RIP, MBA

RIP, MBA

The economic crisis has exposed the myth of business-school expertise.

Posted Wednesday, March 25, 2009 - 3:57pm

If we ask why no one stopped these people, however, we come right back to business school. It was the market fundamentalism that dominates business school thinking that assured us that markets are self-regulating. It was the management myth—the idea that there is some specialized, teachable body of expertise that constitutes management—that confirmed the strange notion that these people were capable of regulating themselves. And it was the shareholder-value model from Business 101 that said all you need to do is load up managers with tons of stock options and they'll be sure to do the right thing. These aren't just ideas that happen to be taught at business school; these are the ideas that provide the rationale for the existence of the schools. The only semblance of a theory behind modern business education is that it purportedly produces "experts" in shareholder-value maximization who are capable of forming an ideal, self-regulating market.

It's a neat theory, of course, and pretty radical, too. But not since the fall of the Soviet Union has a system of belief woken up with so many parking tickets on its windshield.

The reality is that business school is now chiefly a community of intention. It brings together people who share certain career aspirations—for the most part, to make big bucks—and occupies their time teaching them a few technical things that they don't need to know, along with a code of conduct that says, in essence, whatever is legal is ethical; and if it makes money, it's a positive duty. It's now clear that we would have all been much better off if, instead of cloistering these people on fancy campuses with world-class golf courses, we'd have sent them off to do two years of national service.

For the benefit of beleaguered business school academics, it's worth pointing out that a world with fewer MBAs is not necessarily a world without business studies. On the contrary, once researchers dispense with the idea that they have to package their material for the purported benefit of junior managers everywhere, they could actually study business. Maybe they could even learn to criticize it. Maybe they and their students could even learn to report on it, the way that journalists used to do.

In the meantime, since the national-service idea probably isn't going to gain much traction, I suggest that it's time to go long on the humanities. Now that we've tried business with savages, perhaps it's time to give the educated a shot.

  • Matthew Stewart was a management consultant for ten years. He is the author of The Management Myth, out in August 2009. He does not have an MBA.
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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).

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