Are B-Schools the culprit for economic crisis

In an interesting article in The Economic Times, TT Ram Mohan (a professor at IIMA) debates whether B- Schools are the reason for the crisis. He writes, an average person thinks it is the over paid managers from the Business Schools just went and blew it while economist may argue that real reasons were global imbalances and flawed regulations.

 

It’s just a short step to arguing that part of the blame must rest with the industry that produces managers in large numbers — B-schools

Philip Delves Broughton is a journalist who went to study at Harvard Business School and wrote a lively book about his stay there. In an article in The Times of London (March 1), Broughton lashed out at his alma mater and at B-schools in general:

“Time after time, and scandal after scandal, it seems that a school that graduates just 900 students a year finds itself in the thick of it. Yet there is remarkably little contrition. ….You can draw up a list of the greatest entrepreneurs of recent history, from Larry Page and Sergey Brin of Google and Bill Gates of Microsoft, to Michael Dell, Richard Branson, Lakshmi Mittal — and there’s not an MBA between them.

Yet the MBA industry continues to grow, and business schools provide vital income to academic institutions: 500,000 people around the world now graduate each year with an MBA, 150,000 of those in the United States, creating their own management class within global business. Given the present chaos, shouldn’t we be asking if business education is not just a waste of time, but actually damaging to our economic health?”

One can read two separate propositions into the above quote. The stronger one is that B-schools serve no particular purpose. The milder one is that B-school curricula are inadequate and in some ways responsible for much that is wrong today in the world of business.

It is not the greed of MBAs rather, what let down the economy is the ego that elite business schools inculcated in their students. The arrogant MBA would never accept possible lack of knowledge. A non-MBA manager would accept one’s ignorance. But, for an MBA acceptance of ignorance is tantamount to defeat and is never done. Companies have allotted too much authority to a single, narcissistic class of spreadsheet makers and PowerPoint presenters!!

Are the elite business schools responsible for aggravating managerial hubris? I am afraid the answer is yes. I would quote one of the most ego-inflating professorial statements that used to circulate in B-schools: "If you don’t hit the Board within 10 years, —".