Book Review - Rethinking The MBA: Business Education at A Crossroads

Publisher :Harvard Business Press
Year:2010
Price:Rs.895
Authors:Srikant Datar,David A. Garvin and Patrick G.Cullen

Three professors from Harvard Business School have written a very relevant book on business(management) education in the current context.Through chapters 1 to 6, the authors have a critical look at the state of affairs in the MBA education, viewing it from the angle of changing market place, the curriculum, the various concerns, meeting the ongoing challenges of globalization, leadership and integration and also the innovation that has been happening in the pedagogy and the course contents.The authors go on to describe the responses from the institutions to the above concerns and challenges in chapters 7 to 12 and concludes with a discussion why business education and the institutions involved in it can be said to be at crossroads detailing reasons why changes are difficult to happen while stressing that there is a need for change & rebalancing and considering all the challenges for the future.

The book is the consolidation of the proceedings of the two-day colloquium held in May 2008 at Harvard Business School as part of its centenary celebrations. Chapter 1 details how the authors went about the research study.The study was conducted through indepth interviews of academic administrators like deans, current and former CEOs from companies (belonging to four broad sectors namely financial services, consulting, MNCs and high-tech)which frequented BSchool campuses for recruiting MBAs.Data were also collected regarding applications made,enrolments done, fees, faculty hiring etc.They also collected data regarding curricula by looking at leading MBA programmes and also the program content,architecture and pedagogy.Finally, they took a sample of five business schools (major ones from the US and the Europe)and the Centre For Creative Leadership in US, and studied the responses of them to the varying demands on them and changes that happen in the business education landscape.

The research of authors led to understand the knowing-doing-being framework as applicable to B Schools and to the identification of 8 unmet needs, most of them related to being.These are:
Ø Gaining a global perspective
Ø Developing leadership skills
Ø Honing integration skills
Ø Recognizing organizational realities and implementing effectively
Ø Acting creatively and innovatively
Ø Thinking critically and communicating clearly
Ø Understanding the role, responsibilities and purpose of business
Ø Understanding the limits of models and markets

The authors point to the fact that while the enrolments in the top ranked schools increased over a period of time, the enrolments at the lower ranked institutions were declining.Also, the study points to a trend that even financial services firms recruit non-MBAs as it is felt that the on-the-job training they get in the firm is better than that they get in a business school.There are also firms who feel that the training the MBA get in a business school is not necessarily useful.

The authors also find that there exists an effort to standardize the curriculum especially after the leading institutions. They also provide a list of core as well as elective courses offered at the major institutions and also describe their positioning. While differences exist in course length, cohort size, and the number of required courses, one commonality exists in the form of analytical and technical orientation of the MBA training, which is also one of increasing criticism and concern today.

While discussing the rising concerns , the authors describe the research activities of the BSchool, the concerns about the lack of practical applicability of the research conducted to everyday management.The authors themselves feel that while examples of relevant research exist, more need to be done in this area.

Another point of serious concern is that while most courses emphasize on quantitative and analytical techniques, the softer, organizational skills get neglected.This results in students learning analysis but not action.
Yet another concern is about the very shift from learning to earning is networking,attending recruiting events,and pursuing the best possible job rather than devoting time to academic learning.

Yet another concern is that the MBAs are naive about organization and their realities.This, the authors say, is even true about MBAs with years of experience in industry.They quote an executive , who put it bluntly:”In terms of managerial competence,MBA students are at a’B’ level.That needs to be higher”.

A concern that as raised by both academics as well as executives was that MBAs lack essential innovative thinking skills.This puts them into difficulties when facing unstructured problems , ambiguous data, rapidly changing environments and information overload while ready to face clearly defined targeted problems.While pedagogical methods like case studies can help students to overcome the limitations, even case studies tend to be pre-packaged for essential calculations and irections.Managerial jobs usually requires to face unstructured and/or unpredictable environments.And managers have to not only solve problems when presented or appear but also to identify the problems.

A major concern which everybody raised was the lack of awareness or concern by the MBAs of the role,responsibilities and purpose of business in the society.This concern has been emphasized in the past as business leaders were held singly responsible for many of the business failures.The leaders were alleged to be keen to protect their private interests alone ignoring the social consequences of their actions.

MBAs also fail to recognize the limits of the so-called market models.While today markets are supposed to be the final word and hence lot of faith is put on it.But, they should understand that perfect markets don’t exist and hence the market-based models are incomplete.

A host of BSchools have embarked on innovation in curriculum design and pedagogy to overcome some of the allegations regarding these.Authors cite the Stanford’s Critical Analysis Thinking(CAT) as an example.The authors then list how the institutions have chosen to respond to the concerns and challenges by picking sample institutions.

In the conclusion, the authors suggest that there is a need for rebalancing between practice and knowledge.And MBAs should have better organizational skills(the ‘doing’ and ‘being’ skills).And they underscore the need for reshaping the curriculum in line with this.

