Monday, November 22, 2010

Value of an MBA Program

Continuing the train of thought I started a few months ago, I keep thinking about the value of an MBA program. This is a largely introspective exercise, since I am right in the middle of one, which I am doing at IE Business School. As ill (good?) luck would have it, I joined the rows of knowledge-eager business students right after the credit crunch (I am now way too wary of using the word "crisis"), so there was no shortage of criticism targeted at business schools, those who teach there, those who study there, and those who hire the executive brains paying a pretty penny for that.

The article that has grabbed my attention recently was published in HBR in July-August this year, "No, Management Is Not A Profession". I was amazed how much I was in agreement with the author and how much his thoughts were resonating in my head. The main topic of the article can be sort of guesses from its title - if management is not a profession, why do we sent people to business schools and what exactly do they learn there?

Of course, business ethics issues could not have been avoided and I have already written on that. True professions have Codes of Conduct and you can lose your affiliation to, let's say, CFA if you break its Code. In my younger years, I used to be a proctor at CFA exams, overseeing hundreds of accountants writing their Level 1, 2 and (just a handful) Level 3 CFA exams. Each one of them knew that should they be caught cheating, they would never see those tests again, no matter how hard they had tried. Compared to the MBA graduate, what would happen if s/he decides to ship an order earlier to record the sales in the current quarter to "massage" the financials? Not much, huh? Thus, business schools are not professional schools.

The grading systems at business schools are intended to promote collaboration and the spirit of cooperation. What happens in reality is that I have never seen fiercer competition outside of my school. Well, maybe a cock fight would snatch the prize, but the "mighty curve" imposing normal distribution means that only two people out of the entire class will get an A, so what cooperation are we talking about here exactly? The article also states that "an academic grading system cannot reliably predict managerial ability... If a business school is a competitive environment, in which a myth is maintained that the best future business leaders will score the highest grades, dysfunctional behavior inevitably results". At the same time, the big consultancy firms are not considering candidates with GPAs lower than a certain level. Are businesses also to blame for the skews in the management eduction systems? For me, the answer is clearly "yes".

Faculty members also came under attack of the author. He claims that education happens in silos, just like in the real business. A Marketing professor does not know what happens in the HR class, and neither of them has any idea what is being taught in Supply Chain Management. So integration is not taught, but learnt. It has to happen in the minds of students (somehow), because it definitely is not happening in practice. The Yale School of Management has pioneered integrated classes, but not many schools have followed suit.

So the old maxim holds true, "The manager is a jack-of-all-trades and master of none" simply because there is no one task to master. The "essence of an MBA resides in not in professional training but in the broader experience of the business school as a learning environment". I guess that is the reason I have such a hard time explaining to my parents what I learn here in Madrid: business schools are not professional schools but rather incubators for business leadership.

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