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American business schools are reinventing the MBA (economist.com)
48 points by prostoalex 9 months ago | hide | past | favorite | 51 comments



This is something I wrote for a previous post on Hackernews re MBAs:

I went to one of the top-tier (top 3) MBA programs in the US. The way I've described that value of the top MBA programs is in 3 (roughly equally-weighted) categories:

1) The Education: Getting to discuss business concepts with a group of smart, successful folks for 6-9 hours a day is very helpful. Most of the content, I could get from books/ online articles at a fraction of the price, but spending the time in a focused way is actually helpful.

2) The Network: In terms of network, this isn't some vague amorphous thing at Stanford GSB, HBS, or Penn- it's knowing several hundred other folks who are going to be very successful in their careers. This can be useful in sales, fundraising, finding a next job, etc. and DOES have a tangible dollar value.

3) The Rubber Stamp: Having your resume say "Stanford GSB" or "Harvard Business School" does have value to future employers or customers- it de-risks you as you've been validated by a famous institution, and helps THEM to associate with these famous brands.

For the top 3 programs, even though they're VERY expensive (approx $250k in tuition + living expenses, plus at least another $250k in foregone income for most incoming students, for $500k in actual cost+opportunity cost), they're almost certainly worth it.

For middle-/ lower-tier MBA programs, 2) and 3) above aren't NEARLY as valuable, or perhaps don't even exist- is your "network" from Local State School MBA actually valuable? For these, the only real value is the actual education, and most students would be better served with an online program or just actually picking up some books/ case studies/ reading online articles. There are a few exceptions to the this- for instance, often schools that aren't in the top 3 nationwide can punch above their weight in regional networks. For instance, if you want to live and work in LA (or work in the entertainment industry) I've heard that it can be really useful to go to UCLA or USC for an MBA.


Fellow top MBA grad here. Strongly agree with the points above, and I'd add:

4) The Recruiting Pipeline: There is a tranche of very desirable jobs out there that are, de facto, restricted to graduates of the top-N (3 or 7 or whatever) MBA programs. Specifically, associate-level roles at consulting firms, i-banks, and management rotational programs at F500 CPG/industrials/FANG. Especially if you're a career changer (I was a military officer pre-MBA), the 2 years of opportunity-cost are often worth the opportunity set provided by the recruiting platform.

With that said, it's important to note that there's no secret MBA knowledge you'll get at any of these programs, nor will you be coated with magical MBA dust that makes life a cakewalk once you graduate.


> de facto, restricted to graduates of the top-N (3 or 7 or whatever) MBA programs.

Isn't this a problem?


A problem for who?

Certainly not for the MBA programs and their graduates.


Inverting your response gives the answer: anyone for whom those programmes are not attainable, or from which they're excluded.


Right- the current state of affairs serves the top-tier MBA programs, their graduates, and management consulting/ banking/ PE firms very well for the time being.

Top-tier MBA progams' whole pitch is about how getting in to these elite institutions confers massive benefits to the rest of your career- they certainly have no incentive to change any of this. The employing firms get a veneer of shiny "elite" frosting over their staffs (and they're mostly selling the abilities of their staffs)- the current systems serves them very well too. Being egalitarian would have some feel-good optics (maybe), but isn't in the interest of any of these entities.

These old-school institutions aren't where you go if you want something that reflects Silicon Valley-esque "meritocracy", where credentials don't matter and only impact does. That's why this ethos is a big deal, and different than what came before (though it has its own set of issues).


"Meritocracy" itself is a fraught concept:

Although the concept of meritocracy has existed for centuries, the term itself was coined in 1958 by the sociologist Michael Dunlop Young in his satirical essay The Rise of the Meritocracy.

https://en.wikipedia.org/wiki/Meritocracy

https://en.wikipedia.org/wiki/The_Rise_of_the_Meritocracy


Ya I'm with you, hence the scare quotes.

In any case, I'm not defending the MBA industrial complex, but it is an attractive, valuable, and stable system they've set up. I definitely got value from it, but fair it is not.

Silicon Valley/ VC-land has a seemingly more egalitarian system on the surface, but if you dig even an inch deep there's a lot of ugly stuff there too.


Mcmoose, do you think the University of Michigan has regional appeal that justifies the tuition?


Not Mcmoose; but I would say definitely yes. Top 3 is too high a cutoff in my opinion; I would expand the above sentiments to "top 20"; which would include Ross - especially if you are considering regional appeal and are an industry switcher.


Ross is a good school especially if you want to work in marketing, and has a very strong Chicago network.


I really don't know in that case.


