June 12, 2006

Worth(lessness) of an MBA

There is hardly any university worth the name that doesn’t offer an MBA programme. With increasing number of graduates seeking admission there is growing skepticism about the worth of an MBA, that is generally perceived as the most versatile degree that opens many doors of employment. A management professor at McGill, Montreal, Henry Mintzberg, tracked the performance of 19 academically good students of the Harvard Business School (the class of 1990) some 13 years after they graduated (in 2003).

He came up with the conclusion that 10 of the 19 considered themselves “utter failures”, another four rated their performance as “very questionable”, and only five out of the lot did well. The yardstick of success comprised factors such as 1) personal satisfaction with one’s job 2) the respect of one’s peers; and 3) holding a top post – CEO, CFO – at a corporation. Oddly, salary level expectations ranked lower in order of importance; and some MBAs included in their mix of success priorities a capability to make a difference to society.

Prof. Mintzberg is cited in NYT as saying that managers can’t be created in classrooms. If b-schools give people who aren’t management material the impression that they can be turned into managers, they create hubris.

24 comments:

Blog-Capt. Anup Murthy said...

I am of the opinion that B-Schools do not teach students about doing business in the real World. The curriculum is perhaps taught mainly by academecians. If "how to do business in the real World" subjects are taught by businessmen and entrepreneurs in their free time or part time, that would be better. Some (or perhaps most) professors teaching management, marketing, finance and related subjects have no real experience themselves of doing any business, starting any business or even running a business. This makes a difference and I have MBA's coming to me for advise and I never went to B school!

Nataraj KR said...

Whereas i am an University MBA , i have worked with a few B-School MBA's as my boss and also peers in both IT and Non-IT industries. Whereas they demonstrate utilization of management tools/techniques that were taught during the tenure of course,i have not come accross a genuine MBA who has the material of a leader. These days the term "manager" is getting obsolete and professional recruiters are in the constant pursuit of "leaders". Perhaps, this is where EQ(emotional quotient) is gaining edge over IQ.As for me, the leader should have the following qualities apart from many more which i would have missed:
-intuitive and clairvoyant capacity to situations and people.
-indepth knowledge about cross-functions.
-ability to interface with all position levels with equal assertiveness and tenacity.
-candidness in approach without regionalism/napotism,
-problem solving techniques.
-sincere, kind-hearted, open to feedback and a patinet listener.
-Action-backed communicative ability without which people sense the emptiness/vacuum very soon.
-should not give unrealistic committments.
-self-creative mindedness and ability to recognize and laud the creativity of team members.
-Amicable to have good relationship vertically and horizontally.
-Should be devolopment oriented aligning his own and team KRA's with organizational goals.
-Not only a visionary, but should work towards making the vision a reality.
-adoptability to change management scenario.
-last but not the least: hunger for learning new concepts/tools despite ageing process without giving room for "ego" issues.

This could be the raw reason that B-school MBA's fail miserably since they implement all the management tools on non-management staff/team members who are averse to high-handedness. I claim that a man who has climbed the management ladder gradually is an effective manager than the raw graduate who is not exposed to different challenges posed by business scenes.

Blog-Capt. Anup Murthy said...

I agree with Mr. Natraj, especially the management guy ho climbs up the ranks. As for the qualities mentioned for a "leader", thats what I mean when I say entrepreneur. A succesfull entrepreneur has all these skills. Professors and teaching faculty seldom have this experience to pass on to students.

Nataraj KR said...

The following is the response for my e-mail and also my clarifications to him, when i initiated a for-against debate within my own group. !!


Difference between a B School MBA & home grown equivalent is almost same as between ready to eat package & prepaing from scratch.
companies do not have time & money to teach skills to raw candidate and then see him fly away when he is ready.


Home grown --you know the quality of ingredients and quality of cooking. Ready to eat : you are risking !!.

