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RIP, MBA

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RIP, MBA [#permalink]

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New post 26 Mar 2009, 16:24
I could not disagree more with this completely ridiculous nonsensical article but I figured I would post it on here anyway and see if it sparks some debate.

http://www.cnbc.com/id/29895258

Quote:
Put your ear to the ground near any business school campus, and you will hear the sound of another bubble about to pop. The MBA will soon be joining equities and house titles in the museum of formerly overvalued pieces of paper.


Quote:
It was the market fundamentalism that dominates business school thinking that assured us that markets are self-regulating. It was the management myth—the idea that there is some specialized, teachable body of expertise that constitutes management—that confirmed the strange notion that these people were capable of regulating themselves. And it was the shareholder-value model from Business 101 that said all you need to do is load up managers with tons of stock options and they'll be sure to do the right thing. These aren't just ideas that happen to be taught at business school; these are the ideas that provide the rationale for the existence of the schools. The only semblance of a theory behind modern business education is that it purportedly produces "experts" in shareholder-value maximization who are capable of forming an ideal, self-regulating market.

It's a neat theory, of course, and pretty radical, too. But not since the fall of the Soviet Union has a system of belief woken up with so many parking tickets on its windshield.


Quote:
I suggest that it's time to go long on the humanities. Now that we've tried business with savages, perhaps it's time to give the educated a shot.


There are a thousand ways to tear these garbage arguments apart..... GO! :)

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Re: RIP, MBA [#permalink]

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New post 26 Mar 2009, 17:14
Well to be perfectly honest - there ARE some good points raised by the author. While he does tend to go a little extreme and completely disregard the MBA, I do agree with him that some things such as ethical studies and the practical use of an MBA can in fact be disputed.

The author IS correct in pointing out that its more than just a co-incidence that the industry which has crashed so powerfully (banking) has historically been the biggest recruiters at business schools. As future MBA students (and hopefully responsible students), I don't think this is anything to be ashamed about, but simply means that we should look at everything more closely at what is being taught in school.

The other thing that we as students can probably do is to not assume that the MBA is be-all end-all...at the end of the day its simply a tool that can be leveraged for future professional success in the business world. How we use that tool is entirely upto us.

I definitely (and with full bias) obviously don't agree with the author that MBA education should be scrapped. I personally know that I need formal training in some aspect of business and an MBA does provide me that along with a awesome network, structured recruiting while also giving me the needed pit-stop that is necessary at this point in my professional career. I may be brain-washed but what the heck..

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Re: RIP, MBA [#permalink]

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New post 26 Mar 2009, 17:23
i think the major reason why MBA has become such a disaster is the admission committees over reliance on GMAT. Schools go for numbers not quality.

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New post 26 Mar 2009, 17:36
Wow! This sounds worse than Y2K!

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Re: RIP, MBA [#permalink]

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New post 26 Mar 2009, 17:44
I completely disagree with the auther and have to make one point about the supposed coincidence between MBAs and the collapse of Wall Street. MBAs have been graduating from business schools and heading to Wall Street since the 1960s, so to blame the current crisis on an influx of MBAs is a little silly. I would argue that MBAs headed to Wall Street because of the lure of easy money and the possibility of getting rich quick, and they were actually arriving enmass on the downside of the bubble, so they couldn't be the cause. MBAs headed to Wall Street in large numbers because demand for bodies grew as business grew. The supply of MBAs did not push demand on Wall Street. Also, this occured from 2004 - 2007 and most MBAs would have only been 2nd or 3rd year associates at major firms, hardly with enough responsibility to cause any of the current problems.

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New post 26 Mar 2009, 18:31
jb32 wrote:
MBAs have been graduating from business schools and heading to Wall Street since the 1960s, so to blame the current crisis on an influx of MBAs is a little silly.


And those MBAs are exactly the ones who are now leading some of these institutions that have failed?

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Re: RIP, MBA [#permalink]

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New post 26 Mar 2009, 18:40
sterny wrote:
jb32 wrote:
MBAs have been graduating from business schools and heading to Wall Street since the 1960s, so to blame the current crisis on an influx of MBAs is a little silly.


And those MBAs are exactly the ones who are now leading some of these institutions that have failed?

