
The decline of the MBA will cut off the supply of bullshit - richardburton
http://www.economist.com/theworldin/displayStory.cfm?story_id=14742624&d=2010
======
ig1
This article is bullshit. It's premised on a single piece of evidence: the
decline of jobs for MBAs. Holding the decline of jobs in a recession as a sign
a qualification is worthless is ridiculous. The demand for engineers has gone
down as well, does that mean engineering qualifications are worthless ?

Following the same logic if the demand for MBA graduates went up then it would
make sense to argue that MBAs are valuable. So if we look at the early 2000s
where this was true was Lucy Kellaway writing articles calling out the merits
of MBAs ? - well no, it turns out Lucy Kellaway has been writing articles
slagging off MBAs since the 90s.

Ms Kellaway is just using the recession to ride her hobby-horse.

We shouldn't be any less critical when reading articles that support our
personal opinions than those that oppose them.

~~~
agbell
This article is from their speculative 'The world in 2010' publication, which
attempts to forecast the coming year. That means its a bit more speculative
than standard economist articles.

Wall-street bailouts definitely made business less sexy on main street

~~~
siavosh
frankly it's not business that's sexy, making tons of money is. i used to work
on wallstreet, and i can assure you the people there are smart enough, well
connected enough, and greedy enough to find new ways to make fortunes again,
in fact they already are. the bonus' at goldman sachs and scores of hedge
funds this year will seem quite sexy again for those undergrads and mba
students.

------
absconditus
"No financial man will ever understand business because financial people think
a company makes money. A company makes shoes, and no financial man understands
that. They think money is real. Shoes are real. Money is an end result."

Peter Drucker

~~~
InclinedPlane
This is silly. Both aspects are important. Someone who thinks money isn't real
may make huge basic business blunders like not paying the right taxes, not
managing their debt/income correctly, or just making horribly inefficient
business choices (I've seen this a lot). The result may be a company that goes
out of business even though it's perfectly viable if run correctly. Or a
company that dies because it inadvertently violates tax law, or labor law, or
environmental law, etc, etc. Or merely a company that doesn't compete as
effectively against its cohorts and falls so far behind it becomes irrelevant.

~~~
markpercival
No, what's silly is that people still quote Peter Drucker with a straight
face.

Ever been frustrated by the many layers of middle management in corporate
America today, or laughed at a dilbert strip? Blame Peter Drucker.

Just look at the results of all this "management as a science" bullshit - only
one fifth of employees feel engaged with their jobs today, as was recently
pointed out by the WSJ
([http://blogs.wsj.com/management/2009/12/16/management’s-dirt...](http://blogs.wsj.com/management/2009/12/16/management’s-dirty-
little-secret)).

~~~
brianlash
I fail to see the connection you draw between Drucker's teaching (eg What gets
measured gets managed) and the poor management you see in corporations today.
Have you ever read any of his articles/books? Can you point to anything
particularly offensive?

Anyway Drucker wasn't a "management as a science" guy. He was an economist, or
a microeconomist if you're nitpicking.

~~~
markpercival
He certainly fits the mold of a microeconomist, but he revolutionized the
study of management in the US. I don't think it's at all disingenuous to say
that he drove management science to what it is today.

And to sum up his teachings as "What gets measured gets managed" is fairly
trite when he wrote 30+ books on the subject of organizations and management.

So yes, I think "management as a science" guy is totally appropriate. Or as he
is described so often on book covers - "Managment Guru"

My point is, we have MBA's coming out of programs which rely a great deal on
the teaching of Peter Drucker, and companies are starting to wake up to the
realization that Drucker's "Knowledge worker"/MBA doesn't possess the
generalizable skills that he argued for.

Drucker argued for large corporations and layering, giving rise to the current
bought of middle management that make up the majority of cruft in a today's
organization.

