Do MBAs Need More Street Smarts?

by James Heskett

Summing Up

Summing up the unusually large number of responses to the piece on street smarts, the consensus is that they represent skills taught by experience, role models, and experiential learning techniques such as case analysis and discussion (in that order).

Just who are street smart people? They are people who: are "willing and able to make a tough decision based on a gut instinct" (Jason Huang), are "more able to adapt to changing conditions ... because they have a clearer view of the implications of those changes" (Charles Yager), are able to "handle things outside of our normal set of experiences" (Erich Almasy), learn "by failing in previous endeavors" (Rindge), have an "ability to read people ... and situations ... (pick) up on all relevant cues and (know) what to do" (Max Roberts), are "focused on (their) capabilities ... sniffing the traps a mile away ... seeing through BS ... smelling falsehood" (Anonymous), are "able to accommodate ... to a new environment ... globalization is forcing a more general definition of street smarts" (Shankar Balakrishnan), and have a "combination of intuition, savvy and political skill" (Mal Rudner).

Efforts may be underway to understand more about issues related to street smarts. Lilly Evans, for example, cited the work in "practical intelligence" by Prof. Robert Sternberg of Yale University.

Street smarts, according to the most respondents, are learned. As David An put it, they are "primarily an issue of experience. ... If you screw up a deal you will be the best to know how to do better the next time." David Fitzgerald suggested that street smarts are a "combination of attitude and skill, both of which are acquired through experience. ... That is why so many MBA programs teach using the case study method..." Jack Wung appeared to take issue with this view, suggesting that "street smarts can only be acquired in the school of hard knocks."

How can MBA study contribute to street smarts? Umar Khalid suggests a complementary relationship, commenting that, while no substitute for street smarts, the MBA provides "tools and strategic understanding skills that accelerate an average human being's learning curve." Will the continued importance of street smarts, as some suggested, mean a change in recruiting criteria for MBA programs? Or changes in curricula, with more emphasis on sensitivity to others' views and how to influence them as well as greater self-awareness? Or the greater employment of role models—especially those who have learned from adversity—in the classroom? What do you think?

Original Article

In recent weeks, I have encountered several situations in which senior managers and investors of all ages have said, "(name) is a really sharp person with a good MBA, but (he or she) just doesn't have street smarts." That has raised questions that seem to need addressing. The first is, just what are street smarts anyway? The contexts in which the term has come up seem to indicate that they include things like knowing how to close a sale, when to walk away from a deal, when to remain silent, and how to select winners as employees or colleagues.

In our work with outstanding service organizations, we have found that they invariably hire for attitude and train for skills. Are street smarts attitudes or skills?

If street smarts are attitudes, should MBA program admissions offices look for them in applicants? If so, how? Is it more than a matter of just age and experience? If they are skills, should the curriculum be designed to foster them, perhaps through greater emphasis on courses in negotiating skills and increased field experience, among others, on the assumption that street smarts can be taught?

The second question concerns just how street smarts are obtained. Is it a matter of the genes? Do they result from experience, therefore precluding most newly-minted MBAs in their twenties from having them? Or does their presence depend on the environment in which one grows up? For example, a study by John Kotter several years ago found that one of the best predictors of success for at least one class of Harvard MBAs was whether or not a parent of the applicant had had a career in management. An implication that one might draw from this finding is that the presence in a household of a management role mode contributes to the business success of offspring. This, of course, may not guarantee the early development of street smarts.

If experience is the key, how does one get it? Should more MBAs be counseled to become involved in jobs, perhaps in start-ups, where they can hone their street smarts? Or can they be developed in any kind of organizational context?

Finally, just how important are street smarts anyway? What does your experience tell you regarding these questions? What do you think?

    • Jason Huang
    • Developer, e-STEEL Corporation

    Street smarts is probably composed more of attitudes than skills. A person whom I consider to have street smarts will think about the broader implications of a particular action or activity rather than its specific outcome. For example, a street smart person evaluating a candidate for employment would be asking "How did your employer benefit from your tenure?" rather than "How did you cut costs by 12% while boosting overall revenues by 22%?" The street smart person would want to hear about the broader implications or benefits of those actions/activities rather than the fact that the candidate did X and Y while working for employer Z.

