Okay, okay, you get it. MBAs do not put out fires. MBAs often do not seem to notice fires, even when they are raging mere yards away. Hence the scandals Enron, WorldCom, Global Crossing, Adelphia, HealthSouth, AIG. Hence the billions of dollars in hidden debt, the billions more in made-up profits, that could persist on paper quarter after quarter even as their failure to exist in reality emitted an ever fouler smell.
That is, anyway, the assertion of an increasingly influential batch of business-school professors, including noted iconoclasts like McGill University management guru Henry Mintzberg and Yale economist Robert Schiller (who wrote that MBA curriculums are “so devoid of moral content that the discussions of ethics must seem like a side order of some overcooked vegetable”). More reasoned types like the late Sumantra Ghoshal of the London Business School, whose posthumously published Bad Management Theories Are Destroying Good Management Practices has roiled the business education world, agree. “Business schools do not need to do a great deal more to help prevent future Enrons,” Ghoshal wrote. “They need only to stop doing a lot they currently do.”
The attacks come at an already trying time for MBAs, especially those in training west of the Schuylkill. Wharton has only seen a couple of high-profile grads convicted in the current crackdown on corporate greed — IPO king and justice-obstructor Frank Quattrone, and Adelphia’s Timothy Rigas. They’re hardly the zeitgeisty bunch of Greed Generation MVPs it became famous in the ’80s for schooling — junk-bond king and ex-con Mike Milken, corporate raiders Ron Perelman and Saul Steinberg, The Donald Trump himself. Still, lesser embarrassments have stung — like ’98 dropout Mark Yagalla, who started a $50 million “hedge fund” that turned out to invest mostly in the young stock-picker’s harem of Playboy models, or 1998 grad Jeremy Kraus, whose much-hyped ice-cream company, Jeremy’s MicroBatch, lost millions in investment money before he shut it down to found a “business development” firm the SEC alleges used boiler-room tactics to pump its stock.
But the more serious problems at the world’s oldest business school, which turns out about 1,000 MBAs a year, are the signs of crumbling in the B-school industrial complex it worked so hard to build. For years the MBA’s importance has been perpetuated by a triumvirate of conjoining interests — 20-somethings who want to jump-start careers, companies that want to groom them, and schools that want to reap the fees and create wealthy alumni. Now the first two are shrinking away: Wharton applications fell 21 percent in 2004 (and fell again this year), and since 2000, the percent of MBAs landing full-time job offers has fallen to 83 percent from near 100 percent.
Then, in October, Wharton was singled out for ridicule by one of its own when the Wall Street Journal printed an embarrassing letter, “Are MBAs Really Learning How to Do Things?” The missive, written by Wharton marketing professor J. Scott Armstrong, essentially charged that the MBA is a worthless degree. Relating the pathetic responses he’d gotten when he asked students to anonymously write down what they’d learned in previous classes (“I learned to think out of the box” was a popular answer), he wrote that MBAs “resist learning about useful management techniques. On the other hand, they love jargon. Can you say ‘strategic thinking’ or ‘scenario’?” Business schools, he concluded, “have convinced students that they have no responsibility for their learning.” Armstrong, it turned out, so hated MBAs that he hadn’t taught any in years, but other members of the faculty began to step up and concur, to the point that Anjani Jain, the vice dean charged with overseeing Wharton’s MBA program, wrote an e-mail to MBAs reporting that their academic performance was falling precipitously, and little wonder: They had admitted in a semiannual “stakeholder survey” that they were spending 22 percent less time on classwork than students four years ago. Alumni began to fear for the Wharton “brand,” and wondered aloud whether the school’s precious grade nondisclosure policy — a sacred cow that, in the interest of giving MBAs time to work on their “people skills,” since 1994 has prohibited students from telling prospective employers their GPAs — might have to be abolished.
But the most humiliating blow to the MBAs came in an episode earlier this year dubbed the “Pub Controversy.” For decades, Whartonites had gathered on Thursday afternoons (there are no Friday classes) for a prolonged on-campus happy hour “Pub” attended and staffed by MBAs; in February, however, an MBA imbibed so much that he passed out and had to be hospitalized. The ensuing investigation by the school’s risk management department yielded some sobering findings — namely, that Pub managers were paying themselves $31.25 an hour. “In the era of Dick Grasso, the one lesson we should all learn is that executives should not set their own compensation,” Dean Jain drily opined in the Wharton Journal. The reference to Grasso, the notorious former New York Stock Exchange chief who, with the assistance of an oblivious board of directors, set his own pay to the tune of more than $188 million, was so over-the-top as to almost seem joking. But after hanging around Wharton for most of the 2004-’05 school year, I had enough from and about Jain to know he wasn’t. He’d simply had enough.
Tellingly, in the same Wharton Journal, Jain revealed to the MBAs that the “achievement gap” between their grades and those of the (notoriously intense) undergrads who took the same courses was widening. It seems that as the MBAs while away their years chatting and schmoozing and drinking to excess, a younger, shrewder, more competitive group of B-schoolers is toiling into the night, plotting world domination. The MBAs, as a group, have the temperament of Dick Grasso’s clueless board members, whereas the undergrads want to be the $188 million man.