MPP’s, MBA’s and fun stuff like that …
This is a The Economist debate I found while browsing the mag. I really recommend it to all of you who have plans to go do an MBA. Really ask the question, why I want or need an MBA. Bill Ridgers moderated great opening remarks by both Dean Paul Danos and management guru Henry Mintzberg. Hope you enjoy it as much as I did, and see you soon at your MBA school..hehe…EMP.
The stock of the MBA may never have been higher. Of the Fortune 500 companies some 200 are now run by a holder of the degree, far more than for any other qualification. Forty of these chief executives graduated from Harvard Business School alone. Below them are boardrooms stuffed with business-school graduates, replenished by fast-track leadership-development pools fed by a similar source.
But are MBA students good for the economy? At first glance it might seem an odd question to ask. The professionalisation of management has, some argue, been the single biggest factor behind the economic advancements of the past 100 years. Basic ideas such as such as paying employees for their talents and capital budgeting have made companies more competitive and helped to improve the lives of millions of people.
Surely, then, the fact that the most powerful people in business have studied management at the world’s best universities is a good thing. This is what Paul Danos, the dean of Dartmouth University’s Tuck School of Business, will be arguing. He thinks that the reason business prizes MBAs so highly is because they have been taught the business and leadership skills that companies require. After all, if they didn’t, they wouldn’t hire and promote them so enthusiastically.
Henry Mintzberg, a management guru most famous for his book “Managers Not MBAs”, does not agree. He says that MBA programmes teach the wrong things to the wrong people. Not only does this mean that companies are led by unsuitable people, but it also means that the right candidates—who have learned the craft of management through years of practise—are barred from leadership positions by an old boys’ network. This, he believes, holds the economy back.
There are other issues that we might consider in this debate. For example, do MBA programmes aid development in emerging markets? Are business-school graduates more or less likely to act in an ethical way? Is it helpful when an entrepreneur has an MBA? Having written about MBAs for many years, I know that such subjects divide opinions. Many of those who have been to business school talk about their experience with an almost evangelical zeal. Others like to disparage MBAs with equal enthusiasm.
I hope to hear from both sides over the course of this debate. We are lucky to have a heavyweight in each corner: we could not ask for two more forthright and robust thinkers on management. I hope that the next two weeks allow us all to consider the nuances of our beliefs and reach a more considered opinion.
Were conventional MBA programmes to be closed down, a few potentially excellent managers would be denied that boost to the executive suite. But other capable people without that piece of paper would have a greater chance of getting into managerial positions. Indeed, the best managers would find their way there anyway, and with greater justification: they would have earned their managerial stripes as they must, by managing.
As a consequence, companies would be better managed and the economy would be better off. Don’t get me wrong. It is not that the MBA is irrelevant. Rather, it is highly relevant, in a negative sense: it represents a form of training that distorts rather than develops the practice of management.
This is the argument I made in my 2004 book “Managers not MBAs”. Such programmes continue to proliferate while some economies that employ many of their graduates have been faltering, so there may be benefit in reviewing and updating my argument. It is quite simple: conventional MBA programmes train the wrong people in the wrong ways with the wrong consequences.
Management is predominantly a practice, not a science or a profession. It is a craft, rooted in experience. The best of it is also art, formed by visions and insights.
But one cannot teach the craft to people who have never managed—who lack the experience. So MBA programmes mostly fall back on what they can do: rely on the science, in the form of theory—both general analysis and particular techniques. And so too, unfortunately, do many of their graduates. Those who believe they have learned management by sitting still in an MBA classroom are a menace to society. Mostly they have learned about the functions of business. But marketing + finance + accounting ≠ management.
Professional training, such as for medics, is generic—an appendectomy is an appendectomy. Management, however, is rooted in context. It requires a deep understanding of the industry, the enterprise, the people, the processes and the products.
Of course, MBA programmes use case studies: are these not context? Sure, in the form of 10-20 pages of words and numbers about a company the students have never met. But what is the effect of reading these cases and then having to pronounce on what the company should do—two or three companies a day, for two years?
We don’t have a reliable answer to this question. Business schools that are so intent on analysing everything else have been remarkably reluctant to analyse their own performance. Sure, they can tell you how many of their graduates made it to the “top”—that’s easy—but not how these people performed when they got there. (Bear in mind that George W. Bush, Harvard MBA 1975, made it to the top.)
Having this fashionable credential, supported by an “old boy’s” network, with the trained capacity to talk a good game while moving quickly, has helped put many an MBA in the CEO chair. Then what?
A 1990 book published by Harvard listed 19 of its superstar CEOs. We tracked their records to 2003 (the results are reprinted in my book). Ten were total failures and four others performed questionably at best. This offers no definitive proof but is certainly worth investigating. I know of no effort to do so.
The American economy has been having great troubles of late. Is the proliferation of MBAs one cause? Wouldn’t it be nice to have data on that too? But one thing is evident: many of the most dysfunctional practices in business today have been promoted vigorously in the business schools: leadership disconnected from the practice of managing; an obsession with shareholder value that has brought companies the obscenities of CEO compensation and all that destructive “downsizing”—read bloodletting—at the drop of a share price; human beings considered to be “human resources”; companies mesmerised with measuring; the list goes on.
