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Elon Musk had some choice words for business school MBA programs. In a wide-ranging interview with The Wall Street Journal, Mr. Musk criticized MBA education as limiting an individual’s “… ability to think creatively and give customers what they really need.”
Not surprisingly, many deans of business schools immediately disputed Mr. Musk’s comments. These deans replied that Mr. Musk was not up to speed on the breadth and depth of courses now offered. For example, the dean of Stanford’s business school stated that Stanford now offers courses on entrepreneurship and customer engagement. Technology is also high on lists of new curricula at many business schools.
Some of the courses are very important for running a business. Knowing how to read a balance sheet, understanding the role of goodwill on the balance sheet, grasping the role of strategy versus tactics, and focusing on both short-term and long-term are essential learnings. Additionally, as pointed out in The New York Times, networking is an important part of the MBA experience.
On the other hand, many of Mr. Musk’s colleagues from Silicon Valley supported his MBA critique. The general feeling is that MBAs come into enterprises with “airy concepts of management.” MBA graduates are not flexible thinkers. They are not taught how to shift priorities when urgently needed. Further, there is a view that MBA degrees are not worth the money. An MBA is expensive. For many, an MBA does not deliver good value for the money invested.
For example, data from a sample of business schools show that the value of an MBA has deteriorated over time. This trend is depressing.
Value is what you get for what you pay. Compare an MBA graduate’s first-year salary including bonuses to the 2-year cost of an MBA degree.
An examination of a cross-section of US business school 2-year MBA programs over the past decade indicates that the tuition, on average rose nearly 200%. However, on average, starting salaries, including bonuses, rose only 60% from 2000 to the present.
A nearly 200% increase in cost for a 60% increase in monetary value is actually shocking. As one student who left investment banking to get an MBA told The New York Times, “Is it worth $200,000, plus what I could have been making? No.”
Of course, the select, elite business schools have some immunity from the disease of value deterioration. Their special brand reputation still presents a value advantage, for now.
Social issues such as diversity, gender, racial equality, environmental sustainability, health care, globalism, and Covid-19 impact the relevance of an MBA. Careers in technology, science, and engineering are increasing in attractiveness. A PhD in natural language programming is much more valuable at Google than an MBA.
Mr. Musk is correct on many points. Typical MBA programs are out-of-date, using traditional business models with little relevance to today’s and tomorrow’s challenges. But, as with many advanced degrees, there is room for improvement. The MBA degree is not as valuable as it once was. However, there are ways to make the degree more relevant, and more valuable, in today’s changing world. It is possible to reimagine the MBA in ways that Elon Musk would approve.
Here are five critical actions that MBA programs should implement:
First, have a multi-cultural mindset.
Being multi-cultural is not just about the demographic diversity of the student body. It is about the diversity of thinking as well. Enterprises need people who think differently.
The next group of MBA students, Generation Z (born between 1995-2010), is the most diverse US population cohort ever. Sensis, a cross-cultural marketing agency, says that Generation Z is the first minority-majority generation in American History.
As MBA applications in the USA decline, even among some elite universities, business schools in Canada, Europe, and Asia are experiencing increased applications. Why? A reason for this is these programs have more emphasis on having a global business perspective. A global perspective is more than merely having foreign students in the classroom. People who have crossed borders to work know that countries have different values and these differences affect business policies, processes and outlooks.
Second, ditch stultifying teaching methods.
If coronavirus has taught us anything, it is that businesses must be flexible, able to apply new strategies quickly. Businesses must test and learn in real-time. Businesses have been forced to be more creative and adaptive in ten weeks than in ten years.
The traditional case study approach must evolve. Typical case method materials are drawn from collections of stories that happened years ago, sometimes decades ago. The case study reflects conditions that may no longer exist. And, as some point out, traditional cases reflect social and environmental values that today are considered dated and unfortunate.
Historical cases are helpful, encouraging learning from history. We want to avoid the mistakes of the past, not replicate them. But, what happened years ago may not be a pathway to success tomorrow.
Further, cases often emphasize process over imagination. They focus on analytics over creative synthesis. Students learn that the process is the solution. Then, in the case of failure, MBAs learn to say, “It is not my fault; I followed the process. The process failed, not me.”
