Mostly Bloody Awful?

April 28, 2009 8:57 AM

On the role of MBA-based management culture in the current credit-crisis.Downloadable audio and transcript of a radio show that presents some strong opinions on MBA oriented management culture.

Most notable amongst the people interviewed is Henry Mintzberg.

posted by jouke (59 comments total)

There's a very good author called Marianne Keller, who wrote a kind of biography of General Motors, and she says the object in General Motors after the arrival of this new concept of management was to improve the numbers, not to improve the product.

Heh. And know we see how well that's been working out.

Interesting discussion. Thanks for this.
posted by saulgoodman at 9:33 AM on April 28

Ya know who else has an MBA and wanted to run the country like a business?

Now - anyone remember how that worked out?
posted by rough ashlar at 9:37 AM on April 28 [3 favorites has favorites]

Strategic consultants barely existed in the 1950s and 1960s, but the strategic consultant becomes very important after 1970, because if the new chief executive lacks 'domain knowledge' he has to look for someone who possesses 'domain knowledge'. And since he's the boss, he can't very well reach down into the organistion and ask people how he should run the company, because then he's not the chief executive. So this accounts for the rise of the strategic consultants. But unfortunately, many of them were as lacking in 'domain knowledge' as he was, so you had someone lacking 'domain knowledge' consulting someone lacking in 'domain knowledge', and unsurprisingly, there was a collapse in the quality of management.

Wow. And I hear McKinsey never does layoffs. Guess they won't ever have to since there's no end in sight to reign of the MBAs in upper management.
posted by anniecat at 9:42 AM on April 28

The MBA degree was originally designed for managers who already had years of experience under their belts who wanted to expand their knowledge of business beyond their areas of expertise. Operations managers could learn about strategy, Finance managers could learn about Human Resources, a promising sales person could learn about management concepts on their way to a natural progression in their company. It wasn't supposed to be a qualifier to success as it is positioned now.

Today we have 22 year old MBA students running around copping this arrogant attitude, as 22 year old students are wont to do. This isn't their fault; the degree has a perceived amount of prestige around it and students are happy to believe that they're being schooled for success.

The culprit is growth driven universities who want to grow their enrollment every year to pay for whatever sports stadium, atrium, fountain the new dean wants to put their name on. They will happily regurgitate statistics at potential students in order to grow their enrollment.
posted by dobie at 9:43 AM on April 28 [16 favorites has favorites]

I tend to agree with the overall premise based upon my experiences in corporate America, but trying to buttress your argument by tying this to the current financial crisis is pretty weak. If you limit yourself to the role of the egos involved it makes some sense.
posted by sfts2 at 9:47 AM on April 28

I listened to this. I haven't dealt with enough superstar MBAs to form a fair opinion on them but whenever I've dealt with MBAs I've noticed the systemic flaw of looking for the keys you lost in the sewer where the street light shines. You have no idea what an ads conversion rate will be. You have no idea what kind of network effects are going to be at play. You have no idea how long a person who buys the product will continue to buy the product you have no idea how much the ad influences people to buy the product. What do you do? You don't say "I really don't know how effective the ad will be." You make up a lot of numbers based on terrible methodology and you paint a rosy and self serving picture. They want proof for everything but have such a low bar for what constitutes proof that they basically want bedtime story.

I remember I went to a lecture on Six Sigma in college. This was a superstar guy from Harvard and a six sigma black belt which was juvenile and prestigious at the same time. He talked about how great six sigma was as far as quality control and how it was an awesome system and his examples of why it was so awesome was the huge costs associated with a jet engine failure or a respirator failure. That made sense although I don't see anything magical about six sigma as opposed to any other similarly low failure rate. Then he proceeded to complain how many errors the post office made and tech support departments made. And compared aeronautics and medical equipment were growing industries and the post office was losing to fed ex which was more accurate and tech support was declining (which he only used domestic numbers for!). I asked him whether six sigma depended on defects being uniformly costly to be worthwhile. He said that of course cost benefit analysis is important in implementing quality controls but defects were to be avoided at all costs. Really. I left after that. Maybe he was just one idiot and an aberration or maybe he wasn't really that dumb and just was phoning in a college presentation. But it left such a bad taste in my mouth.
posted by I Foody at 9:52 AM on April 28 [4 favorites has favorites]

I especially like the data point about how followup analysis had shown that, out of the 19 top graduating MBAs from the Harvard Business School in 1990--that is, the 19 designated as the best of the best--only 5 of them went on to forge successful management careers.
posted by saulgoodman at 9:55 AM on April 28

LOLMBAXIANS. Until some actual MBAs or people who do in fact work with a ton of them weigh in here, the MBA is just our next stool pigeon to knee jerk hate at.
posted by spicynuts at 9:58 AM on April 28

thanks for this post. i forwarded to my friend in business school. she has been complaining about her fellow students and is threatening to drop out.
posted by eustatic at 10:01 AM on April 28