So how about programmes that are not conventional—by which I do not mean those that drop in a couple of new courses on leadership and ethics? Every time MBA programmes get criticised, they add courses instead of addressing the fundamental problem.
Let me suggest two approaches in particular. The first is to recognise MBA programmes for what they do well: training analysts in the business functions for specialised jobs in marketing research and financial analysis. These programmes just have to make sure that they stamp every graduate on the head with a skull and crossbones, over the words “Warning: not prepared to manage”.
The second is to create new programmes, under a different label, that enhance the practice of managing (I prefer the label “Masters in Practising Management”). Such programmes should be open only to people who are already managers, preferably sponsored by their organisations, ideally in small groups so they can work together in the classroom. These managers should remain in context, coming into the classroom periodically.
Ways can then be used that are appropriate for practising managers (unlike most so-called Executive MBA programmes, which, although aimed at senior managers, replicate programmes designed for people with no managerial experience). Sitting at round tables in a flat classroom, these managers can go into workshops frequently, with input from faculty as well each other. Then, back at work, these managers can team up with colleagues to put their learning into practice.
We have been doing all this for some years, in programmes for managers in business and health care. All establish a climate of learning strikingly different from that usually encountered in MBA classrooms. In place of lone wolves in search of better jobs there are managers committed to doing a better job. Instead of promoting the abstractions of “leadership”, these programmes encourage the engagement of managers. Wouldn’t that make for a better economy, let alone a more humane society?
There is little evidence to support this proposition and much to refute it. Free markets are generally good at determining value, and for decades the market for young business leaders has given a strong vote of confidence to the graduates of top MBA programmes. Tuck and the other leading schools place their graduates in an amazing array of the world’s businesses. The remarkable career options of the 25-30 year olds who make up the vast majority of students in full-time programmes is powerful affirmation that the market places a high value on the skills of our graduates. The demand for these graduates has grown exponentially: Dartmouth opened the first graduate business programme in 1900 with four students. Today hundreds of thousands of graduates are hired out of schools each year from Belarus to Bangladesh.
Similarly, demand for slots in the top programmes is extraordinarily competitive. It is not unusual for these schools to receive ten or more applications for each opening. Applicants now come from all over the world and from a variety of careers. The diversity of experiences these students share with their peers is a cornerstone of the learning that takes place on campus.
The market does not place such high value on top MBA graduates for no reason. Indeed, there is great intrinsic value to the learning that takes place in the classrooms of the best business schools. With its courses, projects and networks, the MBA experience makes young men and women substantially better prepared to start a business leadership career—better prepared not only than when they enrolled but than their peers who followed other educational or career paths. Their professors’ deep knowledge of a wide array of fields, the business and cultural experiences shared among students and the mentoring of alumni in leading global companies broaden and deepen students in ways that would be hard to match in a comparable amount of time working inside a company.
Yet the business world is hardly absent from leading MBA programmes—as some critics contend. Business schools connect to it through experienced students, through a steady stream of visiting business leaders and through faculty whose research probes the history and effectiveness of business practices. In fact, a major strength of the top MBA programmes is that they are constantly responding to the needs of industry. Business schools give students a broad view of practices across a variety of evolving industries, exposing them to a range of ideas and strategies they might otherwise miss. They also provide an introduction to business ethics and models for ethical analysis—with examples often presented by visiting managers.
Other critics argue that MBA programmes merely develop analytical skills and rely too heavily on exercises such as case studies, which fail to capture the nuance of the modern business world. Such arguments are outdated. In the past two decades, business schools have broadened their teaching, giving students exposure to not only analytical techniques but also the values and interpersonal skills needed to be a leader. In addition to ethics, students often study the societal impact of business and the complexities of working in a global marketplace. Teaching strategies are also increasingly varied, with cases, projects, internships, lectures, international travel and web-based learning all employed by most leading schools.
Another criticism of business programmes is that while they excel at teaching skills such as finance, strategy and marketing, they fail to teachmanagement. That’s because its key component, leadership, is an ephemeral skill that can only be learned through practice. This argument isn’t meritless. I agree that a business leader must have experience to truly hone his or her management skills and that nothing can match the complexity, grittiness and intense reward pressure found in the business world.
However, two years in a modern and well-functioning MBA programme will accelerate students on the path to leadership, particularly those who have had significant work experience before starting their coursework. Students learn to rapidly translate events into data (and vice versa), how to communicate effectively with customers, suppliers and regulators and to see how their organisation can broadly affect society.
All this preparation, learning and practice launches amazing careers. Graduating from a top MBA programme rapidly advances students on the road to leadership. I’ve seen students who were engineers become business-development specialists for high-tech companies, chefs who become marketing executives and IT specialists who become investment bankers.
World demand for great business leaders is exploding. The spread of markets and the exchange of business practices is knitting the world ever closer, fostering strong legal systems, raising living standards and leading to tolerance and co-operation. International MBA programmes play a crucial role in this exchange. Effective, progressive managers lead to stronger companies, and stronger companies make for better-off economies. There are any number of successful business leaders who have never seen the inside of a business school classroom, but the leading MBA programmes turn out even more young people who will lead tomorrow’s most enlightened and prosperous companies. It is true that the road to business leadership does not always start in a business school, but many great companies regularly choose MBA graduates and thousands of extraordinary young people choose the MBA path. I believe that these choices are rational and on balance will lead to a better world.