Third, develop CSR degrees.
Turn the MBA from Master of Business Administration into Making Business Accountable. The idea that an MBA is all about being a business administrator is a dead-end.
We already see shifts in corporate behaviors. Businesses and their CEOs are stepping into the fray of social, political, economic, racial, gender and privacy issues. CEOs are now expected to take a stand by standing up for what they stand for.
Today, the urgent cry is for businesses to do what Kofi Annan, the seventh Secretary General of the United Nations, asked businesses to do 16 years ago, in 2004. He said, “I hope corporations understand that the world is not asking them to do something different from their normal business; rather it is asking them to do their normal business differently.”
This is a most critical opportunity for business schools: normal business done differently is about preparing future leaders to lead in this new business landscape. This must be the mission of a new, improved MBA program. Business schools must change the way they teach business.
Fourth, broaden the shareholder focus to satisfying all stakeholders.
Financial engineering for the sake of short-term outcomes kills businesses. Excessive emphasis on financial engineering is a destructive disease. Financial engineering has only one goal: increase short-term profits at the expense of everything else. Financial capital is emphasized at the cost of intellectual capital, human capital, and social capital.
Financial engineering extracts value from brands. Financial engineering is a form of brand extortion. Innovation and renovation of products and services dwindle as dividends and share buybacks increase.
Finance education must emphasize the idea of quality revenue growth. Quality revenue growth is the foundation for enduring profitable growth. You cannot cost manage your way to high quality revenue growth.
Quality revenue growth means: attract more customers, who purchase more frequently, who are more loyal, who generate sustainable revenue growth leading to increased profitability. Quality revenue growth of the top line is the road to enduring profitable growth on the bottom line.
Fifth, Focus on teaching students to think creatively.
The focus of traditional business education is on analytics. Analysis alone leads to intelligence void of creativity. Teach both analysis and synthesis.
Crunching numbers is not conducive to creativity. Real, imaginative and actionable insight will not come from superior data analysis. Analysis provides an understanding of where we are and how we got to where we are. Analysis does not provide insight into what kind of future we can create. Analysis looks backward. Businesses must look forward.
Synthesis means, “The combining of diverse concepts into a new, coherent whole.” Analysis leads to understanding what is happening and why. Synthesis leads to insights into what might happen and why.
MBA students must learn to move beyond mere analysis. They must learn to use their expertise, judgment, imagination and creativity to make reasoned, informed, insightful and creative decisions about a possible future they will create.
Business schools must help students overcome the pervasive fear of taking a leap of faith based on informed judgment. Informed judgment is not guesswork. We need to prepare creative, imaginative, insightful and inspiring business leaders for the challenges of tomorrow.
Elon Musk is correct. Many MBAs bring finance-focused, un-creative, linear thinking to business. And, he is correct that modern and future businesses need holistic, creative thinking based on both disciplined analysis and creative synthesis.
This does not mean an MBA should be rejected. A revitalized MBA education program must reflect our changed world and the changing needs of students and business. These new multi-cultural students will make decisions and introduce practices that will affect social, sustainable and responsible change. These will be our new leaders.
The MBA degree can be a powerful force for change. It can also be a force for good.
https://news.google.com/__i/rss/rd/articles/CBMia2h0dHBzOi8vd3d3LmZvcmJlcy5jb20vc2l0ZXMvbGFycnlsaWdodC8yMDIwLzEyLzE0L2ZpdmUtYWN0aW9ucy10by1kZXNpZ24tYW4tbWJhLWV2ZW4tZWxvbi1tdXNrLWNvdWxkLWxvdmUv0gFvaHR0cHM6Ly93d3cuZm9yYmVzLmNvbS9zaXRlcy9sYXJyeWxpZ2h0LzIwMjAvMTIvMTQvZml2ZS1hY3Rpb25zLXRvLWRlc2lnbi1hbi1tYmEtZXZlbi1lbG9uLW11c2stY291bGQtbG92ZS9hbXAv?oc=5
2020-12-14 13:00:00Z
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