So Janiece has been making me think recently. She pulled out the old canard that an MBA was worth no more than a year’s subscription to the Wall Street Journal. I don’t agree, but on the other hand, despite holding the degree, I am somewhat ambivalent about the value of my education.
But I have to stand up and defend the degree itself. First of all, the original purpose of the degree, back when most Americans still made stuff instead of shuffling paper, was to take Engineers and other technical staff and prepare them to be business leaders within their silos, with perhaps the option of making them strong general managers as well. A good program was supposed to give those staff a broad general education in the rudiments of all aspects of a business, from Finance to Marketing. Most good programs also encourage a specialization so that the student acquires some deep specific skills in a particular area of business. Given that substrate of student, the MBA program is still remarkably good at turning out better managers.
In my own career journey, the education I received in business school was invaluable. I would not have been ready to take on a business role after working in an Industrial lab for a few years. No way, no how. I had too many preconceived notions and arrogance coming out of obtaining a Ph.D. I learned pretty quick in business school how much I thought I knew about how the world outside academia worked was wrong. None of the scientists I work with today could do my job without an MBA or other business training, despite having more years in the industry than I do.
So what specifically did business school do for me? First, it gave me rudimentary skills in the major areas of a modern business so that I can evaluate the concerns of different lines with my projects. It would have taken me years of real-world work experience in a number of different positions (which I may or may not have been qualified to occupy) to get that broad a view of business operations. If, indeed, I was lucky enough to get the right assignments to see all of those lines.
I knew nothing of financial instruments before business school, and the Corporate Finance and Accounting classes gave me a really good grounding in that aspect of business. Now, I find Finance about as much fun as watching paint dry, despite my proclivity for numeric activities, so I took the minimum in that area. People who concentrated in finance got real world projects from real firms to work on as part of their course work. A Journal education (which admittedly is slightly better than a University of Google education because the Journal staff acts as a bozo filter) would not provide that hands-on experience.
Likely as a bench scientist I would never have seen the HR side of modern business (the courses in which were surprisingly useful, though it is perhaps unsurprising that most real-world HR I’ve come into contact with does not practice what I learned in those classes). The Journal is especially weak on HR. In my HR class I was required to approach a company and ask for confidential information on their HR practices so that we could perform a benchmarking evaluation. What the company got out of the deal was an independent appraisal. I had connections with what was then the largest laser company in the world from my previous life, and they opened up their entire operations to my team. It was an amazing learning experience, and one I never would have gotten on the job or in a Journal education.
Beyond those basic classes, I concentrated in Strategy and Marketing. I took classes in Consumer Behavior from one of the world’s leading experts in consumer psychology. I took quantitative research methods and survey instrument design form another leading expert. I came out of B-school with specific, useful skills that I immediately put into practice on my first job. Skills I didn’t have as a scientist, and skills that take time and money to acquire. Skills you can’t get from the Journal.
A good business school should provide more than a case-based education, although cases do have their value. The main deliverable at my school was tied into several courses, and used the content from all of them for a practical purpose – mid-to-large-tier businesses sent the school projects for the students to work on all year as consultants, and we had to present and defend our recommendations just as an actual business consultant would. The teams that worked on those projects were selected by the school, so that a balance of industries and experience was represented on each team. Although the Journal can provide some insight into other industries, there is no other way outside of business school to be thrown into a project with people of such varied backgrounds. I worked on that team with people from the fashion industry, high tech, wood and paper products, steel making, insurance, and other industries. The price of the MBA was cheap compared to the value of that kind of cross-fertilization of ideas.
Which brings me to the international diversity aspect. The make-up of my class was about 45% foreign. Most of the Americans marveled at the large ratio of foreigners. Coming from a science lab, I marveled at the novelty of a class with a majority of native-born Americans. :D
That had a huge impact on my educational experience. And the diversity ran deep – we were not dealing with Americanized immigrants, we were interacting with people who were going to go back to their native countries and do business.
My team had several foreigners on it, actually by luck of the draw we had less than the average. However, we made up for that with quality. Two of my best friends on the team brought a lot of perspective to the project. One was a Finance guy from Hugo Boss in Germany, and a Lieutenant in the Bundeswehr Reserves. The other guy was going to school on company plastic – and the company was Nippon Steel. I probably owe my present career, which I entered because my original group needed someone to deal with the Japan office, to two things – the fact that I got the real scoop on Japanese business practices (and not recycled Nikkei news articles via the Journal) from Kunio, and the fact that the business school offered Japanese language as an elective. I made a very convincing case that I knew what the heck I was talking about when my interviewers asked about Japan. I didn’t know everything by a long shot – in no way was I ready for a senior level position, but I was in a position to do a good job in an entry level slot, which is what I was being asked to do.