And yes, I was required to read Drucker my my management classes.

~~~
brianlash
eg means 'for example.' I wasn't summing 30+ books worth of economic thought.

------
ShabbyDoo
I'd like to know what counts as bullshit. Six Sigma and other such fads
certainly seem like they ought to be included. But, what's not bullshit? A
good MBA program is an amalgam of fundamental concepts in economics,
sociology, mathematics (at least stats), and such. Six Sigma might be
analyzed, but it's not presented as a fundamental truth or even a profound
idea.

Let's take a specific example: the concept of "agency costs". An economist
defines these to be the inefficiencies resulting from one's agents (those
doing work for him, and those doing work for those agents, etc.) having
different incentives than himself. MBA program include agency costs as one of
many economic concepts discussed.

A friend with a Harvard MBA was selling his house while living in another
city. He noted that the traditional real estate agent's "6/4" commission
structure (6% of the first 100K and 4% thereafter) causes a rational agent to
sell as many homes as possible without regard to the actual selling prices.
Why bother seeking out a buyer willing to pay $20K more when you only get $800
of that? It would be easier to seek out an additional seller instead. An agent
incentivized with this structure likely would not act in his best interests.

So, my friend persuaded an agent to accept a very different plan: 2% up to the
price he felt he could get by putting out a FSBO sign in the front yard and
10% thereafter. With this, the agent could earn significantly more by working
to find a high-paying buyer. The house ended up selling for a little more than
the "FSBO sign" price, so he at least saved on commission.

Those here without MBAs might also think in this way -- much as those without
CS degrees might also understand algorithmic complexity. It's not that the
content of a top MBA program can't be learned through self study in the same
way that good developers are sometimes self taught. But, to suggest that the
fundamental content of an MBA program is "bullshit" ignores what is valuable.

Perhaps we are most aware of frat-boy MBAs' self-important yapping, but the
fundamental concepts of these programs are generally sound. I have an MBA from
a less-than-Harvard program and have found what I learned there to be of
benefit. And, I consider myself pretty much bullshit free.

------
InclinedPlane
I can certainly understand the desire to vilify MBAs, there's certainly plenty
to complain about. However, it's also worth remembering that folks with sound
business sense and good intentions are really very valuable. There are
countless examples of very talented people (engineers, artists, musicians) who
came to ruin because they lacked even the slightest business sense and made
some bad choices they couldn't recover from. Weighed along with that there are
many examples of healthy working relationships where makers and business folks
work with each other, complementing each other's skills, making a more
successful business venture than either could alone. Would Woz have helped
revolutionize the computer industry to the same degree without the help of
Jobs? How many other examples of that sort exist?

As well, the quality of the average programmer is nothing to crow about (just
check Daily WTF if you need examples). Personally I can't say for sure whether
I would rather work with an average programmer or an average MBA, neither
situation fills me with enthusiasm. The absence of business savvy
professionals from the startup world is not something to look forward to, even
if it comes with the beneficial result of fewer predatory MBAs. A preferable
future would be one where a greater percentage of makers gain enough business
sense to be able to get along on their own, avoid the worst business mistakes,
and also to develop the radar to be able to avoid the sharks and find the
angels.

~~~
ilamont
Not that I disagree with your premise about makers and business folks, but
Steve Jobs didn't have an MBA or a college degree.

------
sethg
_[I]f fewer bright, ambitious people go into business, economies may suffer.
Instead the talent will go increasingly into the public sector, the law,
medicine—which are already bursting with bright people as it is._

This must be some new definition of “suffer” that I was not previously aware
of.

~~~
jacoblyles
I think it would be conservative to estimate that millions of jobs and
billions of dollars of production are generated regularly from firms founded
by "bussinessy" business types. Yesterday I was listening to an interview of
an entrepreneur that I admire, and I didn't realize until then that he had an
MBA. There are probably tens of thousands of people employed by him.

But don't let me get in the way of your prejudices, it's always fun to kick an
unpopular person in public for the general amusement.

~~~
sethg
The prejudice is not in me, but in the author of the original essay.

There are entrepreneurs who have led companies to provide great value for
their customers, employees, and stockholders, and entrepreneurs who have led
companies straight into the ground. There are doctors who work heroically and
insightfully to save lives and there are doctors who are more interested in
satisfying their God complex than actually caring for patients. There are
lawyers who help right the injustices of the world and lawyers who just look
for excuses to run up their bills.

I don’t see why we should assume, a priori, that fewer bright and ambitious
people in business and more in law or medicine will be a net social loss.

------
SandB0x
To me studying business because you want to be good at business is like
studying the concept of winning if you want to be good at a sport.

That could probably be phrased a little better, but I am just amazed at the
number of smart young people I know who aspire to study an MBA rather than
something tangible/critical that will give them a useful or scarce ability.

~~~
hpvic03
Sports teams spend hours every day watching film for a reason. You have to
study the problem you're facing in order to figure out the best way to handle
it. Business is simply solving one problem after another until you've got a
profitable company.

You learn a ton by starting and running a business, but a formal education can
give you a more encompassing framework on how to think and approach specific
situations.

I'm going to an undergraduate business school right now, and I'm also a web
developer and entrepreneur. Sure, some stuff is common sense, but I've also
learned a lot that was under the surface that I've already found to be
invaluable in my endeavors.

