The Debate: Do MBA programs Miss the Mark on Management Education?

Business schools are often scrutinized for their ability - or inability - to train effective managers and business leaders. The renowned US entrepreneur and venture capitalist Peter Thiel, for example, recently came out against business schools and MBAs, comparing them to herd animals.

In this edition of the TopMBA.com debate series, Dr Henry Mintzberg argues about the need for more effective training in management at business school, while Dr Claus Langfred highlights the many ways in which schools are adapting and preparing students for the business world. You can have your say below the line.

Yes - Henry Mintzberg, McGill Desautels

I have been asked to write a critique of management education. The problem is that there is hardly any management education. There is plenty of business education.

The best of the MBA programs may do fine at training analysts—for marketing research, consulting, financial analysis—but that is not management. Anyone who graduates believing that he or she has been prepared to manage is a menace to society.

Management is neither a science nor a profession. It is a practice—largely craft, learned from experience, the best of it also art, in the form of vision and insights, both supported by whatever science can be used (usually not much).

Management practiced By Analysis (the MBA), devoid of deep experience about the context, in the absence of any real insight, is technocratic. Such management has been causing considerable economic turmoil.

I have written a good deal about the problems of the MBA; here I will just present some disquieting data in support of these claims, and then describe management education. 

The Harvard 19

Business schools like to boast about their graduates becoming CEOs--Harvard especially, since it has the most. But the skills needed to get there may differ from those needed to perform there.

MBA students arrive smart, determined, and aggressive. Case studies teach them how to pronounce cleverly on situations they know little about (see my recent Tweet2Blog, or TWOG, on the subject), while analytic techniques give them the impression that they can tackle any problem. With graduation comes the confidence of having been to business school, plus that “old boys’ network. All this helps many get there on the fast track. Then what?

Ten years after its publication in 1990, I looked at a book called Inside the Harvard Business School, by David Ewing. (The first line was “The Harvard Business School is probably the most powerful private institution in the world.” He may, unfortunately, have been right.)

The book listed 19 Harvard alumni who “had made it to the top” in business—the school’s superstars at the time. My attention was drawn to people on that list who had since run into major problems.

So Joseph Lampel [of Manchester Business School as of this year] and I studied the subsequent records of all 19. How did they do? In a word, badly. Ten seemed clearly to have failed, meaning that the company went bankrupt, they were forced out of the CEO chair, a major merger backfired, and so on. The performance of another four could be called questionable at least.

Some of these fourteen CEOs built up or turned around businesses, prominently and dramatically, only to see them weaken or collapse just as dramatically.

These results were surprising, but not so much as what happened next: Nothing. They were published prominently, in Fortune magazine (19 February 2001), also in my book, Managers not MBAs (2004, pages 111-119), which has sold over 80,000 copies.

The study offered no definitive proof, but you might think that it would have set off alarm bells, or at least evoked a bit of curiosity. That it did not may suggest as much about business schools as these results suggest about their graduates.

How about Management Education?

While many business schools graduates may get into positions of influence, their education does not equip them to perform once there. Of course, a year or two in a classroom does not necessarily destroy a potential ability to manage—after all, there were the five others among that Harvard 19. But the performance of many of the rest suggests either that business schools have succeeded in putting some wrong people on the track to important places, or else that the schools’ emphasis on cases and analysis may be putting some right people on the wrong track of managing.

Some years ago, a group of us from business schools around the world joined forces to create the International Masters in Practicing Management (in business initially, with a later concentration added for health care).

While a manager cannot be created in a classroom, people who practice management can be helped enormously by reflecting on their own managerial experience. Accordingly, our participants stay on the job—this is about doing a better job, not just getting a better job—coming into the classroom for 10-11 day modules five times over 16 months. There, they sit at round tables so that they can spend half the time sharing their experience and reflecting on the insights. The class thus becomes a community of engaged managers, not a gathering of wannabe individuals.

This has facilitated a variety of innovative practices. For example, in friendly consulting, the managers work on each other’s problems. In managerial exchanges, they pair up and spend the better part of a week observing each other’s managing. Both these activities are hugely popular.  Impact teams formed with associates at work enable the managers to carry their learning into their organizations.

The MBA is fine so long as it is recognized for what it does well--and what it does badly. Beyond the MBA, it’s time for management education.

Henry Mintzberg, Cleghorn Professor of Management Studies at McGill University, is the co-founder of impm.org  and imhl.org and the author of a weekly TWOG (tweet2blog).