The taste may differ from brand to brand. Also in a pack of 1000 pop corns you may find 20 -30 half finished/still raw. But you get to consume and enjoy rest of them.


Agreed. But, the 20-30% raw can have a devastating influence on the rest in a food scenario. Hence, this anology is not relevant.

Moreover with passage of time the quality being churned out by schools will only improve. They are waiting for right seeds wich they can turn in to good plants.
hence start prepareing your kids in that way. ..

This a +ve thought in the right direction. The churned out good plants should not claim that they are already sky-touching trees. The plants have to face many summers and rainy seasons for full growth.

Do you want your kid to waste 15 years learning real business workd and then apply that learning ?? dont you want him to start from where you left ?? You need to pass on your experience. Similarly schools are passing on whatever collective quality experience / knowledge we have to new gen.


I want my kids to grow in the same path that i grew since i know the realities of the cumbersome life battle so that the so called "seasoning " is quite effective. It is better to have a stabilized flow than the sudden spurt which only vanishes. !!!

GVK said...

Interesting, and thought-provoking comparison, Mr Nataraj, between MBAs and home-grown managers (HGMs). Do you think their relationship has to be necessarily adversorial?
As someone who knows little on how MBAs are made, I wonder if it is possible to assimilate experience/expertise of HGMs while training MBAs, so that they would have an idea of how we conduct business in India.
I have in mind the managerial attributes of someone who runs 'dubbhawalah' network in Mumbai.
And self-employed small-timers such as Pushcart Papanna (Mysore masale-puri vendor) who multi-tasks - cooks, dishes out, dish-washes, collects cash, and keeps tab on credits tally of regular customers, plus keeping the municipal supervisors and the police in good humor - all, at the same time, without losing his cool.

Nataraj KR said...

The gist of my saying is that the new B-school MBA who is just out of college has to neccessarily assimilate the complex human management while he may have the deep rooted knowledge on management tools. As my colleague has rightly put it, there can be a small chunk of bad managers from this school. But making these guys sit in the high profile chairs to start with, seems to be a paradox.If one analyzes the managerial traits of Papanna about whom you have made a mention and i have had many personal interactions, it is my turn to wonder whether management is charismatic or taught ??!!

Vijendra Rao, the critical outsider said...

