Why an MBA just doesn’t cut it

Mark Vernooij
February 4th, 2019
Article by: Mark Vernooij
Why an MBA just doesn’t cut it

In 1908, Harvard University introduced the first MBA as a general management degree. It combined subjects like finance and accounting with leadership, entrepreneurship, and communication. In the midst of the second industrial revolution, we needed leaders to learn effective management techniques in order to manage increasingly complicated business structures.

 

There are some undisputed strengths of a business school education; access to great researchers that know the latest and greatest in their fields, and the network of students and alumni that can help when it comes to finding a job, a co-founder, or even a romantic partner. Today, however, business schools seem to be losing their edge.

 

In 2017, most U.S. business schools reported declining numbers of applications, including renowned institutions such as Harvard. This year's data is expected to show a fifth consecutive year of declining applications for MBAs.

 

At the same time, we are seeing an increase in alternative education options. Take MOOC's (Seth Godin's altMBA), various platforms offering micro-degrees (Udacity), and physical schools with new curricula and teaching methods such as Kaospilot, Amani Institute, Knowmads, and THNK School of Creative Leadership.

 

A growing number of companies today don't care whether you have an MBA anymore. Earlier this year, Glassdoor published a list of 15 companies that no longer require a degree, one of which was Google. Laszlo Bock, Google's former SVP of People Operations, explains that there are five attributes Google looks for in new hires: general cognitive ability, emergent leadership, humility, ownership, and expertise. "When you look at people who don't go to school and make their way in the world, those are exceptional human beings. And we should do everything we can to find those people," says Bock. Too many colleges "don't deliver on what they promise. You generate a ton of debt, you don't learn the most useful things for your life. It's...an extended adolescence."

 

So why is it that business schools seem to have lost their edge?

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Why do business schools seem to be losing their edge? #business #MBA #leadership #creativeleadership #education Click To Tweet

Too focused on knowledge transfer and functional skills

Business schools – like many schools – were founded on the principles of information asymmetry and professor as the “sage on stage.” But digitization has made knowledge abundant and cheap or even free. And with the rise of platforms, this knowledge is easier to bundle and unbundle into different formats that can be delivered through various channels as we see in other content industries like music and video. The rise of digital education platforms further drives demonetization and access to knowledge and functional skills. While this industry might still be nascent, it’s learning at internet speed and growing fast with no signs of slowing down.

A typical MBA curriculum today is mainly focused on transferring knowledge and functional skills like strategy, operations, and finance. However, this focus comes at the expense of building solid leadership skills, where topics like leading oneself, leading others, leading organizations and systems, and ethics are typically a much lower priority. This is a missed opportunity since these topics are less democratized, more about experience than about knowledge, and thus significantly harder to do in online environments.

Too vested in the paradigm of shareholder value creation

In his 1970 piece in the New York Times, economist Milton Friedman said, “In a free society…there is one and only one social responsibility of business – to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game.” Most business schools – like many organizations – have been eager to adopt this point of view and train their students accordingly.

In a world where out of the top 100 economies 69 are corporations, it’s not just governments and NGOs that can be held accountable for collective progress. Luckily, many people and organizations are coming around to a broader perspective of leadership that considers shared value creation. Business schools, however, have been slow to adapt and change. If the concept of shared value is included at all, it’s often in the form of add-on courses rather than an integrated redesign of the curriculum.

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In a world where out of the top 100 economies 69 are corporations, it’s not only governments and NGOs that can be held accountable for collective progress. #makeanimpact #leadership #business #socialimpact Click To Tweet

Too little differentiation for mid-career executives

Mid-career executives in their mid-30s to 40s are typically served by business schools through part-time or “executive” MBAs. The brand promise of these programs is that students get the same content and similar experience as a full-time MBA, which targets students in their mid- and late-20s. The curriculum for many of these is indeed a similar, but boiled-down, version of the full-time MBA curriculum.

So while executives gain from studying with peers at the same phase in their career, the curriculum is primarily tailored for their time commitment and availability, it’s not tailored to the needs they have in their career stage. This is a highly questionable approach since mid-career execs who are typically in resource management and early leadership positions require very different development from individual contributors or early managers in their mid-20s.

Too slow to progress

A business school’s primary talent is its professors, who have a passion for research. This is why they become professors, and this is how they are incentivized to receive promotions or tenure. As a result, the clock-speed or organizational heartbeat of a business school revolves around research projects and grant cycles, which are typically several months, if not years, long. The effect is that educating becomes a secondary objective at best; many professors barely change or update their teachings over time, forcing students to learn outdated lessons about leadership instead of learning to lead for the future.

Compare this to technology firms and agile companies that work in two- or four-week sprints to constantly learn and improve their products or services. As technology futurist Michell Zappa says, “Technology change is constantly accelerating. That means today is the slowest day you will ever live; and if that doesn’t scare you, think again!” Rather than near-static teachings, we should have a curriculum that reflects this environment of constant change.

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Leaders today have to lead in a world of 'unknown unknowns.' #creativeleadership #complexity #leadership #education #business Click To Tweet

The world is complex, not complicated

In 1908, best practices and expertise were enough to navigate simple and complicated problems, but today, leaders face increasingly complex problems. While complicated problems can be divided into sub-problems and have at least one or more right answer, the correct solutions to a complex problem cannot be unearthed. It’s like the difference between a mechanical problem in a car and a societal problem. Cars are quite complicated, but an expert can fix it. A society, on the other hand, is constantly changing, has many different patterns that shape it, and its whole is far more than the sum of its parts. This is the world of “unknown unknowns,” and it is the domain where most of today’s leaders have to lead.

Business schools have adopted the mechanistic and mass-production view of the second industrial revolution. By design, they have divided the problem of leading an organization into sub-problems: finance, marketing, strategy, etc. This is how departments, professors, research, and teaching are organized and it’s how MBA students are taught. But real life is based on collaboration – across domains, disciplines, sectors – which is exactly what makes leading difficult.

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Business schools are great at teaching business as usual, but today’s business is not usual.

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