American business schools, R.I.P.

Let’s not mince words: Our MBA
graduates marched out and destroyed the world financial system. And if that
were not bad enough, few in academe have stepped up to take responsibility.
Have you heard one professor say, “I taught those people, and I’m sorry?”[i]

I’ve been a professor and administrator
in business schools and engineering schools. I’m glad to be back in engineering
now. MBA curriculum, taught in b-schools, has become a race to the bottom, with
courses getting shorter and easier as MBA programs proliferate and compete for
students.[ii]
I found it harder and harder to be part of that.

Harvard professor Rakesh Khurana
notes there’s no longer a consensus on what constitutes a core curriculum in
business. There is nothing even resembling a unified body of management
knowledge.  “It’s not clear what an MBA consists of anymore,” he says. 

Small wonder, when the b-schools lack
leadership. The Dean that is selected is the candidate with the most
fund-raising ability, and at least enough publications to pretend to scholarly
respectability. She or he is not required to show the academic leadership that
could produce a coherent, relevant curriculum. In any case the Dean will spend,
on average, only three years in office before moving on to another job.

We now see simultaneous intellectual crises in
the disciplines taught in b-schools. The foundations of Economics (“Economics
in Crisis” - Project Syndicate), Strategy (“What Killed Michael Porter's Monitor
Group?” - Forbes),
Psychology (“Fraud Scandal Fuels Debate Over Practices of Social Psychology” - Chronicle
of Higher Education),
Finance (“Why the ‘Experts’ Failed to See How Financial Fraud Collapsed the
Economy” - AlterNet) and Management (“Does Management Really Work?” - Harvard
Business Review)
have shaken.

Why this happened all at once is still a
mystery. It is, though, one reason Khurana says “you’re not going to learn
much” in the MBA program. Students take the MBA not for its irrelevant content,
but simply to show potential investors and employers that they are smart, hard-working
people with good personal networks. Prospective students looking at escalating
tuitions are going to find cheaper ways to demonstrate these qualities.

 “The lobby was as cold and damp and
empty as the soul of a Wharton MBA.”
-Corporate
America (a novel by Jack Dougherty) 

Shall we accuse Dougherty of
literary hyperbole? OK, but a line like that in a bestseller ain’t exactly a PR
coup for Penn. Before the advent of modern b-schools, companies – even Wall
Street banks – hired liberal arts graduates. There’s a lot to be said for this
practice, and businesses would be wise to return to it. Those grads had a sense
of history, a way with words, and some idea how their actions would affect
society. Unlike, need I point out, the ones who designed collateralized debt
obligations.

The AACSB is the US professional
accrediting body for b-schools. One of their national meetings took place at
the height of the Enron crisis. Seated in the audience, I eagerly awaited a
signal from AACSB officials reaffirming the importance of ethics education in
the business curriculum. To my astonishment, the word “ethics” was uttered
neither by them nor by any of the academics in attendance. Instead, the
luncheon speaker – the CEO of Tupperware Corp. – was the only human being in
the three-day meeting who so much as mentioned ethics.

So no one on the faculty learned a
thing, and naturally, students didn’t either. Ten years after the MBAs trashed
Enron, its employees’ pensions, and its auditor, new MBAs inflated and popped
the housing bubble.

 “I won’t hire from Wall Street any more.
All those people know is how to suck value out of a company, not how to add
value to it.” – An entrepreneur

Back in the day, b-schools led the
business world, sending out new ideas and techniques. Now, b-schools react to
the business sector, and far too slowly – especially compared to journalists,
who turn around in-depth analyses very fast. Of what use is the b-school?

When [“Jones”]
showed his new creation to... the university’s intellectual property arm... the
people there quickly introduced him to “Smith,” a former student at [the
university’s] School of Management. The two formed a partnership..., with Jones
as the creative inspiration and Smith as the business head and CEO.
Smith has a somewhat different definition of Bandojo than Jones’ “electronic
musical instrument.” He calls it a platform or single
interface for playing multiple instruments.
-Albuquerque
Business Journal

Talk about sucking value out! Why
pay Smith to replace the straightforward and descriptive “electronic musical
instrument“ with the obfuscatory “platform or single interface for playing
multiple instruments,” a phrase that only a venture capitalist could love? You
can look them up here, but I’ve
disguised names in this recounting. This was to avoid embarrassing the
principals, though I’m not sure they deserve the courtesy. A liberal arts grad
would never perpetrate “a platform for...” (Oh, I can’t bear to type that
phrase again!) 

No one in the university admits
responsibility for any of this. No one in the leading research universities
gets tenure for redesigning curricula. The teaching colleges follow the lead of
the research universities. Therefore no one will change what b-schools teach
students. William Holstein is right:
“Business schools are facing a crisis of global irrelevance.” I might have
titled this column “A Wake-up Call” for b-schools. But how do you wake an
institution from a coma?

Postscript: Not to leave you
all doomy and gloomy. Stony Brook’s degree in Technological Systems Management,
and a few similar programs in other engineering schools, teach students to
bridge the technical and the management sides of organizations, and provide
enough technical specialization to make them employable and useful at high-tech
enterprises. As I say, I’m glad to be back in engineering, where I think we've found some answers to the problems plaguing the b-schools.