The Lessons You Don’t Learn in Business School – Building to Scale

By: Sumeet Goel

May 26, 2015

Mid-May marks the start of the annual business school graduation season. Over the next few weeks, schools from Anderson and Booth to Wharton and Yale will graduate some of the top new business talent, who all feel “ready to lead organizations into the future.” I put that in quotes – why? Because that’s the mindset coming out of business school, of the graduates themselves…but the reality is that couldn’t be farther from the truth.

The reality is, nothing (NOTHING!) prepares you for running a company or building one from scratch except actually doing it – no case studies, no textbooks, no consulting or banking internships. Heck, even your traditional post-MBA roles –brand manager, consulting firm associate and investment banker – none of these are going to teach you the necessary skills to build and run a successful business. You only learn by actually getting out there and doing it.

For me, it was a steep learning curve. My personal background was as narrow an experience set as you can imagine – undergrad at Wharton, majoring in finance and marketing; an analyst role at McKinsey; Harvard Business School; then back to McKinsey. Business school, for me, was an extension of my analyst training. There were lots of case studies, retrospective analyses of large companies, looking at balance sheets and income statements. It was all very helpful learning, but my perspective on the real world was skewed when I left McKinsey in 2000 – weren’t all companies multi-billion dollar conglomerates that needed help with their overall strategy?

We never got into detail about how to manage working capital in a growing business, how to manage/negotiate with suppliers and clients in high growth and declining market situations. We didn’t (actually a more accurate word is “couldn’t”) learn what it *really* means to cut costs down to the bone. To maintain employee morale during a recession where everyone wonders if they’ll be here the next week? If their paycheck will?

Flash forward a few years later to the launch of HighPoint. I was a solo practitioner at the start, doing everything – talent acquisition, client development, operations – you name it. And after 18 months of moving from doing independent consulting work for myself, to trying to build a little firm as a solo practitioner, I was making 20% more money but working twice as hard. That was when my wife helped me to see the basic ‘analysis’ that created scale – keep doing what I do best and what adds the most value to the business, but hire folks to do the other 60% of the job. It’s not anything I learned at Wharton, McKinsey or Harvard Business School, but it was so simple. Yet it was hard for me to fathom – I never thought I was an entrepreneur. I had no pattern recognition and no coaching/training around that.

That was the beginning of my learning to build and scale a business. In short order, I moved the business out of the spare bedroom, we got a real office, hired an office manager, hired an analyst to support future growth. The business took a hit on the short-term income side but over the long-term we were able to scale. Then the flip side arrived: I got too aggressive and scaled right into the recession. No one teaches you in business school how to hire and fire folks at a tactical level. You never hire folks with the expectation that things will go poorly. It takes one of those situations to realize – hey, I need to account for that (unfortunate) occurrence in contracts– not just structure compensation based on upside, but also account for what happens on the downside.

I’ve finally gotten my head around proactively approaching many of the toughest and most confusing challenges we face as entrepreneurs and business owners. It took me over a decade to get here, but without a doubt HPA’s biggest successes over the past few years have been because of it. If I knew then what I know now, perhaps things would have been different. But I’m pretty sure that while the journey would have been different, there would have been a whole host of other challenges that no book ever taught me.

Over the next few weeks, I’ll continue to offer some insights into the challenges that we faced in the early days of HighPoint – and what I learned from the process –stay tuned.