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# Porfolio Selection and Facilitating Conditions

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Porfolio Selection and Facilitating Conditions [#permalink]

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10 Dec 2006, 19:33
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I have spent considerable time and attention studying the world's greatest academic institutions and helping others learn about them. In the course of these studies, I have come to two sets of important conclusions:

Set 1:

1) There are very real differences in the opportunities provided by business schools

2) The differences in opportunities between schools of similar quality are often exaggerated

Set 2:

1) An MBA from a given school is NOT a necessary condition for advancing to the highest leadership positions in the corporate world

2) An MBA from a given school is NOT a sufficient condition for advancing to the highest leadership positions in the corporate world

In other words, attending a particular school is neither necessary nor sufficient for advancing to the highest levels of corporate management but can best be described as a facilitating condition for advancement.

I advise everyone to be suspicious of claims that a particular school provides a set of opportunities that cannot be approached by any other school. Each individual must determine for herself whether these claims are credible but I suggest that candidates require any such claim to satisfy a high burden of proof.

Last edited by Hjort on 18 Dec 2006, 13:28, edited 2 times in total.

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10 Dec 2006, 20:41
Hjort,

I think it is important to consider that opportunities come not only in the sense of diversity or increased quality within the applicants local market, but also in the sense of broadening the applicants geographical range of opportunities.

In this global era, some executives at multinationals can apply for positions anywhere in the globe and get them. However, junior managers may struggle to achieve so, or may receive sub-standard offers they are not willing to take.

An MBA from an Ultra Elite or Elite program will help a graduate to extend his employment market from his local region to across the globe.

Cheers. L.

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10 Dec 2006, 22:19
Precisely- as stated in set 1 there are very real differences between the opportunties provided by different schools (e.g., an elite school vs. a local program). However, within a cluster that groups schools of similar overall quality, the opportunities tend to be quite similar.

For example, one would probably encouter far more opportunities at an elite cluster school such as Duke than she would encounter at a local program. However, within the elite cluster, the opportunities offered at Duke would probably be quite similar to those that one would encounter at Michigan or Dartmouth/Tuck. In other words, Michigan or Dartmouth could be viewed as viable substitutes for Duke in this context.

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11 Dec 2006, 22:43
Hjort, what about opportunities in particular disciplines (IB, consulting, etc.)

My question is based on the following:

1) When chatting with a former co-worker on his experience at Kellogg, he said (briefly outlined):

In my case, while at Kellogg, I joined the Operations (or Manufacturing - I can't recall exactly) Club, we organized conferences, etc. And while we were targeted by some recruiters, and most of us secured good jobs in Operations, we lacked way behind MIT in terms of opportunities in this area (he had some friends over at MIT).

2) While attending a presentation from Ross and chatting with an alum, he mentioned (briefly outlined):

I always wanted to work in Investment Banking. At Ross, we were visited by X, Y, Z Investment Banks. And because the school is not full of Investment Bankers, I could secure interviews with all of them quite easily. I had a few friends over at Wharton who had to invest a whole semester worth of points in their bids just to get an interview from X.

Based on these examples (which I'll admit is not a representative sample), opportunities, while equivalent in quality within clusters, are not so much equivalent in areas of concentration.

Is that so? Or am I jumping to conclusions here?

Thanks. Cheers. L.

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15 Dec 2006, 21:10
I agree Lepium. Within certain domains/concentrations some schools are especially strong relative to the other schools in the same cluster. For example, Carnegie Mellon is widely regarded as one of the very best schools for the intersection of management and technology, easily stronger than many of the elites, ultra elites, and TCE schools and other transelites such as UNC. On the other hand, UNC would probably be regarded as having a better reputation for general mangement than Carnegie Mellon.

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15 Dec 2006, 23:58
I think it is crucial to keep in mind that no school dominates the production of CEOs. Even the largest overall producer (HBS) accounts for less than 10% of the CEOs of the S&P500. The four "firm" market concentration ratio of top CEO producers (HBS, Stanford, Penn, Chicago) is still less than 20%. Even if the two largest producers merged, the HHI would increase by about 50 points (with a pre-merger HHI well below 300 no less).

It is tempting to think that perhaps the higher echelons have a higher concentration of HBS graduates. However, this does not appear to be the case as even the 100 largest firmst have about the same percentage of HBS MBAs.

It should be noted that HBS produces 900 grads per annum, so it could replace the top 100 CEOs several times over.

Further, HBS grads probably have a considerable head start over their competitors from (say) NEF schools in terms of academic attributes, personal network/family connections, and wealth/income.

To be clear, I am not positing any sort of nihilistic or "prestige doesn't matter" argument. Institutional reputation is certainly an enabling factor to advancement, but there are many roads that lead to top leadership positions. I (politely) urge applicants to subject assertions along the lines of "I need to attend School X because it provides unique opportunities" to a very high level of scrutiny.

Last edited by Hjort on 01 Jan 2007, 18:10, edited 1 time in total.