Spicynuts, I checked for that element before posting. What convinced me that these strong opinions merit attention is that Henry Mintzberg is one of the main people critizing MBAs. You can't accuse Mintzberg of LOLMBAXIANS, that is, of criticism that's marred by lack of knowledge of the subject at hand.
posted by jouke at 10:02 AM on April 28

I've worked with many MBA consultants just not ones from great schools. The word problem as proof issue is pervasive. I'd be really interested in hearing some MBA positive opinions. I also want to add that when not talking about MBA flavored theories, like when they were talking the naive foreign affairs, political armchair quarterbacking, and cinema critiques that make up middle-brow water cooler chit chat that I like to indulge in they were adequately smart. It was only when they were doing their jobs that they seemed foolish.
posted by I Foody at 10:07 AM on April 28

What does religion have to do with this?
posted by Crabby Appleton at 10:09 AM on April 28

Wow. And I hear McKinsey never does layoffs. Guess they won't ever have to since there's no end in sight to reign of the MBAs in upper management.

No, but I have it on good authority that they're cutting way back on the perks. Until recently they used to fly new associates to Europe for training, but as of a few months ago training is now local.
posted by sevenyearlurk at 10:10 AM on April 28

You can't accuse Mintzberg of LOLMBAXIANS, that is, of criticism that's marred by lack of knowledge of the subject at hand.

I was not accusing the post. I was accusing the comments.
posted by spicynuts at 10:11 AM on April 28

Well, I've worked with quite a few of them over the years (not Harvard MBAs, but MBAs all the same), but they were working as business analysts or in IT project management roles like me. Most of them had real-life experience in the IT field, and had only gone back to school to get MBAs to improve their prospects for advancement into management careers.

But then, quite a few of them actually were every bit as bad as this discussion suggests.

It always boggled my mind, in fact, how many "leaders" in both the private and the public sector seem to lack both a talent for leadership and any real domain knowledge, getting by instead on their professional credentials and political connections.
posted by saulgoodman at 10:14 AM on April 28

My dealings with MBAs over the years has left me with the view of them as golfers with only a driver and a putter in their bags.
posted by Thorzdad at 10:20 AM on April 28 [5 favorites has favorites]

MBA = wasted time and money IMHO, whatever.

More importantly, can I get this guy to read me a bedtime story every night? Soooooooothing.
posted by eggman at 10:29 AM on April 28

My dealings with MBAs over the years has left me with the view of them as golfers with only a driver and a putter in their bags.

To be fair, some of us MBA students are trying to change both the perception and reality of that.
posted by fusinski at 10:34 AM on April 28 [1 favorite has favorites]

Wow, a stunning amount of prejudice in this thread. First of all, management is only one of many disciplines in an MBA, marketing and finance being two huge other ones. The alumni of the Wharton School of Business is a Who's Who of massively successful finance people over the last 25 years. The Kellogg School of Northwestern has a huge reputation for training successful, visionary marketing managers.

What people don't seems to understand is that running a business enterprise is as much a science as economics or medicine. It is certainly imprecise, but it is not random.

this new concept of management was to improve the numbers, not to improve the product.

This statement is stupid because it reflects a total lack of understanding of General Motors business and its key problems. Do you think Europeans are stupid when they made the best selling car in Europe a Ford? Or that 2 of the remaining 9 top-ten best-selling cars in Europe are made by GM?

MBA education had as much to do with the quality of GM products as the engineering education. The problem GM had, simply put, is that it could not sell cheap cars cheaply. The could sell expensive SUV's expensively, no problem. But the structure of labor agreements and manufacturing arrangements made it completely impossible for them to compete in the lower margin - high volume end of the market.

And what does "improve the product" even mean? Improve it so much that it costs as much as a BMW? Build in green technology the market isn't ready to adopt? Hershey's makes fair to poor chocolate. But they sell a shitload of it. They could make it taste better (I.e. more suited to the tastes of chocolate snobs) but I'm sure it wouldn't sell as much. Should they "improve their product?"

Most businesses fail because of marketing, not product. That is a difficult concept for technical people to grasp, because it guarantees uncertainty and makes it impossible to eliminate risk.

These are ultra-massive enterprises which complex problems. One of GM's biggest problems is its obligations to labor unions which hampers its price flexibility in the US even against cars made in the US by american workers for Japanese car makers. GM doesn't have this union problem in Europe, and it's success in Europe has been increasing over the last few years. I'm not apologizing for GM, which took far too long to straighten itself out than it should have. But the proper solution for this is business failure, followed by bankruptcy.

This article is the latest in a trend that is attempting to blame the financial crisis on capitalism, corporate america generally, market economies, etc. We don't need to rebuild the entire economic system just because a few million people lost jobs they otherwise wouldn't have had but for the froth of the preceding years.

The blame rests squarely on the leadership of the Fed beginning in the mid to late 90's, the management of investment banks, greed in banking culture and consumer culture, and a total failure of government oversight.
posted by Pastabagel at 10:49 AM on April 28 [7 favorites has favorites]

Some of the most brilliant people I've met in business have Harvard MBAs. Some of the stupidest people I've met in business have Harvard MBAs.