    Similarly, a street smart person is someone who is willing and able to make a tough decision based on a gut instinct. A not-so-street-smart person tends to ask for far more information than what can be feasibly gathered within a set of time and resource constraints.

    Finally, I believe that street smarts may be taught by working in the real world. However, I think most people would agree that a six-year old whom others have deemed street smart couldn't possibly have been taught. Most likely, the youngster was born that way to begin with. Any more coaching would probably just make the youngster a sharper-thinking street smart person.

    • Anonymous

    I think the lack of street smarts is real. I think it's a function of age AND experience—and, quite frankly, is probably an inverse relationship with many of the qualities of HBS grads. If you sailed through school and life and jobs without ever having to work at McDonald's or earn your way through college or work on the factory floor instead of in the ivory tower, the only way you'll get street smarts if you understand the importance of and strive to relate to the guy on the factory floor as well as to the CEO. Many HBS grads probably view themselves as above all that. They skipped McDonald's to work in an investment bank for their first job. Or worked at a consulting firm that prided itself on "only working with the CEO," not middle managers. That gives a distorted view of reality and how things really work. If HBS wants to give its students street smarts, it should recruit fewer Ivy leaguers/sons and daughters of Wall Street titans, etc. and more sons/daughters of union foremen. In class, HBS should invite fewer Jack Welches and Ross Perots and more middle managers and shop floor supervisors. Lest you think I'm just railing against the establishment, I'll be the first to admit that I have had a privileged life socially and educationally. But I'll also be the first to admit that I didn't have many street smarts when I graduated HBS and that 10 years of working in the auto parts business and the self storage business have given me a lot more street smarts than HBS ever could have—or than many of my classmates ever could hope to get by heading off to New York investment banks and consulting firms.

    • Charles R. Yager
    • Chief Operating Officer, Colombik & Associates, Inc.

    "Street smarts" combine elements of both instinct (i.e., outside of the individual's control, whether genetic or environmental) and experience (i.e., within the individual's control).

    We have all known young managers that just seem to have good business sense. Training may help them marginally, but they would succeed without the training.

    We have also known young managers that seem never to make the right decision. But over the years, many of those managers develop a decision-making context that leads them to better, more "street smart" decisions. It is the internalized context that can be taught.

    Lack of "street smarts" can be overcome with good analytics. What a good model of a business situation provides is a sense of the dynamics of a decision. People with strong "street smarts" seem to be able to intuitively assess the potential outcomes of a particular decision. Therefore, they are more able to adapt to changing conditions, for example, in a negotiation, because they have a clearer view of the implications of those changes than their intuition-deprived colleagues.

    • Erich Almasy
    • Vice President, The Boston Consulting Group

    I figure that if I am ever truly wealthy I will endow a chair at HBS in "Business Reality." What you describe as street smarts seem to me to be the set of experiences that teach us how to handle things outside of our normal set of experiences. How does one respond to situations you never imagined? Being fired. Being bribed. Being extorted. I think HBS can diversify its mix of street smarts more through the professorial ranks than the students. I also think curriculum (or experiential sharing) helps. Mostly, it seems attitudinal&msash;expose MBAs to a view that they will never know it all and that many times the learning process will be very painful

    • Anonymous

    I believe many MBA students simply lack the experience, which is understandable, as they are often young and have occupied relatively junior roles within their respective organizations. As a result they have not had the exposure to the "hard-end" of business.

    I also believe that a minority of MBA graduates have studied and crammed to earn the MBA title, but they have not tried to apply what they have learned with their MBA back into the workplace. These graduates do lack the 'street-smarts' that you speak of, and could be 'screened out' of the application process--but how are the universities going to supplement their lost revenues?

    • Rindge
    • Director Operations, B/E Aerospace

    Pretty interesting topic. I have always said that street hustlers would be excellent businessmen/women in the corporate world (as they are business people in the street world) with the proper training.