My day has just begun and I tell myself on re-reading this item and the responses to it, that I must not start my day on a negative note.
First of all, let me thank Mr.GVK for engaging us in yet another interesting debate. To the extent that many of the b-school MBAs cited in his item have placed salary low down their priority list, I think they are not failures, but a resounding success. I don't know why The NYT draws a conclusion that is contrary to what the data at hand should have led it; the candidates after all have on their priority list the lofty idea of wanting to make a difference to society. Their Alma Mater should also be credited with success for having worked such wonders. Failure is best traced to organisational inadequacies which get buried deep down weighty balance-sheets and impressive PR efforts, besides, of course, an obliging accomplice called the media.
Over the weekend, I had an unexpected, nevertheless inspiring, discussion with a senior Infosian. I straightaway told him that for reasons that I consider are not invalid, I want to believe that the entity called Infosys is all hype, even a media creation. The worth of an organisation is not to be measured on its earnings alone - just as in the case of the individaul. Yes, profits is a criterion, not the only criterion. The Infosian, surprisingly with an extremely Marxian specialisation, did concede the point. Our discussion was inconclusive, but parted after agreeing to meet again.
Infosys, he said, was like any other organisation, with its own share of black sheep. The difference, however, is that there is right reward for the right candidate. There is, however, a high level of employee dissatisfaction.
Bringing this aspect into our present discussion, this bit of information about Infosys - not totally new to some of us = lends itself to diverse interpretation. That Infosys does not provide the right work atmosphere to its employees, or that the employees set themselves such ambitious targets that even Infosys does not provide the right environment in which to fulfill them; etc.
The Infosys balloon may not burst -it is nobody's wish that it does - but will face the threat of considerable deflation in three years, going by global outsourcing trends, the Infosian predicted.
Here again, one can look at this as something normal in the lifecycle of a company, big or small, and watch from the sidewings how the giant is going to weather the storm. It is its ability (or otherwise) to withstand the impending crisis that will decide the strength (or otherwise) of its MBAs.
The first book on management I read was Peter's Principle. My own thinking and experience, concur as they do with its author, have enhanced my esteem of him. It is the same Peter premise that wants me to lead to some of my dismal assumptions about Infosys. I have never been much of a management man, but I work on my drawing board even before playing a cricket match whose outcome has no great consequence. I am led, of course, by the common sense approach - like the dabbawallahs; or those who worked the miracle called Lijjat Papad. An old woman who sells bananas would know where to squat with her ware in order to do good business. "Visibility" is what is on top of her mind. Those who sight what is on display should also buy it. They must have the urge, or it must be a habit, or it should be a need.
I am reminded of a story by Roald Dahl, the Norwegian writer, in which, a smart (urban) Alec, on coming to knwow that a piece of antique furniture is available on the countryside, goes there on a holiday. He does not want the potential seller - whom he has sized up, even without having seen him, as a simpleton - to know that he has come prepared for buying the piece. So, he parks his vehicle, big enough to carry the antique, at a considerable distance, away from the house of the seller. The deal finalised, having succeeded in talking the guy into underselling the item, our sophisticated city man tells him that he would be back in about an hour with the vehicle. When he goes back, he finds that the gullible villager has chopped off the legs of the antique and, when questioned, says with all his innocence that he wanted to make it easy for him to transport.
My interactions with MBAs has been rather recent. I had not responded readily to an offer to teach soft skills to the MBA students. Then, one day, when I attended a lecture by an Australian linguis, I found that the students were refusing to come out of their shells. I thought this had more to do with the fact that the speaker was a white man. At a time when globalisation is ever increasing the multicultural/multinational/multiracial composition of work places, inhibitions like what I witnessed could not be acceptable. So, I offered to handle them, along with somebody who had similar ideas.
I would like to have feedback from those who are better experience and exposure on: Why is it that the developing world, especially India, has found itself at the wrong end of the negotiating table at all global forums. It is easy to attribute it to the economic might of the developed countries, but I want to attribute it, besides other things, to our common colonial past. How is it that from the Portuguese to the East India Company to the Uruguay Rounds, things are so darn one-sided; with clauses of business deals so heavily loaded against us. Are we, the people, who talk so much and brag about our English being superior to our former masters', such poor communicators?

Blog-Capt. Anup Murthy said...

A difficult set of questions to answer, Mr. Vijendra. I don't believe Indians are poor communicators or that they lack the will to succeed in the International arena. I know too many examples of successes. But, as for Indian communicators getting the short end of the stick during uruguay negotiations or any other "governmental" field, perhaps we are cowed down by the "white tactics". The question is, what is the qualification, training and negotiating ability required when the Government chooses to send a negotiator? Is the right person for the right job sent? Is he able to project india's image as it needs to be presented? did the guy get in by merit or is this guy someone's favourite or God forbid, a guy who got in because of merit or purely low scoring reservations guy? I am probably treading dangerous waters here but it needs to be asked. Otherwise, I don't think we can stereotype Indians as being aloof and not capable of communication.

Vijendra Rao, the critical outsider said...

Thanks for that, Captain. It is the plethora of giants that India produced during its crises that stop me short of making a sweeping statement against our compatriots. Gandhi, Nehru, Ambedkar - just to mention some of the better known examples - were all such powerful communicators. It isn't incidental that all three mentioned here had the benefit of exposure to the west. More recently, even the Emergency brought to the fore the superb communication skills of some of our leaders - Morarji, for instance. (soon after the Emergency was lifted, I heard him in Bangalore, and touched by his speech, even as a teenager, I took out the two-rupee note in my pocket and contributed it to the Janata Party funds, as my contribution to the cause of free expression.

