. I am a big believer in fostering intrinsic motivation. Extrinsic rewards are things such as compensation and promotions. Intrinsic motivation is when people have an internal drive to work hard. To foster intrinsic motivation, you have to give people meaningful work; you must give them some autonomy to conduct that work; you have to provide some variety in what they do each day (not same old thing); you have to give them constructive feedback.
HANK: Hi Dr. Roberto. The term ‘groupthink’ can often be viewed as a buzzword. What do you think is the most effective form of group think? Thanks for your time and courses!
ROBERTO: Groupthink is tossed around far too casually, but it is a big problem in many companies. Groupthink is when you have tremendous pressures for conformity in a group, and as a result, premature convergence on a single alternative. If groupthink exists, people often do not feel safe speaking up. Ask yourself: Are people afraid to share bad news in my organization? Do people always defer to the leaders or the experts? Do we have candid dialogue and debate in meetings? These questions can help you diagnose whether groupthink exists on your team.
CAITLYN: How does intuition influence your business decisions? Has your gut feeling always been a saving grace? Thanks so much!
ROBERTO: Some academics are very negative about intuition because they worry about cognitive biases such as the sunk cost trap and confirmation bias. I disagree. I think these biases can also impair analytical decision making. I think the best decision makers combine intuition and analysis. They don’t choose one method or the other. With me, I am most dependent on intuition when it comes to evaluating people with whom I wish to work. If my intuition causes me concern, I try not to become convinced simply because someone has a great resume. I’ve been burned on that before.
STEPHANIE: How come it’s difficult for some leaders to make a decision and stick to it? Why do some people flipflop on important decisions regardless of their positions of power?
ROBERTO: It’s very natural for people to feel what’s called “anticipatory regret” when making a tough choice. In other words, they get cold feet right before they have to make the call. It’s helpful to have a great sounding board, a confidante, in these situations. It might also be a mentor. It’s someone you can talk to, who can listen to your concerns, but also boost your confidence. Every leader should have a confidante. However, that confidante should not be a yes man or yes woman. They have to be a truth teller who the leader trusts a great deal.
HICHEM: In a new business, which is more easy to look for: new costumers or to try to seduce those of the competitive market or both?
ROBERTO: I think it’s typically better to expand the market and find new customers, rather than stealing customers from existing players. Why? In general, industry profits overall are higher when companies are expanding the overall size of the market. When it’s simply about stealing share from one another, that tends to depress industry profits overall. You tend to see price wars and other forms of intense rivalry that harm margins. Take a look at Coke and Pepsi during the 20th century. One of the things about how they competed is that they rarely cut price for concentrate. They tended to engage in activities that helped grow the market overall so that both firms benefited. It was a healthy rivalry in a way.
HARLEY: But doesn’t that depend on your position in the market? Certainly a market leader shouldn’t be trying to grow by stealing customers. But if the question is which is easiest, if you’re a tiny entrant with an innovation, isn’t it much easier for that little guy to attack the leader?
ROBERTO: Think about Netflix for a moment. Did they steal the core customer of Blockbuster in the very beginning. No, they went after a customer that was marginal and under-served at Blockbuster. The core customer for BB was the soccer mom. Netflix went after the 24 year old living in his mother’s basement. So, that person probably was a BB customer, but they weren’t the heart of BB’s target market. That’s why BB did not perceive Netflix as a major threat.
AMIN: In choosing the business location, is it better to look for the “more clients” place or the quality of the product brings the clients? And a little advice for the underdog businessman?
ROBERTO: You have to understand your target market. One key mistake that many firms make is simply trying to be all things to all people. Instead be very clear about the specific customer you intend to serve. Then go find that customer. That means making tradeoffs. In other words, you have to choose what NOT to do. Who is not your primary customer? What directions will you NOT move in? As for the advice, I would argue for pursuing an indirect attack. Don’t go punch the powerful incumbent in the mouth. Find a way to attack them more indirectly. Punching them in the mouth is likely to invoke retaliation, and they may have the deep pockets to crush you!
SANDRA: What’s more successful: vertical or horizontal integration? And are some particular fields better off with one than the other?
ROBERTO: Vertical integration is not necessarily better or worse than horizontal integration. The real question is whether that expansion of scope actually adds value. For horizontal integration, the question you should ask is: are the multiple businesses better off together than apart? For vertical integration, the question is: are we better off because we have expanded to own a different part of the supply chain, or can someone else conduct that activity more effectively than us?
In general, the research says that focus wins. Expansion of scope often destroys value, contrary to what many managers believe. In particular, unrelated diversification tends to destroy value in advanced industrialized economies (but not necessarily in emerging markets).
AVAN: Hello, Dr. I bought your Know What You Don’t Know book, just starting, great by the way… is there a good book for the startup entrepreneur? Thanks.
ROBERTO: I think The Lean Startup is a good book for all entrepreneurs. I also think every entrepreneur should read Christensen’s book, The Innovator’s Dilemma.
JANE: I was curious what your thoughts were about the consistent decline in McDonald’s profits. It’s surprising to me to see such a giant in the fast food industry fall steadily.
ROBERTO: McDonald’s seemed to be very late in perceiving the threat from new players such as Five Guys, Shake Shack, etc. as well as from players such as Panera. That’s so interesting, though, since McDonald’s used to be an investor in Chipotle. You would think they would really understand the threat as a result. However, it shows how it is very hard for a giant firm to adapt. I do think they hit a home run with the move into coffee. However, they now have had a hard time coming up with a second act. They grew effectively by adding coffee drinks about a decade ago, but now it’s hard to drive same store sales even higher without another major innovation.