    Street smarts as you define them (when to walk away from a deal, when to remain silent, etc.) are a learned skill and not an attitude. As one's base of experience/knowledge grows, they should obtain "street smarts" or better said "business sense."

    If someone gets frosted in a deal, they should learn from that experience and apply it in go-forward situations. Can you teach these skills? It would be difficult to do in my view. How do you train for the myriad of situations one might come across? Are street smarts helpful? Better believe it. Two years ago I was asked to turn around the division I am now in. If not for street smarts, I would not have been able to realize which people were blowing smoke at me and which ones weren't. By realizing which people could add value, we were able to make some fairly dramatic changes. How did I obtain this "skill?" By failing in previous endeavors and taking away knowledge on what to do differently next time. Also, time spent with those street hustlers didn't hurt either.

    • Max Roberts (Frederick E) MBA 1972

    Street smarts are evident when one is very comfortable operating in a particular zone of action. Street smarts are picking up on all relevant cues and knowing what to do. In a phrase: savoir faire, but only in the most basic sense. The phrase street smarts we apply to more obviously competitive, rough-and-tumble situations and savoir faire to the more refined.

    Example: Some know what to do the minute they are put in a boat. No motion is wasted. Others look at their hands. They do not know how to move, how to run a line through a fair lead or even why it is needed. They stagger and stumble—awful to watch.

    Alternately, how do you think a Hell's Angel would do in a crowd of Junior Leaguers? How might a Foreign Service diplomat do amid longshoremen? Rarely would any one person's range of experience equip him to function effectively in both a motorcycle gang and a group of longshoremen and also at a Junior League fund-raiser.

    Some know what to do early. I have known entrepreneurs' sons who were close to their fathers and they seemed born to be entrepreneurs. I have known entrepreneurs' sons not close to their fathers and who just lacked the moves.

    A person who can gain the right instincts, outlooks, and insights early can become an entrepreneur (or anything) almost upon leaving the nest if a parent or anyone they bonded with showed them how. I believe there is a good case for early exposure. Another person might take 20 years to become an entrepreneur, pay dearly for any lessons learned, and throw in the towel. One can lust after an objective just so long. If one does not get it or make enough progress within reasonable time, one can burn out.

    I believe Kotter's conclusion is on the money. I would add that the child must have had some basis for wanting to be like the parent. But it works for anything—manager, policeman, farmer, woodsman, waterman, farmer, etc., especially the last, as there is so very much to learn to farm well besides just work-attitude.

    I believe certain abilities help with smarts or savoir faire—first, a high degree of awareness. This includes awareness of where one is, what situation one is in, what stage the situation is in at the moment, and which way it is trending. Intuitive people are sooner able to connect the dots and usually seem to catch on faster. Ability to read situations and what the situation calls for counts.

    Another is ability to read people. This counts where human interaction is the main activity. On a ship, boat, or on a camping trip, mechanical instinct looms pretty large.

    On horseback balance, timing, and horse sense count. A few might have these naturally their first time in the saddle but very few. (Apparently Peggy Fleming skated the first time she used skates.) In a pre-break-even business an ability to read cash flow, cash flow trends and know the cause without bending hours over the ledgers would count.

    Intuition is valuable, but commonsense, sensitivity to others and a reasonable self-confidence also matter.

    Commonsense seems the ability to basically and quickly diagnose a problem or situation and if needed to explain a solution or the situation. Lengthy, baroque diagnoses and solutions leave both diagnostician and audience lost.

    You can test future students for certain attitudes. The best test is what they have succeeded at. For potential where they have never succeeded some kind of psychological mapping might work. The key would be to know which areas they were short in and push them to try, not to be surprised if they were at first clumsy, and not to worry about it. When they first learned to walk they staggered, stumbled, and fell. Scraped knees and bumps are part of advancing.