Nataraj KR said...

I don't know what logical sense i made with my views. But, by interacting with journalistic "diggaja"'s like you people, i am refining myself. Late entry into the bus, but a very right one.

Vijendra Rao, the critical outsider said...

I have for quite some time now been obsessed with the question, whether or not loyalty to the nation - a less strong alternative to patriotism - should come into play in the context of business management. When I raise this question, I don't necessarily have the example of a case like the Union Carbide (where things were crystal clear and, to my mind at least, there was no scope for dilemma over the choice; in fact, it is more a humanitarian issue).
Take the example of Coke. There is so much said about the huge concessions shown to the company by the government. How many of our masters of business administration, whether from b-schools or elsewhere, are led by ethical considerations? How much importance should this issue be given in the global economy? Proliferation of MNCs has thrown up the question of whether our MBAs should be loyal to their employers or to the interest of the country. Or, does the question occupy their attention at all?

Nataraj KR said...

Mr Rao, i feel that the answer lies in your question. Obviously, not only MBA's from B-schools or otherwise, have to go with the flow, if not for anything, atleast for saving and fortifying his chair. Even though, it may be a mental prostitution of deceiving oneself by going against one's internal voice,but who will have the audacity to question the business model itself? My earlier viewpoint-Should be devolopment oriented aligning his own and team KRA's with organizational goals-would perhaps answer your question. MBA's are obviously led by business considerations and not ethical ones, atleast in the Indian scenario. My earnest hope is that the vision of the head of the institution is ethical.

Vijendra Rao, the critical outsider said...

Yes, Mr. Nataraj, public attention is seldom focussed on this subject. Don't we all know that politics is dirty, yet want to know more about newer scandals? If only we can have a more extensive discussion on this, with more examples thrown in! I don't know business ethics form part of the MBA syllabus. (Well, ethics of journalim is supposed to be part of our trade, but when I last inquired with university contacts, I was told that it was not).

Nataraj KR said...

Ethics percolates down to all layers within the organization by the visions of the CEO and the agenda of the organization. In our organization, the integrity is the most strigently followed management principle and we have a department headed by the ranks of a General Manager to promulgate the importance of this management trait by periodical communiques by mass e-mails and other mediums. All employess have to give a web based online declaration to follow the code of conduct formulated by this group. But, you know there are exceptions like the rest of the world. Hence, ethics is driven by individual personalities rather than rules and regulations. This is my opinion.

GVK said...

We seem to be straying off the point, if I may submit. And the point was: How do MBAs rate their career progress,in terms of their own yardstick of success ?
We can't re-order this mad, bad, profit-driven business world. I thought the Americans invented b-schools to serve, not to reform, the corporate world.
Now to my plug: Would like to draw the attention of Mr Nataraj to this book, 'Rip-Off'. if he hasn't already read it. I wrote a column on it some time back - Management Consultants or Humbug in Pin-stripes?

Vijendra Rao, the critical outsider said...

Isn't it possible for a few MBAs at least to be feeling the intense futility of all the machinations with which they climbed the professional ladder, only to realise that it was not worth it? Doesn't this realisation make them disillusioned? Success, not failure, as a rich source of disillusionment? I think Satyajit Ray has brought this out in one of his early films.

GVK said...

Absolutely, it's not only possible, but is happening. I mean, disillusionment of MBAs. At any rate, this was my reading from that Canadian university management professor's findings. To recap, his study found 10 of 19 academically bright Harvard b-school students of Class 1990 reported,after some years into their career, they were "utter failures", not in terms of pay, perks or positions they held, but in terms of lack of job satisfaction (which is disillusionment); in terms of not getting the respect of their peers. Some of them also found their position dib not or wasn't high enough for them to be able to do things that would make a difference to society.

Nataraj KR said...