The book has been written well with lot of data on BSchools, admissions,faculty strength etc etc.The bok also must have come at the time when the whole world has raised serious questions about the very relevance of the MBA course.

But a few concerns for the readers remain.For example, why Centre for Creative Leadership has been considered as one of the respondents?CCL is not fundamentally an MBA institution. Another concern is about the respondent institutions.In the sample of five institutions(after removing CCL), four are from the us and one from Europe.Such a study should have included responses of institutions from across the globe rather than a skewed sample from the US.

The authors have also expressed that “these criticisms are surely overstated “ while talking about the recent economic crisis and the role of leadership in many companies who were alumni of some of the best-in-class BSchools. The reviewer, an MBA and teaching at MBA levels for the past 15 years, feels that there is a serious problem in the way fresh MBAs perceive the world.While we claim that MBA education is professional education, the definition of profession is not necessarily reflected in their behaviour and conduct.They are highly competitive but a large majority of them are self-centred with practically no concern for their co-workers and the society at large;altruism is not a hallmark in them.

The Funny Side of Newspaper Reports

The quarterly results of Subex were announced on Jan 27,2011.If you happen read two dailies in Bangalore, one would get confused. And if you had read only one of the papers, you would have made a buy decision and if you had read another one, you would have made a sell decision. The Bangalore edition of Malayala Manorama(MM) , vernacular daily in Malayalam language, dated Jan 28,2011,gives a rosy picture of the company, having turned in 112% growth in net-profits during the third quarter of the financial year 2010-11,compared to the third quarter of the previous year. The profit at the net level for the period is said to have improved to Rs.24.04 crores as against Rs.11.38 crores during the same period of the previous year. The paper has titled the story to mean “Subex achieves 112% growth in net-profit”

Economic Times(ET) dated Jan 27,2011 also gives the results of the company. The ET has titled the details under “Subex logs 48% drop in net profit”. According to ET, the net profit for the third quarter ending Devember31,2010 declined to Rs.21.51 crores as against Rs.41.87 crores in the corresponding period of the previous year.

So, how will one go about? Those who had read only MM would have gone ahead buying shares, probably to witness a number of people, who read ET, selling the shares.How skewed it will be to selling or buying will depend on how many people who have read the respective papers traded on the Subex counter.

Results posted at Subex website proves MM right.

Book Review:Small Change: Why Business Won’t Save The World

The book by Michael Edwards, an authority on civil society, philanthropy and social change, and who was a senior advisor to World Bank on civil society from 1998 to 1999 and also director of the Ford Foundation’s Governance and Civil Society Program in New York from 1999 to 2008, is a stingy criticism on the involvement business(where profit is the all important driving force) in trying to remove some of those ills that affect a large percentage of the population. According to him very few have seriously tried to question or find out whether business can make a real difference and alleviate the innumerable problems that society faces. He squarely feels that at a time when businesses and markets themselves are under severe criticism for many of the economic ills of the recent past and have not been able to fix their problems, it is highly irrational to assume or believe that businesses can solve problems that the society and its other institutions face. He asserts that one of the concerns that arise is that businesses try to transform society by bringing in norms that they are familiar with(guided by markets, scale, profits etc) while the real transformation will occur when businesses behave more like civil society, not the other way round. By narrating substantial evidence, Edwards clearly lead every one to believe that social transformation is not a job to be left to market forces or to the whims of billionaires.

The business’s initiatives for the alleviation of society’s problems, nicknamed philanthrocapitalism by Mathew Bishop and Michael Green, is echoed by people like Oracle founder Larry Ellison: “the profit motive could be the best tool for solving the world’s problems, more effective than any government”. The author provides supporting evidence that the money that is contributed by the non-business institutions and public to society is far higher than that is provided by business: about 70% of US households contributed about $307 billion in the year 2008 while Google has promised to spend over $175 million over three years and the Gates Foundation’s promise to give away $1oo billion over its life time.

Yet again, philanthrocapitalism, seems to be biased towards certain high profile areas when it comes to health care initiatives. Most concentrate on diseases like TB, malaria and AIDS. But more deaths happen due to diarrhea, pneumonia, and intestinal parasites etc.

According to the author, one of the issues that contribute to the pitfalls is the drift in the mission. He asks a pertinent question: How can philosophy rooted in money and self-interest give rise to societies that are ruled by love? Businesses have profits as the bottomline; philanthrocapitalism also looks at even the basic needs of the society from a market pint of view. Expositions by management experts like Prahalad-to look at the market at the bottom of the pyramid-also is purely market-oriented. The concept is founded on the business aspect of how the businesses can exploit the huge mass of poor at the bottom of the population pyramid and not necessarily from the society’s well-being point of view.

