If it were easy, everyone would do it

Before I came to b-school, one of my work colleagues asked me why I wanted to go. Business, he said, seemed like common sense. The goal is to make money. If you have a good idea and used common sense, surely anyone could make a buck. Why did I need training for that?

At the time a tiny part of me wondered if he was right and I was wasting $100K+ on a common sense education. But with one semester of school under my belt, I can safely say that this stuff isn’t easy. We read case after case about smart people who are caught in difficult situations. And in some instances we’ve learned that common sense can get you in a whole lot of trouble.

But the idea that this stuff was easy officially died for me one day last semester. I was talking to a classmate who worked in banking and then started his own clothing business before coming to Darden. Scott had a great designer, an innovative concept (the clothes were made in Manhattan and sported tags that said so) and some good buzz. But the business didn’t make it.

Fast forward to Darden and Scott is learning many of the lessons that could have saved his business.

He said it was a little frustrating to realize in class that if he’d just had a few more tools, if he’d just known about this concept, if he’d only learned that framework earlier he might still be in business.

Business might not be rocket science. But it’s certainly not easy.

Overheard over the holidays

Thanks to Darden’s generous vacation policy, this is the longest time I’ve ever been home for the holidays. Which also means it’s the most time I’ve spent with my parents in a long time. Specifically my mom and her goofy and slightly inappropriate sense of humor.

So, here for your amusement, are a few tidbits I overheard at home during the holiday break.

At the dinner table discussion about booze:

Mom: I had my last beer in second grade.

Watching a Viagra commercial:

Steph: I thought that was going to be a men’s hair dye commercial.

Mom: If it’s not one head, it’s the other.

Driving home from the movie theater:

Mom: Guns fascinate me. What? They do!

Watching a guy on the local news with a large, red, swollen nose:

Mom: Buddy, you need to stop drinking. It’s too late for your nose but you might save your liver.

How b-school warped my brain

Here’s something they don’t tell you in the b-school literature:

An MBA education warps your mind.

Six months ago I thought like a journalist. I thought in terms of ledes and sources and motivations and background. I thought about column inches and word counts, photos and multimedia elements. I thought about how to tell a story, how to stay one step ahead of my competition and how to convince my colleagues to embrace the Internet.

Here are some things I didn’t think about:

-          Why that spaghetti sauce is sitting at the end of the grocery aisle.

-          Why I can get that candy bar at Costco but not at Harris Teeter.

-          Why I can’t buy a single person’s sized ketchup any more.

Well, I think about that stuff now – all the time. I can’t watch TV, walk through a drug store or stand in line at Chipotle without seeing the business decisions and strategy behind each of them. The world was exactly the same, I was just seeing more of it. Exactly how much Darden has warped my mind became evident on three occasions.

Master of operational efficiency

Brain Warp #1: Chipotle is a model of operational efficiency

I’ve eaten more Chipotle in my first months of b-school than ever before in my life. But I knew my brain had been warped when I noticed the line workers. Light bulb moment: Chipotle is a model of operational efficiency!  Pay attention the next time you’re waiting in line. Chipotle always has a lot of workers behind the counter and they’re all cross-trained to handle any spot in the line. But when they’re in that spot in line, they only do that one job. All the food products move straight down the line without any deviations. As a result, no matter how long the line is you only wait about five minutes to get your food.

Brain Warp #2: The Halloween Store has excellent inventory management

Credit for this one goes to my boyfriend, who took a spin around the seasonal Halloween store looking for a last-minute costume right before Oct. 31. He was dismayed to find nothing but a scrawny French maid outfit, a few rubber masks and a pitchfork.

SpongeBob has a short shelf life.

But his warped mind didn’t just see empty shelves. It also saw a store that knows exactly how much product to order so that almost nothing is wasted. After all, how much are those Spiderman leotards and Sponge Bob Squarepants masks going to be worth after Halloween? Not much. An excellent inventory manager accurately predicts how much product she’ll need and isn’t left holding anything extra.

Brain Warp #3: NPV of a washer/dryer

My roommate Janine and I don’t have a washer/dryer in our apartment. Most of the time this doesn’t bother us but once in awhile, almost always on wash day, we ponder buying a unit so we can stop schlepping our dirty delicates to the communal laundry room and fishing for quarters.

At the beginning of our MBA experience, we asked ourselves, “Can we afford a washer/dryer?” But now, one semester in, we ask ourselves, “What’s the net present value on a washer/dryer? Will we really save $600 or more over the next two years? Will our increased energy costs really be lower than our pay-by-the-load costs?”

My, my, my how things have changed.

Justin Key

Justin preparing for one of his Sunday barbeques.

My friend, neighbor and Darden classmate Justin Key died last week of complications from swine flu.

There. I wrote it. Perhaps now I will start to believe it’s true. Justin passed away on the first day of our holiday break and I’m still expecting to see him, standing outside my apartment door, cracking jokes and asking to borrow my vacuum, when we return for classes next month.

