Last week, Forbes printed a short interview with Dick Foster, Senior Partner and Director at McKinsey & Company. Foster is most famous for his book, Creative Destruction. From the interview, it would appear that Foster is more than a little skeptical of business gurus who advise doing the same things you see high-performing companies doing: “There was no such company, and there never had been such a company!”

The Dick Foster interview is today’s Friday Inspiration. Here’s a short excerpt:

“Let me tell you how I got to the term “creative destruction.” In the 80’s, I was in a search for “the excellent company” – the all-seeing, all-knowing, all-wise company that made all the right moves in advance, and that made more money for its shareholders than any of its competitors. This was the permanent outperformer stock – the really good deal. I looked at 4,000 companies over 40 years, and what I found stunned me. There was no such company, and there never had been such a company!

“I thought something had to be wrong. Was I looking at the problem in the right way? No company had been able to outperform the market for any substantial length of time. (GE came as close as any, but didn’t do any better than the overall index). Somehow the market – managed by nobody – was performing better than all the brains on the planet. But why? Then I realized that the reason markets outperform companies was closely tied to what Joseph Schumpeter called “creative destruction.” This was actually a phrase that came from the Hindu religion, dealing with the transformation of an individual throughout their life, from creation, onto death, and ultimately rebirth.

“That whole notion of creation, life, and destruction seemed a like a good model for what was going on in markets. When the time comes for a company to face its maker and file for bankruptcy, it does it – the markets don’t care. And when there is opportunity out there to create something new, hundreds will go after it. Most will fail, but one or two will succeed (and we’ll assign Apollo-like status to the latter, while quickly forgetting about the 500 others who failed). Markets are better at creation than any individual company, and they are much better at destruction. A company cannot perform better than the markets that are adapting more rapidly – it’s just a fact of life.”

Check out the rest of the interview at Forbes.com.

This post doesn’t have much to do with marketing or stories, it’s just something I’ve been thinking about for the past couple of days…

I have been reading Seth Godin’s new book, Linchpin, in which he is very critical of the failure of our education system to teach creativity. He argues that we churn out legions of “factory workers” who appear happy with meaningless jobs in exchange for the security of a paycheck. We are taught to follow directions, color within the lines, and never question authority. And we learn those lessons very well. (The way Seth describes it is far more nuanced.)

At the same time, I have been reflecting on my own experience with business school, and wondering how it could have been better. Don’t get me wrong—I had an amazing experience and learned many things I would not have learned otherwise. I don’t regret my decision to pursue my MBA at all. But I essentially got the same education as the other 62 people in the program with me. I have to wonder: is there a better way? Should I have learned something different from the others?

I’m certainly not the first person to ask these questions. Josh Kaufman began exploring the idea of a personal MBA about five years ago. He put together a very good reading list from which any motivated student can learn almost everything a traditional MBA student learns in the course of study—probably more. There’s a lot to like about Kaufman’s idea. A student can tailor an experience around his own needs and weaknesses—all for a few hundred dollars and an Amazon account.

But the lack of interaction with other students and professors is a huge drawback. In my own experience, discussions with my fellow students, including a PhD. of Genetics, the freelance technical director of a bay area opera, the safety director at Rio Tinto, and an operations VP at Kimberly Clark, taught me far more than the books or case studies alone.

But as good as it is, the classroom experience itself, isn’t very real-world. Discussing the people management policies at Southwest Airlines is far different than managing the people. Making decisions in a marketing simulation isn’t at all like the real-world process of product development and marketing products to real consumers. So I have to think there is a better way to teach these skills.

I’d love to see my business school offer a new degree, a master’s of business creation (MBC) or master’s of business innovation (MBI). Students would be formed into small groups of three or four. Tuition would become seed capital and professors would act as paid advisors to help students brainstorm ideas, then launch a business or not-for-profit enterprise.

This would require a lot of people to step out of their comfort zones. Written tests would be pretty meaningless—instead students would be graded on successfully applying concepts to real world situations. The accounting final might be the actual tax documents for the business. Professors wouldn’t be able to show up and present the same lecture they’ve given for the past eight years. In fact, they wouldn’t know what they should teach until they arrived at the group’s daily meeting. One week, students might need accounting help. The next week, help with negotiations or ethics. The next week, advice on marketing, or design, or statistics. The professors basically become a board of directors for the students to rely on.

The university could introduce business students to professors and students from other disciplines (say medicine, engineering, or chemistry) who are working on new technologies with market potential in order to start their businesses. A portion of the profits from the successful start-ups could help reduce the overall cost of the student’s education—or they could be fed back into other meaningful programs at the school.

