Analysis – Business Education, MBA Programs Helped Trash The Economy


Business education: Harvard Baker library

Business Education: The EconomyHarvard business school library

Business schools educate armies of bankers, investors and corporate finance executives. How come they don’t feel responsible for the financial havoc that has ensued?

After the dotcom bubble burst in 2000, and then again, following 2008’s financial crisis, there was a brief flurry of soul-searching among business schools.

Then poof — gone.

Business schools still don’t seem to be grappling with what it is they’re teaching that could have contributed to the biggest economic failure since the Great Depression. As someone who teaches at business schools in the U.S. and the U.K., I find this deeply troubling.

How can B-schools teach about organizational change and then fail to be examples of it? How can professors advocate for rigor and then not demonstrate it themselves?

I fully appreciate that some schools are more advanced, creative and thoughtful than others but I remain puzzled by how little core curriculum and ethos have changed across the board. So here are the top questions I think every business school needs to address in order to help create top-flight business leaders

Does business education need to be so expensive?

Harvard estimates that its 2013 MBA students will need to find $84,000 for 9 months of education. Others argue you can get by on $60,000 per year. But if you take into account two years of lost earnings, you’re looking at a cost of anywhere between $240,000 and $400,000 for your MBA.

If you are carrying this as debt, you’ll find that your MBA, far from enhancing your career prospects, has shrunk them — because there will be plenty of jobs you cannot afford to accept. Wall Street or large corporations are the only places you’ll find the salaries you need to eliminate your personal debt.

The prospect of such debt-ridden graduates risking everything they don’t have on a start-up seems counter-intuitive at best. But if B-schools turn into Wall Street feeders, the cost in loss of intellectual freedom will be immense.

Does business education really need two solid years?

Most European schools now offer MBAs in 12-18 months, in modules, in part-time and executive programs. This is challenging for teachers because it means students take learning, apply it instantly and come back and report whether it worked or not.

I think those reality checks are fantastic and there’s no doubt that my part-time students are invariably the most challenging. It also makes a two-year program look bizarre.

Moreover, one reason many schools have failed to get their female enrollment significantly about 25% is because women don’t like the idea of taking so much time out of the workforce when they know they may have to do the same again if they have kids. The business environment is dynamic and fast-changing and two years out of it feels increasingly anachronistic.

Why are some business schools still portrayed as boot camps?

Women are suspicious of the boot camp ethos with which some schools market their programs. The gladiatorial fervor of the lecture room puts them off not because they aren’t smart and rigorous but the concept of business as a cutthroat arena in which you either kill or are killed feels ugly, stale and male.

Lots of bright young men find it pretty repellent, too.

They’re looking for a way of doing business that solves more problems than it provokes. Some of the newer schools, like Presidio, and some of the state universities are responding to this but they still have to counter the old boot camp image.

When will multi-disciplinary teaching attract kudos instead of objections? Almost all business is fundamentally multi-disciplinary, requiring tremendous collaborative skills from individual disciplines. A few schools like Carnegie-Mellon understand this and have excellence in core disciplines to put together into strong innovative programs.

But the accrediting agency, AASCP puts little store by this and most academics find that multi-disciplinary work holds them back. The most prestigious academic journals are mono-disciplinary so the newer work is hard to get published. Because it’s harder and may take longer, the investment of time garners little reward.

This is a classic example of a system that is past its sell-by date. Business school accreditation needs to reward those who are in step with the business environment, not penalize those who try to be.

When and how will ethics become central to every aspect of teaching? We all know by now that teaching ethics as a standalone subject doesn’t work because it marginalizes what should be centralized. Harvard’s attempt to teach emotional intelligence in a few weeks seems likely to confront the same problem.

What is challenging about ethics in business is that most people simply do not identify an ethical problem when they encounter it; they don’t perceive the options or the consequences of their choices. And that failure of perception is even greater when they are saddled with debt — which takes me right back to Problem 1: the cost of MBA programs.

I love business, I love teaching it and I have tremendous passion for my students and their achievements. I have always believed — despite mounting evidence to the contrary — that business is the single most powerful way to make the world a better place. And that’s why it grieves me to encounter, as I so frequently do, a mindset around business education that focuses either on selling degrees to boatloads of consumers or, even worse, on providing nifty side doors for academics to sidle onto Wall Street.

It’s time to stop teaching leadership and demonstrate some.


Margaret Heffernan is an entrepreneur, chief executive and author. Her most recent book is “Willful Blindness: Why We Ignore the Obvious at Our Peril” (Walker & Company).

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