The actual MBA curriculum is neither here nor there. Having a top-tier MBA is just a signifier that you were willing and able to sculpt your life and career into the school's desired shape.

I always balked at the thought of taking that path and, what do ya know, when I decided to apply, they didn't want me. But I found a selective niche program that concentrates on my chosen career path, so we'll see how that goes.
posted by mullacc at 11:08 AM on April 28 [1 favorite has favorites]

What people don't seems to understand is that running a business enterprise is as much a science as economics or medicine. It is certainly imprecise, but it is not random.

As someone in a top 5 mba program with a science undergraduate degree, I take a certain amount of issue with labeling mba education a science even though I know this isn't the point of your argument--but it is an important distinction to make. Half of the classes concentrate on soft skills which are extremely difficult to quantify, and as for the hard skills, there are many instances where students are taught how to do something without being explained WHY, which is a cornerstone of science.

A good (albeit rudimentary) example is when students are taught how to calculate the present value of a dollar. This is a calculus-based principle, so business students are not expected to learn WHY this works... even though this is a cornerstone of understanding how to manufacture a pro-forma income statement, calculate bond values, etc. Students just accept this information as fact, and while it indisputably IS fact, questioning or proving this is not part of the curriculum. MBA students, in this instance, are consumers of the science behind the principles they are learning.

I don't want to sound as if this makes the education useless, because in all honesty I have learned so much about "how the world works" since I have joined this program it is in all honesty mind-boggling and life-altering. It is undoubtedly worth the investment. But make no mistake: MBA programs do not churn out leaders capable of figuring out all the answers to new problems--they churn out machines designed to combat known existing problems in business. Which is, of course, how we got into this financial mess in the first place. Too many folks accepting the status quo and printing money to stop and ask themselves how or why a system was running so impossibly "well."

Of course, all educational programs churn out machines... the difference is that MBA students are given the keys to the car after only having read about driving on a freeway in a book, when only a percentage deserve this kind of treatment. There are visionaries and morons in every discipline. Feel free to treat the MBA morons as badly as you'd like, but realize that we're all not the same.
posted by fusinski at 11:15 AM on April 28 [11 favorites has favorites]

Pastabagel I think you make a good point about improving the product. But I've had terrible experiences with MBAs lots of people have. I don't think that there's anything so wrong with the people who get MBAs, but I really do wonder what MBAs learn that is interesting, useful, and true. I've seen very few examples of it dealing with marketing consultants and efficiency experts. There are numerous things that doctors and (at least micro) economists (where my undergraduate education was), and engineers, and lawyers know how to do that I don't know how to do that are useful that they learned by going to school. What do MBAs actually know that makes them worth the premium they charge? That's what I don't get. This is an issue that I have stronger feelings on than is probably fair and I get that, but I've actually made some effort to find out what I'm missing and come up empty handed. Maybe it's an unfair question maybe anything novel requires more background than I'm capable of understanding, but I've made some effort to learn and found much of it an exercise in renaming the obvious with insular jargon and using complex (or simple) math on made up data. None of my criticisms apply to accounting or finance (where I would have entirely different criticisms).
posted by I Foody at 11:21 AM on April 28 [2 favorites has favorites]

The problem GM had, simply put, is that it could not sell cheap cars cheaply. The could sell expensive SUV's expensively, no problem. But the structure of labor agreements and manufacturing arrangements made it completely impossible for them to compete in the lower margin - high volume end of the market.

I have trouble believing this. Why wouldn't the labor agreements have caused them trouble in the SUV market as well? There certainly were and are competitors there. And they certainly did have cars down at the low end of the market -- Geo was aimed underneath the Corolla, for heaven's sake, the Chevy Cavalier was probably underneath that, and Saturn was not exactly a luxury brand.

If you're arguing that they had a marketing failure for those products, I could tentatively agree, but I don't see how the labor agreements fit in.
posted by weston at 11:32 AM on April 28

Wow, a stunning amount of prejudice in this thread. First of all, management is only one of many disciplines in an MBA, marketing and finance being two huge other ones. The alumni of the Wharton School of Business is a Who's Who of massively successful finance people over the last 25 years.

LOL.
posted by delmoi at 11:32 AM on April 28 [3 favorites has favorites]

And what does "improve the product" even mean?

Most businesses fail because of marketing, not product.

The prevalence of similar views and attitudes--views and attitudes, I'd point out, that you aren't so much even arguing for as invoking--are exactly what the commentators in the original FPP were attributing to the rise of business school management culture. You seem to be taking as axiomatic some of the very same assumptions that these criticisms specifically call out as untested products of the MBA culture, and then countering the criticisms using arguments derived from those assumptions.

MBA education had as much to do with the quality of GM products as the engineering education. The problem GM had, simply put, is that it could not sell cheap cars cheaply.

Then why do the vast majority of people I know who've previously owned GMs say the reason they switched to a Toyota or Honda was because they were so much better engineered and so much more reliable?