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01 Jan 2007, 18:44
Top 10 Per Capita S&P500 CEO Producers

1. Harvard
2. Stanford
3. Wisconsin and Dartmouth
5. UVA
6. Penn and Chicago
8. Texas and Indiana
10. Columbia

[As usual, this ranking is approximate]

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05 Jan 2007, 18:10

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05 Jan 2007, 20:09
It's a good one ...

After visiting few of the top Ultra/Elite -Columbia/NYU/Yale/Darden schools and talking to numerous International students at the top 16 schools, I found out that the majority( 90%+ ) of the Intn'l students go for Finance/Consulting jobs ..would like to know what sort of careers they end down the line

Has any such research done on the non-american MBA's heading the fortune 100/500 companies.with an MBA ???

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06 Jan 2007, 16:01
Not sure if this is what you had in mind, but I've done some research on holders of non-US MBAs heading major corporations in the US.

There are only a few of these CEOs including-

Hugh Grant who was educated at IMCA (Buckingham UK)
http://www.monsanto.com/monsanto/layout ... eb_bio.asp

Gary B. Smith who received an MBA from Ashridge.
http://www.ciena.com/corporate/corpinfo_76.htm

David Pyott of Allergan who received an MBA from LBS

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07 Jan 2007, 07:40
I am looking at Non-US citizens with an US-MBA heading US Corporations..........( Agree my earlier post was not clear )

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04 Mar 2007, 01:42
Hjort wrote:
I think it is crucial to keep in mind that no school dominates the production of CEOs. Even the largest overall producer (HBS) accounts for less than 10% of the CEOs of the S&P500. The four "firm" market concentration ratio of top CEO producers (HBS, Stanford, Penn, Chicago) is still less than 20%. Even if the two largest producers merged, the HHI would increase by about 50 points (with a pre-merger HHI well below 300 no less).

It is tempting to think that perhaps the higher echelons have a higher concentration of HBS graduates. However, this does not appear to be the case as even the 100 largest firmst have about the same percentage of HBS MBAs.

It should be noted that HBS produces 900 grads per annum, so it could replace the top 100 CEOs several times over.

Further, HBS grads probably have a considerable head start over their competitors from (say) NEF schools in terms of academic attributes, personal network/family connections, and wealth/income.

To be clear, I am not positing any sort of nihilistic or "prestige doesn't matter" argument. Institutional reputation is certainly an enabling factor to advancement, but there are many roads that lead to top leadership positions. I (politely) urge applicants to subject assertions along the lines of "I need to attend School X because it provides unique opportunities" to a very high level of scrutiny.

Hey Hjort, I've some ideas which could arguably help complement your analysis on the "CEO count issue".

Let me use two "example people" to explain my point.

Person 1) Top performer, outstanding visionary, excels in every quality that a successful business career demands. Eg: Bill Gates, to name one, but I'm sure there are several examples.

Person 2) Reasonably good performer in his profession, maybe a visionary in some area, well above average in several criteria, yet not quite truly outstanding in every aspect. Eg: HBS or Stanford admit X.

Person 1, will arguably not need a top MBA education to fulfill his potential. He can afford to join a lower ranked school or skip B-school (or even college) altogether and will still succeed in business life. He would be able to become a founder and/or CEO of an important organization, nevertheless.

Person 2, will need his top MBA to increase his chances of succeeding. He may still not make CEO, but I can argue that his chances are greater after the MBA than they were before the MBA.

My hypothesis: the closer a person is to "average" the more he needs a top MBA to increase his chances. The problem is that B-schools would not like to have their classes full of just average people, for obvious reasons. So they end up selecting the best candidates from their applicant pool, which means they still miss the few overachievers who never apply to B-school because they don't need to attend B-school anyway. Additionally, in some cases, a thorough knowledge of an industry is considered a must for a CEO. In such a case, B-school students, which typically change jobs more regularly, would be at a disadvantage.

So I think one reason why no B-school (not even the top schools combined) has a major representation in the CEO position is because most CEOs did not need B-school in the first place.

I assume that as time goes by, attending B-school will become much more of a requisite for several jobs, so outstanding visionaries will still need to go through that process anyway (in the same way as people hoping for several jobs need to attend college nowadays). If and when such process takes place, we would probably see the B-school representation in the CEOs numbers rise.

There's another theory that argues that an MBA can be counter-productive for some positions (and there was a study which argued that an MBA was counter productive for the CEO position in particular). But since I do not subscribe to that theory I won't be ellaborating on it.

Hope I conveyed my theories clearly. What do you think?

Cheers. L.

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05 Mar 2007, 20:51
I like your analysis, particularly the idea of the MBA becoming an expected form of education along the lines of the college degree today. I do have strong doubts regarding the "counterproductive MBA" argument. As long as the academic rigor of the degree is maintained, it will continue to be valuabe form of training for managers.

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05 Mar 2007, 20:51
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