    In first year some speak eloquently from the start. Others stumble. Encouragement beats humiliation. And if a group sees the aim as one of getting all up-to-speed all should pitch in to help the rest. This seems to work better for everybody including those seemingly with natural gifts. If they have shown somebody else how, their accomplishment is enormous and also socially beneficial. They rate extra credit not for being better than someone is else but for bringing someone else up to par.

    In USMC boot camp, after ensuring that all are paying attention and trying their utmost, the notorious drill instructors next look for those who having done their chores right and offer to help others who are a little behind. They see those who have correctly performed then show others how as potential leaders. Doesn't mean others are not, only that the first to exhibit the impulse have something very worth cultivating. It also lightens the DI's instructional load. No less for any manager.

    The prior two paragraphs departed into the good of encouraging cooperation versus competition in a learning situation. Only the paragraphs before them dealt with street smarts also known as savoir faire in other contexts.

    Hope it (1) makes sense and (2) helps.

    • Anonymous

    Interesting topic, timing could not have been be more appropriate.

    I have been classified as having street smarts. Having started businesses since my early teens, I have gained a wealth of business experience. My teen business experiences led to a regional sales position with a national company selling consumer products before leaving high school (never completed), which in turn led to the creation of a sales and marketing firm doing business both domestically and internationally with $5.0 million in sales. After 15 years of much success, I decided to move on to other ventures, because of boredom and industry consolidation. However, the two ventures I became involved with, which had over $15.0 million in revenues and 120 employees, turned out to be, let's just say, economic disasters, losing it all. (I will spare you the details.) But I never viewed this as a failure, just part of the learning curve.

    I could go into great detail about dealing with individuals with MBA's and no street smarts; frustration would be putting mildly. I will go as far to say that an individual with an MBA without street smarts is probably the most dangerous decision an organization can make.

    So, my perception of streets smarts?

    Being focused on your capabilities. Sniffing the traps a mile away. Seeing through BS. Smelling falsehood. Picking pick up badly structured deals immediately and conversely picking up very quickly things that have merit, people that have merit, people who have true integrity as opposed to stated integrity. Achieving a self-knowledge, by stepping down from your pedestal and saying, I've got a lot to learn, there are things I know I don't know, there are things I don't even know I don't know about. Compensating your weaknesses by drawing on other people's strengths. Retaining humility and a sense of reality and retaining the ability to reflect thoughtfully and realistically about oneself. Some people have it; other people learn it the hard way, some people never get it.

    For the past year I have been seeking an executive management career opportunity, for the most part I have been competing with individuals with MBA's. What has been very disconcerting is not being able to get to the interview stage. Reason: no MBA. It appears to me that HR managers and executive recruiters have made their life easier by using "not having an MBA" as tool of convenience. Do companies lose out because of this; after all, isn't it important for an executive management team to have a balance between intellectual capacity and a working knowledge of how to get things done? My experience has been that the most successful organizations strike this fine balance among their executive management teams.

    I do have great deal of respect for MBA programs. I know of many executives that have been able to successfully integrate their MBA learning experience into their business careers resulting in them becoming better managers, and for some, better people. But I am beginning to wonder if MBAs are becoming a "dime a dozen," which is beginning to devalue an MBA designation.

    The next few weeks will be interesting for me. I have taken the gloves off in my career search. I am utilizing every street-smart trick I know to garner an interview for a high profile executive management position, for which there are over 130 applicants, with over 80% having an MBA designation. I am quite confident, because of using street-smart techniques, of getting an interview. It will then be very interesting, at least for me, to see if street smarts will overcome an MBA.

    I hope I have been of some assistance to you. Maybe you can answer one question, a question that I have given much consideration. When I was considered successful from a monetary perspective, CEOs, CFOs, lawyers, accountants, and other professionals were tripping over themselves for my attention and no one ever said "you know we cannot do business with you because you do not have an MBA." For example, if tomorrow I walked into an executive recruiter's office and said I have $5 million in the bank and I want to hire twenty people, I am quite sure he or she would not say, "I am sorry, sir. We only do business with people who have MBAs." Now being on the other side of the fence, I cannot get in the door without an MBA. I think it is an interesting paradox.

