Age has not been kind to the Master of Business Administration degree
Few degrees other than Art History generate as much criticism as the time-worn MBA.
What is an MBA? At its core, the MBA is a post-graduate degree that purports to teach essential business skills such as being able to read an income statement, balance sheet, and various managerial accounts; grasp the basic principles of marketing (i.e. lie shamelessly to dupes); dip a toe into the murky waters of operations management, and to an increasing extent attempt to explain entrepreneurship.
All while being careful, as one must be these days, not to upset anyone, anywhere, at any time, with anything that could be interpreted either today or in ten years’ time as being Politically Incorrect.
It’s easy to mock the MBA: after all, what knowledge of corporate realities do academics possess? Academics are people who’ve carefully insulated themselves through tenure from the precariousness of commercial activity and whose notion of “output” is writing largely pointless papers that few will ever read. Promotion is mostly based on time served rather than competence or innovation, and often the cherished notions of academics have zero relevance to the real world.
Yet it is too easy to forget how amateurish most management was until quite recently. Today’s market surveys and data science are the direct result of MBA programs emphasizing the role of empiricism and analysis in day-to-day management. Process engineering and continuous improvement are likewise concepts that would have gained very little traction in the Western pre-MBA world.
When I did my MBA nearly thirty years ago I realized the curriculum was defective. Disciplines were taught separately. Marketing had no bearing on accounting; operations management had no relationship to sales. Rather than being a coherent integrated course of study, the MBA was simply a collection of bits, each taught as though entirely isolated from all the others.
In many cases the intellectual content was laughable. Porter’s famous “five forces” model and the BCG four-quadrant box were examples of vacuous slideware yet gained astonishing credence among naïve professors, probably because those professors were lacking the real-world experience necessary to reveal the many flaws inherent in such simplistic ideas.
And yet… the alternatives were far worse: ignorant managers acting on whims, hunches, or simply genuflecting to the instructions of superiors regardless of how catastrophically inept such instructions often were.
The MBA was at least the beginning of an attempt to introduce some degree of conceptual rigor to what had hitherto been a swamp of absurd assertions and little more.
We have to feel sorry for those who devise and teach MBA curricula. After all, the fundamental assumption of such courses is that there are kernels of wisdom that can be learned and applied in real-world situations and unfortunately reality often confounds this belief.
The MBA cannot explain to the eager naïve students paying handsomely for their degree that in real Corporations people are often so stupid and so focused on playing political games that any semblance of rational decision-making is cast aside. Few students are told how budget decisions are distorted by poorly-thought-out standard policies (baseline budgeting, use-it-or-lose-it, hire in Q1 and fire in Q4, etc.) that create huge long-term harm yet seem invisible to senior management simply because those senior managers grew up with such distortions and take them as inevitable facts of life rather than as flaws that could easily be corrected.
MBA courses would lose a great many students mid-course if they revealed how large a role chance and ordinary human incompetence play in the affairs of life, and how career-harming such things often are.
Furthermore, the idea of academics trying to teach entrepreneurship is hilariously misguided, akin to asking a blind quadriplegic pacifist to teach no-holds-barred cage fighting.
Those who teach at MBA schools are the people who pump out the necessary quantity of academic papers; real-life entrepreneurs are nowhere to be seen except as occasional drop-in exhibits at a very few business schools. To the best of my knowledge there are no highly experienced former serial entrepreneurs teaching full-time at any serious business school anywhere in the world.
The standard model is to have the Professor of Innovation & Entrepreneurship be someone who has dropped in on a few meetings at a handful of currently-successful companies that are now so large that their hardscrabble entrepreneur days are long gone and the past has been rewritten and sanitized. Armed with their “insight” from such experiences, the Professor believes he/she has isolated the key factors that resulted in success. Chance is edited out entirely and wisdom is substituted. No mention is made of the various unethical things those early founders did in order to increase their odds of surviving the first couple of years.
In other words, a the Professor’s academic output will be pure anodyne fiction suitable for a Harvard Business Review case study.
As MBA course fees have increased to absurd levels over the last couple of decades, it’s difficult to argue that most students receive value for money. The intellectual content of most MBA programs is sparse; relevance to real-world problems is limited; and increasingly the skills we’ll need five years from now aren’t even on the curriculum.
And yet…. There are hidden advantages. If you want to work for a major consulting firm, an MBA from a top business school is nearly always a prerequisite, but perhaps not quite for the reasons one may think.
The MBA shows you had the intellectual capacity to absorb some basic concepts and the determination to make it through to the end. These are desirable characteristics for a consulting organization. The most desirable characteristic, however, is not listed in any compendium of course titles: it’s the network you’ve established. The real reason people pay through the nose to attend Harvard Business School or Stanford Business School or the London School of Economics or INSEAD or IMI is not because of their towering academic superiority but because the people they meet will become a lifetime network.
Consulting firms endlessly and shamelessly leverage extensive networks that have been built up over decades, as do top investment banks. People move between the top consulting firms, investment banks, and global corporations on a regular basis, extending and reinforcing the all-important “human capital” that comes from being able to reach the right people at the right time.
Lesser mortals have no such access and therefore miss out on the very best opportunities most of the time.
This is a classic example of (quite literally) network effect. The more a business school can boast important alumni, the more ambitious young people will compete for places. The better those young people do in later life thanks to their network of contacts, the more valuable that MBA becomes, and so on in a self-reinforcing cycle.
Thus in the end, regardless of its intellectual and practical shortcomings, the MBA is likely to survive as one of the best ways to build an instant network that will, with a bit of luck and planning, carry you though much of your professional life.
But the audience for MBAs is shrinking: it meets the needs of the ranks of people who see their careers largely or entirely confined within the realms of large traditional corporations.
In the tech world, however, what you can do and who you know in the VC community is far more important than an academic degree (the sole exception being the Stanford MBA, thanks to Stanford Business School’s deep connections in the VC world and its huge network of former entrepreneurs).
If you’re not in the tech world but are still entrepreneurially minded, an MBA may help in terms of teaching you the basics of business but chances are other factors will be far more important. After all, nearly everyone can learn to read an income statement but few are gifted at turning vision into product, selling services, or simply having the internal resilience to keep going during bleak times.
For me personally the MBA was a somewhat-qualified asset; but mine was nearly 30 years ago. I’ve used a few of the skills I learned back then, but they’ve been relatively minor factors in my own career. As I went to a UK business school, there was no network worth talking about (the Brits are abysmal at networking, seemingly finding it “impolite”). Even my Oxford connections are sparse and have been of very little use over the years. But at least the MBA gave me confidence, early on, that I understood the basics. And it provided me with insight regarding how to simplify and present in a convincing manner. While a PowerPoint slide deck may be intellectually spurious it has wondrous powers of persuasion, and in the end we all need to persuade others in order to get anything done.
So if the future continues to belong to large traditional corporations, the MBA has a reasonably secure place in the academic landscape. But if the future is increasingly dominated by the likes of Google, Microsoft, ARM, and others then I suspect the MBA is doomed to gradual erosion and ultimately to irrelevance.
No doubt heroic (at least, heroic in academic terms…) efforts will be made to update curricula, introduce ever-more “relevance” in coursework, and perhaps even invite a few more real-world entrepreneurs to give occasional talks. But events in the outside world will determine the future of the MBA, and it’s difficult to predict what those events will be.
In the meantime one thing is totally clear: unless you’re desperately keen on using expensive glossy toilet-paper, there’s absolutely no reason ever to buy the Harvard Business Review.