BUSINESS

Better By Degrees--The MBA has taken a lot of knocks, but visionaries are determined to restore it as the ultimate career accelerator

3/15/2006



TO MBA OR NOT TO MBA: that is the hundred-thousand-dollar question. The champagne-popping cachet of the credentials has gone the way of the zoot suit. The three-letter grad tag no longer guarantees the keys to an Audi TT, summers sipping Pinot in Tuscany or that corner office with a fabulous view. Nowadays, MBAs suffer the butt end of as many jokes as Tom Cruise . And despite the fact that hundreds of thousands of MBAs occupy management positions in corporations, Joe Public's current perception of the MBA is that a person needs one about as badly as a fish needs a bicycle.

FedEx's roasting of the degree in a television commercial that aired last year still draws chuckles around the water cooler. In the spot, a brash twentysomething employee is asked to make a shipment using FedEx.com. "You don't understand. I have an MBA," he whines. "Oh, you have an MBA," his supervisor responds. "In that case, I'll have to show you how to do it." Then a narrator comes on to deliver the ad's knockout punch line: "FedEx.com makes shipping so fast and easy, even an MBA can do it."

The media can't be credited with cracking the first critical lashes, for it was academia's own who turned MBAs into whipping boys. Henry Mintzberg, Cleghorn professor of management studies at McGill University, asserts that the MBA "trains the wrong people in the wrong ways with the wrong consequences" and that "using the classroom to help develop people already practising management is a fine idea, but pretending to create managers out of people who have never managed is a sham."

Another outspoken critic is Stanford's Jeffrey Pfeffer. "There is little evidence that mastery of the knowledge acquired in business schools enhances people's careers or that attaining the MBA credential itself has much effect on graduates' salaries or career attainment," he wrote in his 2002 paper "The End of Business Schools? Less Success Than Meets the Eye."

When there are so many negative vibes in the air, people's tunes change in a hurry and enrolment numbers reflect the souring sentiment. In the first three months of 2002, 68,977 students worldwide took the GMAT (the required admission test for entry into an MBA program) compared with 52,519 in the first three months of 2005, a 23-percent decline in application volume. However, the drop in enrolment is slowing. When you compare GMAT test volume for the first three months of this year with the same period last year, there is only a 1.54-percent drop. So is the fog lifting?

It's worth examining the history of the master of business administration program to find the answer, because to B-school historians the current malaise has a ring of déjŕ vu. The last time the degree's credibility was in the dumpster, it came out smelling as sweet as a daisy.

The first graduate business class was offered at Dartmouth College's Amos Tuck School in New Hampshire in 1900. Eight years later, the Harvard Business School followed suit and by the 1920s had developed the core of its curriculum, the now-ubiquitous case-study method. Soon afterward, the venerable institution was dubbed "the West Point of capitalism." But it wasn't until after the Second World War that MBA programs started to gain widespread global popularity. Canada's first MBA program, now known as the Richard Ivey School of Business, was established at the University of Western Ontario in the fall of 1948.

The bigger you get, the more you are open to scrutiny, and damaging studies released in the 1950s by think-tanks like the Ford and Carnegie foundations took business schools down plenty of pegs. As a Business Week article aptly put it: "Back then, business schools were the Rodney Dangerfield’s of the college campus: they got no respect."

At the time, the charges facing the MBA were almost identical to what it is being accused of today: outdated teaching methods that disconnect graduates from the realities of the corporate world. The '50s hazing period was to be short-lived. In response to the criticism, the curriculum was overhauled, placing a greater emphasis on analytical problem solving. Admission requirements were made more stringent, and the MBA became the must-have academic accessory of quant jocks and future Robb Report readers alike for the following four decades.

So here are we are again at what looks like the tail end of another correction. Faculties are again focused on rebuilding the MBA and broadening the scope of curriculum to restore the degree's reputation as academia's ultimate career accelerator.

Visionary thinkers like Roger Martin, dean of the University of Toronto's Rotman School of Management, have already made great strides in this direction. Rotman has allied itself with the Ontario College of Art & Design in a series of joint courses to foster MBA students' right-brain development, so they can think abstractly as well as they do linearly. Rotman's Business Design and Integrative Thinking learning philosophies champion the kind of mental agility that is at the core of the decision-making process at innovators like Apple and Google.

"What the Rotman School is doing may be the most important thing happening in management education today," crows management guru Peter Drucker in an endorsement of the direction that Rotman's graduate business program has taken.

Going global is another sizzling B-School trend. Dezsö Horváth, dean of the Schulich School of Business at York University, has transformed Schulich into a transnational powerhouse boasting 43 exchange partnerships with schools around the world, and grads employed in more than 80 countries. For his efforts, Horvath was named 2004 Dean of the Year by the Academy of International Business.
The cocky illusions of MBA grads being above tasks for the "average" employee (like deliveries) and deserving six-figure salaries upon graduation have dissipated as well. Darren Lafreniere, 27, who will be starting his MBA this September typifies a healthier outlook shared by many new students.

Lafreniere ran an aftermarket automotive parts business for the past three years but came to a crossroads where, in order to get bigger, he'd have to make a substantial investment in plant and equipment. He came to the conclusion that he'd rather make that investment in his education. He has applied to Canadian schools Ivey, Schulich and Rotman for admission this September.

"I know I'm not going to be turned into a vice-president overnight, but at the same time the jobs available to MBAs off the bat are still more attractive than the ones open to BAs and BBAs. I don't want to be a university graduate starting in the corporate world at the kindergarten level. I want to work on projects that will stimulate and challenge me."

The once-compelling MBA money train, which had been chugging along at a sloth-like pace for the past few years, is once again starting to pick up steam. According to a GMAC (Graduate Management Admission Council) survey released in April 2005 that polled 1,691 recruiters representing 1,019 companies worldwide, the estimated starting salary for MBA graduates is $78,040 US, up from $72,021 US in 2001, although that must be discounted for inflation. Now factor in emerging markets' growing demand for MBAs and the picture gets rosier by the minute. China, which has had MBA schools on the mainland only since 1991, will require 100,000 to 200,000 MBA graduates a year just to keep up with current demand and avoid a talent shortage as its economy surges. These numbers are far too large to satisfy domestically.

All signals point to a reversal of fortune for the bruised and battered MBA. How long it will take for the engine to really start revving is anybody's guess, but until it happens, remember that the schools got too cocky before the students did. The kids are all right.

This article ran in the Bay Street Bull

Copyright © Mike Dojc, 2006

MBA, Pinot, Tuscany

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