I'm surprised education is even mentioned. Every MBA I know has always stated the real value of the degree was for the network is provided[1]. A general management degree would naturally be useless in a world that increasingly values specialization.

From this perspective, MBA programs are just expensive signaling, or even a luxury good. As usual for elite education, these who meet the strict and competitive entry requirements are highly talented individuals, so the programs real value to employers is the sorting they provide by filtering from a large set of candidates.

[1] I have a PhD, but I work and know many MBAs. My father, wife, and several former bosses have been MBAs. Very capable, but none mentioned much value in the degree program.


Why is there no value in the general knowledge and coursework itself?

There are people getting MBAs that started from literally zero business knowledge. Let's say a Computer Science major, who has now worked in the industry writing code for 10 years, wants to move into management. Where would that person get any business knowledge if not for that course work?

How will that person relate to the aspects of the business that management needs to be aware of without the kind of basic accounting, finance, and legal coursework that is part of a typical MBA program?

Sure, someone who is already on the business side with a lot of experience in that area may not get any value out of an MBA.


> Why is there no value in the general knowledge and coursework itself?

There's a bunch of things a manager needs to know - but:

1. Some things in the course won't be applicable to your industry.

2. Some things in the course will be presented very credulously, while industry practitioners may have a different view of them.

3. Some things in the course are vital skills, but can't be usefully taught in a classroom.

4. Some things you'll already know.

Depending on your experience before the course, and where you're planning to end up after the course, after you eliminate 1-4 there might not be much left :)


There is value in the education, but it’s the exact same education you can get anywhere. Go to a community college and take statistics, economics, accounting, finance, and maybe a couple interest classes and you’ll have roughly the same academic exposure for a tenth of the cost. You don’t need an MBA program to learn business fundamentals.


Compare the curriculum for yourself. An MBA program at a reputable business school has more elective and specialization options, along with a higher level of difficulty. It's not accurate to declare that Community Colleges have no difference in curriculum to a respected graduate business school (and they do not cost 10x more, that is an exaggeration).

Cleveland State University MBA:

https://www.csuohio.edu/business/sites/csuohio.edu.business/...

Cuyahoga Community College Business Administration Degree:

http://catalog.tri-c.edu/course-descriptions/badm/?_ga=2.241...

At Cuyahoga Community College, do you see any electives like Lean Six Sigma, Supply Chain Analytics, or Medical Care Organization?


People seem to forget that the MBA (originally Master of Science in Commerce) was meant for technical undergraduate majors (like Engineers) to learn business concepts (and not meant for individuals who have a business undergrad degree). That’s also why the graduate degree was called a Master of Science.

When you hear people claim that an “MBA is useless”, it’s typically spoken by people who took business as an undergraduate degree. And hence - yes, it is useless if you already have a degree in business ... and that was not the original intended audience to be attaining such a degree.


Indeed, perhaps the better claim would be that undergraduate in business degress are the ones that are fairly useless.


I have an undergrad bachelor of arts with a double major in business and accounting. It has served me well in tech and I'm a data engineer now. The tech learnig was all on the job and self-paced.

I did take two quarters of MBA classes but they were mostly redundant with my undergrad. I was bored and dropped out.


Bachelors degree are usually pretty good indicators of learning capacity in my opinion. The more rigorous a bachelors degree, the likelier the candidate will be able to learn whatever is thrown at them.


Do you have a reference on this?

Google's Ngram Viewer has ... nil results for "master of science in commerce".

There is a "master of commerce" degree, though that's both contemporary and specific to Commonwealth countries, generally:

https://en.wikipedia.org/wiki/Master_of_Commerce

Hrm ... OK, so Dartmouth offered an MS Commerce in 1900, though it appears that:

1. Wharton had pioneered the concept in 19 years earlier in 18881.

https://www.jstor.org/stable/23702737

2. Harvard introduced an MBA, apparently under that name, in 1908.

doi://10.1016/j.emj.2014.03.006

Seems it's more accurate to say that there was an offered programme as "MS Commerce", but that the degree was never widespread, nor was usage long-lived.


Source:

https://en.m.wikipedia.org/wiki/Master_of_Business_Administr...

Quote “... Master of Science in Commerce, the predecessor to the MBA.”


Also: UVA still have an MsC programme:

https://www.commerce.virginia.edu/ms-commerce


Right, I saw and referenced that. Seems little used and rapidly eclipsed.


It never made sense to me that one could specialize in business. Every business is radically different from one another, even from competitors.

Seems like it would be better to combine a few basic business courses with an advanced degree in a technical subject. Going deep into “business” seems to divorce a person from the reality of any particular company. It gets to the point where they’re in danger of disrupting a company’s successful strategy because it contradicts their business class theory. And then the elves leave middle earth [1].