~~~
thwarted
I think the films being referred to were more along the lines of "how to spend
your millions", "what it's like to show off your superbowl ring", or
commercials where sports stars are asked "What are you going to do now?" and
they respond "Go to Disney Land", as if these somehow indicated HOW to win.
The films you're referring to are the proper ones to watch to, as you say,
study the problem area and come up with winning strategies. It's not watching
movies like Big to find out how to become an executive at a toy company or
Gung Ho to determine how to run an auto manufacturing plant.

~~~
jacoblyles
The business program that you attended must really suck.

------
mnemonicsloth
If The Economist can use the word _bullshit_ , in the technical sense -- self-
conscious jargoneering intended to inflate the speaker's perceived importance
-- then the rest of us can too, right?

~~~
jasonfried
You don't need permission to say bullshit. Always call it when you see it. It
doesn't need shelter.

~~~
antonovka2
37signals would be significantly raised in my estimation if you tempered your
invectives with less emotional arguments.

Of course, tempered rational arguments rarely drive significant traffic, and
lackluster traffic doesn't drive sales.

~~~
fretlessjazz
This is not the 36signals blog nor TMZ.com; Jason can say what he wants.

~~~
antonovka2
Where did I claim otherwise? I only noted that his suggested approach -- which
is clearly reflected by 37signals -- has led to me maintain a lower estimation
of their decorum and the value of their positions.

------
vitaminj
In defense of MBAs, they can actually be useful IF you already have domain
knowledge. The problem is when MBA graduates with no domain expertise are
unleashed to manage and lead a business. It's dangerous even in small markets,
for example the Stanford MBA trying to sell condom keychains
(<http://www.storylog.com/how-my-start-up-failed/>)

I work in a multi-disciplinary engineering firm. In the past, the project
managers were typically promoted from the senior engineering ranks (like a
lead mechanical engineer). About 5 years ago, the company decided to create a
separate discpline for project management. So graduate engineers would go
straight into assisting project managers, and then becoming one themselves
without ever working on a project as a discipline engineer.

Now we have to deal with project managers who've never actually worked on a
project and don't understand how projects really get done. They only know how
to manipulate cost and schedule spreadsheets and set unrealistic milestones.

The best project managers I've worked with have had extensive experience
working on projects in their discipline, then supplemented these skills with
an MBA or similar such management training.

------
richardw
As entrepreneurs our focus is different anyway. Some people will attend
b-school to get a better job. We'll attend to learn skills, which is part of
what the article says:

"In future, those who stump up will do so because they want to learn the
skills, not because they think they are buying entry into a cool and exclusive
club"

B-school is what you make of it. You get a couple years to soak up a ton of
knowledge. Sure there's always BS but there are some incredibly powerful
models that you just won't learn outside of it unless you're _very_ dedicated.
HR? As primarily a developer, I'm not going to read an HR textbook unless
someone tests me on it. Turns out it's a very interesting subject and links
strongly to your strategy. Same with marketing, finance, etc etc.

You can also attend, get through the exams and have the primary output being a
piece of paper - same as any other degree.

------
btilly
I've been waiting for this.

Clayton Christensen predicted the coming decline of the MBA several years ago
in _The Innovator's Solution_ (very good book BTW). The financial bubble has
extended the popularity of MBAs, but it is a net loss to take several years
out of your career to gain information that you could gain on the side while
continuing working with an executive MBA. Eventually the market is going to
come to accept that.

------
richardburton
A friend told me that a Harvard MBA graduation dinner Warren Buffet was
invited to speak. Apparently one of his lines was something like: "If you were
going to do anything incredible you'd have dropped out by now". I bet that
went down well.

------
samt
Please. There's enough bullshit in the world to outlast oil, water and
sunlight. A few less MBAs, at best, means that some of that bullshit will have
to find real jobs and will make slightly less money. More environmental
engineers, now that would be something to celebrate.

------
takrupp
One the hats I wear is that of a recruiter (its business we operate here)
focused on finance and biotech. I couldnt agree more: MBAs aren't that
hireable right now, even in banking. In fact a good junior, with 2 years of
experience, are much more placeable. As for higher degrees, if you want into
banking or business, comp sci, physics, applied math, statistics are better MS
degrees.

I dont have an MBA, and havent pursued one thus far, but for the cost and
knowing the job market, I think the article is mostly right. Good managers can
teach business stuff as long as the talent is dynamic enough. Those analytical
skills, though, are highly valuable in this market to smart hiring managers.

------
loganfrederick
It's good to see The Economist addressing some of the fundamental flaws in how
"business" is practiced today, particularly at the end of the article.

The past two decades transformed business from the valuable business-building
concepts of management, distribution, and efficiency to obscure concepts like
deal-making and arbitrage.

They have their place in the financial/economic systems, but they are not the
foundation of business. With shows like "The Apprentice", these are the parts
that are glorified, and it leaks into our business education.

Business isn't about finger-guns and handshakes. It's about creating value and
then getting it to those who need it.

------
agbell
I hope we don't lose Dragons’ Den. The Canadian version is great
entertainment.

