An Interview with Mike Mazzeo about Roadside MBA
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Strategy Innovation Jun 2, 2014

An Inter­view with Mike Mazzeo about Road­side MBA

Back­yard lessons for entre­pre­neurs, exec­u­tives, and small busi­ness owners.

Based on the research of

Michael J. Mazzeo

Paul Oyer

Scott Schaefer

Listening: Interview with Mike Mazzeo

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Many aca­d­e­m­ic dis­cus­sions about busi­ness strat­e­gy focus on the big guys — the Wal­marts, the Exxon­Mo­biles, the IBMs. But the vast major­i­ty of busi­ness­es out there are ones most peo­ple haven’t heard of: busi­ness­es like Enid, Okla­homa-based Aerosock, which man­u­fac­tures col­or­ful, durable wind­socks, or Braces by Bur­ris, a small Arkansas ortho­don­tics com­pa­ny with its own unex­pect­ed­ly use­ful cor­po­rate airplane.

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Do the strate­gies taught in top MBA pro­grams work for these small- and medi­um-sized busi­ness­es too? Mike Mazzeo, an asso­ciate pro­fes­sor of man­age­ment and strat­e­gy at the Kel­logg School, along with two fel­low econ­o­mists, Paul Oyer and Scott Schae­fer, hit the road to find out. They have writ­ten about their endeav­or in a new and sur­pris­ing­ly fun­ny book called Road­side MBA. Mazzeo agreed to sit down with Kel­logg Insight to dis­cuss the book and the research that went into it.

This inter­view has been edit­ed for length and clar­i­ty. For a longer ver­sion of our con­ver­sa­tion, check out the accom­pa­ny­ing podcast.

Kel­logg Insight: This is quite an unusu­al premise for a book. What made three econ­o­mists decide that a road trip, or actu­al­ly six of them, was a good idea?

Mike Mazzeo: We fig­ured out that the road was a great place to iden­ti­fy and to meet up with small- and mid­dle-mar­ket type com­pa­nies that often don’t get a lot of atten­tion in the mate­ri­als that we present for MBA stu­dents. We have a lot of mate­r­i­al geared toward the very largest com­pa­nies, and there’s a pret­ty pro­lif­ic set of mate­r­i­al tar­get­ed toward star­tups. But it’s that vast area in the mid­dle where there was a hole. 

We thought it would be inter­est­ing — both for us, from the per­spec­tive of learn­ing more about strat­e­gy, and for indi­vid­u­als run­ning com­pa­nies, who would poten­tial­ly get a lot out of hear­ing about the lat­est ideas in busi­ness strat­e­gy through the expe­ri­ences of com­pa­nies like theirs.

KI: So you wrote a book about this expe­ri­ence and in this book some­thing called Mazzeo’s Law comes up again and again. What is Mazzeo’s Law and why is it so important?

Mike Mazzeo: A lot of peo­ple have this pre­con­ceived notion that there’s a right answer — that if com­pa­nies only fol­lowed a par­tic­u­lar recipe they would be suc­cess­ful. We reject that idea and real­ly feel the right thing to do, in any spe­cif­ic sit­u­a­tion, depends on the con­text. So what we’ve nick­named Mazzeo’s Law states that the right answer to every strate­gic ques­tion is, It depends.” The trick is to under­stand what it depends on. In the book, for a vari­ety of strate­gic issues and com­mon prob­lems that com­pa­nies face, we iden­ti­fy what it depends on.

The key suc­cess fac­tor for this com­pa­ny was devel­op­ing a way to accu­rate­ly esti­mate what the pre­cious met­als were pri­or to pur­chase so that they could pay a fair price to the junk dealers. 

KI: Over the course of your trav­els you’ve vis­it­ed dozens of com­pa­nies. Is there one com­pa­ny that real­ly stands out in your mind? Per­haps one whose suc­cess­ful busi­ness mod­el was espe­cial­ly sur­pris­ing or unusual?