Wait, no--that's too anecdotal. Let's take a more rigorous approach to making the argument:

Since when is running a company about making money anyway? It's about delivering quality and value at a reasonable price. It's about service to the community. Who can deny that? Wal-Mart's corporate mission statement is "We save people money so they can live better," not "We relentlessly drive production costs down so that you can enjoy cheap imported goods now, and domestic wage depression later."

The difficult thing for marketing people to grasp is that, no matter how fancy the packaging or flashy the ad campaign, there is some shit people will not eat.

Pastabagel I think you make a good point about improving the product.

Ngghh? Whaa--? If one of the chief goals of management isn't to improve or at least maintain the quality of goods or services in order to keep the company healthy, then it's just a numbers game and free enterprise is total bullshit. Because there are lots of ways to improve the numbers--as this piece mentions, using accounting sleights-of-hand to take credit liabilities off-the books and pump-up earnings, and that isn't even the half of it. The reason we, as a culture, have historically valued the free market system is because we believed in the underlying theory that free enterprise is all about producing innovations and improvements in goods and services. If I grant your claim that improving products has nothing to do with business, then there's no justification for preferring one approach to markets over any other. We might as well socialize everything, and market it as free enterprise.

This statement is stupid because it reflects a total lack of understanding of General Motors business and its key problems.

Which is, of course, ultimately the damn unions, not the fact that GM management has known exactly what its obligations under labor contracts have been all along and have completely failed to re-factor in other areas to properly account for those obligations, preferring instead to drag their feet and play whiny little victims of big bad organized labor. Not to even get into how unfair it is to compare Japanese and US automakers, since the availability of national health care in Japan is a major factor in keeping Japanese automakers operational costs down--not to mention, as I understand it, Japanese executive compensation schemes are still downright puny compared to our own.
posted by saulgoodman at 12:19 PM on April 28 [3 favorites has favorites]

Ngghh? Whaa--?
You can lower the quality of the product and lower the price and still come out ahead. Or availability. Or awareness. There are many arenas that a product can compete on other than quality. It's fair to point that out.
posted by I Foody at 12:28 PM on April 28

What gets me is this term "domain knowledge"? Isn't "domain knowledge" really just a fancy word for knowledge? The major flaw with the MBA degree is the idea that you can let people with generic managerial training run everything, despite having zero knowledge of the "thing" they're supposed to be running.
posted by jonp72 at 12:45 PM on April 28 [1 favorite has favorites]

I Foody: To me, it is a product improvement to be able to produce a product more cheaply through real innovations in manufacturing technologies or processes (as opposed to lowering the cost through some combination of regulatory capture and economic exploitation).

In fact, now that I think of it, I could see a reasonable argument being made that globalization has had an immeasurably negative impact on real technological and methodological innovation in manufacturing. After all, why should anyone bother trying to improve the tools used in manufacturing to bring costs down when they can just relocate their manufacturing centers and pay foreign worker's a lot less to use the old tools to achieve the same outcome?
posted by saulgoodman at 12:47 PM on April 28

Isn't "domain knowledge" really just a fancy word for knowledge?

Pretty much, only a little more specific. It's knowledge within a particular field. Another common term used is "subject matter expertise."
posted by saulgoodman at 12:49 PM on April 28 [1 favorite has favorites]

If you're arguing that they had a marketing failure for those products, I could tentatively agree, but I don't see how the labor agreements fit in.

It's labour agreements as a general category but specifically the health care costs of pensioners that are doing them in. Funny that.
posted by srboisvert at 12:53 PM on April 28

After all, why should anyone bother trying to improve the tools used in manufacturing to bring costs down when they can just relocate their manufacturing centers and pay foreign worker's a lot less to use the old tools to achieve the same outcome?

Disclaimer: Not defending globalization. BUT the answer to "why" is that the idea is not just to bring down costs--the idea is to bring down costs while improving quality at the same time. That's where things get interesting. Contrary to popular opinion, you actually CAN have it better, faster, and cheaper.
posted by fusinski at 12:53 PM on April 28

Since when is running a company about making money anyway? It's about delivering quality and value at a reasonable price. It's about service to the community. Who can deny that?

In a system with public companies and investors who are often very far removed from any knowledge of the companies or their business models (example: My "Freedom 57" 401(k) fund or whatever it's called), making money is exactly what it's about. Delivering quality, value or community service may or may not be a side effect of making money. And that's not even taking into account hostile takeovers and other such practices. There are plenty of cases in which completely healthy companies delivering quality products have been taken over and restructed to maximize the ability of a few privileged individuals to extract wealth from the company.

I would also argue that individuals who may want to do the right thing and consider quality, social value, and corporate responsibility don't have long-term power to control whether their companies promote these things. Once you have public investors, even the CEO can get the boot if profits miss by the right amount for a couple of quarters.