~~~
gsmaverick
I can't believe some of those deals. $25,000 and 50% plus a renaming of the
company to include the investors name.

~~~
agbell
Yes, the deals are sometimes crazy exploitative. But at the same time, they
sometimes dish out lines of credit to people just because they like them.

The real problem with the show is the format. The amount of money they ask
for, they need to get. So the equity amount always climbs to 51%.

I think that even the deals that are agreed upon mainly fall apart later on.
Great show though.

------
kls
I wonder if the decline in MBA's and the associated value placed on them
directly correlates to the fact that law school applications are surging. I
seems to me that Law may be a close second for someone considering an MBA, I
know Law is a close second for those who opt not to go to Med school.

------
timothychung
For most students, MBAs are for networking, from what I was told.

People exchange their business cards on the very first day and build up a
network trying to climb the corp ladder together...

It is a sad situation but nevertheless, who seek true value in our modern
world? Reflections will bring us wisdom.

------
ryanwaggoner
First, Please avoid editorializing story titles.

Second, this article has the facts wrong. MBAs from top schools aren't having
trouble finding jobs, nor have those jobs started paying way less.

~~~
noelchurchill
Also, I don't think it's the MBAs that are the problems. Rather, the job
market was sending the wrong signals by paying people with MBAs far more than
they're worth. Due to the inflationary monetary supply enabled by the federal
reserve, the finance industry was able to grow and become extremely
profitable, attracting lots of talent with large salaries. These people would
have naturally gravitated to many different career choices if the pay scales
weren't so lopsided.

~~~
mnemonicsloth
_Inflationary monetary supply enabled by the federal reserve... lots of talent
with large salaries._

This sounds like a villain-hunt: a well-known cognitive bias that seeks to
explain circumstances in terms of human agents with simple, understandable
motivations to the exclusion of environmental, structural, or probabilistic
explanations that lack such features.

In this case, while I'm sure the Fed bears some responsibility, a lot of the
growth of the financial sector over the last 30 years is probably due to the
fact that several billion Asians have entered the world economy in that time.
Their work creates wealth, which is useful as capital, for which there are
markets, which grow from the influx and thus offer larger rewards to clever
people who work in finance, should they find a better/faster/more efficient
way of getting things done.

~~~
noelchurchill
The Fed began expanding the M3 monetary supply at a historically unprecedented
rate in the 80s, and has become more and more aggressive with this policy over
time. The entire point of this policy is to stimulate business by encouraging
spending, make credit more attractive because the value of debt loses value
over time due to inflation, and discourage saving. As consumers spend more,
businesses make more, sending signals to the job market that getting into
business and getting an MBA is a really good idea because you make more money.
So that's exactly what people have done. Now that the American consumer is
tapped out, broke, and unable to take on any more credit, obviously businesses
are going to do poorly because their goods aren't being purchased, and they
certainly can't afford to hire any more expensive MBAs. Do you agree?

A growing and productive world workforce does lead to additional
production/wealth creation, and I do think this is conducive to business, but
I don't think it's the significant factor explaining the current glut in the
job market for people with MBAs in the United States.

The population in China is still expanding, workforce is growing, and GDP is
still booming, so if this were the driving force fueling the demand for MBAs
from America then that demand should still be there.

------
balding_n_tired
1\. If only.

2\. The love affair with business is cyclical. The 1980s probably tied in with
MBAs just because more people were going to get graduate and professional
degrees.

------
Harj
_What do the brightest and poshest students at Oxford and Harvard want to
study? Business._

as an Oxford alumni, i'd love to know what she's basing that statement on.

~~~
authentic
the correct singular is alumnus

few things bother me more than blatantly incorrect usage of Latin next to
supposedly prestigious institutions

~~~
tree5
Fewer things bother me more than pseudo-intellectual jackasses bothered by
grammar.

~~~
jackfoxy
Fewer things bother me more than flippant replies to pseudo-intelectual
jackasses. I'm just not bothered by very much.

------
ivenkys
Isn't this well known ?

Hasn't Dilbert been saying this for years more succinctly and wittily ?

------
zaidf
Such tone is pretty counter-intuitive, IMO.

------
pwnstigator
_What do the brightest and poshest students at Oxford and Harvard want to
study? Business._

Brightest? Math, computer science, the natural sciences, and the humanities.

Poshest? Philosophy, classics.

Neither has much interest in an _undergraduate_ business degree, and both
classes of people come from an environment where people with undergraduate
business degrees are considered not to have gone to college.

Regarding business <strike>credentialing</strike> education: you do that after
college, especially if you need or want a late 20s boost. That's what the
MBA's for.

------
sree_nair
The Article Just Tells people what they want to hear. Management Positions
will still be filled with the MBA Crowd.

