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    Our Dying Business Schools
    By Fred Phillips | June 28th 2014 06:13 PM | 4 comments | Print | E-mail | Track Comments
    About Fred

    After a dozen years as a market research executive, Fred Phillips was professor, dean, and vice provost at a variety of universities in the US, Europe...

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    American business schools, R.I.P.

    Let’s not mince words: Our MBA graduates marched out and destroyed the world financial system. And if that were not bad enough, few in academe have stepped up to take responsibility. Have you heard one professor say, “I taught those people, and I’m sorry?”[i]

    I’ve been a professor and administrator in business schools and engineering schools. I’m glad to be back in engineering now. MBA curriculum, taught in b-schools, has become a race to the bottom, with courses getting shorter and easier as MBA programs proliferate and compete for students.<!--[if !supportFootnotes]-->[ii]<!--[endif]--> I found it harder and harder to be part of that.

    Harvard professor Rakesh Khurana notes there’s no longer a consensus on what constitutes a core curriculum in business. There is nothing even resembling a unified body of management knowledge.  “It’s not clear what an MBA consists of anymore,” he says. 

    Small wonder, when the b-schools lack leadership. The Dean that is selected is the candidate with the most fund-raising ability, and at least enough publications to pretend to scholarly respectability. She or he is not required to show the academic leadership that could produce a coherent, relevant curriculum. In any case the Dean will spend, on average, only three years in office before moving on to another job.

    We now see simultaneous intellectual crises in the disciplines taught in b-schools. The foundations of Economics (“Economics in Crisis” - Project Syndicate), Strategy (“What Killed Michael Porter's Monitor Group?” - Forbes), Psychology (“Fraud Scandal Fuels Debate Over Practices of Social Psychology” - Chronicle of Higher Education), Finance (“Why the ‘Experts’ Failed to See How Financial Fraud Collapsed the Economy” - AlterNet) and Management (“Does Management Really Work?” - Harvard Business Review) have shaken.

    Why this happened all at once is still a mystery. It is, though, one reason Khurana says “you’re not going to learn much” in the MBA program. Students take the MBA not for its irrelevant content, but simply to show potential investors and employers that they are smart, hard-working people with good personal networks. Prospective students looking at escalating tuitions are going to find cheaper ways to demonstrate these qualities.

     “The lobby was as cold and damp and empty as the soul of a Wharton MBA.”
    -Corporate America (a novel by Jack Dougherty) 

    Shall we accuse Dougherty of literary hyperbole? OK, but a line like that in a bestseller ain’t exactly a PR coup for Penn. Before the advent of modern b-schools, companies – even Wall Street banks – hired liberal arts graduates. There’s a lot to be said for this practice, and businesses would be wise to return to it. Those grads had a sense of history, a way with words, and some idea how their actions would affect society. Unlike, need I point out, the ones who designed collateralized debt obligations.

    The AACSB is the US professional accrediting body for b-schools. One of their national meetings took place at the height of the Enron crisis. Seated in the audience, I eagerly awaited a signal from AACSB officials reaffirming the importance of ethics education in the business curriculum. To my astonishment, the word “ethics” was uttered neither by them nor by any of the academics in attendance. Instead, the luncheon speaker – the CEO of Tupperware Corp. – was the only human being in the three-day meeting who so much as mentioned ethics.

    So no one on the faculty learned a thing, and naturally, students didn’t either. Ten years after the MBAs trashed Enron, its employees’ pensions, and its auditor, new MBAs inflated and popped the housing bubble.

     “I won’t hire from Wall Street any more. All those people know is how to suck value out of a company, not how to add value to it.” – An entrepreneur

    Back in the day, b-schools led the business world, sending out new ideas and techniques. Now, b-schools react to the business sector, and far too slowly – especially compared to journalists, who turn around in-depth analyses very fast. Of what use is the b-school?