To the original post, I also have known good MBAs and bad ones. I think the negative view of them has a lot to do with:

1) the perception that MBA programs are a magnet for people who just want to make as much money as possible, rather than having any specific drive to create some useful good or service. Not that that's evil or anything - in many ways, our culture is designed to promote this way of thinking.
2) the sense that they are fed some narrow and often incorrect assumptions and that they move from there, as opposed to a science, in which proving and reproving base principles is encouraged. Someone in an MBA program tell me if I'm wrong - do you have classes in things like "Limits to Capitalism", "Credit Card Rates: Usury In Disguise", etc.?
posted by freecellwizard at 1:13 PM on April 28 [1 favorite has favorites]

fusinski: That sounds nice, and I'd like to believe it, but in the real-world, what company is going to spend a dime more on R&D into experimental new manufacturing or industrial processes (research that might lead to a real breakthrough but that could just end up being a big waste of time) when they can just exploit imbalances in global labor markets to bring down their costs almost overnight without actually doing the hard work of innovation?
posted by saulgoodman at 1:14 PM on April 28

in the real-world, what company is going to spend a dime more on R&D into experimental new manufacturing or industrial processes ... when they can just exploit imbalances in global labor markets to bring down their costs almost overnight without actually doing the hard work of innovation?

In the real world, manufacturing companies account for more than 50% of global R&D expenditure. Toyota is the classic academic case of how they destroyed the US automakers with innovative processes. Dell is another. I don't mean to sound condescending, but do your research... seriously. This is happening. The shifting of manufacturing to low-cost labor regions is not the be-all, end-all story of making things better and cheaper. Lean and innovative manufacturing processes account for most of the savings.
posted by fusinski at 1:49 PM on April 28

funsinski: error. It is not "popular opinion" that you can have ith better, faster and cheaper. And you got the equation wrong. It's Right, Fast, and Cheap. Pick 2.

Yes, you can have it Right and Fast, it's not going to be Cheap.
Yes, you can have it Right and Cheap, it's not going to be Fast.
Yes, you can have it Fast and Cheap, it's not going to be Right.

Work from there and you might have some semblance of the most peoples problem with MBA's. They think you can have it Right, Fast, and Cheap, and they are always, always, always proven wrong.
posted by daq at 2:11 PM on April 28 [2 favorites has favorites]

Ack. I hate these threads. I especially hate the passive-aggressive use of the phrase "not to be condescending." Warning: Don't make me break your balls, rhetorically speaking.

The shifting of manufacturing to low-cost labor regions is not the be-all, end-all story of making things better and cheaper. Lean and innovative manufacturing processes account for most of the savings.

"Lean and innovative manufacturing processes" such as Toyota used to eviscerate its American competitors are not the be-all, end all-story of globalization either. Much of the story has been about putting capital back in the driver's seat after many years of labor movement advances. Don't kid a kidder.
posted by saulgoodman at 2:20 PM on April 28

Do you think Europeans are stupid when they made the best selling car in Europe a Ford? Or that 2 of the remaining 9 top-ten best-selling cars in Europe are made by GM?

All of the Ford and GM vehicles in that list are designed, engineered, and built by their European subsidiaries in Europe.
posted by zsazsa at 2:24 PM on April 28

Saul, please don't get me wrong--I'm not pretending that the Nikes of the world don't exist, and that real savings haven't been achieved in exploiting cheap labor. But there really is a lot of innovation going on out there, and automotive is an easy example to point to right now given the complexity of building a modern vehicle and the current state of certain players in the industry. I guess my larger point is still that there is plenty of good and bad generated by the leaders of business out there, and it's just really easy to focus on the bad right now since it is so pervasive in our everyday lives.

On a personal note, I take mistakes that others have made very seriously, and I know that I'm not the only one of my classmates who feel this way. It is very refreshing, for instance, to hear a lot of my classmates talk about their feelings on the market crash resulting from too much focus on short-term gains. I really do believe that the current generation of MBA students are going to operate a lot more conservatively and with a greater sense of responsibility than those of years past. Crisis has an interesting way of defining new values.
posted by fusinski at 2:33 PM on April 28

Pastabagel: What people don't seems to understand is that running a business enterprise is as much a science as economics or medicine. It is certainly imprecise, but it is not random.

Since we don't understand, can you help us understand? Seriously, how are you defining science and how does management fit that definition? Surely "science" means a lot more than "not random". My definition would involve the scientific method, but I'm guessing that's not yours because I don't see how that could fit.

Anyway, seriously, explain.
posted by If only I had a penguin... at 2:58 PM on April 28 [2 favorites has favorites]

I think Detroit's affection with the SUV might be a consequence of stupid tax law allowing write offs of vehicles:

[F]irst write off $25,000, which is the limit for first-year expensing of these vehicles. Next, you apply 50% bonus depreciation to the remaining $25,000 of cost, which allows you to write off another $12,500. Finally, you deduct 20% of the $12,500 balance as regular depreciation. Your total tax savings: A whopping 80% of the purchase price -- or $40,000.

