DULAF Essay

Please read the article, and submit a short essay (DO NOT EXCEED 1 PAGE) on how the lessons learned will affect your strategic decisions in the future.
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Journal of Business & Leadership (2005-2012)
Volume 6
Number 1 Journal of Business & Leadership
Article 2
1-1-2010
Lessons Learned When Dressing Up Like A Firm:
Personal Strategic Management
Dodd-Walker: Lessons Learned When Dressing Up Like A Firm: Personal Strategic
Dodd-Walker
Journal of Business & Leadership: Research, Practice and Teaching
2010, Vol. 6, 1-9
LESSONS LEARNED WHEN DRESSING UP LIKE A FIRM: PERSONAL STRATEGIC
MANAGEMENT
This paper explores the pedagogical benefits of teaching students to dress up like a firm and develops an experiential
exercise to be used in teaching small business management and personal strategic management courses. Much can be
gained from teaching students to view themselves as small businesses and applying the lessons of organizational research
to enhance their personal strategic management skills. Globalization has changed the competitive landscape, increasing
the need for all to become more competitive. Students must be able to internalize key strategic and financial lessons to
gain and sustain a competitive advantage. To be successful, students need to be able to view the world through the eyes of
a firm.
applicants to determine employers’ needs and figure out
what the applicant can do for the company; job applicants
should study the potential employers’ operations and write
proposals discussing how to improve their operations. They
warn job applicants to remember that a job is a business
transaction and a matching of needs (Crystal and Barkley,
1994). Thus, to be effective, students need to be able to
view the world through the eyes of a firm.
In 1991, Barry Staw wrote an article titled, “Dressing
Up Like an Organization.” In this article, he asserts that
individual and organizational behavior are the same thing,
not just parallel, when there is an individual decision maker;
that is, organizational actions may be individual behavior
masked by an impersonal entity. Staw (1991), therefore,
advocates the use of individual psychology to explain
organizational behavior. He posits that many sociologists
are implicitly using psychological concepts in their macro
models and that dressing up as an organization could be
extremely beneficial to organizational research. He makes a
clarion call to “Dress up like an organization and capitalize
on the perspective it brings. (Staw, 1991: p. 812)” This
paper builds upon that premise but reverses the directional
flow of the information. Rather than focusing on how
organizational research can benefit from knowledge of
individual behavior, this paper emphasizes how individual
behavior can benefit from knowledge of organizational
research; that is, this paper seeks to present the pedagogical
benefits of dressing up like a firm (DULAF). Specifically,
students learn seven important lessons when they view the
world through the eyes of a firm.
The development of the paper will proceed as follows.
First, a discussion of small business management in the
globalization era will be presented. Second, the role of
experiential learning in small business management will be
addressed, and the experiential component will be presented.
Third, strategic and financial lessons from dressing up like a
firm will be discussed. Finally, the paper concludes with a
summary of its primary argument—dressing up like a firm is
an invaluable pedagogical tool that enhances students’
comprehension and application of theories of
competitiveness. Additionally, teaching aids are provided in
INTRODUCTION
As the American workforce wrestles with the effects of
a recession and globalization, and American icons, such as
General Motors, falter on the brink of bankruptcy, the topic
of national competitiveness reverberates from coast to coast.
Firms are restructuring or downsizing in an effort to become
leaner and meaner—more competitive—while workers and
job applicants pursue strategies to increase their
competitiveness (marketability). Students seek double
majors, foreign language proficiency, and high GPAs in an
effort to establish a competitive advantage. This parallel
search for competitiveness is essential as Porter (1990)
asserts that they are inextricably linked. Per Porter (1990),
national competitiveness is the aggregate of the
competitiveness of a nation’s industries and constituent
firms, and the firm’s competitiveness is tied to the quality of
its factors of production, such as skilled labor. (Michael
Porter is the Harvard Business School competitiveness guru
whose work is recognized in academic circles, corporations,
and governments around the world, 2008.)