No - Claus Langfred, George Mason University

In a recent “ask me anything” thread on the website, Reddit, Peter Thiel expressed some concerns about MBA graduates, explaining his strong reluctance to employ them.  Thiel noted that most tended to be “high extrovert/low conviction” which he feels leads towards “extremely herd-like thinking and behavior.”

Concerns of this type are nothing new.  His sentiment, in part, echoes what Henry Mintzberg articulated in his book, Managers not MBAs from 2004.  Mintzberg used words like “arrogant” and “mindless” to describe MBAs, and described conventional MBA programs as being “out of touch and unrealistic” and training “the wrong people in the wrong ways.”

MBA programs have often been maligned for the perceived shortcomings of some MBA graduates.  In the early 2000s, the Enron, WorldCom and Tyco scandals led many to lay some of the blame of corporate misbehavior at the feet of MBA programs. If only MBA programs at Harvard and Northwestern had taught Jeffrey Skilling and Andrew Fastow more about ethics, the logic went, perhaps the fraud at Enron might never have occurred.

Although Peter Thiel is careful to not entirely throw the baby out with the bathwater—saying that he doesn’t have an “absolute ban” on hiring MBAs, I believe he may still be engaging in several logical fallacies.

First, while it is easy to vilify the stereotypical and Dilbert-inspired narrow-minded and numbers-focused MBA graduate, he or she is largely a bogeyman of a bygone era.  MBA programs have been constantly evolving, improving themselves, and trying to create a better and more flexible and open-minded graduate. 

The scandals of the early 2000s resulted in much introspection at MBA programs, often leading to substantial curriculum and instructional changes. Business schools are constantly learning from the business world, and updating curriculum and content to make sure they match the real world, and not some unrealistic and abstract ideal. 

For example, the use of current business cases, consulting projects with local businesses, internships, projects and competitions to develop new products or services, etc.—are all ways that modern MBA programs ensure that they are not “out of touch and unrealistic” as Mintzberg lamented.

Second, rejecting the MBA graduate may result in a dearth of important underlying business skills in an organization, especially a smaller one. An enthusiastic innovator may have a fantastic idea, but can easily fail without having a basic understanding of fundamental business principles and management skills—no matter how good the idea itself might be. 

In what may seem like a somewhat counter-intuitive notion, it is perhaps in the small and medium startup firm that MBA graduates would be particularly useful, to help avoid basic errors in terms of functions like financial decisions, basic marketing concepts, effective accounting and perhaps most importantly, effective teamwork, leadership and change management.

Third, it is important to acknowledge that Peter Thiel does operate on the creative side of the tech sector.  Some might argue that an entrepreneurial tech startup, requiring creativity and innovation, might be at odds with the rigorous focus on control and very quantitative thinking of many traditional MBA graduates. 

Note my use of the word “traditional” since in fact, modern MBA programs typically involve extensive specialization and elective selection, which allows interested students to be far more diverse and flexible than the stereotypical “traditional” MBA graduate of the past.  At George Mason’s School of Business, for example, our Center for Innovation and Entrepreneurship houses our Mason Innovation Lab and hosts various programs and competitions to encourage and support innovation and creativity, ensuring MBA students who are interested in entrepreneurship and technology develop an in-depth and practical understanding of that world, and are not just a bunch of stiff suits who are focused on numbers and spreadsheets.

Finally, expanding on the previous point, MBA programs today are far more focused on what was almost derisively called “the soft skills” a decade or two ago.  Business schools have realized that while the “hard skills” of finance and accounting and operations and quantitative analysis, etc. are absolutely crucial fundamental skills for graduates to have and to get a job in the short term, it is in fact the “soft skills” such as leadership and negotiations, and power and politics, and psychology and people, that will ultimately allow the modern MBA graduate to have a successful career in the long term.

The pitfalls of “herd-like” thinking, flawed decision making, and cognitive heuristics and biases are extensively taught in modern MBA programs – so Peter Thiel should be thrilled.

Claus Langfred is an associate professor of management at the School of Business at George Mason University, and is academic director of the MBA program. Prior to teaching in George Mason’s MBA programs, he has taught MBA students at the Olin School of Business at Washington University and at the Kellogg Graduate School of Management at Northwestern University. He primarily teaches classes on organizational behavior, teams, and leadership. 

What do you think? Have your say below the line.