Ok, so we can’t exactly be revolutionaries given that we’re economists and business professors… I mean, how much more establishment can you get? Nevertheless, we do have some strong beliefs, and here’s one:
Mazzeo’s Law: The right answer to every strategic question is “It depends.”
We named this for Mike simply because he makes a habit of repeating it over and over to his introductory business strategy students at Kellogg. It’s become a bit of a catchphrase for him; an economist version of “Stay Classy, San Diego.”
Anyway, to illustrate what we mean, consider the following question: Should a firm try to offer the highest possible product quality? And before you quickly answer “Yes, quality is good!”, consider that two of the biggest Fortune 500 success stories of the past two decades — Apple Computer and Wal-Mart — have chosen very different paths on this question. Steve Jobs was notorious for insisting on the highest possible quality in the user experience, and Apple’s success clearly reflects this orientation. Wal-Mart, conversely, is not known for selling the highest quality products or offering the greatest shopping experience, but rather for selling at a low price.
The answer to the High Quality or Low Price question is “It depends”, and the trick for any executive, entrepreneur or small business owner is to figure out what it depends on… so you make the right decision for your business.
Corollary 1: The trick is figuring out what it depends on.
And here’s where the MBA curriculum comes in. Regardless of the issue — whether it’s strategic positioning, pricing, growth, outsourcing, hiring, providing incentives, designing an effective organization, negotiating with suppliers — any firm faces a variety of strategic options. We see the MBA as a set of frameworks for figuring out what the right answer is for your firm.
To put it a bluntly, we’re quite suspicious of anyone who says “all firms should do X.” Or that there’s a single “best practice” that all firms should adopt. We think purveyors of notions like this are ignoring the complexity of the modern business world, and the fact that so many firms manage to succeed with such widely varying approaches to business.
So, one of our goals is to illustrate important MBA frameworks, telling the “it depends and here’s what it depends on” story using examples drawn the rich diversity of American small business.
Oh, and we have one more corollary:
Corollary 2: If the answer isn’t “It depends,” then it’s not a strategic decision.