In this new era of global competition, Porter (1990)
contends that the basis of competition has shifted to
knowledge creation and assimilation. This “shift” has
intensified the role of educators whose purpose is to impart
knowledge. Student expectations of teachers are also
increasing as they seek environments where they can both
obtain and apply knowledge with the goal of succeeding in
this dynamic business environment (Fretwell and Hannay,
2006). Many educators are meeting the challenge by adding
experiential components to their courses to enhance their
effectiveness (e.g., Azriel, Erthal, and Starr, 2005; Fretwell
and Hannay, 2006), such as the card game Spades to further
students’ understanding of strategic principles (DoddWalker, 2008). Given the contemporary battle cry,
experiential components that emphasize competitiveness
would seem both timely and appropriate. In this transitional
period, it is imperative that students understand and apply
the central elements of competitiveness or strategic
management. Per Crystal and Barkley (1994), career
development experts, “winning” job interviews require job
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Published by FHSU Scholars Repository, 2010
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Journal of Business & Leadership (2005-2012), Vol. 6 [2010], No. 1, Art. 2
Dodd-Walker
Journal of Business & Leadership: Research, Practice and Teaching
2010, Vol. 6, 1-9
Adler’s directive. Interactive teaching methods include
student-led discussions and oral presentations, guest
speakers, television game shows (Azriel et al., 2005), films
and videos (Comer, 2001), card games (Dodd-Walker,
2008), team building exercises, role-playing, performance
appraisals (Fretwell and Hannay, 2006), board games
(Kiyosaki, 1998), and case studies (e.g., David, 2011; Hitt,
Ireland, and Hoskisson, 2009). The objective of interactive
teaching is to connect with students and enhance their
understanding through experiential learning; interactive
teachers realize that learning is facilitated when students
connect. Concurring, Thorndike declares, “Learning is
connecting. (cited in Brubacher, 1951: p. 103)”
The experiential exercise presented in this section was
developed between Fall 2006 and Fall 2008, and it adheres
to Michaelsen and Razook’s (2000) guidelines for effective
learning groups. They contend that group work can increase
students’ learning through give-and-take discussions in
which students learn from one another, and assignments at
each stage should be characterized by the three s’s—same
problem, specific choice, and simultaneous reporting
(Michaelsen and Razook, 2000). The initial version was
tested on Managerial Finance II students to review the major
principles of Managerial Finance I and spark their interest in
the subject. (Observation suggests that many students
struggle with the subject because they do not perceive its
relevance.) The experiential exercise consisted of twentyfour pages of questions, assumptions, balance sheets, income
statements, and tax schedules designed to emphasize
important strategic and financial lessons as teams worked
together to determine the financial status of a recent college
graduate after ten years. The final version was reduced to a
one-page spreadsheet and tested on Small Business
Management students to underscore the reason that so many
small businesses fail—lack of understanding of key strategic
and financial principles!
Two versions of the final experiential exercise were
presented to Small Business Management students a week
apart. During the first “test” week, teams were asked to use
DULAF Experiential Exercise A (see Appendix A), which
omits an important expenditure category, to determine the
financial status of a recent business graduate with a BBA in
ten years based on the team’s projected starting salary,
graduate’s marital status, number of children, and living
expenses. Ten years represents an appropriate period for the
initial or “birth” phase of an organization and is consistent
with organization life-cycle research. According to Miller
and Friesen’s (1984) life-cycle classification criterion, the
birth phase is defined as the period in which a new firm
attempts to become a viable entity, and it consists of firms
that are less than ten years old. McGee and Dowling (1994)
and Weiss (1981), however, assert that new firms are no
more than eight years old, while some studies estimate a
twelve-year time lag before new ventures achieve the same
profitability level of mature businesses and an eight-year
break even point (Biggadike, 1979; Weiss, 1981).
appendices to both encourage and facilitate the use of the
experiential exercise in teaching small business management
and personal strategic management courses.
