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MBA Schools - Trouble in Paradise?

July 13, 2007 09:33 IST

Things have never been better for business schools. College graduates in every country in the world vie for admissions to business schools, after, in many cases, spending months training for the tough entrance exams. Business schools everywhere have the luxury of picking and choosing among the many who apply.

In the United States, at the top business schools, only a small proportion of the applicants are admitted. In India, the choosiness is even more, with the Indian Institutes of Management admitting less than 1 per cent of the nearly 200,000 who take the admission tests.

The picture gets even rosier at graduation time with employers scrambling for a chance to make their pitch to students. Starting salaries for MBAs from the top business schools in every country beat that of any other profession by miles and have been in an ever-increasing spiral for the last few years.

At the IIMs, during the last few years the placement "season" lasts less than a week, during which the entire graduating class is snapped up. At the top international business schools like the Harvard Business School and INSEAD in Europe, the feeding frenzy is as much.

Why, then, has there been a spate of articles in recent times from respected business school professors with titles like "How Business Schools Lost their Way," "The End of Business Schools," and "Can American Business Schools Survive?" What trouble do these savants see in the future while the rest of the world continues besotted with an MBA degree?

To start with, when lists of business leaders are drawn up, people who really made a difference, people like Bill Gates of Microsoft or Dhirubhai Ambani closer home, MBAs don't figure in them. More embarrassing, many (as in these two cases) do not even have a college degree, let alone an MBA.

When studies are done about the career progression after a few years of work, MBAs do not seem to have made significantly more progress than non-MBAs.

An internal study done by the prestigious US management consulting firm, Monitor, found that "people hired from high-end business schools were no better at integrative thinking than undergraduates...hired from the top-notch liberal arts programs".

Some would-be reformers of the MBA programs, like Jeffrey Pfeffer of the Stanford Business School, believe that much of what business schools teach - analytical tools like statistics and basic disciplines like economics and sociology - are readily learned and imitated by any intelligent person.

On the other hand, things like communication ability, inter-personal skills, leadership and, most importantly, "wisdom", the ability to weave together and make use of different kinds of knowledge, are less easily taught. Paradoxically, these are the very skills that lie at the heart of a leadership role in management.

Others like Warren Bennis and James O'Toole (their article in the Harvard Business Review, "How Business Schools Lost their Way," is much quoted in this debate) say that there is actually a crisis in management education and trace this to business schools attempting to adopt a "scientific model".

This model attempts to treat management education as if it was something like physics or chemistry or biology whereas it is, in their view, more a "profession" like medicine or law. They see this distinction between an academic discipline and a profession as the central issue.

Why have business schools adopted the scientific model of physicists and economists rather than the professional model of doctors and lawyers? They believe this arises from business schools attempting to gain scientific respectability and avoid the stigma of a vocational training centre. The scientific model, says Bennis, "advances the careers and satisfies the egos of the professoriate".

Business schools have always had this conflict: is it their role to impart "training" or is it to impart "education"? This is not a trivial distinction. Training is aimed at equipping students with a set of tools that they can immediately apply in their very first job.

For example, teaching students to do a discounted cash flow analysis, that trusty tool of financial analysts, is "training". "Education," on the other hand, is supposed to be longer-lasting. For example, understanding the nuances of the difference between the law of diminishing returns and the law of increasing returns and more importantly how these two different theories came about may not do much for a student in his first job but would perhaps equip him with a lifelong ability to understand the drivers of business success and failure.

The result of all this debate is a worldwide attempt to reform business school curricula. One direction of this reform is to infuse more humanities into the curriculum. James March of Stanford is supposed to have taught his famous behavioural sciences course using novels like War and Peace as his textbook. There is more to learn about human behaviour in these classics, he believed, than in articles in business journals.

"Business schools," says Bennis, "need a diverse faculty populated with professors who, collectively, hold a variety of skills and interests that cover territory as broad and as deep as business itself."

If paradise has to be regained in this age of specialisation, is a broad-based humanities-oriented curriculum the answer for business schools?

Ajit Balakrishnan is the founder and chief executive officer, rediff.com.
Comments welcome at ajitb.rediffiland.com

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