[1] https://steveblank.com/2009/12/21/the-elves-leave-middle-ear...


The people I see with MBAs obtained them because they were more or less told to. If you want to advance you need to do this. When I was mentoring an intern we had an event with the CIO. All his top VPs were there and he had them state their masters degrees. The executives value the commitment to get a masters as much as they value the degree itself. Some times they don’t even care much about the education, we gave you a challenge and you completed it.

I’ve seen similar situations where managers were told to teach an EE, SE, or even business classes at a local college at night.


There are a whole set of disciplines which are effectively systems-management knowledge or training (or to use older terms: science and arts or technology). Business administration, government administration, clerical studies (in the sense of religion), military science. These are domains of large, complex, and idiosyncratic systems -- both amongst disciplines and within them -- in which there are both general and specific sets of knowledge.

There are elements of business administration which are fairly generalised, and those which are specific to given organisations. Keep in mind that in business management as with technology, there's an advantage for large incumbents (think, early 20th century, railroads, chemical industry (especially DuPont), oil, steelmaking, automobile manufacturing, and a few major retail ventures) of stamping a business school with your own process, methods, and models, such that graduates are prepared to enter your own rather than competitors' workforces. An early form of the mindshare battle.


Could the same be said about computer science or most engineering degrees? You walk out of your CS program ready to be a frontend web developer or a device driver developer? I think all degrees are pretty general and then you specialize in the job.


The MBA has lost its once held stature in most industries. It’s almost become an acronym for dumb business decisions in many circles: “This must be something the MBAs came up with.”

If schools want to stay relevant they need to create programs that produce leadership candidates for today’s modern business environment. For too long it’s just been a cash cow for schools and people went because it was the thing to do. With market attitudes changing and applications way down schools need to rethink.

Dare I say an MBA case study is needed on making the MBA relevant again ;-)

Yes the networking element is there but seriously you don’t need to pay 50+k a year to do networking!


There is a case study, on CEO with or w/o an MBA, and there was no correlation into the company performance, there was a positive correlation with better compensation.

We’ll post the link when I find it.

Edit: just use google scholar, there are a load of studies. Scanning through the titles quickly shows that a many people are wondering what is the value of the MBA. It does make the schools a lot of money.


Well, isn't that just like evaluating the difference between whether or not you're a self-taught programmer?

If you already have business skills, either from an undergraduate business degree, experience, or self-teaching, you don't need a non-specialized MBA.

If you look at the actual MBA curriculum it has courses that seem to be quite obviously useful if you ask me.

The only problem here is that there are some places that won't let you take a management role without a masters degree or MBA, instead of evaluating your actual level of skill, creating a surplus of MBA demand.

(And there are bad engineering schools just like there are bad MBA schools).


>Well, isn't that just like evaluating the difference between whether or not you're a self-taught programmer?

Not quite. Self-taught programmers can get high salaries too. Notice what the OP said about how having a MBA did not correlate with company performance, however it DID correlate with increased compensation. Basically, if you want to get paid extremely well, you need the MBA, even if it has nothing to do with how the company performs.


MBA is functionally a useless degree. (My opinion is based on interactions with MBAs over 25 years).

Look at the companies that you admire and that show the ability to innovate... chances are they are run by people with technical backgrounds.

Example: AMD is run by Lisa Su, whose background is in EE. HP was run by MBA holder, Carly Fiorina.


If you're basing that opinion on interactions with other people that you potentially don't like in the first place, who you're already judging to be inferior to engineers, it's not surprising that you find business knowledge to be useless.

You're judging them on their compatibility with your personality, not on the actual knowledge that an MBA or other sort of business degree provides. It's really easy for engineers to completely dismiss the kind of knowledge (including emotional knowledge) that people in sales, business, and marketing possess. They aren't just some dummies who don't know how to code.

It also shouldn't be surprising that pure engineering companies like AMD are run by engineers, and while HP is an engineering company in some form, it's also more of a business services company. They do things like contract out desktop support services to large corporations or the government - that is much less about engineering and technical ability and more about providing continuing services, providing a business relationship.

It's actually not a lot different than hiring a custodial firm. Why wouldn't someone with a business background run HP? HP's commodity hardware business doesn't actually make a whole lot of money from what I remember.


Maybe you should read up on the history of HP. It is largely considered to be the case study in how a company can be ruined when technical management is replaced by "MBA" management.


