Monday, January 7, 2013

MBAs and the decline of corporate America

A reader of my novel Termination Man asks, "Is the popularity of the MBA responsible for the decline of corporate America, as measured by rates of job satisfaction, morale, and our global competitiveness?" 

(Termination Man--while by no means a thesis against the MBA--can certainly be interpreted as critical of the "MBA cult".)

There are many aspects of the reader's question. I'll answer one of them in this post: How useful--or harmful--has the MBA been to American business in recent decades?

Key points:

1.) The MBA is overrated. The popularity of the MBA is not the primary factor behind the recent decline of conditions in corporate America. However, the exaggeration of its importance has been a negative factor.

2.) An MBA is no substitute for industry-specific experience. People with MBAs tend to believe that they can successfully apply general MBA-taught concepts to any industry. In other words, many senior managers now regard an MBA as being superior to industry experience. This is a grave mistake. 

3.) Corporate managers frequently engage in "magical thinking" about the value of the MBA. The real-world capabilities conferred by the MBA (especially an MBA from a so-called "top 10" or "top 20" program) are grossly overestimated in boardrooms throughout America. Most MBAs know far less in practice than they think they do

4.) The problem is not the degree--but the exaggerated perceptions of its value. None of the above points should be interpreted to mean that the MBA is "bad" or "without value." The MBA is a worthwhile degree. However, it should not be regarded as a.) a prerequisite to management, or b.) an automatic qualification of managerial prowess.

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At the end of the day, the overemphasis on the MBA is symptomatic of our desire for shortcuts--for immediate results. 

The idea of spending a few years earning a degree that will convey instant managerial qualifications appeals to our cultural bias for quick solutions. It's fast, it's (comparatively) easy, and it's sexy (especially if your MBA was issued by a brand-name school). For most of us, the MBA seems far preferable to working in the trenches of a particular industry for 10, 15 or 20 years.