    When [“Jones”] showed his new creation to... the university’s intellectual property arm... the people there quickly introduced him to “Smith,” a former student at [the university’s] School of Management. The two formed a partnership..., with Jones as the creative inspiration and Smith as the business head and CEO. Smith has a somewhat different definition of Bandojo than Jones’ “electronic musical instrument.” He calls it a platform or single interface for playing multiple instruments.
    -Albuquerque Business Journal

    Talk about sucking value out! Why pay Smith to replace the straightforward and descriptive “electronic musical instrument“ with the obfuscatory “platform or single interface for playing multiple instruments,” a phrase that only a venture capitalist could love? You can look them up here, but I’ve disguised names in this recounting. This was to avoid embarrassing the principals, though I’m not sure they deserve the courtesy. A liberal arts grad would never perpetrate “a platform for...” (Oh, I can’t bear to type that phrase again!) 

    No one in the university admits responsibility for any of this. No one in the leading research universities gets tenure for redesigning curricula. The teaching colleges follow the lead of the research universities. Therefore no one will change what b-schools teach students. William Holstein is right: “Business schools are facing a crisis of global irrelevance.” I might have titled this column “A Wake-up Call” for b-schools. But how do you wake an institution from a coma?

    Postscript: Not to leave you all doomy and gloomy. Stony Brook’s degree in Technological Systems Management, and a few similar programs in other engineering schools, teach students to bridge the technical and the management sides of organizations, and provide enough technical specialization to make them employable and useful at high-tech enterprises. As I say, I’m glad to be back in engineering, where I think we've found some answers to the problems plaguing the b-schools.


    <!--[endif]-->

    <!--[if !supportFootnotes]-->[i]<!--[endif]--> One honest, frank exception is my Texas colleague Jamie Galbraith, an economist who after the crash testified to a Congressional committee that his is a “disgraced profession.” 


    <!--[if !supportFootnotes]-->[ii]<!--[endif]--> “Most management schools are reporting a decline in the number of applicants for their two-year MBA programs... students are flocking to one-year specialized degrees.” http://strategy-business.com/article/00164?pg=all



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    Comments

    Can't agree with you more. Most MBA students are fed through a hurried night-school curriculum as they're also working a full-time job. Not a recipe for excellence. As business exerts more and more power over universities, the true inquiry necessary in academics falls away. It's not just in science. Follow the money. FSU and Koch bro money, for example.

    MBAs were also leading companies that drove the growth of the economy in the last half-century. The complex financial instruments that fueled the financial crisis were, without question, created by engineers who applied their mathematical "talents" to debt and equity markets. Based on your logic we will also need to blame engineers for climate change and weapons of mass destruction. Human greed not an MBA education is responsible for the events you describe.

    Fred Phillips
    MBAs were also leading companies that drove the growth of the economy in the last half-century. 
    That's an empirical question, would have to investigate. Here are leading counter-examples: Jobs and Gates were college drop-outs. Hewlett and Packard were engineers, and engineers led their highly successful company until it lost half its market cap under MBA Carly Fiorina.
    financial instruments that fueled the financial crisis were, without question, created by engineers
    and also by unemployed physicists, but all hired by business managers.
    blame engineers for climate change and weapons of mass destruction.
    Yes, I do. This is why I'm pushing the programs in our Technology&Society department, which help students bridge the gap between technical expertise on the one hand and the social/policy impact side on the other.
    Richard King
    Several years ago I was on the receiving end of the business approach of someone who had gained an MBA in the USA.

    For various reasons, which will be explained in my forthcoming book, I endeavoured to set up a “Technology Diversification Centre” to bring business to the South of England. It was based on my involved with a couple of companies and helping them develop their business by introducing products made with advanced materials which were fining their way out of aerospace and defence applications into more general use. I won money from the European Konver Fund with my proposal, to be spent on a matched funding basis; for every Pound Sterling spent, an equivalent sum would be released from the fund. Individuals are not allowed to have such European funds; it has to go through some sort of official body, a University, a Business Link, a Council, etc. the then CEO of Portsmouth and South east Hampshire Chamber of Commerce, now part of Hampshire Chamber of Commerce, persuaded a Borough Council to assist me. The funds, therefore, went through them.

    In the meantime there had been developments which would have resulted in the local Centre being a stepping stone to a major Centre at a West London University, co-sponsored by a major Bank. Dr Joe Elliott, who set up the MTech in non-metallic materials course that I had pursued in the 1970s, suggested I ask for a professorship; I did and it was, essentially, agreed in principle.

