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Value your instincts, but reinforce them with learning

Jun 23, 2024 Management, Sunday Nation

As a teenager, I would be often found in what was Nairobi’s leading second-hand bookshop of the time, off Koinange Street.

Booklovers thronged this shop, and the array of popular titles available was surprisingly good. I was there every week or so, trying to make my meagre pocket-money go further by buying used books rather than new ones. Those were magical days, when delightful discoveries could be made on those dusty shelves.

When I visited that bookshop, I was both a buyer and a seller, as were most of the regular customers. I remember the first time I brought back a book that I had purchased a week earlier, intending to sell it and use the money for a fresh buy. I flinched when the rather forbidding and unsmiling bookseller told me the price. I had bought the book for 25 shillings; but she would only give me less than half the money if I sold it back to her.

Naïve me thought this enormously unfair, but I sold the book nonetheless, and reluctantly coughed up some extra shillings to buy the next book I had my eye on. It was only gradually that I realized that it would make no sense for the bookseller not to have a markup on her purchase price—how else would she pay rent and utilities, and have any income left for herself?

I thought about that shop when reading a novel recently about another second-hand bookstore, in Japan. The thought occurred to me: how do the owners of these businesses set their prices? Which business-school pricing models do they use?

Of course, most people engaged in simple shopkeeping have no business education at all. But do they need it? Pricing theory would have some solid advice for them: to be very aware of their costs; to assess their customers’ willingness to pay; to be aware of the prices of competitors, and of new books; and to understand the rarity value of certain tomes.

Here’s the thing, though: the owners of used bookstores anywhere in the world are well aware of all those guiding principles—mostly without ever having set foot in a business school, or even without opening a business book! A good seller is doing an age-old dance between intuition and calculation. You may get your prices a little wrong when you begin, but years of experience of watching and interacting with bookworms provide an instinct on what different books are worth to different people. A store that has run for years is usually getting its markups and discounts right.

Much of business is like that: those who are in it, learn it by doing it. They burn their fingers a little (or a lot!); they learn sharp lessons; they get better as they go. What value, then, does business education have? 

There is in fact great value—if you know what you are looking for. A great body of knowledge now exists around the practice of business, and getting access to that repository allows you to understand what is proven to work, and what usually fails. The right business education can teach you how to learn from the mistakes of others, without making them yourself.

In addition, as a business grows in complexity, there are many new dimensions that benefit from professional training. How to manage your capital across multiple units, for example. How to get the best out of employees by leading them well. How to build a brand and communicate it effectively. How to organize operations efficiently. How to stay on the right side of the law and the regulator. How to think strategically about what’s coming in your industry. All of these things could be left to natural intuition alone; but there are professional skillsets that make an important contribution to better business management.

Whether you are setting off in business or already engaged in one, there is great value to be found in learning a little more. This can be done formally, through institutions, or by using the enormous resource that is the internet. My best advice is this: choose carefully. Pick programmes and insights that are rooted in reality rather than theory. Do not waste time on teaching that is merely theoretical or fixated on academic models. The best business school dons teach what is actually proven to work—not in spreadsheets and slide decks, but in the actual world of human interaction. They are trying to create the successful businesspeople, not the successful academics, of the future.

There is no alternative to human intuition. No theory, no framework, no model can take the place of the human understanding of other humans. Nonetheless, we can all benefit from learning to think critically; from acquiring new skills; from broadening our perspectives; from listening to others; from learning from our history. The best education delivers those key benefits, and builds on our natural instincts. It does not supplant it. The best teachers and best students of business are always learning first from actual practice and acute observation. 

(Sunday Nation, 23 June 2024)

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