Suddenly a big expensive SUV looks comparable to a Camry in many respects.
posted by pwnguin at 3:23 PM on April 28

The ratio of "good" MBAs to "bad" MBAs I've seen so far in my career is about 1:9, and that is perhaps being charitable.

Entrance into non-elite MBA programs is a joke for the most part, just meet a minimum requirement and pay your fees.

I think the MBA degree has been devalued so much since the middle 90's that unless you went to an elite school, the MBA is more or less worthless.

And really, how many times do we need to remind that Bush had an elite MBA, and was a complete failure at business before wandering into politics in a drunken stupor?

(No offense to any individual MBA holder/seeker. If you want to be mad at someone, be mad at your institutions who are basically selling the degrees.)
posted by Ynoxas at 3:26 PM on April 28 [3 favorites has favorites]

Well, you would hope it would somewhat resemble science. Or at least a well applied technology. Instead what we see at MBA schools is an endless stream of anecdotal evidence termed as "case studies." Success stories. Failure stories. But no rigor or framework or methodology to explain the stories and test them in a way which might help businesses game-plan. Just more stories about what P&G did in the 90s or what IBM did in the 80s. What you end up with are a pile of cautionary tales against having any sort of real business strategy. I wouldn't expect much out of an MBA. An MBA has heard countless stories about business. But business isn't just so much storytelling.
posted by 3.2.3 at 3:39 PM on April 28

Someone in an MBA program tell me if I'm wrong - do you have classes in things like "Limits to Capitalism", "Credit Card Rates: Usury In Disguise", etc.?

Definitely. I'll be graduating from one such program in a few weeks, and looking back on the required classes, the curriculum does try to look at the limits and failures of market capitalism.

To give you a few examples from the first year (which was before everything started going under), when looking at corp. responsibility we looked at failures at Enron, Worldcom, Martha Stewart, the ethics of Shell's activities in Africa, the tension between product patents and lifesaving in pharmaceuticals, the ethics of customer information gathering companies such as Choicepoint, the implications and ethics of offshoring, whether it's right for a private company to manage water (exemplified by Argentina), etc. etc.

As to financial stuff in particular, I didn't take as many financially-focused classes as some of my peers, but in the ones I did take we definitely went over how financial decisions can lead your company astray (we looked at how the Tribune company kept getting into trouble and how companies with steady cash flows tend to overleverage and overinvest, for example) we had a case on Iceland before it all blew up, as well as cases on the ethics of microloans.

There's certainly more than what I can dig up through looking at my notes. It's definitely taught, although it can be argued whether students actually take the issues to heart, and whether a school can actually compel students to do so. Furthermore, many of today's business leaders went to school in the early 70s, and I can't speak for the curriculum back then.
posted by Humberto at 4:08 PM on April 28

Ok, a few very subjective notes, hopefully covering points I haven't seen addressed here yet.

First of all, keep it's important to keep in mind an MBA is a remarkably versatile degree, especially so if you attend a Business School that allows a high degree of customisation. So I don't think its possible to make the broad, definitive statements here I'm seeing about MBAs, as the qualification can and will change markedly from institution to institution and, as many here upthread have picked up on, student to student.

From my own point of view: I already had an Msc in Quantitative Finance (London in the mid 90's) when I started my MBA in my mid 40's. It seems a lot of the business schools have noted the "snotty nose 22 year old kid problem", (not my view, someone upthread) and are now pitching Executive MBAs, which is what I took (I'm writing my dissertation as time away from MeFi and other distractions permits ...). An Executive MBA typically requires four to six years work experience as a prerequisite for admission. Most of my class ("cohort" in MBA speak) had ten to twenty years work experience, so our interaction was radically different than if a percentage of our class had been those stereotypical 22 year olds. Not "better" or "worse", just different.

I think looking at my two masters if I had to pick one if would have been an MBA, for the following reasons:

First of all, it's versatility. My MSc is very, very specific into a Capital Markets orientation. I'm a Quant by the sole measure of that degree. Nothing wrong with that, but lets face it: lots of stuff happens to companies, for example, in the board room that my MSc didn't prepare me to understand (sidenote: I took another degree in Management Accounting to cover that omission but won't discuss it here as that degree is very, very focused as well).

Second, my MBA taught me to think very, very critically, a skill that I believe lots of educational tracks (e.g., my MSc) omits in a variety of ways. Can't be critical if you don't understand the basic material, and lots of our time both in and out of class was spent first gaining an understanding of a topic (e.g., strategic change), then critically analysing various approaches to driving change in an modern, multinational organisation.

Third, my MBA rigoursly exercised and strengthened my presentation skills, as most of our courses were graded to no small extent on interaction with a sometimes critical and hostile audience. That skill has rewarded me tremendously - for example, I've gotten involved in UK politics and I'm the spokesperson for our 'cause, not only addressing Local Councils but also getting the odd radio and telly bit in.

Fourth, my MBA required solid time management skills to complete. Comprising fourteen courses (not counting dissertation) in a compressed period of time, the amount of work was overwhelming for many who dropped out.

