MBA: the letters that spell financial ruin at Harvard
Business-savvy Masters of Disaster suck value from their employers and are of far less use to society than decent carpenters and accountants
The first thing we do, let's kill all the MBAs. Had Shakespeare been writing Henry VI today, there's no doubt that masters of business administration would surpass lawyers as the vilest curse on the ordinary man. After all, what has this modern tribe of Power Point-presenting, spreadsheet-making, derivative-spewing drones done lately but drive the global economy into a very deep ditch?
I write as one in possession of an MBA from the Harvard Business School. Unfortunately, these days it's more like a scarlet letter than a union card to the financial elite. At Merrill Lynch, two Harvard MBAs in succession, Stan O'Neal and John Thain, oversaw the fall of a firm once known and feared as the Thundering Herd. Andy Hornby, who was on deck for the HBOS's near-collapse, is a Harvard Business School alumnus. General Motors' CEO Rick Wagoner is another.
Up until last month, President George W Bush, Treasury Secretary Hank Paulson and the Securities Exchange Commission chairman, Christopher Cox, formed an embarrassing Harvard Business School trinity of financial ruin.
I recall in my first term at Harvard, in the autumn of 2004, being taught by a professor of leadership who had a sideline advising Sir Fred Goodwin at RBS. Goodwin was frequently mentioned in class as a model of the modern "change manager". Billions of pounds of losses and one near-nationalisation later, Goodwin's change model looks less appealing.
And we haven't even got to the hundreds of anonymous hedge fund managers, investment bankers and traders, who willfully poisoned the financial system over the past decade and waltzed away with fees and bonuses they will never be forced to repay, even after shunting the clean-up costs onto their governments. Many of these individuals possessed MBAs from Harvard.
Eight years ago, the Harvard MBA in the news was Jeff Skilling, the CEO of Enron, who in turn managed fleets of other Harvard alumni working for and advising his "new paradigm" firm. Fifteen years before that, Harvard MBAs played a sufficiently significant role in the insider trading scandals which washed through Wall Street, for a former chairman of the SEC to donate millions of dollars for the teaching of ethics at the school.
In fact, the reputation of MBAs as Masters of Disaster has reached such a low that one has to wonder if this vaunted, modern qualification is really good for anything. If lawyers or doctors collectively fouled up on such a scale, one might start by examining what is taught at law schools and medical colleges. How come this supposedly brilliant elite, trained in management, risk and reward, have so devastated the economy?
MBAs use their management voodoo to suck the blood of the real value creators
Part of the reason is that the MBA does not actually train anyone to do anything. It's interesting. You learn something about all the various business functions. You become more confident in meetings where people yammer on about ROIs and Monte Carlo analyses. And you might even emerge capable of building a ten-year financial projection.
But whereas a youth training scheme in car repair or a plumbing apprenticeship might actually teach you to repair a car or fix a leak, the MBA does nothing more than give you some ideas for how to approach a problem. Which is why so many of the most successful business people, Bill Gates and Rupert Murdoch to name just two, never bothered with a formal business education. Their success derives from their experience and their nature not from sitting in a classroom with a group of aspiring management consultants.
MBAs in the public mind have become expert at extracting value from an economy, through fees, bonuses and exorbitant salaries, without knowing how to build value. They use their management voodoo to suck the blood of the real value creators in an economy. But really they are of less practical use to society than a decent carpenter or accountant.
There are, of course, good MBAs as well as bad ones. But the degree is far less valuable than the schools and their alumni would have us believe. By building it up so much, they have created a monster ripe to be dragged off to the gallows. ·
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