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By Aftab Khanna

Tomorrow I will officially transition from being an MBA Candidate to an MBA Graduate of Kellogg’s Class of 2015. Over the last few weeks, as the journey started approaching its goal, a few of us had conversations about what our key takeaways were.

What are the things we learned that would stay with us for years to come?

An MBA gives you technical skills and core subject matter knowledge, but some lessons stand out. As I thought about my own learnings, a few things came to mind and I thought it was worth it to share them with current and prospective students.

I would add some caveats here, though:

  • The list is purely subjective and reflects my opinions. Others may completely disagree and that would be fair.
  • The list is also colored by the kind of classes I took. Someone with a different class mix would have other things to talk about (which is the beauty of an academically diverse MBA program).
  • Lastly, it is not so much about how many points you can take away but how deeply the information impacted you, and that is something that comes down to the quality of faculty and what they taught you. At Kellogg, I have been lucky to be taught by some wonderful professors, and this list would surely not have been possible without them.

1. The free markets work … mostly

And when they don’t, there is one word that describes that failure: externalities. Externalities are actions we take that cause an impact felt by others; we do not take this impact into account while taking the action. Smoking is a classic example of an externality. You don’t need a business school to tell you that free markets are the most optimal economic mechanism to generate and distribute wealth, but you do need to understand why and when markets fail and what to do about them. If you ever feel that a market-based solution is not working, hunt for the externalities.

2. Marketing is much more than advertising

Call me a little silly, but advertising was the face of marketing for me and I could not think beyond it before coming to Kellogg. What I learned was that for a business marketer, the ad creative is the last thing that should matter. Marketing runs parallel to all your business decisions (as does Operations). The key is to think of a customer problem to solve, identify a unique customer segment, tailor the product to address their problem and then position it to them. One lesson that I will never forget came from my Advertising Strategy class: Your job is to own the strategy, the creative is owned by the agency. Never try to modify the creative. Simply reject it if it betrays the product positioning and strategy.

3. Do not mistake correlation for causality

A lot of sensational articles you see on the web suffer from this syndrome. The human mind is trained to search for cause/effect relationships everywhere, and the first plausible one that we come across tends to get sanctified. Does carrying a cell phone in the front trouser pocket reduce sperm fertility in men? Does consuming chocolate lead to weight loss in women? Did New York City’s crime rate drop in the 1990s because Mayor Rudy Giuliani cracked down on graffiti? Whenever you see a sensational headline or a piece of business research in your field, pause and ask whether it is merely a correlation or an actual causation. (P.S. – The answer to all the three questions above is No.)

4. Conditional probability guides a lot of our value based debates

As one of my favorite professors at Kellogg remarked, decision sciences or probability studies can explain almost everything in life. Conditional probability is often behind a lot of our policy debates – our station in life conditions our views. If you are wealthy, a redistributive economic policy would not appeal to you, while if you belong to an economically weaker strata of society, you would push for such a policy. Our values are dependent on our existing conditions. But ask yourself this – if you could not choose how or where you were born, and on one end of the probability tree is richness and wealth and on the other end lies deep poverty and deprivation, would you still prefer a world without any safety nets? To me this was a fascinating perspective, one that I never considered and it opened my thinking to the scope of application of probability concepts.

5. Doing currency arbitrage is like picking pennies in front of a speeding truck

One of my favorite Kellogg classes was International Finance. At some level we all think we can game the markets. As an international student, I was always alive to the sensitivity of exchange rates of my home country and the US – always searching for that arbitrage. What this class taught me was that you simply cannot forecast currency rates, and unless you are playing with millions of dollars of (ideally) someone else’s money, currency arbitrage is likely to burn you. You cannot forecast currency depreciations and interest rate changes and eventually it becomes a zero sum game. The other big learnings from this class – the best way to hedge against currency risk is to produce locally and that currency hedging is a long-term marriage, not a one night stand.

6. Create value, but don’t forget to find someone who can pay for it

The Performance Indicator case in my Core Strategy class was one of my favorites, not only because it related to golf — of which I am an avid fan — but also because it teased apart the relevant distinction between value creation and value capture. A breakthrough technology that would help golfers identify whether a used golf ball was beyond degradation was struggling to find adoption simply because its inventors were going after a segment of the market (premium golf ball makers) where the technology would have eroded value by pushing customers toward lower priced golf balls. Another learning that came from the case – innovation may sometimes erode value across some parts of the value chain.

7. Fall in love with the problem, not the product

An often repeated mistake in technology markets is to become obsessed with a product and not the problem. The case of Iridium stands as a landmark tombstone here. A brick-heavy phone developed in the 1990s to help solve the problem of being able to communicate when you had no access to landline telephones. The issue was that Iridium was very expensive and could only work when the user was in a clean line of sight with the satellite. The mockingly sighted use case – a CEO sitting at the top of Grand Canyon. Yet Iridium continued to bleed money simply because no one stood up to say that they were too focused on the product and not the customer problem. The cel lphone revolution eventually did the talking for them.

8. There is wisdom in the crowd

I must confess I was a bit skeptical of the whole crowdsourcing buzz until a class experiment made me see its application. Under the right conditions (a straightforward problem not requiring expertise and the crowd possessing basic knowledge about the problem), a crowd can outperform a team of experts. From whether it is predicting who will become President to who gets picked as the No. 1 player in a draft, the crowd can outperform the average prediction of individual experts in all cases. There is a catch, though, and that is called diversity; the crowd must be sufficiently diverse (read random) for its errors to cancel out.

9. The best strategies get tripped by non-market events

We now operate in a world where businesses routinely must think, care about and accommodate their external stakeholders. The ability of non-market events to scuttle a business plan is enormous and I am glad that at Kellogg this was a core focus area from both a national and international perspective. How do businesses form coalitions to guard their interests against changing regulations? How do we manage gatekeepers and regulators? How do we align interests and how do we safeguard investments in emerging markets with uncertain governments and weak judicial systems? Corporations like Wal-Mart have been singed by non-market events all over the world. What was thought as lying at the frontier of business decision making is now a more frequent reality, and something that can pour water on the best laid plans.

10. The best way to build culture is through guidelines and not rules

You will many Kellogg professors speak about values-based leadership and how to use values to guide decision-making. A lot of organizations pride themselves on their culture and many try to change their culture. A key learning for me was that culture is not a dictum – it is an evolutionary process and hence best left to broad guidelines to govern it rather than strict rules. Rules promote backlash and workarounds, whereas guidelines allow sufficient flexibility for implementation. Another critical learning was the use of social norms – people follow the lead of those around them. Put them in relatable situations, tell them what their peers did and affirm positive values to achieve behavior change.

11.  Never enter a negotiation without planning

Always have a BATNA (Best Alternative To a Negotiated Solution), prepare and identify your priorities and your counterpart’s priorities, then find room for give and take by looking at all the issues together. You will be surprised by how much everyone can compromise.

Lastly, enjoy and own your MBA journey. It’s a once-in-a-lifetime experience, and it is entirely up to you to derive as much value from it as you can!

Aftab Khanna is from New Delhi, India. Aftab is a bit of a social media addict, loves to watch any kind of sport and shares his thoughts on Twitter at @aftabkhanna.