Justin wasn’t just my neighbor and classmate. We went to church together and hung out with friends on the weekends. He started our apartment block Sunday barbeques where he would man the grill while the rest of us snacked on appetizers and acted as his sous chefs. Justin was a friendly, attentive host and his weekly barbeques were a much-needed break from the fast pace and frenetic demands of Darden.

But the thing that solidified our friendship was salsa dancing. The week he moved in, I discovered that he, like me, was an avid salsa dancer – only he was far better than me. Once a week, we’d visit Charlottesville’s only salsa scene and spin across the floor. Dancing with Justin felt like flying.

When the dancing was particularly good, when I caught all his cues and we pulled off a very difficult turn, I’d look up and see his huge grin. He simply couldn’t hold it back. Justin would start laughing as we danced, overcome by the joy of executing something so perfectly that it felt effortless. We were flying together.

I could make a laundry list of the things that made Justin special – his smarts, his distinctive laugh, his quirky sense of humor, his generosity, his patience, his ambition, his talents – but those pieces don’t add up to the whole person. The whole Justin I’ll remember is the guy who laughed out of pure joy as he spun across the dance floor.

Eat well for cheap

It’s that time of year – the time of year when the loan money starts running out. Students all over the country are scraping the bottom of their bank accounts to make rent and constructing Christmas gifts out of macaroni and shoe boxes.

In b-school, we’re living off the last of the corporate food and giveaways from the companies who came to campus to recruit. That means many of us will be subsisting on Hamburger Helper, Heinz ketchup and Fruit Roll-Ups until we go home for the holidays.

Which is why I thought this blog by some folks who are trying to eat well on $50 a week might prove helpful. They claim they’re not just eating, but eating well. Check out this Time interview with the bloggers which also includes links to several other cheap eating options.

You’ll thank me when Mom’s Thankgiving leftovers run out.

Section B makes ‘BusinessWeek’

Yep, that’s right, we’re famous. Our section bird made BusinessWeek’s list of wacky b-school traditions. Check out the blurb and the other traditions. For those of you shopping for schools, I think you can tell a lot about a school from its ”wacky” traditions (or lack of them).

If you want to know what happened with the bird and how we got it back, read on here.

The Bird on Halloween night with two of his biggest fans.

What I learned at b-school: Week 11 & 12

It seems the time delay in your free business education might be permanent – at least until I get through the hell that is cover letter writing and interview prepping season. But better late than never! Here’s a rundown of the valuable tidbits I learned over the past two weeks:

Two-year-olds are natural operations consultants. This week in Operations class we learned about the Toyota Way – the method the company uses to keep improving its manufacturing process. Again. And again. And again.

Toyota uses a lot of tools to make this happen. There’s a cord that employees can pull when they see a defect in a product on the line. There’s a policy of working with suppliers to make sure they’re always improving their processes. And there’s a nifty parts distribution system that delivers each part to the worker at the exact time he makes it.

Kaizan expert Sofia (with mom Kristen) wearing a tiara on her second birthday.

But another big piece is called the 5 whys. When Toyota has a problem, it keeps asking “why?” until it gets to the root of it.

All of which made me think that my friend Kristen’s two-year-old daughter Sofia could get a great management job at Toyota. After all, what do three-year-olds love more than asking why, over and over and over again?

SUVs always sell. I ran a luxury car company last week. At least, I did during a simulation. In an effort to harness our Type-A competitive tendencies, Darden pitted learning teams against each other in the auto industry. The company with the most net income and the highest stock price won.

After studying the market, we decided our customers wanted a luxury SUV. So we built the Bruner, named in honor of our b-school dean. And then I saw the economic forecast – gas was expected to jump to $5 a gallon.

I thought for sure it was going to be GM/Ford/Chrysler all over again.

But then, to my surprise, the Bruner sold out in the first year. And the second year. And the third year. We couldn’t make the monster fast enough.

The end result? We had one of the highest net incomes and best stock prices in our class. Not sure if that’s reflective of the real world, but…

Don’t worry about that trade deficit with China. This week in macroeconomics our Chinese professor told us to think about the United States as a company. USA Inc. has assets and liabilities.

Its liabilities are the treasury bills it sells to foreigners (like the Chinese). USA Inc. pays 3 percent to 4 percent.

It takes the money it gets from selling t-bills and does two things with it:

• Spends it (Americans heart shopping). This gives us 0 percent return.
• Invests it – often in China! And that money gives us a return of about 30 percent.

Our professor said the money we invest in China far outstrips the money we spend. In this scenario, USA Inc. looks like an investment bank and China looks like a factory.

So, who gets the better deal in this situation?

USA Inc.

Beware Hulu watchers: ‘The era of free TV is fast dying’

That was among the refreshingly candid gems we got last week from an NBC exec. He was beamed in from New York to enhance our case discussion about NBC’s decision on whether to buy the rights to Major League Baseball.

But what he really gave us was a wakeup call about the future of TV.

