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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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As an MBA (and MS-IS) student, I found this article particularly interesting and chastening.
I'm not going to defend the MBA, although there are good arguments for the degree - more specifically, for the education that comes with the degree.
What I do find erroneous with the article is the assertion that MBAs are what so grievously injured specific companies and thus the whole of the global economy. A plethora of good MBAs can do nothing to prosper - or even save - a company being affected by matters grossly out of its control. It is the heavy hand of the government which I believe created and fostered the problems which infected private companies.
This contrast is particularly bad:
"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."
One could well argue (in the U.S.) that the legal profession (in the cases of both torts and constitutional law) has been perverted by the heavy hand of government and as for the medical profession, it's just a matter of time. The rationed healthcare that will come with the label "universal" will have physicians making choices hardly in the best interests of their patients.
I'd be interested to know the author's political views, though I believe I can estimate them through his interpretation of events.
Why stop at MBA. Hasn't the entire educational system failed?
I couldn't agree more. Far too many companies are bamboozled by the myth of the Harvard MBA. It's a global crony network of arrogant graduates with an exaggerated sense of compensation entitlement, and who hire each other, particularly in the City and on Wall Street. I don't have an MBA, but years of experience. Today, no one will even talk to you if you don't have an MBA. I cannot figure out what they think they are getting.
I am waiting to graduate with an Mba this summer, not Harvard or even one from the US just my small local University mainly because it was all I could afford and was brought up to respect qualifications such as these help you advance in life. You can kick the qualification because it did not lead to your Porsche, but it is not meant to just provide an introduction to multiple business aspects. Without experience and even with it, sometimes things can go wrong gambles and sure things can fail; to paraphrase Shakespeare "The fault lies not in the Mba, but within ourselves". We were quite happy to reap the benefits of share dividends and cheap mortgages when it was going our way, ignoring the warnings from financial experts etc. Our collective greed caused this global meltdown, not a paper qualification; for my money I'd rather trust people with qualifications as for ever maverick is one hundred idiots managing the business towards bankruptcy who because they do not believe in the positive benefits of education.
Bravo! Applause, applause! It's been clear since the 1980s that possession of a Harvard MBA guarantees bad judgment, amorality, and ruin. If I owned a company, "Harvard MBAs" need not apply would be on the door. If I were Governor, I would eliminate the position of every arrogant Harvard MBA in State Government and start over with people with common sense, experience, and character.
I was wondering when someone would write this article. When I read excerpts of Jeff Skilling's business ethics paper (on line, from afar) in 2001 I pulled all my money out of the stock market. No regrets there, tee hee ha ha.
"... it is becoming difficult to know which MBA is really worth taking." - It shouldn't be. It is, as the previous respondent stated a waste of tuition fees. But then, I speak as someone who realised the worthlessness of these qualifications(?) years ago, ie when I learnt that the Crawford village idiot - a man whose first language is demonstrably not English - was in proud possession of one. Here was proof that even if anything was taught, it certainly wasn't tested.
So many MBAs are on the streets that it is becoming difficult to know which MBA is really worth taking.
Philip, I completely and wholeheartedly agree with you.
I didn't go to Harvard Business School, although I did graduate from Harvard College. I also have an MBA from a respected but solidly "second tier" midwestern business school (mistake #2 in my view - mistake #1 was signing up for an MBA program at all).
I went into an MBA program basically because it's what I thought I had to do to get a job after the Dot-Com bubble burst. Did my degree provide valuable knowledge that made me a better employee or open up new opportunities for my career? Not the least bit.
Right now, my MBA is a $57,000 bill that labels me as overqualified for most of the jobs that are left in this shrinking economy. You nailed it right on the head - MBAs don't teach students how to DO anything. Nothing they can't learn on the job or spending a few weekends at the public library, anyway.
And it really is telling how companies that are historical, spectacular failures like Enron and Bear Sterns would only hire people from "top" business schools.
It's my view that today, MBA programs are little more than tuition-collecting centers for universities. Their supposed role in incubating the next generation of business leaders has pretty much been fully discredited.