How an MBA Helps Develop Decision-Making Skills for Leaders
Decision makers in business have always dealt with complicated problems and situations in the midst of rapid technological change. But now, some things are different, and according to Peter Klein, they are pretty obvious to anyone.
“The quantity of information available to us is just so much more,” Klein, professor and department chair at Baylor's Department of Entrepreneurship and Corporate Innovation, said. “One of the key challenges facing decision makers today is similar to the challenge all of us face every day: How do you sort through this flood of information to pick out the things that are important?”
There is a parallel to this in social media platforms, which attempt to solve the information overload problem with feeds that highlight what is most relevant and interesting.
“Business leaders are in that same position,” Klein said. “They are overwhelmed with an avalanche of information, much of which is not useful, is misleading or distracting. They have got to figure out how to focus and take a more holistic view. What are the big-picture issues facing my organization in my position? And how do I extract from the flood of information that surrounds me the few key pieces I need to make a smart decision?”
Those are the sorts of questions Klein helps students grapple with in the capstone course he teaches, Global Business Strategy, for Baylor's Executive MBA in Austin, which meets on Monday evenings. With 30-plus years of teaching experience to go along with other experience (like his previous role as senior economist on the U.S. Council of Economic Advisers), he has significant experience in this area.
Baylor's Approach to Teaching Decision-Making Skills
Because decision making is such a foundational skill for leaders in every industry, it is a major focus in Baylor's MBA programs.
Klein likes to point out to potential students that an MBA is a generalist degree. Rather than specialized programs like a master’s in accounting or finance, an MBA—Master of Business Administration—teaches students how to integrate knowledge from different business disciplines.
“In an Executive MBA program, like our Austin EMBA program, the students typically have considerable professional experience, but most of them are specialists,” Klein said. “Someone has been in accounting, or in information systems, or marketing, or whatever their entire career.”
“We are trying to get them to see the big picture, to figure out how they integrate different bits of knowledge from different business functions or different aspects of their company, to take the CEO's perspective. We say, ‘We are trying to train you to be the CEO, who has to deal with accounting and finance and marketing and management and HR and operations—and figure out how to pull all those things together to make a decision that's in the best interest of the organization as a whole.’”
A practical way to help students advance their knowledge and skills is to have them interact with people of different backgrounds. Those teams force students to develop and fill in their weak spots and, at the same time, they have the opportunity to share their expertise.
It is also helpful to point out that since this is a capstone course, it is taken at the very end of the Executive MBA. So students have already had those functional, specialized courses. Klein expressed how his job is to help them bring together what they have learned to make larger assessments and decisions.
“The key to good decision making is knowing how to put the pieces together,” he said.
Understanding What Strategy Really Is
Students in the capstone course learn how to put everything together through a mix of specific and overarching frameworks. Specific tools like the popular SWOT analysis and Porter’s Five Forces Framework join with the overarching focus of strategic thinking, which is by nature realistic and practical.
“Strategy is not the same thing as mission or vision or objectives,” Klein said. “A lot of CEOs, a lot of companies, if you ask them about their strategy, they will give some kind of pie in the sky, sweet-sounding verbiage about their vision or mission. ‘Our strategy is to be the world leader in XYZ, making a difference in peoples' lives.’”
“One of the key emphases in my course is getting students to understand: That is not strategy. Strategy is: ‘What specific actions do you take to become that thing that you say you want to become?’ It is not about painting a rosy picture. It is about realistically assessing tradeoffs. You start with some kind of motivating general strategic statement about how you are going to do that. Then you come up with a set of specific actions that you can take right now and things that you will do in five years or in 10 years that will get you to where you want to go.”
That strategy of understanding and integration into everyday decisions is what separates leaders in lower and middle management positions to those in high-level roles. What the latter group does becomes, in a sense, automatic.
“Strategy consists of the diagnosis of the problem, a guiding policy that says how you are going to solve the problem, and a set of coherent actions to get there,” Klein said. “Once you start thinking about problems that way, you cannot stop!”
The Role of Digital Tools for Top Decision Makers
Klein pointed out how top managers need to focus on their primary functions in such a data-driven business climate —providing leadership and guidance, formulating strategy, hiring and supporting good people and empowering them to do well. But there is a threat to their effectiveness if they react too hastily to what digital tools provide.
“Digitization has led to a little bit of flattening of the managerial hierarchy because some of those middle management functions can now be performed by software, which sounds great and efficient,” Klein said. “But one problem is then you get senior managers who are closer to employees in the field … they look at that dashboard every morning, and they find out, ‘in this part of this company, this number is below what it needs to be. I need to do something about it.’ And they start sending emails or start setting up meetings with employees.”
“That just adds stress; these employees do not need the CEO to come and talk to them. The temptation to overuse digital tools particularly by intervening too much and too often, rather than letting things run their course, is a major concern.”
There is a boundary between what a machine can do and what only a human can do. Managers and decision makers should be focused on what they do best—not the temptation to tinker with the technology.
“That is a hard thing for a lot of students who get an MBA,” Klein said. “They are very good at operations, they want to be good at strategy, but that involves letting go. Trusting other people to do the thing you want to be doing yourself so that you can focus your attention on putting all the pieces together. Focusing on the long run rather than the short run.”
Overall, top managers need to be aware of digitalization traps, which is not only a topic in the Executive MBA, but the subject of Klein's recent research in Business Horizons.
How Decision-Making Skills Advance in a Cohort Model
One of the hallmarks of the Executive MBA program is the cohort model. It brings together different aspects of the learning process and facilitates the development of skills like decision making.
“Of course we are emphasizing skills, frameworks, techniques and building up your knowledge base in a program like this,” Klein said. “But the social aspect, the horizontal learning aspect cannot be overemphasized. It is different than some undergraduate courses in a lecture hall listening to somebody giving a speech. Our classes are not like that. Everything is interactive. There is a lot of peer-to-peer learning.”
Indeed, the professors are great, and the articles and books they ask students to read are too—especially Klein’s, he pointed out jokingly—but the added value comes from putting students together in an environment where they can work through how to make an important decision.
“It creates an environment within which people can grow and learn and build relationships,” Klein said. “We are guiding and steering and helping create that environment. That is where the real value lies.”
By the time students get to his capstone course, they have known each other the whole time. They have become like brothers and sisters, arguing with each other, going on trips together and connecting. It is a fascinating thing for Klein to experience because he knows many of them only from connecting with them prior to their decision to earn their Executive MBA.
Their transformation is unmistakable and uplifting.
Want to develop the decision-making skills you need to advance as a top leader in your industry? Baylor University offers an Executive MBA at the Hankamer School of Business in Austin, which takes place on Monday nights. Want to learn more or have questions? Reach out for a one-on-one consultation with our admissions advisers. Complete the form below, and our team will contact you directly.