Yeah but that's like saying some of these men weren't breastfed as a baby and that contributed to their stubborness, which led to the failing of their firms. An MBA is an impossible variable to isolate, so it can't be proven either way.

Most of the traders that share a large portion of the blame for the current crisis do not have MBAs. The point being that having an MBA or not is an irrelevant data point.

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Re: RIP, MBA [#permalink]

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New post 26 Mar 2009, 19:24
The author definitely brings up some good points. The "maximize share holder value" mantra tends to get chanted ad naseum through the 2 years of business school. Students are taught that maximizing share holder value will take care of bringing good to the society since the shareholders(i.e, also a sub set of the society) benefit from these initiatives. Schools typically talk about ethics before the 1st year begins, during orientation, or through elective courses that deal with ethics. What they fail to do is inculculate ethics case studies in each of their core courses, spark debate within the student community and constantly warn them about the slippery slope to socio-economic disasters. In other words, ethics cannot be fed separately, it has to be weaved into the general teaching and learning philosophy.

I once asked a famous finance professor at a top business school how he teaches his students to behave ethically. He responded that ethics are best left to individuals and that schools cannot be accountable for individual behavior. He, predictably, repeated the share holder value maximization argument. Schools and MBA students need to understand that the "free market" does not relieve them of their responsibilities to society.

That said, I dont think the value of the MBA is going to drop. Other industries which have not traditionally had access to top MBAs, such as non-profit/government, will grab these graduates.

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Re: RIP, MBA [#permalink]

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New post 26 Mar 2009, 19:33
yea...MBAs and bankers aren't innocent (everybody makes mistakes).. but I think this author (and a lot of people) likes to single them and put the blame on them.
It's just an article though.. So I also understand that writers sometime just want to put down extreme opinions to get some attention.

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New post 26 Mar 2009, 21:01
case and point, you had the first MBA president, George W Bush..and look what he did to the good ol USofA...

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New post 27 Mar 2009, 04:19
This article relies on basic assumption: "Majority of business leaders are MBAs. Obviously they don't know how to run the economy, so we need to abandon the entire concept of B-school".

Vast majority of leaders during the Great Depression didn't have graduate degree, instead they had university education. According to the author of the article, in the year 1931. or 1932. they should have closed all universities in the US (and worldwide) because nobody managed to learn how to run economy but led us to disaster in 1929. Does it make sense? Yeah right...

In addition, what about PhDs teaching at business schools and universities? Should we strike in the heart of the problem and lay off all professors because they failed to give the proper instructions to future business leaders? If they failed to research functioning mechanisms then what is the point of PhD designation at all?
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New post 27 Mar 2009, 06:05
FN wrote:
case and point, you had the first MBA president, George W Bush..and look what he did to the good ol USofA...


It's been a few years since I was in a statistics class, but I don't think a sample size of 1 is sufficient to draw conclusions about a population of several hundred thousand. I agree that the author makes some valid points, but to draw conclusions about a large population (all MBAs) based on poor management decisions of a relative few MBAs, well, as my southern friends like to say that dog just ain't gonna hunt.

But it can be fun to make generalizations based on small sample sizes:

- Jeffrey Dahmer attended Ohio State University. Therefore all OSU grads are cannibalistic serial killers.
- Mary Kay Letourneau was a teacher. Therefore all teachers are pedophiles who will marry one of their students after having their love child.
- John Gotti lived in NYC. Therefore everyone in NYC is in the Mafia.
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New post 27 Mar 2009, 06:51
FN wrote:
i think the major reason why MBA has become such a disaster is the admission committees over reliance on GMAT. Schools go for numbers not quality.


This is not true at all. I know plenty of people that have great GMATs and didn't get into school. For example, I have a friend w/ 4.0 GPA from MIT and 800 GMAT who got dinged everywhere but Wharton, where he was waitlisted.

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New post 27 Mar 2009, 07:00
Among the not-so-crazy things the author points out in this article...

Quote:
If we ask why no one stopped these people, however, we come right back to business school. It was the market fundamentalism that dominates business school thinking that assured us that markets are self-regulating. It was the management myth—the idea that there is some specialized, teachable body of expertise that constitutes management—that confirmed the strange notion that these people were capable of regulating themselves. And it was the shareholder-value model from Business 101 that said all you need to do is load up managers with tons of stock options and they'll be sure to do the right thing.


