When Aware's first compilation CD came out, in 1993, Latterman quit his job as a certified public accountant with Coopers & Lybrand in Boston. "My plan was to start a company or go to business school," he says, and when his second CD came out, in 1994, he decided he could handle both. He enrolled as a full-time M.B.A. student at the Kellogg Graduate School of Management at Northwestern University, in Evanston, Ill.
Latterman, 28, says his M.B.A. training in negotiations has been especially useful. "In the music business," he says, "everything is negotiated." Early on, his inexperience in contracts led to some mistakes. "If I really wanted a song for a compilation, I'd make concessions," he says. "One band's lawyer insisted on a clause saying the CD could not be distributed by major labels. I'd been promised orally that that would not be in the contract, and by the time I saw it, it was too late--the CDs had already been produced. So I got screwed. I'm going to come out a helluva lot better from now on because I understand the process."
Aware's sales hit $100,000 in 1994, then tripled in 1995, when the company produced its third compilation plus two full-length CDs. "Business school did not enable me to run a successful company," says Latterman, who graduated in June. "But it's going to enable me to have a much more successful company in the long term."
The Big(ger) Picture. The shifting landscape in the world of graphic design, rocked by new technology, was disturbing to Margaret FitzGerald, 33, president of Metaphor Design, in Plymouth, Mich. When she started the company, in 1988, small firms like hers, which currently generates less than $1 million in annual sales, had a clean niche. They created collateral printed marketing material--brochures, logos, letterheads, annual reports, and the like.
But electronic presses made it easier for printers to do design work, and desktop publishing brought a flood of new competitors. "To survive in business," says FitzGerald, "I had to get a handle on the whole marketing process, which required a broader knowledge base."
With that objective, in the fall of 1995 FitzGerald enrolled in an evening M.B.A. program at the University of Michigan, her alma mater. A course in strategic marketing has been particularly valuable. "As a graphic designer, I usually work with information that comes in to me. What I learned from the course," she says, "was the need to jump to a higher level, to ask where the marketing research came from and to understand what information is relevant in deciding what a marketing piece should be." FitzGerald's intention is to become more of a marketing consultant to her clients. Providing a wider range of services, she says, "should differentiate my firm within this broadening spectrum."
Solutions to Current Company Problems. Not a tool, exactly, but help with real business problems is one of the benefits company owners reap when they're also in school.
In 1994 Dan Poston turned day-to-day management of International HTC over to his partners--easier said than done for most CEOs--and enrolled as a full-time M.B.A. candidate at the University of Oregon in Eugene. Yes, it was a sacrifice. First, it cost him roughly $20,000 in tuition and fees for the two-year program and another $10,000 in living expenses. Then there was the family separation. His wife, who owns a beauty shop and beauty-supply distributorship, and his daughter stayed in L.A., which necessitated frequent weekend commutes.
But the management curriculum was rich, and as Poston identified material that applied directly to International HTC, he carried those lessons back to headquarters. For instance, he helped avert a crisis at the company by using quantitative analysis he had learned in a marketing course to change its product strategy. "Previously, we looked only at our own position in the market," he explains, "never at the overall market size. Consequently, we believed some of our potential was unlimited. When we did a full market analysis, we realized that one of our main products--a chemical that cleans machinery--could not possibly grow much more than 20%. We decided we should go with something else." If he hadn't taken that particular class? "We'd have proceeded believing we had great potential," says Poston, "and in several years we'd have hit a brick wall." His newly learned skill, Poston contends, "puts us on a par with bigger exporters who do that kind of analysis all the time. And it gives us an edge over other small players because they don't do analysis at all."
Poston brought real problems the company was having into the classroom. In a course called Business, Government, and Technology, he posed a situation in which a defector from Hissan tried to persuade International HTC to sign a distribution agreement with him instead. "It sparked a lively class discussion," Poston says. "We went through the legal problems, the ethics, the marketing side, the financial challenges--the upside and the downside. The class really helped me thrash out the issues." He decided to stay with Hissan.
