“I hire people in spite of an MBA, not because of one”. That is Elon Musk participating in an online conference organized by Wall Street Journal. Adding insult to injury, Musk blamed the present condition of American corporates on “too many MBAs running companies”.
Musk’s comments have stirred the MBA pot all over again. The debate around the relevance of today’s MBA education has been growing ever since the Lehman Brothers collapse and the collateral damage to the financial services industry globally. The MBAs were blamed for a lot of the dodgy products the hedge fund industry had been feasting on for a decade or more.
The book ‘Rethinking the MBA’ by Srikant Datar [now the Dean of Harvard Business School], David Garvin and Patrick Cullen examined the topic in detail. The authors spoke extensively with companies and their hirers, experienced MBA graduates, policy makers and MBA school academics.
Their book laid out some clear guidelines on what MBA education needed to do, in a hurry. One was to bring in a stronger sense of social consciousness and ethics in the course content. The other was to build a more wholesome global agenda on MBA education.
Several leading B-Schools, including Harvard Business School, adopted a ‘Code of Conduct’ oath as a direct aftermath of the book. The MBA Oath posits this core premise for HBS graduates: “As a business leader I recognize my role in society [and] will remain accountable to my peers and to society for my actions”.
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The Indian dilemma
The problems we face in India are a little different. Unlike in the west, our two-year MBA programmes attract mostly freshers, kids with no work experience. The main attraction being a way of postponing the job-hunting ordeal. In several communities, it is also a valuable passport to enter the marriage market. No wonder India has over 4000 business schools churning out a large number of MBAs of specious quality.
But let us address the issue facing MBA education in the better institutes and the challenges posed to them.
Rohtash Mal, the former MD of Escorts, in an article in the Business Standard B-School Special, pointed out the need for elite MBA schools to ensure that their students are prepared to face the hard grind and not aspire for the corner office as soon as they leave the fancy campus. His argument was that many fresh MBAs are impatient, not willing to do the hard grind by working in rural areas or put in that extra effort to learn the ropes.
This has been a recurring theme for over four decades, only that it has gotten much louder in the last decade.
The other side of this problem is that MBAs are excessively swayed by the emolument package and not by the job content. This tendency to grab the highest paying jobs is natural, since an estimated 50% of them have had to avail student loans to pay for their MBA education. Unfortunately, there is a herd mentality in the top campuses and this takes away the need for each student to figure out what he or she really wants to do.
In my own case, when I got rejected by Hindustan Lever at my summer Internship interview at IIM Calcutta (in 1978), I decided to relook at my priorities and discovered the world of advertising. I had heard about how a new breed of MBAs were reshaping the Indian advertising scene and decided to be a part of this.
And I am not alone when it came to MBAs picking up a less trodden path. I remember interviewing a top ranking student at IIM Bangalore in the mid 1990s, on their third day of placement. She had decided that she wanted to work in media planning in Mumbai and hence waited for Day 3, foregoing potentially better paying marquee jobs.
I wonder how common this is today.
But coming to Elon Musk’s comment about MBAs, is their utility to companies on a downward spiral? Is there an alternative model?
It appears that Elon Musk is not alone in his view about MBA education.
Josh Kaufman, a non-MBA who managed to get hired by Procter & Gamble, has made it his life mission to help MBA aspirants explore an alternative route to glory. In his bestselling book ‘The Personal MBA’, he claims that he is able to give you a “world-class business education in a single volume”.
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Kaufman’s argument is that MBA education in the US has become so expensive that the net gain is not significant. Quoting the study ‘The End of Business Schools? Less Success Than Meets the Eye’ from the Academy of Management Learning & Education, a study that analysed 40 years of data, he says, “there is scant evidence that the MBA credential, particularly from non-elite schools or the grades earned in business courses are related to either salary or the attainment of higher level of positions in organizations.”
The situation we have in India will also get hit by this rethinking of MBA programmes. But there is an important difference in India vis-a-vis US B-School education. Unlike in the US, Indian undergraduate colleges are in a sorry state. The concept of liberal education is almost totally absent, except for a few premium colleges and new age universities like Ashoka.
I would like to submit that MBA schools in India, both the first tier and the second tier, have built a robust industry interaction platform. Undergraduate institutions are yet to up their game on this aspect. But once they do, and if their overall quality improves, we could see the US situation repeating in India: why pay so much for a two-year education and lose out on two years of earning?
There is yet another recent phenomenon that we are seeing in India, the growth of remote MBA programs. Offered by the better B-Schools, an executive can hold on to his job yet do an MBA by attending e-classes in the weekend. The COVID crisis has made this kind of education even more accessible and acceptable. If the better B-Schools start aggressively chasing remote MBA programs, they will seriously dent the prospects of the lower ranking B-Schools.
B-Schools in India have also innovated with specialized MBAs. The growth of analytics has led IIM Calcutta to collaborate with Indian Statistical Institute Kolkata and IIT Kharagpur to offer an MBA in Business Analytics. It is reported that these MBAs command a premium over the general-purpose MBAs. So the future may be bright for such tailored MBA programs which cater to specific needs of the Indian corporate sector.
But change is afoot
So, will the MBA lose its sheen in India? I would like to submit that MBAs are being produced by the thousands since corporates need them. They fill a vital gap in corporate hierarchies. Even post COVID, we have seen B-School placement season ending in just two days at the top B-Schools.
B-Schools will change to become more and more industry-focused. Not just to become providers of warm bodies but providers of thinking power. B-Schools will innovate new modes of content delivery so that it can reach larger number of students, in more towns and cities at an affordable cost.
Going forward, I expect the MBA market to get splintered into many sub-parts. There will be the big two-year MBA program which will be elitist and catering to the large corporates and consultants. Then there will be many specialized MBAs focusing on specific sectors like financial services, information technology, retail/hospitality, healthcare, marketing communication, entrepreneurship and more. The third will be the part-time programmes that a working executive or entrepreneur can attend.
All three will grow, but the last will probably become the biggest segment. And when that happens, Elon Musk will change his opinion about MBAs, hopefully.