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Are MBA Programs Failing?

Posted on Saturday, Mar 20th 2010

By guest author Jeff Saperstein

Sramana has launched a most useful discussion about whether MBA programs are failing entrepreneurs. As a fifteen-year adjunct lecturer at San Francisco State University’s Graduate School of Business and a ten-year visiting professor at ESCP–Paris Graduate Business Program, I have taught thousands of MBA students. Research we conducted for “Bust the Silos: Opening Your Organization for Growth (December 2009) can also shed some light on the efficacy of MBA programs to better prepare participants to be successful innovators and entrepreneurs during their careers.

First, it may be useful to broaden the discussion from entrepreneurial-centered MBA programs to include both traditional MBA programs and executive MBA (EMBA) programs that offer accelerated degrees for part-time working executives. These three categories encompass most of the global MBA programs in business schools.

Business schools are most useful to teach broader multi-discipline critical thinking (good case study work provides the opportunity), collaborative and leadership skills, and a lifelong professional network with some of the fellow students in the cohort. The business models and information content in the courses may be less useful since they are frequently outdated or too theoretical.

Some MBA entrepreneurship programs may put too much focus on the fund-raising part of start-ups. However, creating an effective organization is equally important to the successful scaling of the enterprise. These management skills can be studied and enhanced in an accredited MBA program.

MBA programs can also be valuable in helping participants think through problems with a broader perspective than they would have with their co-workers.

As Alina Diznik, a freelance journalist writing for the Wall Street Journal, notes, “Bob Cancalosi, the chief learning officer at GE Healthcare, a unit of General Electric Company, says he urges some top execs to attend an executive MBA program because he believes the programs will help them learn to understand the balance “between right-brain and left-brain thinking” and quickly come away with new ideas. “It allows us to not always be drinking our own bath water,” adds Mr. Cancalosi. (1)

In addition to expanding their thinking, MBA students can acquire necessary communications soft skills: team building, problem-solving, and collaboration. These skills are necessary for success in an innovation-based workplace.

Value networks are replacing hierarchical work structures in many of the leading global multinational corporations that start-ups will be working with. Value networks define work in roles, not job descriptions, in multi-functional teams rather than departmental functions, and open organizations rather than vertical company silos. (For more information see valuenetworks.com.)

MBA programs are generally far behind in effectively teaching workplace structural innovation because many of the professors have not experienced it themselves in their own work. Unfortunately, most business schools are hindered by the same antiquated work structures that have hindered conventional businesses from taking full advantage of the Internet-enhanced work environment.

Anyone thinking about business school to accelerate his or her career should evaluate the MBA offering on leadership development, communications skills sets, and workplace structure innovation in addition to the quality of the cohort they will be learning with. As Curt Carlson, CEO of SRI, has so aptly stated, “The most important innovation is in the way we work.”

1. “MBA Programs: Are They Worth It?” Alina Dizik, Wall Street Journal, September 30, 2008.

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I have studied Business Administration for five years but that was decades back. I do not think that there have been useful changes in MBA or other programs for decades. In any case there is a lag between real world needs and course content changes.

Gunasekar Saturday, March 20, 2010 at 6:59 AM PT

An Entrepreneurship-centered MBA is kind of a paradox in my opinion. Who can teach entrepreneurship the best way it can be taught? I think those who have been there and done that, so entrepreneurs themselves. But these entrepreneurs seldom think of coming to B-school to educate others on the ways to do it. So, as it turns out that it is taught by those who study or research entrepreneurs. This differs from school to school. However, many a time, it is merely taught out of existing literature using standard methods, perhaps a Capstone project.

At the end of the day, any program can only take the horse to the river, cannot necessarily make them drink. Entrepreneurs from B-school who actualy make it, do so getting inspired by cohorts. These guys have had the fire long before they entered B-school. Perhaps they did not even need B-school. But their intentions get rekindled by the stroking of coal that the professors manage to give them. That’s the utility of Biz education.

Once the venture (no reference to VC) flies, I strongly believe that these B-schoolers, who have good breadth of knowledge on various aspects of running a business are well equipped to succeed, provided their basic idea and assumptions are well validated.

Ram Saturday, March 20, 2010 at 7:34 AM PT

Well, a good point. I studied in Calcutta University; I did my PG in business management from IISWBM.
I came to know that Mr.L.N.Mittal was a MBA
student of IISWBM-Calcutta University, he dropped out and joined his family business, and the rest is known to the whole world.

In the hall of fame his name is above late Prof. Sumantra Ghoshal , who also studied in IISWBM.

I think it hardly matters if you are an MBA or not, business is caught, but management can be taught which can not always be utilized/practiced in day to day running of business.

In day to day business life unlike any other numerical subject logic don’t work always. No business situations are alike and unique all are different and has got it’s own uniqueness and characteristics..