    • David An
    • Investment Manager, T-Venture (Deutsche Telekom)

    I guess street smarts are primarily an issue of experience. Learning by doing, being thrown in the cold water as Germans put it. I disagree that business schools should try to simulate real-life situation since then it will always be better to do it outside of school rather than being in a secure environment and paying $30,000 tuition.

    If you screw up a deal you will be the best to know how to do better the next time.

    • Monish Ramesh Gangwani
    • Director, MAYA - Solutions in Corporate Communication

    Being "Street Smart" is certainly most important. As an MBA, one may have all the technical qualifications to do the job right. However, if he lacks the business attitude and professional outlook, no one would like to do business with him. I'm sure that the MBA curriculum these days looks after these aspects as well. Eventually, it boils down to the individual. One's attitude should ooze the feeling of "you want to do business with me and in turn add value to your business and it would be nice if we could pay attention to my terms."

    • Shankar Balakrishnan
    • Systems Analyst, Deloitte Consulting

    Street smarts surely form a large chunk of a manager's personality. Like any other trait of a manager, this develops with time. It is all about being able to accommodate oneself to a new environment and being able to get the problem solved in the most optimal manner (where the definition of optimal is context-sensitive). It is neither more nor less important than other traits. However, globalization is forcing a more general definition of street smarts, which then becomes more important than other managerial traits. Street smarts are partly acquired through experience and partly learned through training. Training can make the individual realize potential ways of employing "street smart-ness". Once trained, the individual can continue to build upon the skill through experience. Therefore, the solution to help students acquire this trait is two-fold. In the global context, street smart-ness varies!

    • Anonymous

    Having an MBA and having been trained in a top 100 U.S. company, and now working with a start-up I must agree that MBAs are often too theoretical and do not have the hands-on experience needed to determine when to close, when to walk away in a negotiation, and how to behave.

    Unfortunately, the most successful business people I have met in my age group (38) were the ones who had an excellent mentor at work or were from a family who owned a business. Street smart in my opinion is more of a skill that you develop. There is a price to pay, and I too had to pay the high price of walking away from a business that I had developed and that was going public. I left without any of the percentage of stock I was suppose to have, even though I had a written document! I don't have to tell you either the amount of hours I had put into bringing up the project...

    Yip! Everything has a price, I only wished I wouldn't have had to pay it after my MBA.

    Well, my reward: I have learned that being street smart is all that matters. I have learned never to fall in love again with technologies and to use legal advisors referred by people I trust who have used them before. I am also aware that legal documents can be interpreted in many ways. And I learned that my MBA law courses were not at the executive level and didn't teach what they should from a street smart standpoint.

    Maybe some of you will think it is because I was not that clever in the first place. I disagree. I did not had the survival or killer instinct developed strongly enough, or maybe I thought good faith was good enough. Wrong!

    When you lose something you have worked for…you realize that you have to fight for yourself and protect yourself first in this business world. There is no free lunch!

    Unfortunately, talking with MBA colleagues, I also realized that my experience and comments are shared among many other MBAs who wished they had been trained more aggressively, since the business world is becoming more and more sophisticated in communications, and also in street smart ways to make deals.

    Now, I am implementing what I have learned and it's starting to bring results. I will remember the million it cost me though!

    • Lilly Evans Strategic Learning Web, UK

    What is called here 'street smarts' seems to me to be addressed by the term practical intelligence by Prof. Robert Sternberg of Yale University. His PACE center is conducting some research in this and related areas.

    • Umar Khalid
    • The Daily Leader

    An essential element of being street smart is being able to understand the other person's psyche in real time. Some people get that training early at home, thereby explaining the genetic make up and parents from business background theories, while most of us learn it through our professional interactions.

    MBAs, in my experience, lack this skill because they come from a sanitized platform of theoretical business education. When these theories clashes with the practicalities of real life, and they invariably do, a freshly minted MBA usually loses focus and has to re-engineer his mental make up in order to survive and then move up the ladder.

