The aftermath of a historic financial crisis seems an appropriate time to take stock of graduate business education. What are we teaching these people before they head off to the executive suite?
Three Harvard Business School scholars, Srikant M. Datar, David A. Garvin and Patrick G. Cullen, address this question in “Rethinking the M.B.A.: Business Education at a Crossroads,” a thought-provoking examination of the curriculums that shape many top investment bankers, consultants and chief executives. After studying the nation’s most prestigious business schools, the authors conclude that an excessive emphasis on quantitative and theoretical analysis has contributed to the making of too many wonky wizards. M.B.A. recipients, according to this book, haven’t learned the importance of social responsibility, common-sense skepticism and respect for the dangers of taking risks with other people’s money.
Put even more bluntly: Business schools played a contributing role in creating the geniuses who brought us the economic meltdown of 2008.
“Postcrisis, executives and deans identified a number of gaps in M.B.A. teaching, largely in applied areas,” the authors note. These include risk management, internal governance, behavior of complex systems, regulation and business/government relations and socially responsible leadership. The authors lend credence to critics who “question whether business schools do a good job of alerting students to the imperfections and incompleteness of the models and frameworks they teach.”
Further diminishing the chances that M.B.A. programs will produce wise stewards of capitalism, students are both strikingly disengaged from classes and overly confident about their capabilities, the authors observe. Introspection is rare; avarice, rampant. Several deans reported to the Harvard researchers that the time students spend in, or preparing for, class has declined significantly — at one institution, to 30 hours a week in 2003-4 from about 50 in 1975. The authors add: “Rather than devoting themselves to academics, students were spending increasing amounts of time networking, attending recruiting events, planning club activities and pursuing the best possible job.” One unnamed dean is quoted as mourning: “The focus has shifted from learning to earning.”
Based on my interaction with business school students, graduates and professors since the 1980s, when I attended college and law school at Harvard, I question whether the tilt toward money over scholarship is all that new. Be that as it may, the stark landscape portrayed in “Rethinking the M.B.A.” ought to prompt Harvard, Stanford, Wharton and all the rest to start doing just that.
The authors describe themselves as optimistic that business schools will rise to the challenge. “We have already seen a number of schools experimenting and reinvigorating their programs” since 2008, they write.
Their evidence, unfortunately, seems scant. At the University of Chicago Booth School of Business, the dean told the authors that “the most important change needed was not new curricular materials or courses but faculty and student behaviors that encouraged deep questioning and professional communication without trading substance for deference.” You don’t need an M.B.A. to interpret that mumbo-jumbo as a prescription for inaction.
Harvard Business School, meanwhile, is “considering” some new courses; task forces are “reviewing options.” Not exactly the degree of urgency one might expect coming out of what very nearly was a repeat of the Great Depression. It’s worth noting, as well, that in 2002, in the wake of the Enron scandal, many business schools vowed to examine eroded values and balance-sheet shenanigans. Apparently those reforms didn’t take.
The authors urge their colleagues to move quickly to “rebalance their programs to take a more managerial perspective.” This advice brushes uncomfortably close to parody. In their next book, will they suggest that law schools take a more legal perspective? New courses, the scholars write, should stress “risk management, the design of incentive systems, regulatory oversight, the degree of interconnectedness of the global economy and the limitations of mathematical models.”
One might reasonably ask why these issues haven’t played a prominent role in graduate business education. Better late than never, I suppose. Now the vital question is whether schools will, in fact, adopt such courses. They had better, if they plan on surviving. On many campuses, the full-time business school enrollment has fallen off as students shift to less expensive part-time programs. Employers are expressing increased doubt about the value of a traditional M.B.A.
If the universities do not respond, this book indicates, they may see their graduate business programs eventually go out of business.
Paul M. Barrett is an assistant managing editor of Bloomberg BusinessWeek.