Interestingly, now that I've looked into it, both of Hewlett Packard Enterprise and HP Inc's current CEOs have computing and engineering degrees. At around a combined $80 billion in revenue in 2019, they must be one of the most lucrative ruined companies I've ever heard of.

Remember, many people who are candidates for an MBA already have a non-business degree, and they're looking to get a fundamental business education.

So a wonderful example of that might be Tim Cook, who has a bachelor's in Industrial Engineering as well as an MBA, and runs the most valuable tech company in the world.

Many people say he's not as good as Steve Jobs (due to the lack of personality cult), but then again, Apple is now making more than double the revenue that it did under Steve Jobs with a revenue mix that is much less dependent on the iPhone. The fastest growing segment is services, which is far more profitable and less risky than hardware (ask Pebble, BlackBerry, or Fitbit about that).


Well doesn't it depend on the company and current state of the company, market, economy, that dictates who's put on the head of a company?

For example, in hard market conditions, or grim financial periods usually the CFO takes the leash as the CEO, in times where innovation is required a CTO takes the leash, and in times of abundance and room for growth CMOs come forward - I know it's not that linear, but in different stages companies bring forward different people with different backgrounds.

Also you can innovate in a lot of ways other than technical ways - brand, business model, operations, supply chains, distribution, market development, the list goes on.


Your theory assumes the CEO is the one driving innovation. I think you give CEOs too much credit.


>Look at the companies that you admire and that show the ability to innovate... chances are they are run by people with technical backgrounds.

>Example: AMD is run by Lisa Su, whose background is in EE. HP was run by MBA holder, Carly Fiorina.

You're looking at the wrong thing. You're looking at the companies, their products, etc., and how much you admire those companies and what they produce.

What you're not looking at is executive compensation. You obviously don't think much of HP when Carly was running it, but how much money did she make in that position? That's what's really important, not how the company did, what products it made, or what you personally think of any of that. For Carly, the only thing that matters is how much money she got, so that's the only metric that matters when discussing whether her MBA has any value. Did Carly make more money than Lisa Su? If so, then Carly's background was more valuable to her.


I agree. And I have an MBA.

I work as a Software Engineer.


Well, that makes sense. Why would a Software Engineer need the knowledge that's a part of an MBA program?

If you were in a role that required some basic knowledge of the business, and you didn't previously have that knowledge, I'm sure it would come in handy (i.e. basic accounting, finance, and legal concepts).


Seems Intel is run by an MBA too, with zero engineering experience. Maybe it was he who fired all the senior engineers since their products were mature.


No, that happened on the watch of the prior, technical CEO. The current CEO's layoffs have mostly been about consolidating and outsourcing IT.


A lot of my friends are in, or have completed an MBA program. Has anyone ever noticed the whole “we go on 10 trips a year as a cohort. If you’re missing out on those, you lose out on the experience” nonsense?

I’ll admit I wanted to get an MBA, but when I did my due diligence, time and time again, people talked about the unexpected costs (read: trips) associated with getting value. That irked me to the core.


I finished an MBA at UNC in 2005, right as they aggressively partnered and launched an online MBA using the same branding.

I got what I wanted from the degree, but it felt like the new product damaged the brand of the full time program.


Don't rule out the large number of MBAs from mediocre schools polluting the waters with what you get from any fool that parties more than studies. Many, many MBA programs are grade inflated baby-sitters for those that that learned nothing during their undergrad and are now getting an MBA at night.


A big factor is where we are in the economic cycle. It looks like we are heading in a recession, and if it is the case, I am happy to predict that applications will go back up.


Are computer systems management classes and knowledge now at par with accounting and finance in MBA?

The fact that there is still the occasional CEO that brags about not even reading his email (granted its been 10 years since I heard something like that publicly) is ridiculous.

The entirety of the smooth management of modern systems is IT systems.

It would be nice if they taught morality, but I can hear the eyerolls from the students from a thousand miles away.


>The fact that there is still the occasional CEO that brags about not even reading his email (granted its been 10 years since I heard something like that publicly) is ridiculous.

Actually, these days, that might not be such a ridiculous thing. One of my engineer coworkers brags about how he never reads his (work) email either. And he has good reason for it: it's just full of spam and junk, even from the company. If there's something truly important he needs to know about or do, his manager or a coworker will tell him. Of course, part of that is because the rest of us who do read our email are basically acting as his filter, and informing him of the important things he's missing. But serious, email is such a cesspool now that I can see why someone would avoid using it, especially at work where they typically use Microsoft Outlook instead of GMail. At least GMail does a pretty decent job of filtering things, showing you the important stuff, putting spam in the spam folder, etc. Outlook is pretty useless by comparison.





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