Last month I was conducting a workshop in Aditya Bikram Birla Group regarding some modern management practices.

The CEO of that firm told me that LNM came to Mumbai in AVB lecture series and told while acquisition of Arcelor he took a bench mark of 60 days to buy Arcellors and he completed the deal in just 59 days one day ahead of 60 days.
It was a stupendous task of mobilizing huge fund and negotiating with international financial consortium, but he did it. He had tremendous resistance from EEU and even from the stock markets.
The situations and style of operations varies from place to place, and executions matters the most, it’s becoming very complicated and competitive, so it’s a continuous re learning and unlearning and practicing and perfecting it’s style.
I don’t think copy book style and case study oriented approach is very effective. I think practicing is more important than studying.
It’s a continuous journey of learning and practicing.
I like Ram Charan, his approach is very effective and hands on. I was reading Prof. Tarun Khanna’s “Billions of Entrepreneurs” it all starts from small and humble beginning.
Enjoy this link from the guru Prof. Ram Charan , it’s simply mind blowing.

https://www.youtube.com/watch?v=maDfWeolAws

With Warm Regards,
Deb.

Debashish Brahma Saturday, March 20, 2010 at 7:59 AM PT

I am not sure how relevant it is but while reading this I continuously remembered a speech I heard from Mr. Rushi Mody on IIT Convocation.

He said not in this exact words, if you want to continue your study learn more on the subject you have spent so many years. When we take an MBA student we spent 6 months to ‘unlearn’ what you have learnt there before you start learning what it takes to become real manager.

Don’t jump on me but it take a heck of experience to become a great manager and the competition is not whether somebody has a management degree or not.

Santanu Saturday, March 20, 2010 at 8:31 AM PT

I have a masters degree in entrepreneurship. Simply put a MBA is about managing another person’s wealth. Entrepreneurship is about creating wealth. There are several programs out there today that teach methodologies on how to do this. MBA’s were never designed for this. With the state of the global economy I think educators are realizing that they have to do more. I’ve seen a movement of combining programs on entrepreneurship with traditional MBA programs. I personally think there is a conflict of interest with this. There two separate disciplines that have completely different objectives.

Tim Saturday, March 20, 2010 at 11:54 AM PT

[…] by rankings—contributes to their inability to teach entrepreneurship. Is this important in the larger dialog? Is it as much, more, less a factor than Saras D. Sarasvathy’s work on the inherent […]

Are b-school systems accommodating for entrepreneurship? : Aaron Templer's blog | Branding, marketing, communications | Denver, Colorado Monday, March 22, 2010 at 1:24 PM PT

Here’s a frightening reality. For the past two years business-bound high school juniors and seniors, in five separate classes, have asked “Is it worth it to get an MBA?”

I’ve been working with these classes for over a dozen years and the past two are the first years I’ve gotten that question. That does not bode well for our ability to compete in a global economy moving forward.

My impression is that MBA programs are designed to teach people how to manage what already exists. They don’t teach people how to create.

In a similar vein, MBA programs seem to focus more on the cost side of the business than on the revenue side. Another indication that MBA programs aren’t designed for entrepreneurship.

Finally, MBA programs seem to relish complexity. The processes and systems these programs teach are far more complex than those employed by entrepreneurs who prize simplicity.

Based on these observations, I’m inclined to agree that MBA programs are not going to spur entrepreneurship. Indeed, some of my fellow consultants and I, who have been asked to participate in the entrepreneurship initiatives of major universities here, rarely stay involved for very long because we quickly recognize that the initiatives don’t have a goals orientation.

Dale Furtwengler Thursday, March 25, 2010 at 11:47 AM PT

I have been thinking of getting an accredited mba programs to spur up my resume, as many companies today are inclined on looking for MBA graduates to hire. Although I think MBA’s of today are more theoretical and I agree with you when you said that it won’t help much when it comes to adding revenues but will only help refine ones researching abilities. I think that graduate schools should implement a class or course that is 70% practical application and 30% theories or case studies as some of the theories might no longer be useful especially as how the market remains unstable.

mba programs Wednesday, October 13, 2010 at 10:52 PM PT

Looking for practical learning, join 1M1M initiative: https://sramanamitra.com/1m1m
We have plenty of hands-on-learning for anyone who wants to learn by doing.

irina Thursday, October 14, 2010 at 2:57 PM PT

Sramana's Forbes article ('Why B-Schools Set Up Entrepreneurs To Fail') hits the nail on the head.

While entrepreneurs should be focusing on creating, sustaining and then growing a successful start-up model, many MBA programs reverse the priorities and start off with the financing part.

Probably because the (apparently more-glamorous) financial aspects like valuation and fund-raising get more attention than the tedious roll-up-your-sleeves-and-create-something-worthwhile-first elements.

gmatprep@mba Wednesday, May 18, 2011 at 10:44 AM PT