... and the money quote:

Quote:
The reality is that business school is now chiefly a community of intention. It brings together people who share certain career aspirations—for the most part, to make big bucks—and occupies their time teaching them a few technical things that they don't need to know, along with a code of conduct that says, in essence, whatever is legal is ethical; and if it makes money, it's a positive duty.


I totally agree with this. One reason why this recession, I hope, will be such a socially disruptive force is that it provides a powerful counterargument to this "free market knows everything" nonsense conservatives have been trotting around ever since the Soviet Union fell. Capitalism and the free market are incredibly powerful movers for human prosperity, of course, but like anything else, they need to be tempered with reasonable controls. At some point, we in the U.S. forgot that.

In regards to MBAs, I've become extremely skeptical that everyone in top B-schools is really there to learn a big bunch of new skills. The MBAs who were screwing the pooch in the banks and AIG and the rest were ticket-punchers, flattering themselves that they were really much smarter than they turned out to be, and apparently willing to disregard the social implications of what they were doing in the interests of turning a buck.

Now obviously, a business education can be used in many different ways. I hope that after this experience, employers will be a little more concerned with hiring graduates who take an ethical approach to doing business. I don't know if that's really something you can teach in business school... I feel like you'd have to incorporate that aim into admissions as well.

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New post 27 Mar 2009, 07:13
Did anyone really disregard the social implications of what they were doing? They were certainly arrogant and had peculiar blindspots for risk, but if you don't actually acknowledge the concept of a downside how can you be disregarding the consequences of that downside happening.

the vast majority of these people, as we're finding out now, didn't understand what they were doing well enough to realize that they were risking systemic failure. It's not like they looked at the possibility and were like "who cares, lets make some money, it'll be someone elses problem when the shit comes down." They either didn't understand or didn't believe that the shit ever COULD come down. Their failure wasn't misunderstanding the consequenses of the risks they were taking, it was believing that they weren't taking any risks.

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New post 27 Mar 2009, 07:19
Toubab wrote:
One reason why this recession, I hope, will be such a socially disruptive force is that it provides a powerful counterargument to this "free market knows everything" nonsense conservatives have been trotting around ever since the Soviet Union fell.


Except a major reason why we're in this mess right now is gov't involvement in the mortgage market.

Do you really think a independent bank (no gov't bailout option, no guarantee of bad loans, no gov't coercion to do high risk loans) would have lent people $500K mortgages to people who make $20K/year?

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New post 27 Mar 2009, 07:22
Let's try to keep politics off the main board. We can start a new thread in off topic if you guys want to discuss that aspect.

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New post 27 Mar 2009, 07:26
refurb wrote:
Toubab wrote:
One reason why this recession, I hope, will be such a socially disruptive force is that it provides a powerful counterargument to this "free market knows everything" nonsense conservatives have been trotting around ever since the Soviet Union fell.


Except a major reason why we're in this mess right now is gov't involvement in the mortgage market.

Do you really think a independent bank (no gov't bailout option, no guarantee of bad loans, no gov't coercion to do high risk loans) would have lent people $500K mortgages to people who make $20K/year?

RF



exactly

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New post 27 Mar 2009, 07:35
zoinnk wrote:
Let's try to keep politics off the main board. We can start a new thread in off topic if you guys want to discuss that aspect.


Your right, I'm bad for off-topic posts.

I'll stop.

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Re: RIP, MBA [#permalink]

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New post 27 Mar 2009, 07:47
i think its not fair to blame this fiasco on MBAs only..i mean a major source of todays meltdown is Alan Grenspan, who presided over such a low interest rate regime that forced banks to take on excessive risks. you had Quant geeks (i went to school with many of them) and economists who totally didnt understand "risk" as one would if these quant quacks ever worked for NASA or bell labs. I mean wall street plucked a lot of these quant guys straight from school, and these kids never really put their engineering/mathematical skills to use in the real world where they could develop understanding of risks.

MBA has its uses, I wouldnt be applying to B-schools if there werent any benefits of getting an MBA training, but i think where we went wrong is to equate mba = leadership, regardless of that persons mantle.

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Re: RIP, MBA   [#permalink] 27 Mar 2009, 07:47

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