RIP, MBA
The economic crisis has exposed the myth of business-school expertise.
Put your ear to the ground near any business school campus, and you will hear the sound of another bubble about to pop. The MBA will soon be joining equities and house titles in the museum of formerly overvalued pieces of paper.
The problem in the short term begins, like so many other fine things these days, in the financial sector. Over the past two decades, about one-third of graduates from top business schools took jobs in finance. But banking will never be what it once was (we can only hope), and consulting—the other major consumer of MBAs—is reeling, too. Couple declining demand with the fact that at the onset of a recession, the supply of students actually rises as the prospectively unemployed look for ways to fill in gaps in their CVs, and "shorting" the MBA looks like a compelling near-term trading strategy.
The really grim news for the MBA, however, is about more than short-term trends. Isn't it just a little suspicious, after all, that the sector that showed the greatest appetite for MBAs was the most grotesquely mismanaged? In fact, the economic crisis has exposed long-standing flaws not just in the modern approach to business education but in the very idea of business education.
The truth is that the relevance of the technical training allegedly offered by the MBA was always overblown. The idea that there is some body of knowledge pertaining to business management that can be packaged up and distributed to the business universe in two-year course-lets—well, it sounded good about a century ago, when it was first conceived. Maybe it still had merit when the schools were turning out only a few thousand graduates per year. But it certainly stopped making sense well before the schools achieved their current level of production of a whopping 140,000 or so graduates per year. The empirical evidence on the contribution of the MBA to individual career performance seems to bear this out—mainly because it doesn't exist. In fact, if the relevance of an M.D. to the performance of doctors were even half as unsubstantiated, we'd probably be fantasizing about tossing a few physicians in jail, too.
The other truth helpfully revealed in the throes of the crisis is that ethics and integrity and social responsibility aren't just optional extras for good business management—unless by "management," you mean "looting." Managers don't need to be trained; they need to be educated—in the sense of "civilized." Unfortunately, a business degree isn't just irrelevant to that purpose; it's positively detrimental.
Now, to be fair, people don't behave like jerks just because they spend two years in business school. After all, as many of my business school friends have pointed out, most of the first year goes into heavy partying, and the second year is really a marathon job fair. No, for the most part, people behave like jerks because nobody stops them from doing so. The charmers at AIG walked away with multimillion-dollar second homes as a reward for exposing their institution and the entire financial system to outrageous risks because it was (so far as we know) a perfectly legal way to make money. The whizzes at Goldman Sachs hedged their supersize profits with underpriced, implicitly publicly backed insurance from AIG for the same reason.
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My experience
There is a correlation between MBA's and Wall Street jobs. Otherwise, this article offers nothing but a bitter, cynical tone. I received my MBA, where I learned a great deal about operations, strategy, marketing, finance and more. We were taught theory, and worked in teams to study the results of actual business practices. We also significantly cover ethics, and among others I took a class on how business objectives can be aligned with socially responsibility. If anything, what I learned in business school has taught me to be critical of what has happened on Wall Street. My degree also emphasized the use of evidence and common sense, which has been lacking in all aspects of the financial industry (and perhaps journalism, too). My MBA has also undoubtedly helped my career in media strategy. So, I offer up my personal experience as evidence that MBA's can be and are useful. I suggest that those looking to critique business school (like anything) look to the actual use of evidence and not just snarky rants.
MBA
Hmm- Ethics was a core class in my MBA program. So I am not sure what this guy is talking about. National service huh., Well I personally spent six year in the US Marine Corps before ever stepping foot into to college. I also have been doing community service for more than ten years since I have left the Marines. Even the most simpleton knows that service to ones community is a part of most reputable firms and business programs. What service did this guy ever do?
RIP, MBA
all that time and energy spent on "case studies" real and imagined--couldn't a better and higher use be found? www.DMHolmesLaw.com
Mr. Stewart, You're in the
Mr. Stewart, You're in the right track of mind but your details need some refinements. I do agree with you that an MBA program, being what it is, should, by default, include ethics as part of its curriculum. One commentator claimed that in his/her particular program, they did "case studies" on ethics and by this fact, it ought to refute your claim that MBA programs do not appear to teach ethics. I would have to say that this is a weak claim. It is a weak claim simply based on the fact that the commentator used a personal example. He used his own MBA program in whatever state/city it was taught in. This claim doesn't tell us whether or not other MBA programs also teach ethics in the form of "case studies." If he made the claim that most MBA programs do teach ethics in the form of "case studies" and perhaps borrowed a statistic from a reliable source such as any of the government websites, then maybe his claim would be stronger but it would depend on how he presents it. Otherwise, saying, "Well, my school taught ethics in our MBA program, that means you're wrong!" isn't a very strong claim. If anything, it's more of a childish claim--that is, making any statement that would remotely refute your claim--even if it is highly unlikely or far-fetched. Stepping back a bit, in your fourth paragraph, you said that "the relevance of the technical training allegedly offered was always overblown." I find this a peculiar statement namely because you didn't provide any specific examples of where MBA graduates' knowledge and training was not relevant in their application in whatever industry they work in. However, I think I have a clue as to what you're alluding to. I think you might have been alluding to the notion that in a typical MBA program, the instructors teach them all these "fanciful" systems and methods that, in a perfect world, would theoretically work but in practice, it is, in fact, almost useless knowledge or have very little value in their application. If this is what you had in mind but couldn't find the words to put them in, I can sort of understand why you might feel that the MBA program seem overblown. To this point, however, I would have to say that the "technical training" (if any) that the MBA student receives IS, in fact, relevant for whatever position that he or she intends to apply his or her business knowledge. The issue, I think, isn't whether the training is relevant but whether the training is effective, that is, whether the training produces results. More specifically, whether the training provides the student with the essential skills and knowledge to succeed in the position in which he or she plans to work in. I think that most MBA programs accomplish this. Now, just because the MBA student succeeds in his or her position, let's say, a banking position, it doesn't necessarily mean that this person practices sound business ethics or that the person is necessarily an expert in business. Typically, one would think that if you are an MBA graduate, you ought to know what is sound business ethics and the correct application of its principles as well as knowing or having a specialized, in-depth knowledge of business management and how to apply their principles correctly but unfortunately, this is not true. Or at least, it's not true for some companies. And from here, Mr. Stewart, you can use the examples you've provided to illustrate this point. Some of the commentators mentioned that just because an MBA graduate person behaves unethically in a business doesn't mean we should abolish the program from which he or she received his or her education. They do make a legitimate point that the responsibility ought to fall on the individual but the fact of the matter is that the program did play a direct role in the education of the individual. Given this, the program must also take part of the blame.