Get ready for Hulu (now an online service where you can watch many TV shows for free) to cost you money, perhaps a subscription fee. Get ready for your cable company to deny you high-speed if you don’t subscribe to cable too. And if you want to watch TV online, you’ll need a password from your cable company.

Hulu: Free no more?

“We are resigned to letting people watch where they want to watch,” the exec said. “We just have to figure out how to monetize it.”

It’s not an easy nut to crack. Take Hulu, which has short commercials on its free online shows. NBC makes 20 cents per viewing of a TV show on Hulu. On TV, for the same show, they make 60 cents.

It’s that kind of gap that’s killing them – and not just them. Every old media platform is struggling with the same issue. How do we continue to fund the quality of programming/news/information that our customers want on the smaller returns that new digital platforms offer? So far, the math just isn’t working out in their favor.

I’m no stranger to dying media platforms (hello, my career in newspapers!). Which means I’m rooting for NBC and all the other media companies to figure something out. After many hours pondering this problem with scared and desperate journalists, I think part of the solution is to stop giving away the milk for (almost) free.

Media companies jumped online assuming that the same strategy they used on their old platform would work: We make content, businesses buy advertising, we make money. But they didn’t realize that online ads wouldn’t deliver the same fat revenues – or even enough revenue to cover the cost of making that content. So they gave away content without getting enough in return. And it’s killing them.

It’s time to figure out a way to shut off the free. Which is exactly what this NBC exec was talking about.

Almost everyone listening to him insisted they would never, ever pay for Hulu or any of the other services they’re used to getting for free. But I’m not so sure. I remember my parents telling me about how people were initially appalled by the idea of cable TV. Why would anyone pay for television?

Here’s hoping they can figure out how to make us pay for it again.

How you know you’re a poor grad student

 You see two quarters lying on the ground outside Old Navy (where you’re going to buy discount khaki pants because you don’t have enough money for Gap khakis) and your first thought, as you swoop down on them, is, “That’s one-third of a load of laundry!”

What I learned at b-school: Week 9 … and 10

I’m running a little behind on my weekly lessons. Blame Halloween. Blame an insanely hard finance case. Blame a networking/job hunting/interview prepping frenzy that is November. Just don’t blame me. I’m clearly having inventory management issues.

Here you go, two weeks of learning for the price of one:

It’s not about you. This is my friend Leslie’s mantra. Every time one of us gets our nose out of joint about someone who’s wronged us – ex-boyfriend, annoying coworker, cruel boss – she often reminds us: “It’s not about you.”

And you know what? It usually isn’t about us. The crappy behavior we’ve received often has nothing to do with us. Instead, it’s often about experiences or forces beyond our control.

Turns out macroeconomics is the same way.

Our professor told us this week to stop thinking about the economy in terms of what we would do. Maybe you would take that $5,000 bonus and stash it away in the bank. Maybe you would cheat on your taxes to avoid paying the government. But macroeconomics is not about what you’d do. It’s about what the typical person would do. And if you try to base it on your personal choices, you’ll never get the big picture.

Diversification is something for nothing. One stock alone has a risk. Another stock alone has a risk. But somehow – magically! – when you put the two together, their total risk is less than their individual risks. You haven’t done anything to lower the risk. You’ve just diversified (the magic word in finance, I’m learning). And that simple action gets you something (less risk) for nothing.

Put all your money in an index fund. I have to admit, I learned this lesson years ago from the lovely folks over at the Motley Fool. But it was nice to have that lesson confirmed by finance class. After spending a class talking about mutual funds, our professor pointed out that most mutual funds only slightly outperform the market – and any gains you get are quickly gobbled up by fund fees.

Even missiles have a supply chain. This week we learned about supply chain management and how hard it can be to get inventory where you need it when you need it (more on that later). At the end of class, some folks were sharing their real-life experiences with supply chains. MBARenee talked about manufacturing office supplies for Wal-mart. Another guy talked about cigarette distribution. And then the former Apache helicopter pilot in our class raised his hand.

“I used to be involved in supply chains when I was in charge of ordering ammo,” he said. “We had one missile that was really popular and if we ran out of stock, it was impossible to catch back up.”

Needless to say, his example literally blew everyone else’s out of the water.

Food tastes better – and costs less! – on small plates. It had been awhile since any of us had eaten a real meal out, one that didn’t involve ordering at a counter and eating something wrapped in deli paper. So when we didn’t have study groups on Thursday night, my very smart friend Sarah suggested dinner out at Mas, a tapas place.

The food was fantastic. It had been ages since I’d eaten tapas and I’d forgotten how great it is to try a bunch of different things and not get bored with what’s on your plate. We had a constant stream of yummy food coming to the table – bacon-wrapped dates, duck medallions, seasoned shrimp, a salad that was “spanked” by mustard, according to the menu. And, best of all, after a big pitcher of sangria, a full meal and dessert, the bill was only $30 each. Including tip. Score!