SMALL BUSINESS MANAGEMENT AND THE NEW
ERA
In the United States, firms are classified as small
businesses (SBs) if they have less than five hundred
employees; SBs employ more than half of the private
nonfarm work force, produce approximately half of all
American sales, and are responsible for more than half of the
innovations (U. S. SBA: The Facts, 1999). According to the
Small Business Administration (SBA), small business has
once again become the dominant economic force in the
United States (U.S. SBA, 2000); thus, small business
success is a crucial issue. There is a myth that most—nine
out of ten—new businesses close during the first year of
operation (Headd, 2003; Phillips and Kirchhoff, 1989), but
Phillips and Kirchhoff (1989) found that approximately one
out of two new firms were open after four years, and this
was independently confirmed by Headd in 2003 using a
different data source. Per Phillips and Kirchhoff (1989), one
out of four new businesses fail within the first two years;
similarly, Headd (2003) found that one out of three closed
within two years. Although these numbers differ
dramatically from the “myth,” a heightened focus on new
firm survival is warranted as the growth of new small
businesses is expected to increase.
The ultimate small business is an establishment with a
single employee—the owner. This type of business is likely
to increase during this current era of globalization as
organizations increasingly use “outsourcing” and
“subcontracting” to streamline in an effort to reduce their
labor costs and become more competitive. Per Street and
Street (2007), offshore outsourcing and its domestic
equivalent—subcontracting—are expected to escalate as
global competition increases and organizations strive to
increase both their efficiency and effectiveness. This
atmosphere enhances the importance of students
comprehending and applying the DULAF lessons, which
highlight key strategic and financial principles, because
“Research indicates that organizations using strategicmanagement concepts are more profitable and successful
than those that do not. (David, 2011: p. 17)”
SMALL BUSINESS MANAGEMENT AND
EXPERIENTIAL LEARNING
The methods of teaching any subject should be
primarily dialectical according to Adler (cited in Brubacher,
1951). Interactive teaching and experiential learning are
simply two sides of the same coin: interactive teachers
foster a collaborative environment that facilitates student
participation. The base of experiential learning components
is growing as innovative instructors and practitioners heed
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Dodd-Walker: Lessons Learned When Dressing Up Like A Firm: Personal Strategic
Dodd-Walker
Journal of Business & Leadership: Research, Practice and Teaching
2010, Vol. 6, 1-9
According to organization survival research, only four out of
ten organizations are open after six years (Headd, 2003;
Phillips and Kirchhoff, 1989).
Using DULAF Experiential Exercise A, the teams
deliberated probable scenarios and estimated amounts for
each expenditure category, projecting net worth after ten
years. Each team submitted its estimates to the instructor,
and the amounts were entered into the spreadsheet or Small
Business Management (SBM) Calculator from the
instructor’s podium for the multimedia “visual” effect.
Variances ranged from 1 % to 70% of net worth projections;
that is, “actual” net worth calculations were positive but
equaled only 1 to 70% of net worth projections. After
discussing the “reasonableness” of each category of
expenses before the class, a model scenario was determined
for a single, recent college graduate with a BBA (see
Appendix B); based on the model, the graduate had a net
worth of approximately $27,000 in ten years, which
consisted of home equity and savings for simplification
purposes.
The second week, the instructor distributed DULAF
Experiential Exercise B (see Appendix C) and revealed that
a major expenditure category had been omitted the first
round—the cost of appliances, electronics, and furniture!
(Additional prompts, such as personal grooming, were added
to enhance the accurateness of the students’ calculations.)
The students could not believe that they had neglected to
estimate costs for such an important category. The purpose
of the instructor was to demonstrate the importance of
“management” to firm success as well as simulate an
“experience” that allowed the students to understand why so
many start-ups fail during the introduction or birth phase of
an organization’s life cycle. After discussing all the
estimates again, the model scenario was revised for a recent
college graduate with a BBA (see Appendix D); based on
the revised model, the graduate had a “negative” net worth
of approximately $73,000 in ten years, which suggests a
staggering amount of debt! This sheds some light on the
rising number of bankruptcy filings; according to the
Administrative Office of the U.S. Courts, total non-business
(personal) filings were over one million for the 2008 fiscal
year, which ended September 30, representing a 30%
increase over fiscal 2007 (Rooney, 2008).
The final phase of the DULAF Experiential Exercise
was to demonstrate the effects of changes on firm net worth
while reviewing key strategic and financial lessons; that is,
the DULAF Experiential Exercise consists of both the SBM
Calculator and the DULAF lessons. Finally, the students
were instructed to view themselves as firms and to apply the
concepts learned in class to improve both their competitive
positioning and personal firm performance. The DULAF
lessons discussed will be presented in the next section.