There may still be a place for textbooks and semi-regular lectures. But they would be taking place against a background of experience where the theories can be tried and tested.

Graduates from this program might not be a good fit for GE, IBM, or Pfizer. But I’m guessing more of them would come away from their educational experience as artists and entrepreneurs, rather than the drones Seth Godin describes. Something to think about anyway…

Related Thoughts:

• Others have thought out this idea too, probably better than I: here and here.

• There appear to be several business programs in Europe that are very similar to the one described above. It may be time to import some of these ideas to our U.S. schools. Examples here, here, and here.

• I posted a link to this talk by Sir Ken Robinson about how schools kill creativity at the old blog. It’s been around for awhile and linked to quite a bit, but if you haven’t seen it before, it’s well worth the 20 minutes it takes to watch:

A little over a year ago, Todd Sattersten sent me a copy of his (then) new book, The 100 Best Business Books of All Time: What They Say, Why They Matter, and How They Can Help You, coauthored by Jack Covert. In exchange for the book, I was supposed to provide feedback. For a variety of reasons I took a hiatus from blogging about the same time and never got around to posting my thoughts. So this is long overdue. My apologies to Todd and Jack.

As anyone who has browsed the Business section of the bookstore knows, there are far more books than anyone can possibly read. If you took all the business books published in 2007 and stacked them on top of each other, they’d easily reach the top of a nine-story building. And that’s just one year’s worth of books. What about the years since then, and the years before? How can anyone sift through that enormous pile and find the books that solve their problem or strengthen their particular weakness? That’s the challenge that Todd and Jack’s book sets out to meet.

And for the most part, The 100 Best Books fulfills its promise. Organized into 12 chapters covering subjects like leadership, strategy, management, innovation, and big ideas, each review identifies the major concepts presented in a “best” book, plus a short section recommending still more books for readers who want to go beyond the basics (this is my favorite feature of the book).

I found myself nodding in agreement with many of the recommendations, books like The Innovator’s Dilemma, Execution, Influence, Positioning, The Art of The Start, Made to Stick, and my personal favorite “business” book of all time, Orbiting the Giant Hairball.  I also found myself making a list of books that I have not read yet, but need to.

The book’s only weakness is also its genius. Unlike the best business books, it doesn’t focus on and flesh out any great ideas. Instead it usefully points you to the books that do explore the ideas you want to know more about. If you want to learn more about entrepreneurship or marketing, this isn’t the book to read. But it is the book you would check to find the books to read.

On the whole, The 100 Best Books of All Time is a pretty comprehensive reading list for anyone who wants to learn more about 12 business subjects (it’s almost a do-it-yourself MBA). And while there are certainly hundreds of worthy books not included in this volume, it’s still a pretty good place to start. It can be read cover to cover, or used as a topical reference for those who want to learn more about a particular subject. It’s worth having close by as a reference for those times you need the right book to read.

Worth a recommendation. Buy it here.

This entry was originally posted on May 11, 2007 at the old Brandstory blog.

I have been a fan of Blue Nile ever since I received a booklet from them six or seven years ago. The booklet, really a direct mail piece, explained how to do different “guy” things like carve a turkey, mix a gimlet, and get a good table at a restaurant. It was well written and well illustrated. Sprinkled in with these other tid bits was advice about how to buy a diamond ring. It was brilliant. Probably the most engaging mailer I’ve ever received. One of my coworkers at the time must have agreed because it disappeared from my office a few weeks later.

Shifting gears (sort of)…

A recent (very short) article in Fortune magazine profiled Mark Vadon, the founder and CEO of Blue Nile and asked him about his management style. Mark notes:

“I’m obsessed with Starbucks. I was talking to one of its executives and asked him why they have grown so much when other people have tried and haven’t. And he said, ‘Well, there are 1000 little things that impact the customer where we’re 10% better than anybody else.’ I think that’s exactly what we’re trying to do: stay focused on all the tiny little details that matter to our customers.”

Is Blue Nile 100% better than Tiffany’s or Zales? Probably not. But by being a little more accessible, providing more information than their competitors (they do a great job educating customers on their site), and offering service that’s a little better, they have created a very successful company and brand. By focusing on getting the small things right, the company grows.

Side Note: Blue Nile has a very common brand story—Mark was frustrated by his experience buying a diamond at a retail store and thought, “there has got to be a better way.” Today there is.

Unfortunately you can’t find the Blue Nile story on their site (missed opportunity), but you can read more about the Blue Nile brand story here.