    Most MBAs, luckily, are able to do so exactly for the reason they fail in the first place. Their theoretical education provides them the tools and strategic understanding skills that accelerate an average human being's learning curve.

    • David Fitzgerald
    • NuTool

    "Street smarts" are a combination of attitude and skill, both of which are acquired through experience. The result is an ability to choose the right strategy or tactic to fit the situation.

    Most people acquire their knowledge of how to operate in the "real world" via personal experience. Intelligent people also learn from the experience of others. That is why so many MBA programs teach using the case study method, to offer their students business experience in addition to learned theory.

    As for the role of parents in managerial positions, they simply pass on their own management experiences and lessons learned to their children, directly or indirectly. Their children have a significant advantage if the parents pass on the "right" lessons.

    My advice to MBA students is:

    1) Learn as much as you can not just enough to get an "A" in the class. Try to understand how the theories apply in the business world.

    2) When you get into the business world, learn as much as you can about your job, your boss' job, and the job of everyone around you and in other departments. It will help you understand how the company works and the context of your position in the company. Just as importantly, it will also help develop a network of friends, associates, and possible mentors as well a reveal a career path that fits your personal goals.

    • Mal Rudner
    • Enflo Corporation

    On this second U.S.A. Day of Infamy, the important question is asked: "Do MBA's need to learn more 'street-smarts'"? The answers is yes, and please allow me to broaden the issue. It is vital for our society, business and otherwise, that MBA's receive significant learning of leadership, social, and emotional intelligence. "Street-smarts" is a small subset of what else MBA's need and might be called a combination of intuition, savvy and political skill.

    Daniel Goleman and others have identified approximately a score of interpersonal, intrapersonal and leadership skills and traits that business executives absolutely require to be successful. Research shows that more than 70% of personal, career and organizational success is determined not by IQ, not by learning accounting, marketing, finance, planning, IT or technical skills, but rather by an executive's self knowledge, inter-personal and leadership abilities.

    We all know this is true; it's commonsense. Yet, our formal education processes ignore this learning, leaving it to the accumulation of experience and individual propensity and motivation.

    What is so sad about this approach to leadership development is the huge cost of lost opportunity. Leadership, emotional and social skills can all be learned and improved upon by every individual. IQ is in no way a limiting factor. Try a career in mathematics, physics or rocket science with average intelligence, and one is likely to face many difficulties and much frustration. Almost every human being, however, has the ability to continually learn these personal skills, simply by virtue of his or her humanity.

    I assert that devoting 33% of an MBA curriculum to the learning of leadership and social intelligence would have a profound effect on the business community—and perhaps the entire planet. Nothing in organizations is more powerful than motivated, committed human beings. Nothing impacts the bottom line as much as the quality of leadership and the enthusiasm of caring, hard-working people who align their own and their organizations' goals.

    It would not be easy to augment MBA programs for the significant learning of leadership and inter/intrapersonal skills and social intelligence. The payoff, however, would be absolutely huge.

    How we might accomplish this evolution is open for debate. Already a few MBA programs have risen to the challenge. The process is not easy, but it is extremely satisfying to all involved, and definitely doable.

    Oh, the immense number of poor decisions I've seen over three decades that could have been otherwise with a little common sense, leadership, social skill and a little savvy. How much waste of human talent have you seen? Is it not worth the effort?

    • Jack Wung
    • Curtin University

    Street smarts can only be acquired in the school of hard knocks. It is not something academic or theoretical and cannot be thought in the traditional sense of education. Streets smarts equate to how well honed your survival skills are if you were to be put on the streets with others trying to do the same. I believe that the street smarts education is quantified when what seems like your future is at a stake and on the line. For example, for a young entrepreneur with no formal education starting a new business with borrowed funds, he is forced into a situation where he either has to learn how to be street smart quickly or the business environment will teach him that. We are talking about his whole life savings, plus some, here. This guy has tremendous amounts on the line. So if he were to fail in this venture and learn from it, isn't this earning is ten times more valuable than an MBA scholar working with Bain&Co.?