Beyond that, I made a point to enter foreign-dominated groups in the self-selected teams in other classes. In most of my non-marketing classes I wound up working either with Kunio and another Japanese, or with a couple of Turks. I got good international exposure from them, and they benefited from my quant skills. In business school more than any other graduate program except the JD, peers matter. In my marketing classes I wound up working with a couple of Korean guys. Many a dinner with them and Kunio gave me real insight into the business and political relations between their two countries. To be fair, most of the Americans gravitated to American-only team when given the choice.
Now that brings up an important point – I got a lot out of business school because I’m the type of intellectual vampire who seizes every opportunity to learn something and sucks it dry until the veins are making that empty milkshake sound. Less motivated people get less out of business school, and one of the problems with the MBA degree is that the material is really not rocket science, with the exception of some of the more esoteric finance stuff and a bit of the quantitative statistics in predictive market research – topics which can be easily avoided by the lazy. Any reasonably good parrot can do enough to get out of the even a good program with passing grades. There is really no filter in the program beyond the initial selection process. Thus programs with easy admission requirements generally issue diplomas that would find better use as tissue paper.
Now I went to a school that’s in the second tier in the Business Week rankings, but still well within the top 50 business schools in the world. I got a good enough education that I can compete successfully with graduates of Harvard, Yale, MIT, Chicago and Wharton. But those people have a couple of edges on me. The bottom quartile of their class was probably equal to the middle quartiles of mine – their peers pushed them harder, and on average had more experience at Fortune 100 companies prior to matriculating. They also got social networking advantages I didn’t, because Donald Trump sends his kids to Wharton, not a second tier, high value-for-money institution. Educational Return On Investment means less to families at the top of American business than it did to me.
I think that on the whole, a business education can be a very valuable experience.
But there are too many business schools and too many MBAs out there, and outside of the coasts, it’s a lot more likely you are interacting with the dregs of American business education.
Unfortunately there is an over-reliance on credentialism within American business. The MBA at lesser programs is now nothing but a signal of ambition. Thus, the proliferation of MBA programs has led to relaxed admissions of people who really don’t have the background to make the most of their business education. There is an administrative assistant with an MBA at my company. It’s a Podunk MBA, from an institution not respected enough to get her a job using it at my company, yet she’s over credentialed for her current position. If she goes somewhere else and gets a job using that degree, she won’t have the skills of the people who graduated from my school. That’s an issue.
Given my own experience, I’d say that an institution that is too small to attract a significant number of real world projects for its students, not prestigious enough to attract top students who push their peers, and has less than 30% foreign students is not likely to produce MBAs of much value.
In addition to that, the ratio of full-time to part time students matters. I don’t have much use for executive or part time MBAs. Executive MBAs take people with years and years of experience, but who are lacking that special piece of paper. I’m not sure how much value the MBA adds in that case. Part time MBAs miss the whole benefit of an MBA. The students take night classes with the same peers from the same local businesses, removing much of the cross-fertilization of ideas from different industries. The number of foreigners tends to be very low, reducing the impact of student diversity. And finally, the programs often take 5 to 7 years to complete at one or 2 night classes per semester. The other benefit of an MBA is to immerse students in topics from all over the business world at one time so that they begin to see the connections between the silos. Taking the classes one at a time reduces the student’s ability to see those connections, and taking them over 5 years ensures that the material from 5 years ago ahs been completely forgotten by the time the degree is granted.
It seems to me that business education is in a very similar state to Medical Education before the Flexner Report. I’d like to see a lot of programs forced to improve or close. The quality rapidly drops off beyond the top 70 or 80 schools (world-wide not US), and graduates from those other institutions give the rest of us a bad name.
That’s not the only issue with the MBA degree. Graduates of the top schools have their own issues as well. The idea that the skills that the MBA imparts give one a deep understanding into the mechanics of all businesses is a pernicious one. There is no substitute for experience in (and passion for) an industry. Legions of bloodsucking, useless consultants, themselves graduates of top-tier MBA programs, reinforce this notion.
A lot of the problems in the modern business world come from managers who talk about their products in a generic sense. One of the stupidest things I ever heard came from such an MBA, something to the effect that if he were to split his business up and one person were to take the people and equipment, and he were to take only the brand names, he’d do better than the person with the goods. That statement pretty stupidly discounts the contributions of all those people who do the actual work of bringing a product to the customer. A brand is a quality signal, and unless he could maintain the same quality with his mercenaries and rented plants, those brands would disintegrate. Ask Magellan.
The MBA is a starting point. Denigrating it in the absence of any other business education is a mistake. The school matters, but most importantly, what one does with it matters. More than any other professional degree, it means little outside of the context of the holder's work history and work ethic. But with it the hard worker becomes that much more valuable.