Invalid article
Here is someone who is claiming to have the inside scoop on MBA's and what the students think and learn. Yet, he doesn't even have an MBA (he doesn't show that he has that many credentials in general, only some experience as a management consultant) and therefore no experience to point to in order to validate what he's talking about (it's like Al Gore trying to be a scientific expert on environmental issues, lol)! How can he know what goes on in the MBA programs if he's never been there? And overall, he doesn't appear to have any valid sources for the allegations he makes (he comes off as someone who is just whining and complaining about the economy). Yeah, business schools teach students about business, but from my experience, it doesn't mean it teaches them to be unethical. It's quite the opposite. They have a big emphasis on ethics and reputation, not just on making a profit… they highlight and go over ethical misconduct cases all the time! Anyway, I think there are some major flaws in this article and the author's subjective interpretations of the business environment. The issue of whether or not the demand for MBA graduates is decreasing is a separate analysis in itself and needs the data to back up that statement (although it seems obvious that the demand for MBA graduates would be going down during a recession… it doesn't take a rocket scientist to figure that out). The other thing I thought was funny is that he was basically saying that it was MBA (or highly business educated) graduates who were the cause of mismanagement of the financial sector that was most impacted by the financial crises. I believe that to be a completely invalid statement. Again, he is making these allegations and has absolutely no data to back them up except for his feelings (I guess that's because he hasn't had enough business schooling to learn how to properly present analyses, :)). Anyway, it looks like he has been angry at the current financial crises and he is looking for something or someone to blame for it, and somehow came up with the idea that the source of all evil is business schooling, since he is not included in that group. But… this is just my take on it. I don't know the guy at all. But if he wants to get across a point and declare it to be valid, he should probably back up is analysis...
I disagree
Sir,
I find your article poorly researched and do not believe you have met your thesis. Yes, I am an MBA candidate. If I were to turn this paper in as an assignment, I would fail for lacking credible resources. I challenge you to substantiate your claim by evaluating the curriculum of several MBA programs. I predict you will find that ethics is a the core of many credible programs, and learn that MBA's learn through case studies. The purpose of the case studies is to learn the consequences of one's decisions, and the impact on stakeholders.
I question your ethics and standards considering you published such outrageous claims without providing substantive data. Were I to judge all journalism schools based on this article, I would draw a very harsh conclusion of j-schools. You cited that 140,000 MBA's are earned a year. How many individuals have been proven guilty of gross ethical violations?
The MBA
A dead-on article, and the tone of some of the replies just tells you how sharply you hit a nerve. The utter vacuity of MBA curricula has been known on campuses for a long time. Check here for the reputation, among Ph.D. students at least: http://www.phdcomics.com/comics/archive.php?comicid=914 Finally, our first and only president with an MBA was ... George W. Bush. Honestly, this should settle the debate right there.
marketing
looks like we are all going to need to become writers and critics. Nice marketing for your book. Where did you learn that?
It's not the MBAs...
Hate to break it to you, but the guy insuring CDS's at AIG is NOT an MBA. Neither is the risk mgmt guy at Bear, or the derivatives guy at Goldman, or the trader at Morgan Stanley, or the research guy at all those quant shops that blew up in Aug-07. Finance MBA's simply do not know enough math for these positions, which are instead held by PhD's, econ masters, financial engineering guys, former physicists, etc. Finance MBA's usually do 1) inv banking (M&A or the corporate side, not the structuring side), 2) fundamental (not quant) investment research, or 3) corp finance for a MSFT or Gap or some big firm. So you've got the wrong guys here.
MBAs
I don't see the logic in the author's argument. His same logic could be applied to just about any failing industry. Should we also slam the engineering degree because our auto domestic auto companies can't seem to make cars that compete with the Germans and Japanese? What brought down the banks was greed, plain and simple. If you want to place blame somewhere, blame it on the lack of regulatory oversight by governments around the world (i.e. the people).