Fifth, and I hesitate to add this but I must: connections. Much of modern business is all about relationships and who you know. You meet people and friends of friends and form a network that astounds you going forward. Example: looking at the old six degrees of separation, I'm two degrees away from Obama, and solely due to my MBA. No, it's not like I'm gonna be able to call him for a favour, but it's the people you know and the people they know that will help you.

So I don't think my MBA was a waste of time or money. Can't talk to others experience. I'm sure some of the folks who are very critical have MBAs and are speaking from personal experience.

But my MBA has already paid for itself in lots of unexpected ways and more than likely will continue to do so for the rest of my life.

Or until I take another degree!
posted by Mutant at 4:20 PM on April 28 [2 favorites has favorites]

there are many instances where students are taught how to do something without being explained WHY, which is a cornerstone of science.

And that lack of understanding can quickly produce errors, as the user of, for instance, a statistical instrument, should have a more than sound understanding of the mathematics behind their tools.

For instance, I have seen more than once people, MBAs and not MBAs, who where aware of the fact that an arithmetic mean is not the same as a geometric mean, or a median. Yet this "fact" was just a tidbit in their memory, and when it came to choosing between using mean or median to describe a distribution, many choosed the mean.

If part of the failure to understand which instrument should be used rests on the shoulders of students, sometimes superifical or too focused on pleasing their masters with the least possible effort, it is also true that in a number of statistical textbooks, at least in my experience, little attention is given to the fact that it takes very little to misrepresent a distribution and its undesiderable effects.

Teachers should also pay attention to how their students learn, and not only what they have learned and make sure they do indeed think about what they are doing, as opposed to just doing it.

But, if an education system is designed to print as many degrees as possible in a given amount of time, in order to obtain enough income to keep the system afloat and profiteable while "producing" replacement-cogs that don't question a set of given axioms, it is no wonder that some schools may be producing acritical "cogs" imbued with ideologies and rethoric, and some occasional skills, and not people trained to think rationally and critically on their own.

This also have effects on "office politics" skills, learning to deal with the fact that having countless degress will not shield anybody from being questioned by bosses and coworkers, or even more or less adamntly opposed. In an office or workplace in which most people can't tell a rational constructive criticism from an offence to their dear own ego, because they are not used to question their own knowledge to being with, much time and opportunities will be lost.
posted by elpapacito at 5:24 PM on April 28

Mutant, you talk about how the MBA has personally benefitted you (you're two degrees away from Obama, etc. and you have better time management skills), but not how your MBA has benefitted your organization or made you a better manager of the people you supervise, which is what Mintzberger's point was. It's great for your own personal career and makes you part of an elite group where you guys can help each other in the name of brotherhood, but how has it made your organization a better doer of whatever it does or makes, and could you have been just as valuable of an employee if you had learned management by managing or being mentored rather than trying to fast track your career by getting an MBA?
posted by anniecat at 6:10 PM on April 28 [1 favorite has favorites]

Mintzberg. Mintzberg.
posted by anniecat at 6:16 PM on April 28

Pastabagel: What people don't seems to understand is that running a business enterprise is as much a science as economics or medicine. It is certainly imprecise, but it is not random.

If only business people actually *understood* something of the scientific method-- but many seem, at least in my experience, remarkably prone to buying complete nonsense that a basic understanding of the scientific method would prevent.

The "case studies" and reliance on experts whom they don't seem to evaluate at all critically (particularly consultants, from what I can tell) seems to lead people to accept stuff that a methods 101 class wouldn't accept.

For example, that data is not the plural of anecdote and correlation is not cause: truly simple things.

Juking the stats, as they say on the Wire, seems to be more important than knowing what is really going on and trying to get beyond the sales talk and actually create something that makes a difference.

Do people in MBA programs have to learn anything of this? Only in the elite programs? Or is it like what someone posted above where they are given formulas, but not even the basics of their derivation? (Not suggesting people need to know all or even many such details, but even the bare form can allow you to know what assumptions are wrapped up in things, for example).
posted by Maias at 7:44 PM on April 28

Entrance into non-elite MBA programs is a joke for the most part, just meet a minimum requirement and pay your fees.

This is more or less true. An accredited, non-elite business school by my residence even recently eliminated the application fees. You really only need to go through the annoyance of taking the GMAT and in doing so, score in the ~50th percentile. Of course, the same can be said for most non-elite graduate programs of other flavors as well. Why so much venom towards the MBA in particular?

I think the MBA degree has been devalued so much since the middle 90's that unless you went to an elite school, the MBA is more or less worthless.

No additional education is worthless.
posted by fusinski at 8:42 PM on April 28

Wow. And I hear McKinsey never does layoffs.

Au contraire, I was told that the top consulting firms (McK, BCG etc) drop the bottom 25% of their consulting workforces every year to make space for new ones. They have some glib theory about churn being good for the soul and stuff. What it really means is that there's this dog-eat-dog Type-A culture where people are either on espresso shots or vodka shots all the time.
posted by the cydonian at 9:40 PM on April 28 [1 favorite has favorites]

No additional education is worthless.
posted by fusinski at 10:42 PM on April 28

I concur and will correct my statement.