The hitch with the market approach to solve society’s problems is that while markets require business to deliver at a price dictated by customers, civil society deals in friends and neighbours, who is expected to support the needy, whatever comes or at any cost. According to Edwards,” market norms are impersonal, characterized by the freedom to disconnect, to switch to a different supplier whenever and wherever I may want. This is not a convincing basis for a healthy and successful society, which requires a commitment to each other and to the public good, and the loyalty to hang in there for the long haul of social transformation even when the going gets tough and things turn against you. There is no responsible exit from society and the duties we hold in common”. Also, at the core of markets is individualism and the role of the entrepreneur as the major force for growth and change whereas at the heart of civil society is collective action and mutuality.The author quotes Sanjay Sinha, MD of Micro-Credit Rating International Ltd.in support of his arguments: “The new philanthropists believe that there must be a magic bullet for everything, an instant cure for poverty.They are not willing to believe that poverty reduction is a far more complicated matter than the idea of eBay”.Author feels that billionaires have little experience of not having power,of not being in control, and not being able to predict what is going to happen to prices, sales and profits.

The problem with the philanthrocapitalists is that they consider the world as a giant machine in which levers can be pulled to achieve the desired outcome, not as an organic entity which is constantly evolving and hence unpredictable and uncontrollable and where there are no straight solutions and past success is not necessarily a reliable guide for future. Social transformation requires humility, patience, and the determination to hang in there for the long term as against the impatience and short-term thinking of markets and entrepreneurs. Also, the metrics and measures of performance for business favour size, marketshare etc whereas quality of interactions between people and the capacities and institutions they create are what matters in doing good to the society. Opinion polls indicate that public is favouring authenticity over professionalism among the qualities. The author uses a quote from Jim Collins,” we must reject the idea –well-intentioned, but dead wrong- that the primary path to greatness in the social sectors is to become more like a business” to sum his concerns of using market-related arguments and initiatives for social good.

In conclusion, author says that while philanthrocapitalism is an interesting idea, it lacks evidence to support the claims that are made about its impact and also provide little logic in why business thinking should be more effective than other approaches in bringing about social change. Citizen philanthropy –broad based, deep rooted, bottom up, passionate and uncontrolled-would provide a much stronger foundation for social transformation than reliance on business and the market.Edwards provides a road map for reforming philanthropy for social transformation:
Step 1:Involve as many people as possible so that everyone can share in defining which problem get addressed, and how, as is required in a just and democratic society.
Step 2:The deprived and poor shall be brought to the centre and made the prime movers in identifying where additional resources can be helpful and implementing solutions.
Step 3: Reduce bureaucracy so that securing of resources is made easier
Step 4:Direct maximum resources to the most difficult and entrenched social problems, where business/government fear to tread.
Step 5:Strengthen transparency, accountability, and learning , so that peer and public pressure can encourage innovation without the need for too much government intervention.
And to conclude, Edwards asserts that any foundations/non-profits trying to do good to the public, shall be accountable to the beneficiaries(ie public) rather than to the board of the foundations or to the philanthrocapitalists.

The book describes lots of concerns on philanthrocapitalism and aligns with lots of our concerns in India especially in the wake of the recent issues concerning microfinance companies.

