Some business schools are too remote from the real world and aren't equipping their graduates with the skills they need.
I sit on the international advisory board of European business school IESE and have just returned from a very interesting visit to the Barcelona campus. I talked with enthusiastic students from around the world and with their dedicated teachers. I came away impressed with their confidence and belief in themselves and their future in business Yet they may be in a minority, as many business schools in the UK and the US are facing a double-digit drop in applications for their MBA programmes.
Speculation about the causes of this has centred on the financial crisis and the decline of the banking sector as a potential employer, the Coalition Government's tougher immigration controls and a general disillusionment with business ethics and values. Whatever the reason, the deans of business schools everywhere are spending a lot of time thinking about the future of business education and its relevance to shaping future corporate leaders.
Students make a significant investment in terms of money, time and commitment when they sign up for an MBA. Fees are high, entry to the best schools is extremely competitive and the courses are demanding. Many schools use the promise of the increased potential for advancement and improved salary prospects as a recruiting tool. It is not surprising then that MBA graduates tend to have high expectations and sometimes an inflated idea of their value.
One former CEO of a large multinational consumer goods company, himself an MBA, told me that they can be very difficult to manage and fit into a corporate structure, so they often end up in strategy roles and chafe at the absence of bottom-line responsibility. His view was that the case study model employed in most business schools, often with a heavy emphasis on finance, focused too much on the quantitative evaluation of business problems, which is mostly of use in banking and consultancy. The result of this was that increasing shareholder value took priority over understanding customer needs.
As careers in banking and consultancy are now scarcer and less attractive to students, many business schools are trying to recalibrate their teaching to encompass entrepreneurship. A debate rages as to whether entrepreneurs are born or made but certainly many schools now seek to teach aspiring entrepreneurs.
Waheed Alli, the media entrepreneur and Labour peer, while conceding that a business education might have provided him with a quicker route to acquiring some technical financial skills, told me that too many MBAs 'know a lot about discounted cash flows but not enough about collecting the cash each month, and every entrepreneur I know cares more about the latter than the former'. His view is that the entrepreneurial approach is 'part science, part creativity and part instinct', and that the curriculum of most business schools would have to fundamentally change to embrace this. …