    Regrettably, although the project was all my idea and all my own work, a senior Council Officer, took it off me and gave it so someone in the Council employ, that person styled himself “MSc(Eng), MBA(Harvard), MIEE”. The project was taken in a completely different direction, overspent on the funds, among other things and wrecked it. Someone under the aforementioned person was given the task of running it, with a salary that the funds would not stand, plus a car, and in offices on an industrial estate, far beyond the available resources.

    I checked on the above mentioned person’s qualifications, in part because his actions were a total breach of the Code of Conduct of a Professional Engineer. It transpired that he had ceased to be a Member of the Institution of Electrical Engineers, now the Institute of Engineering and Technology, ten years previously while he was studying for his MBA at Harvard; the MBA was genuine as I faxed the Dean of Harvard business School to check.

    The Council had to pay money back to the Government Office for the South East of England, supposedly due to a “misunderstanding”, at least that was how it was reported in a local newspaper, though the repayment was almost certainly far higher that in the newspaper article and the Borough residents have been kept in  the dark. The same newspaper would not publish my side of it, even moving a reporter, who was going to investigate, away from the local office.

    From what I saw and what I was told about other projects, conversations with the Government Office (who felt, at times, that they were being taken for fools by the Council) there was a general approach that amounted to deception, fraud, false accounting and misappropriation of European funds.

    The way events developed, five years work on my part was wrecked, I lost a professorship and had to scramble around for other income; hence me ending up in part-time lecturing at Bordon Military College, the University of Brighton and Chichester College, along with other involvements. Even so, I still estimate I lost out to the tune of £1m, or more, in income; a professorial salary for over a decade plus extras that would have accrued.

    As the above mentioned CEO of the Chamber of Commerce rated my non-engineering interests to be worth at least 10% on local tourism, with other senior business people agreeing, my losses are vastly more than that. The estimated losses to the region, over the years come out at something like £0.5Bn for the engineering contribution that would have been and £1Bn for my other interests; all down to a corrupt Borough Council and someone with a Harvard MBA, along with those who helped in the cover-up, of course. Another loss was a Second Bridge to Hayling Island (http://www.rlkassociates.co.uk/RLKA_hisb.htm), which could have been built with European Funds as a second generation technology demonstrator.

    Those events would be in a sequel to the present book, which ends in 1994. Hopefully developments will take me back to university to fulfill an ambition to do research in applying the engineering and technology approach to matters that mainstream science cannot get its collective head round, in which case I will be closer to the science book situation. Engineering is not the main thrust of the book anyway. People at the university knew about it and Heinz Wolf was already a Professor their, with a reputation for being slightly eccentric even before then. They also knew about my other interests and involvements and were quite happy to have someone who would likely be considered even more eccentric than Heinz, at least by mainstreamers. The delay in publication is partly due to the after effects of the aforementioned events, which were rather shattering for me, plus the expect impact of the book as it has no equal; Richard Bach’s “Bridge Across Forever” is, perhaps, closest; I do not have his poetic gift of language but have a “twist” which is unique, more than just the one, in a sense.

    Under English Law, I could name the Council concerned due to the High Court “Derbyshire Ruling” of 1992/1993; that is described in, for example, the “Engineering Background” (http://www.rlkassociates.co.uk/RLKA_engb.htm). A public body cannot sue for comments made about it, though the Council in question is scared of the publicity anyway; nothing has been done about a fair amount of detail on my websites and blogs that has been there for a few years.

    There is a degree of irony involved as I live in Havant, Hampshire, and my Member of Parliament is David Willetts, Minister for Science and the Universities; no, he would not help, though there seem to be plenty of other people who have been declined in their various ways, other than me.

    Paradoxically, the local press is currently supporting an application for Government funds for part of the region where I live, ‘We are urging Ministers to listen to us’, says Solent LEP director (http://www.portsmouth.co.uk/news/business/local-business/we-are-urging-k...); that is in the current edition of the Portsmouth News. It involves, among other things, the building of a new town, or at least village, near Fareham, which the majority of residents are against.

    In my experience, so far, Hampshire is not the best place for business unless you have “clout” and, or, independent routes to assistance and publicity outside the County. Although, had the Internet been in those years, as it is now, or even five years ago, that would have certainly been a way out past the cover-up and they may not have dared to take that route in the first place.

    The above is not really a good advertisement for Hampshire as a County for business, perhaps in other matters as well, or for a Harvard MBA.