I think the non-elite MBA has been so devalued that it no longer serves any purpose in the corporate world except for attaining higher salaries in structured-salary corporations, or meeting minimum requirements for some top-level management positions.

In other words, it has turned into simply a sorting and access mechanism, much like undergraduate degrees have for entry into the white-collar world.
posted by Ynoxas at 10:05 PM on April 28

Au contraire, I was told that the top consulting firms (McK, BCG etc) drop the bottom 25% of their consulting workforces every year to make space for new ones. They have some glib theory about churn being good for the soul and stuff. What it really means is that there's this dog-eat-dog Type-A culture where people are either on espresso shots or vodka shots all the time.

This is sort of true, but it's also part of their corporate culture. You typically get hired for a two year period, then a small percentage get promoted, the rest leave. It's not like there's hard feelings from those that don't make the cut, nor is it a surprise. They try to help their "alumni" to get good jobs elsewhere.
The reason for this is that they are cultivating their next generation of customers.
posted by atrazine at 12:00 AM on April 29 [1 favorite has favorites]

It's not like there's hard feelings from those that don't make the cut, nor is it a surprise.

Oh yes, of course not, and I do realize I should have been clearer here, but people obviously know what they're signing up for when they take it up. And clearly, there's no social stigma either for 'losing out', as it were. That said, my point was that McK is not really structurally set up for life-long employment that the OP seemed to imply; the reality is that there's a lot more churn there than in 'industry'.
posted by the cydonian at 6:11 AM on April 29 [1 favorite has favorites]

Coincidentally, I had only just finished reading this 2006 article called The Management Myth, by Matthew Stewart, before seeing this thread.

The world of management theorists remains exempt from accountability. In my experience, for what it’s worth, consultants monitored the progress of former clients about as diligently as they checked up on ex-spouses (of which there were many).
posted by harriet vane at 6:12 AM on April 29 [3 favorites has favorites]

Humberto:

Thanks for the explanation of your MBA experience. It sounds like in your program at least, there is some good material examining different economic systems, ethics, etc.

Given the stridency of my earlier post, you gave a remarkably cool and helpful reply.
posted by freecellwizard at 7:14 AM on April 29

Daniel Davies on some useful things he learned in business school. Part two.
posted by russilwvong at 9:42 AM on April 29

If you have a sciencey undergrad background and a techie early career like I had, an MBA is a great degree to get, not because it allows you to become a Master of the Universe but because it gives you a framework to think about how business (and hence a lot of the world) works.

Until I did my MBA, I had no clue about Accounting, Finance, Marketing and Strategic Management. After the degree, I didn't have all the answers but I knew the right questions to ask at least. And a way to think about getting the answers.

The other reason to take the degree is that if you go to a good school (I'm not talking necessarily Ivy League), the experience is a blast. It's thrilling, intimidating, scary, mind-stretching and provocative. You're dealing with problems that have no certain answers, the challenge is thinking about them fully from a broad multi-disciplinary angle. You're under heavy time pressure in a team environment. You'll be pushed to limits and in being so, you will grow.

It's been over a decade since I got my degree. If I had to do it again, I would. The payoff personally has been terrific. I would recommend the Executive MBA option though. Without work experience, the benefit of the degree is reduced. (And get your company to sponsor you).
posted by storybored at 8:55 PM on April 29 [2 favorites has favorites]

If you have a sciencey undergrad background and a techie early career like I had, an MBA is a great degree to get, not because it allows you to become a Master of the Universe but because it gives you a framework to think about how business (and hence a lot of the world) works.

I would say the same thing about getting an entry level career in the IT consulting field and working my way up. I started out as a Project Administrator with my current employer about 8 years ago, then I quickly moved up to a Lead Business Process Analyst role, before moving into a Programmer/Analyst role a little under 5 years ago.

And the reason I wanted to make the switch from the "business side" to the "technical side"?

Because it began to become increasingly plain to me that as valuable as everything I'd learned about business in the abstract over the last few years was, without sufficient domain knowledge, I was still essentially groping around in the dark. After seeing far too many projects suffer because the right hand didn't know what the left hand was doing, I realized I had to know exactly what any technical solution we proposed would entail, in a direct, hands-on way.

No doubt, there are general management principles that apply equally well no matter what the specific nature of a business is. But it takes time and practical experience to develop the intuitive skills needed to know how to apply those principles effectively. So I don't think management training counts for much in isolation, no matter how elite the training. It's just too abstract a subject matter. It's like giving a guy a box of hand tools, making him sit through a series of lectures on how they're supposed to be used, and then declaring him a master carpenter.
posted by saulgoodman at 9:11 AM on April 30

I think you're on to something there, saul. Without domain expertise, an MBA isn't firmly grounded. They can't tell the difference between solid judgment and bullshit. Maybe that's what makes some MBAs dangerous.
posted by storybored at 7:32 PM on April 30