SMALL BUSINESS MANAGEMENT AND THE
DULAF LESSONS
The purpose of strategic management is to explain why
some firms outperform others (Dess and Lumpkin, 2003).
Application of this knowledge enables firms to gain and
sustain a competitive advantage. This competitive
advantage, according to Stimpert and Duhaime (1997),
results from a series of connected decisions involving both
internal and external factors. Hitt, Ireland, Hoskisson (2009)
concur, noting that research findings indicate that
approximately 20% of a firm’s profitability is explained by
external factors, such as the firm’s industry, while 36% of a
firm’s profitability is explained by internal factors, such as
the firm’s actions and characteristics. Gaining a competitive
advantage, therefore, necessitates an understanding of the
factors that affect firm performance.
In 1988, a committee of the Academy of Management
studied the nature of the strategic management field to
determine its boundaries and primary research streams
(Summer, Bettis, Duhaime, Grant, Hambrick, Snow,
Zeithaml, 1990). This committee developed a broad
framework to encompass most of the strategy literature
(Summer et al., 1990). The mapping of the field’s
representative reading list within the framework resulted in
eight primary research streams or areas that affect firm
performance: (1) leadership (general management), (2)
decision-making, (3) organizational culture, (4)
entrepreneurship (innovation), (5) level strategies, (6) notfor-profit (profit orientation), (7) values , and (8)
environment (Summer et al., 1990). The concurrent work of
Ohmae (1989) suggested an additional research stream—
strategic alliances—as the new global competitive landscape
necessitates the formation of alliances to effectively manage
the integration as well as the costs of the diverse
technologies of contemporary products. The first five
DULAF lessons presented in this section reflect these nine
areas that affect firm performance; the remaining DULAF
lessons reflect key financial principles.
Lesson 1: Management makes a difference!
Smircich & Stubbart (1985) contend that managerial
analysis is much more critical than environmental analysis
because organizational actors enact (create) their
organization as well as its environment. Child (1972) agrees
and asserts that organizational decision makers determine
the firm’s environmental boundaries when they make
strategic decisions regarding organizational location,
clientele, types of employees, etc. Although Porter’s (1980)
work delineates the five forces that determine the
attractiveness of an industry or competitive environment,
these forces can be addressed by the firm’s strategies to gain
or sustain a competitive advantage. According to Hitt et al.
(2009), the firm can strategically position itself within an
industry to influence the forces in its favor or at least buffer
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Published by FHSU Scholars Repository, 2010
3
Journal of Business & Leadership (2005-2012), Vol. 6 [2010], No. 1, Art. 2
Dodd-Walker
Journal of Business & Leadership: Research, Practice and Teaching
2010, Vol. 6, 1-9
itself from the power of these forces to enhance its ability to
earn above-average returns. This strategic positioning is the
result of the alignment between the external and internal
environments (Summer et al., 1990), and it is the task of
organizational leaders; thus, the impact of the environment
can be considered within the general management functions.
According to Hellriegel, Jackson, and Slocum (2002),
there are four general management functions—planning,
leading, organizing, and controlling. Planning requires
setting organizational goals and proposing ways to reach
them; the purpose of planning is to establish the firm’s
overall direction, identify and commit the firm’s resources
necessary to achieve its goals, and determine the tasks that
must be completed to reach those goals (Hellriegel et al.,
2002). Organizing is the process of arranging the firm’s
resources to meet its goals; the firm’s performance (success)
depends on management’s ability to effectively and
efficiently utilize organizational resources (Hellriegel et al.,
2002). Leading is the process of directing the behavior of
others to achieve the firm’s goals, and it is a crucial element
of both planning and organizing (Certo, 1980; Hellriegel et
al., 2002). Gary Yukl (1998) broadly defines leadership as
the process wherein an individual influences the
interpretation of events, choice of objectives and associated
strategies, organization of work activities, motivation of
people to accomplish the firm’s objectives, maintenance of
cooperative relationships inside and outside of the
organization, and the development of organizational
resources. Controlling is the process by which a firm
consciously monitors its performance and takes corrective
action to meet its objectives (Hellriegel et al., …
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