Ms GVK/Rao, I am of the opinion that the disillusionment or the feeling of futility can occur in any profession and this is more of a human nature rather than being specific to MBA's. I have come accross a doctor who had minted money, earned success, popularity and name by his of own practice and still felt disilusioned. It is a relative term and depends on what stage the disillusioned person is in, in the life path. For all the reasons, my father, being teacher was never a disillusioned man at 65 and he was teaching the young folks despite a heart attack, not for earning his livelyhood , but for keeping himself engaged.Hence, the definition of futility or disillusionment varies from person to person and every mortal has his own attributes.

Blog-Capt. Anup Murthy said...

I agree with Mr. Natraj about disillusionment can happen with any person on any job. I have a question, perhaps this mood of the US/Canadian MBA's is different than those MBA chaps in India? If there was a negative feeling about this profession, would there be a mad rush at our IIM's and other institutions? MBA entry level salaries have become headline news annually in India and kids are seeing stars and want to do their MBA and so on. So, is the negative feeling phenomena just a western thing at the moment or is it wider than that?

Nataraj KR said...

Undoubtedly, the MBA's from IIMs are a better recognized lot than their conuterparts either in Indian Universities or for that matter, few Westren universities also. The probabilities of better positions with good compensation package are more for these products of IIM's vis-a-vis foriegn University MBA's due to the very stringent norms being followed to filter out the rest during admission.Further, these courses are designed in such a way that the simulation of the real business situation happens during the tenure of this course. Obviously, these institutes carry a high tag. As you have rightly said, this negative opinion is something to be pondered about for better understanding, amidst devoloping craze amongst youngsters to get the admission for these courses.

Vijendra Rao, the critical outsider said...

The madness for money, in some cases it would look, finds a cure only in its fulfillment. That explains the mad rush.
"MBA mado varegu huchchu bidolla" kind of syndrome. Amid this madness, it is extremely gratifying to note that there have been a couple of IIM exceptions where candidates have preferred a less paying job because it gave them job satisfaction.

Anonymous said...

Mintzberg, as usual - I've found, has come up with a self-serving conclusion. He's anti-MBA to start with. His study results as given, are not profound. As a McGill MBA grad myself with 12 years in the workforce since graduation (and 4 before my MBA), I could probably identify similar results through conjecture and life experience. The only MBAs (from B or Tier1 schools) I've known to succeed in the ways indicated are those who had strong connections at the get-go. The MBA enhances critical analysis skills picked up earlier. These will take the non-connected to the pinnacle just below the ceiling. The rest is connections. McGill needs to reign in Mintzberg and send him to a factory!

Scott Arthur Edwards said...

Hi my friends! I'm writing to you because I just came across a business that I think has great potential. It lets you save money on almost everything. Make money from almost everything, Including home loans- plus... help lower your taxes--best of all--it requires absolutely no investment. I thought you might be interested and like to check it out...

Here I have a extra income site/blog. It successfully covers extra income related stuff and almost everything else!

Come and check it out if you get time, Scott.

Anonymous said...

Amusing. Well, by the measure given I guess I'd be a failure since my salary with an MBA is the same as what I made 20 years ago as a fresh BSEE. Of course, now I'm an entrepreneur, lead several businesses, regularly outmaneuver slothful corporate competitors and know enough about both life and tax accounting not to worry about the size of my salary. When it comes to work happiness over the last 25 years I can count the high points on one hand and the longest sustained period has been since I got my MBA and left the corporate rat-race of the Fortune 500.

An MBA probably is not worth it if you only measure your self and success by how much money you make and where you are in the corporate org chart. Frankly an MBA has no more intrinsic value that any other degree, even undergrad, primarily because 1) the degree is ubiquitous - supply and demand applies, 2) like getting an engineering degree, you've only learned the science but not the art but too many people don't understand that and 3) too many A-list MBAs devalued the degree by relying on the school value over anything learned (or not).

The value is in what you learn and your ability to apply that to creating something good.