MBA, RIP?

Paul Raven @ 02-07-2010

This week’s Zeitgeist was brought to you by… growing mistrust of the American higher education system, and of higher education in general! First of all, the business world wakes up from the hangover of the economic collapse and starts wondering whether the ubiquitous business degree was a root cause of the indulgences of the night before [via Bruce Sterling].

The truth is that the relevance of the technical training allegedly offered by the MBA was always overblown. The idea that there is some body of knowledge pertaining to business management that can be packaged up and distributed to the business universe in two-year course-lets—well, it sounded good about a century ago, when it was first conceived. Maybe it still had merit when the schools were turning out only a few thousand graduates per year. But it certainly stopped making sense well before the schools achieved their current level of production of a whopping 140,000 or so graduates per year. The empirical evidence on the contribution of the MBA to individual career performance seems to bear this out—mainly because it doesn’t exist. In fact, if the relevance of an M.D. to the performance of doctors were even half as unsubstantiated, we’d probably be fantasizing about tossing a few physicians in jail, too.

The other truth helpfully revealed in the throes of the crisis is that ethics and integrity and social responsibility aren’t just optional extras for good business management—unless by “management,” you mean “looting.” Managers don’t need to be trained; they need to be educated—in the sense of “civilized.” Unfortunately, a business degree isn’t just irrelevant to that purpose; it’s positively detrimental.

Next, The Economist wonders why vocational education is still so frowned upon, even though it would be demonstrably more useful than college degrees [via TechnOccult]:

America has a unique disdain for vocational education. It has supported such training since 1917; money now comes from the Perkins Act, which is reauthorised every six years. However, many Americans hate the idea of schoolchildren setting out on career paths—such predetermination, they think, threatens the ethos of opportunity. As wages have risen for those with college degrees, scepticism of CTE has grown too. By 2005 only one-fifth of high-school students specialised in an industry, compared with one-third in 1982. The share of 17-year-olds aspiring to four-year college, meanwhile, reached 69% in 2003, double the level of 1981. But the fact remains that not every student will graduate from university. This may make politicians uncomfortable, but it is not catastrophic. The Council of Economic Advisers projects faster-growing demand for those with a two-year technical-college degree, or specific training, than for those with a full university degree.

Meanwhile, down in Chennai (formerly known as Madras), the (degree-carrying) head honcho of Zoho (a software-as-service outfit) explains why he makes a point of not hiring programmers with degrees [via SlashDot]:

We started to ask “What if the college degree itself is not really that useful? What if we took kids after high school, train them ourselves?” I talked to a lot of people internally, and one of our product managers introduced me to his uncle, a college professor, who he thought might be interested in hearing me out. As I shared our observations on recruiting, he shared his own experience in over twenty years teaching Mathematics and later Computer Science. It turned out we shared a common passion. He joined us within a month to start our “AdventNet University” as we very imaginatively called it. This was in 2005. He went to schools around Chennai to recruit students. So as not to distract anyone from their existing plans, we waited till the school year ended, went to several schools to ask for bright students who were definitely not going to college for whatever reason (usually economic). We then called on those students and their parents, and explained our plan. We started with an initial batch of six students in 2005, who were in the age range 17 or 18.

That proved to be an outstanding success. Within 2 years, those students would become full time employees, their work performance indistinguishable from their college-educated peers. We have since expanded the program, with the latest batch of students consisting of about 20, recruited not just from Chennai but smaller towns and villages in the region.

And finally, the quasi-legal funding schemes of derugulated Russian universities could be taken to represent an expression of “spontaneous capitalist neoconservatism” – one that other European institutions are keen to copy, even though the evidence shows that an increase in private funding actually leads to a decline in educational quality:

Public universities of the continental Europe (France, Germany) have 8-10 per cent of their budgets coming from non-public sources.[1] Certain UK universities, which are often used as a didactic model by advocates of reform, receive up to 28 per cent of their budget from endowments, tuition fees and other publicly independent sources. Russian universities do not provide the public with statistics of this kind, with excuses such as calculation difficulties or appealing to the principle “it depends on what is taken into account”. Nevertheless, in private discussions administrators of several large public universities and departments indicate a proportion of “around 50 per cent” from private sources, which corresponds quite well with expert estimations of 45-55 per cent given in the early 2000s. Even if university managers always love to get more from the public budget, last year’s State programs and State institutional grants, unknown in the Nineties and even in the first half of the current decade, may result in some indigestion syndrome among university structures.

I’m not sure that mistrusting the value of a diploma is a new thing – my father used to joke about how one should “hire a fresh graduate, while they still think they know everything” – but these questions sure fit in neatly with the current trend for wondering where we went wrong, and whether we might be able to avoid doing it again. Whether we’ll actually make the changes we need to (or even recognise them) remains to be seen, natch.

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2 Responses to “MBA, RIP?”

  1. Rick York says:

    I happen to hold a Master’s in Business from Columbia. I was sponsored by my employer. I received it when I was 40 years old. I believe that by that point in my life the graduate degree gave me insights which were valuable to me and my employers.

    I have made it clear to anyone who asks that I would never hire a young person with an undergraduate business degree. Nor would I hire and MBA who had no work experience.

    I have always believed that the fundamental purpose of a university undergraduate education is to teach people to think. Not think like a business person, a professor, lawyer etc. But, to think for themselves. The best managers are people with a broad perspective and an active fertile imagination. Both undergraduate and graduate educations can help one gain both but, they are not necessary nor sufficient.

    The past prosperity of the USA, i.e. that of the period starting with the end of WWII and ending in the early 21st century, was based on universal education which was universally free. Certainly wealthier people and very smart people received more costly educations, particularly if they were white males before 1980.

    At one point in the late 20th century the university system in the state of California was considered one of the, if not the, finest in the world. Then came proposition 13. We all know where California and its education system are now.

    Somewhere in that period, the American people decided to kill the golden goose. They considered lower taxes now more important than prosperity for most in the future.

    Thanks to the anti-tax Right in the US we are now well down a path of failure. The Right in the USA has persuaded at least a substantial portion of the electorate that they can have their cake and eat it too. And most of our mothers taught us as children that that is simply not true.

    Thus, the point is not vocational or arts and sciences but simply understanding the value of virtually all secondary and higher education. Starving young minds today leads to starving the future.

  2. Chad says:

    As someone with an undergraduate (business) degree, a graduate degree, and 15 years of work experience, I have yet to have a job I couldn’t have done without them. Some subjects (science, math, etc.) fit into an educational system (though the past century’s model needs to change drastically). Business does not.