Mike Mazzeo: One of my favorites was a com­pa­ny that we met in a town called Dothan, Alaba­ma, called Pan­han­dle Recy­cling. It turns out that Pan­han­dle Recy­cling only recy­cles cat­alyt­ic con­vert­ers from auto­mo­biles. Cat­alyt­ic con­vert­ers are a valu­able byprod­uct of a junked car. They’re worth $200 – 400, depend­ing on the size of the con­vert­er and the pre­cious met­als put into the fil­tra­tion process. This cre­ates a chal­lenge for a com­pa­ny like Pan­han­dle that is in the busi­ness of buy­ing junk cat­alyt­ic con­vert­ers and sell­ing the pre­cious met­als to com­pa­nies on the open market.

The key suc­cess fac­tor for this com­pa­ny was devel­op­ing a way to accu­rate­ly esti­mate what the pre­cious met­als were pri­or to pur­chase so that they could pay a fair price to the junk deal­ers. They had a very impres­sive Chief Infor­ma­tion Offi­cer, who kept the data about all the dif­fer­ent kinds of cat­alyt­ic con­vert­ers — that was their key piece of intel­lec­tu­al prop­er­ty. We didn’t expect going in that a junk­yard would have a CIO and that a spread­sheet would be their key piece of intel­lec­tu­al property!

KI: In a lot of ways, small- and medi­um-sized busi­ness­es are at a dis­ad­van­tage when it comes to com­pet­ing against the big guys, but you vis­it­ed some com­pa­nies that were able to use their small­er size and their inti­mate knowl­edge of the cus­tomer base to their advan­tage. Can you talk about one of these visits?

Mike Mazzeo: In Colum­bus, Indi­ana, we met Mike Bodart, the own­er of Hoosier Sport­ing Goods, a very small com­pa­ny — but a very suc­cess­ful one. Mike was an intense mem­ber of the ath­let­ic com­mu­ni­ty in Colum­bus. He knew all of the high school coach­es, and he knew all the lit­tle league teams, and he knew when foot­ball prac­tice start­ed. The big box stores didn’t have that kind of spe­cif­ic infor­ma­tion. Mike told us he would chuck­le when he would see their ads for foot­ball equip­ment show­ing up in the news­pa­per three weeks after foot­ball prac­tice had already started.

KI: But that’s kind of sur­pris­ing, isn’t it, because pre­sum­ably even these big box stores have local employees?

Mike Mazzeo: They have local employ­ees, but unlike Mike, who owned his store, the local employ­ees didn’t have that strong of an incen­tive to work that infor­ma­tion. Mike would take orders for his store at soft­ball games.

KI: So he’s out there on Sat­ur­day morn­ings and Sun­day evenings?

Mike Mazzeo: Con­stant­ly wear­ing a Hoosier Sport­ing Goods t-shirt as an adver­tise­ment! In Colum­bus, Indi­ana, there are two high schools that play each oth­er once a year. Mike sells a lot of t-shirts that time of year in the two schools’ col­ors, orange and brown. Mike knows that and stocks his store accord­ing­ly. But to have indi­vid­u­al­ly select­ed inven­to­ry at every one of its local stores based on infor­ma­tion from the com­mu­ni­ty — that’s some­thing that’s very dif­fi­cult for a big firm to exe­cute on. If you’re a small­er firm, see what the big guys don’t do well and then try to orga­nize your com­pa­ny around that. Mike said: look, we don’t stock any­thing in the store that Kmart or Wal­mart also stocks.

KI: Are some of these small- and medi­um-sized com­pa­nies at an advan­tage in terms of being able to com­pete against the Internet?

Mike Mazzeo: In some ways yes and in some ways no. A small­er com­pa­ny would have an advan­tage when a strong ser­vice com­po­nent is real­ly impor­tant. On the oth­er hand, the Inter­net is good at orange and brown t-shirts.

Mike Mazzeo is an asso­ciate pro­fes­sor of man­age­ment and strat­e­gy at the Kel­logg School. His book, Road­side MBA, pub­lished by Busi­ness Plus, is avail­able online or in book­stores June 102014.

Featured Faculty

Michael J. Mazzeo

Associate Professor of Strategy, Faculty Director of the Chicago Campus

About the Research

Mazzeo, Michael, Paul Oyer, and Scott Schaefer. 2014. Roadside MBA: Backroad Lessons for Entrepreneurs, Executives and Small Business Owners. Business Plus.

Read the original

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