A conventional business education may inhibit the learning essential to carving out a successful niche. In contrast, consider the case of Ryan Barr, the founder of Whipping Post – a remarkably successful maker of leather goods. Ryan is a musician, has a deep interest in design, and was an education major in college. Ironically, Ryan is almost apologetic about his lack of a conventional business education. However, I suspect Ryan’s humility, curiosity, and experimental approach are sources of advantage. Those attributes enable him to quickly develop compelling products. The assumptions embedded in conventional business education, on the other hand, may preclude the kind of learning key to the success of Whipping Post…to this point.
Types of Business
Let’s take a step back to consider the business landscape. More than ever, businesses can be sorted into one of three types:
- Infrastructure providers build and manage facilities for repetitive operational tasks such as logistics, storage, manufacturing, and communications. They benefit from economies of scale.
- Customer relationship businesses work to find customers and build relationships with them. These businesses benefit from economies of scope.
- Niche operators conceive of attractive new products and services and then figure out how best to bring them to market. These businesses benefit from their ability to understand specific customer wants and needs and act upon them quickly. The inertia of size means these businesses face diseconomies of scale and scope.
As John Hagel and his colleagues at the Center for the Edge have noted, the business landscape is shifting toward an ecology characterized by simultaneous concentration and fragmentation. Very large companies provide infrastructure and customer relationship services that enable a swarm of product innovation companies. Each depends on the other.
Whipping Post is a Niche Operator
Ryan’s business is a perfect example of a niche operator. Whipping Post leverages the capacity of large collaborators to commercialize products at a remarkably small scale in a very short period of time.
Initially, Ryan’s insight “from years of playing” as a guitarist resulted in the launch of his first hit product, The Picker’s Wallet. He was able to produce an initial batch of just 50 wallets, offer them for sale online via his Shopify ecommerce site, and attract the attention of a handful of major online media outlets to build awareness. As a consequence, the wallet sold out in 30 minutes. Today, five years later, the company offers a variety of rugged leather goods that reflect Ryan’s unique design aesthetic.
The growth of Whipping Post has followed a pattern of rapid, iterative, experimental learning:
- Ryan’s immersion in his niche stimulates insights about potentially commercializable products.
- He has a relatively small number of new products manufactured to his design specifications.
- Ryan offers the new product to subscribers to his email newsletter.
- Direct feedback from his customer-fans determine whether the product is added to the Whipping Post catalog.
People unencumbered by a business education will find nothing remarkable about the preceding. It will seem an obvious approach to many. Nevertheless, this ready-fire-aim-repeat method is anathema to the MBA.
The Virtues of a Growth Mindset
In my conversations with Ryan, it’s clear that he embraces what Rob Chapman (another guitarist) emphasizes as the “importance of sucking”:
Just to clarify, what I’m not talking about is a kind of self deprecating loathing for lack of improvement… more a face on “Bring it on bro” kind of attitude where you embrace the fact that in order to develop you have to go through a process of sucking in order to become truly great.
In other words, Ryan accepts that he doesn’t know how…yet. He has a growth mindset that prompts him to seek the knowledge and expertise of others. Notwithstanding his lack of a business background, Ryan had learned about design, manufacturing, ecommerce, logistics and fulfillment, marketing, and the cultivation of a network of freelancers. By taking advantage of the know-how of others, he’s able to continuously learn more about the wants of his customers and develop new products rapidly.
The Benefits of Constraints
Whipping Post is a bootstrapped business. As Ryan will attest, that can be painfully constraining. On the other hand, financial constraints impose a useful sort of discipline. It tends to make us a little more focused and a little bit faster than we might otherwise be. Hunger (though not starvation) can sharpen our senses. The lack of resources also forces us to take small, iterative, experimental steps in lieu of grand, sweeping assaults on the market.
That’s important, because innovation is inherently uncertain and risky. There are some things we simply cannot know until we try. Making big, bold forays into the fog and dark can lead to disasters of Titanic proportions. Ryan’s innate financial conservatism has helped him avoid business-sinking icebergs.
The Assumption of Bigness Underpinning Conventional Business Education
We speak of “small” businesses as if the adjective is necessary to differentiate from the typical business. The truth, though, is businesses having fewer than five employees are the norm and comprise 95% of all businesses in the U.S. Businesses having 20 or more employees are the exception.
What we think of today as conventional business education is relatively new. The Harvard Graduate School of Business invented the MBA in 1908 to address the needs of a rapidly industrializing economy powered by scale and scope. Prior to industrialization, all businesses were small.
The perspective of the Master of Business Administration presupposes the existence of accumulations of products, customers, and employees as well as manufacturing and marketing capacities. In the MBA’s world, there is abundant data. Much is analyzable, and much is known. Those trained in the art and science of big business offer value, but value is contextual.
Creative Intelligence Is Necessary for Niche Operators
I have an MBA. However, in the context of innovation and startups, I’ve learned the most from designers, artists, engineers, musicians, scientists, and writers. They have helped me unlearn what I thought I knew about business. These creatives deal in the world of imagination, possibility, and the not-yet-known. Their intuition and training emphasizes the need to create data through experimentation and iterate based on feedback. They are more hands-on and less abstract than MBAs. As a consequence, creatives can harness powerful sources of empathy, insight, and adaptability that can be muted by conventional business education.
Watch the following and listen. I hear the words of people with a deep understanding of the connection between customer, product, and manufacturing. They aren’t the words that are typically inspired by a spreadsheet.
The Emerging Relevance of Conventional Business Skills
Whipping Post is a small business, but it’s grown rapidly. It’s no longer possible – or necessarily desirable – for Ryan to be involved in all aspects of design, manufacturing, marketing, distribution, and sales. He’s not a one-man-band; he orchestrates a network. Increasingly, that requires Ryan to take a “30,000 foot view” of his business. Methods of forecasting and administration are becoming increasingly important. As the constraints of bootstrapping become more hindrance than help, Ryan must now evaluate financing strategies.
In other words, the tools of the MBA must now complement the intuition and art of the creative. The MBA’s skills can be learned. I’m confident that Ryan will learn them.