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Does MBA=Masters of Barely anything?

By Ziv Navoth

"The dangerous people, especially in this hyped-up society, are... those whose confidence exceeds their competence. MBA programmes not only attract significant numbers of such people but encourage their tendencies."

Cantankerous criticism or a wake-up call for an ailing industry? Read on to find out.

Last month Business Week published its annual list of Top Business Schools. Anxiously awaited for by prospective students and university faculty alike, the list's objective is to choose the school that does the best job of breeding the world's best managers. Increasingly, however, there are voices questioning whether business schools have anything to do with good managers in the first place. Some, like Management theorist Henry Mintzberg even go as far as saying that "conventional MBAs train the wrong people in the wrong ways with the wrong consequences."

But why criticize business schools if all they're doing is meeting the demands of the marketplace? If there are people out there who are happy to pay $60,000 for a two-year MBA, why shouldn't business schools keep on selling a product that's been in demand for almost 100 years?

The answer lies in the fact that while the top end of the market is still willing to pay top fees to sit in a classroom for two years, the fundamentals of management education have changed. Unfortunately, business schools, and the programs they offer, haven't.

Fifty years ago, if you looked at the organizational chart of a large corporation, you would see a pretty straightforward picture: A pyramid with anywhere from ten to fifteen layers of management separating the CEO from the workers on the factory floor. Two decades ago that chart began shedding these layers - resulting in corporations with as little as four or five levels of heirarchy.

But walk into corporate America today (or Corporate Japan, or Corporate Germany, for that matter) and the "org chart" resembles a child's doodle more than a coherent structure. In fact, many organizations don't even attempt to draw such a chart, admitting that structures have become so dynamic that any attempt to fix them on a sheet of paper is futile.

But while the nature of management has changed dramatically over the past 50 years, the teaching of it hasn't. Yes, some MBA programs have added modules on "Entrepreneurship" or "Corporate Responsibility", but on average, most MBA programs in 2004 look remarkably similar to the ones offered in 1954, focusing heavily on analysis and the study of discrete business functions.

So what should business schools do to become more relevant? According to Mintzberg, managers need a different type of MBA, one that moves away from the traditional approach of teaching discrete modules on "Marketing", "Finance" or "Strategy" as if these exist independently, to a more eclectic approach that favors integration of the diverse (and often messy) aspects of being a manager.

Not content with criticizing today's MBA programs, Mintzberg developed his own "anti-MBA". A collaboration of business schools from six countries around the world, Mintzberg's "International Masters Program In Practicing Management" includes modules such as "Managing Relationships" (taught in Japan and Korea) and "Managing Context" (taught in India). The IMPM also requires students (who are, on average, 10 years older than most MBA students) to submit periodic "reflection papers" describing their own learning experience.

"The dangerous people, especially in this hyped-up society, are... those whose confidence exceeds their competence. MBA programmes not only attracts significant numbers of such people but encourage their tendencies. "

Henry Mintzberg

But what if Mintzberg is wrong? What if we shouldn't be designing a better MBA in the first place? What if what we should be designing is a new way for managers to become, well, better managers?

Stop for a second and ask yourself this: What are the pressing issues YOUR organization is dealing with today? What are YOU losing sleep over now? Chances are that "Finance", "Marketing" or even "Managing Context" aren't it. More likely you're concerned with getting more out of the team you manage, the team which suddenly has 15% less people on it. Or maybe you've been given the task of helping your company merge with another but know that the success of the merger has nothing to do with calculating the future discounted cash flow of the merger's cost savings, but with dealing with the fears, hopes and aspirations of the people working for both organizations?

Yet if these are your key concerns, if these are the real issues managers are coping with today, then where can they turn for help? The answer is: nowhere.

True, many universities offer executive MBAs, but these are rarely more than a stripped down version of your plain vanilla MBA. True, some companies have their own "universities" (GE and Motorola come to mind), but these are rarely more than internal MBA programs - set up to provide future executives with education that is slightly more customized for the needs of their company. What's really missing from the world of management education is a way to provide managers with the tools they need, where they need them, when they need them.

But why should you care about the future of business schools? After all, you knew that MBA programs produce misguided managers before reading this article (let me guess - you're working for one).

The answer is that management education is an industry that's probably not that different from the one you work in. It also happens to be a broken industry - one that is increasingly at a disconnect with its customers. Looking at how organizations in

"What if we shouldn't be designing a better MBA in the first place? What if what we should be designing is a new way for managers to become, well better managers?"

this industry react to change can teach us a lot about the organizations we work for and their own chances of survival.Consider the three distinct stages organizations in a changing industry can go through:

Stage 1: Deny that the environment they operate in has changed.

Stage 2: Admit that the environment has changed, but insist that what's required to meet the change is to do more of the same.

Stage 3: Adapt to the new environment (or perish in the process).

Most business schools are still stuck in Stage 1, that is, they think that the basis for competing in today's world is through offering a "better" MBA (read: more expensive programs with the same components).

Other business schools recognize that the needs of today's customers are different than they were 50 years ago, but still offer programs which assume that sitting in a classroom for two years will make you a good manager.

Few, if any business schools, have managed to completely adapt to the new environment. Judging by the history of industry transformations, many will either fail or simply become irrelevant in the process. And you don't need an MBA to figure that one out.

Want to Know More?

Henry Mintzberg, long considered the "bad boy" of management, has just come out with his 10th book "Managers Not MBAs: A Hard Look at the Soft Practice of Managing and Management Development". His "Next Generation" MBA program can be found here. His personal website can be found here.

Business Week's recent table of "Best B-Schools" can be found here.

One innovative MBA program which leaves its graduates with more questions than answers is offered by the Theseus International Management Institute.

One of the best overviews of how the nature of business has changed was written by Peter Drucker in the Economist.

Note: Last month I told you about the Futures workshop I ran for Microsoft and the Industrial Designers Society of America. The results are in and can be viewed here.

Ziv Navoth helps organizations improve their performance by creating a unique and valuable position in the marketplace. He is the Managing Director of Verve! (www.verve.nu) and can be reached at ziv@verve.nu.