Boiling my MBA down to four points

The overarching point of an MBA is to try to figure out the answer to one question: How do you make a company more profitable? Being a fan of making complex things simple, here's my answer to that very simple question.

Basically, to make a company profitable you have to get better at one (or more) of these four things:

1. Management
2. Innovation
3. Money
4. External Environment

It's that simple.

All the strategies you can use to become more profitable - and by extension, everything you learn in business school - falls into one of those four categories. If you're running a company, and you want to become more profitable, all you have to do is brainstorm how you will tweak the four levers, prioritize your ideas, and start executing.

Apparently, management theories are more legitimate when you make them sound mystical, so I'll call this idea "Tambe's MIME Model." Before continuing, let me suggest that this model can apply to the public and social sectors as well, if you broaden the question from profitability to impact.

TAMBE'S MIME MODEL

Management is first lever you can tweak. This includes the management of people and other assets, like equipment, that people use to do their jobs. If you were to tweak this lever you'd figure out why your people weren't effective and then do something better. That might include improving the quality of managers and supervisors in the company, improving a process to increase output, or upgrading technology and equipment to something better.

Innovation is the second lever you can tweak. This includes introducing new products and services or improving existing offerings. If you were to tweak this lever, you'd put in the hard work of understanding customers' needs and pour resources into R&D to figure out a solution for those needs. Innovation need not be big - it could be as simple as improving one feature (e.g., remember when Apple added volume controls and a mic to its earbuds). Or, it could be as big as doing something the world has never seen before (e.g., creating the microchip).

Money is the third lever you can tweak. This includes cutting costs or improving the terms of financing. If you want to tweak this lever, you'd improve financial controls or find better ways of getting capital into the company. This is the sort of stuff people talk about when it comes to accounting, corporate finance, and improving the "bottom line."

External Environment is the fourth lever you can tweak. This includes increasing trust and awareness with customers or working to change the company's competitive landscape. If you want to tweak this lever you might do a marketing campaign, lobby for a more benevolent regulatory framework, or buy your competitors to reduce competition. Everything from lobbyists, to marketers, to M&A fall into this category.

I'd add that there's a dark side to using the MIME Model, because you can try to tweak these levers in an honest way or in a dishonest way. For example, when it comes to external environment, you could run a marketing campaign that truly informs consumers about the value of your products in a compelling way (think the Pure Michigan campaign). Or you could run a disinformation campaign that misleads the public (think the tobacco companies downplaying or outright lying about cigarettes causing cancer).

You could also try to lobby the heck out of an issue to prevent new, innovative entrants from entering your industry instead of upping your own company's game. You could threaten to fire people in order to increase productivity, or you could do the hard work of building a management culture that improves performance without fear tactics. If you ask me, appealing to the dark side of the MBA toolkit is cheating and not sustainable anyway.

Again, to summarize, there are four general ways to making a company more profitable: improving management, innovation, money, or the external environment.

In any case, I fully welcome your critiques on how to make this model more useful, especially from my fellow MBAs. After all, what's the point of spending a stupid amount of money on tuition if we can't distill what we've learned into something simple enough to be useful by us or by others?

For a great read that congealed my thoughts for this post, check out The Economist's special report on Superstar Companies.

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