Administrative Behaviour by Herbert A.Simon

Of late, consequent to a renewed interest in the very discipline of Management in which I hold qualifications as well as has been associated with in executive as well as academic capacities, I have developed an urge to learn from business/management classics. Of course, I had read many management classics from a number of management gurus including the so-called ‘godfather of management’, Peter Drucker, starting with The Practice of Management and recently ending with The Concept of The Corporation(written earlier than the other) and also what can be classified as a fundamental book on Corporate Governance, The Modern Corporation and Private Property by Adolf Berle and Gardiner Means. I tried to get a copy of Administrative Behaviour by Herbert A.Simon, the only one to win a Nobel Prize in Economics for his contribution to the general theory of management related to decision making in organizations(all others were from finance streams), but was not available. In the middle of 2009, I could get a copy of the same but could read it only recently as I was pre-occupied with writing my own book on Corporate Governance.The book, originally written in the year 1945,still makes real sense and is awesome from the point of depth of understanding and insight Prof.Simon had about the decision making administrative behaviours in organizations.No wonder the Royal Academy of Sciences in their presentation of Nobel Prize described the work as “An epoch-making book”.The fourth edition published in 1997 has been updated with extensive new commentaries at the end of each chapters by the author. Prof.Simon, born on June 15,1916, expired breathed his last on February 9,2001.
As described earlier, the book deals with the decision making behaviours in organizations.Prof. Simon describes the process of decision making by defining what is decision making and administrative organizations. Then he moves on to explain the problems that are inherent in the theory. For example the four universally accepted administrative principles in the initial days of administrative science like specialization, unity of command, span of control and organizing the employees according to purpose, process, clientele and place, something related to the first principle, have been severely criticized after a definite period. While criticisms exist, Prof.Simon feels that these do not necessarily change the decision making criteria and processes in an organization and hence it can be easily explained. He moves on to describe the role of facts and values in decision making and also the role of rationality. Then he explains the psychology of decision making, how organizational equilibrium affects decision making, what is the role of authority, communication in decision making, how efficiency criterion, loyalty and organizational identification of employees affects decisions etc. Prof. Simon concludes with the anatomy of organizations. The highlight of his contribution about decision making is the bounded rationality concept. Despite managers want to make decisions that are perfectly or fully rational or after considering all alternatives, managers usually consider only limited options or alternatives from a whole lot of options available to them.
While the book is fundamentally on decision making, Prof. Simon talks about a whole lot of other aspects that have relation to the decision making process. For example, he talks about the gap between theory and practice in administrative decision making. He also talks about the necessity of business schools having faculty drawn from the world of science as well as from the world of practice. He says that human decision making uses beliefs, or ‘factual premises’, which may or may not describe how the world really is or whether true or false.
A very important insight regarding how opportunities get noticed is given by Prof.Simon. He says that ‘one of the mechanisms that focuses human attention on important problems is surprise.’ And he goes on to explain the conditions for such surprise like we get surprised when we are knowledgeable about a situation and something unusual(contrary to our knowledge)occurs. He cites the example of Alexander Fleming getting surprised why bacteria in a dish was dying and leading to the discovery that penicillin can kill bacteria.
And Prof.Simon asserts that the critical scarce factor in decision-making is not information but attention. According to him what we attend to, by plan or by chance, is a major determinant of our decisions. Because of this ,he says that ‘company laboratory is seldom the major source of basic discoveries from which new products can be developed.’ The laboratory usually serves as an intelligence link between science and community. ’Its task is to observe and communicate with that community, and to notice and develop further opportunities that are presented by it’. This is what companies like P&G( through its Work it and Live it programs) do today.
According to him ,workers were poor but happy before industrial revolution but industrial revolution has made them richer but unhappy. Prof.Simon describes two charges that are levelled about work itself: industrial revolution dehumanized work and the appearance of the electronic computer has dehumanized it further.
Prof.Simon had even described the ‘repositories of organization memory’. This is nothing but the Knowledge Management we talk about today. He had said that ‘practices which would become simply habitual in the case of the individual must be recorded in manuals for the instruction of new organizational members.’
The only contention of Prof.Simon dating back to 1945, which today might be questioned, is about the role of authority. He had said that ‘a plan of action is developed for the group, and this plan is then communicated to the members of the group. The final step in the process is the acceptance of the plan by the members. Authority plays a central role in this acceptance’. While this might still be true of many organizations, I think good organizations have groups making the plan together and it automatically becomes acceptable to all. Hence the question of authority might not arise in the acceptance of the plan.
I thank Prof.Simon for enlightening me with his wisdom and insight!

101 Things I Learned in Business School

101 Things I Learned n Business School by Michael W. Preis and Matthew Frederick, provides a list of things that could be useful to any MBA or MBA aspirant. In a short 101 pages book, the authors provide a number of snapshots of business and management, with each page devoted to a ’thing’. They start by defining business, drawing distinction between business philosophy and philosophy of business, different types of capital all of which are not economic, through running meetings, ways of growing businesses, vision, mission, organizational culture, top-down and bottom-up approaches, the span of control, negotiations, why not to worry about lost opportunities, not to wait for initiating marketing activities till things get bad, cannibalizing your own sales rather than suffer loss at the hands of competitors who introduce new products, take adequate care of substitutes as they can pose competition, different accounting principles and norms and financial ratios, types of bankruptcies, the monetary and fiscal policies of the governments, effective advertising, and a whole lot of tools and organizational processes, with wonderful quotes inserted in between. I found some of the ‘things’ interesting. Among them are the distinction between business philosophy and philosophy of business, that the party that cares less about the outcome of a negotiation is in the stronger negotiating position, suggestion to cannibalize your own sales, the importance of theories, that a good sales person will even talk a customer out of making a wrong purchase(even in the face of lost sales), because in the long run the customer will respect the salesperson’s honesty and may become a repeat customer, group facilitation(through Form, Storm, Norm and Perform or F-S-N-P cycle).One quote that caught my attention was: “If you want to be a leader, you’ve got to be a reader” by Dr.David Noebel, US religious leader. The book concludes by quoting Anu Aga, former chairperson of Thermax Ltd. “We survive by breathing but we can’t say we live to breathe. Likewise, making money is important for a business to survive, but money alone cannot the reason for business to exist.”
The book can be a handy tool for young managers. For the type of content and the target audience, the price at Rs.595 looks pretty high. The book is published by Hachette Book Group.