Do MBAs add value to oraganization?

I believe that it is only a matter of time before organizations conclude that the traditional MBAs of today, who are very well suited to managing at the middle level, singularly fail to perform at the highest level in a competitive world.

I believe that while MBAs have thrived over the last century, it was mostly because management was coming of age. Organizations were still siloed in functional departments. Even today, the middle management in organizations is fairly siloed, though the technological advances of last couple of decades, combined with the changing demographics of the work force, have blurred such distinction. At senior level, the organizations never were, and are unlikely to be siloed. It is the compartmentalization of the organization which enabled the MBAs to function properly, through applications of management frameworks and models taught in the classroom.

It has been my experience, being an MBA myself, and having hired MBAs over the last few years, that MBAs live by frameworks and models that allow them to parameterize any given situation to arrive at possible conclusions. Siloed organizations and middle management responsibilities are perfectly well suited to apply any number of frameworks and models learnt at business schools. However, as the silos dissolve, or as MBAs are forced to think & act as CEO of large organization, the frameworks which were so effective till yesterday, suddenly lose their potence.

Consider the following.

As senior management of any organization (large or small, private or public), one needs to be effective in the following five areas. I believe the framework and methodology mind set of MBAs fail them spectacularly when they apply the business school principles to most (if not all) of the following:

a) Understanding of human behaviour and conflict resolution: Perhaps the most spectacular failure of MBA teaching is in this area, be it in dealing with internal employees, external stakeholders or social awareness groups such as environmentalists.

b) Decision making process involving scenario setting, risk assessment and stakeholder management – The framework methodology lends itself well to solving problems on this dimension, but without adequate understanding of human behaviour, the stakeholder management falls flat, resulting in any number of boardroom coups that we hear about.

c) Innovation and strategy: Consultants have made fortune consulting with clients in this area. Since the consultants are mostly MBAs, we are forced to conclude that MBAs are good on this dimension as they rise to senior management positions in organizations.

d) Maturity: In my opinion, this is another area where traditional, ‘framework’ based MBA teaching fails to develop responsible CEOs. To me, maturity is being aware of fine balance between authority, and the responsibility which comes with such authority. Over the last ten years, the corporate world has been awash with misuse of authority at senior levels, many of whom were MBAs from Ivy league schools.

e) Execution ability – In the corporate world, the word ‘execution’ tends to get misquoted as often as the word ‘Strategy’. My definition of execution involves strong project management abilities, most important of which is an eye for critical detail – the operative word here is ‘critical’. The ability to separate critical from non-critical, and having hands on management of critical activities is again something which is missed in the frameworks driven, advisor world of MBAs.

I believe that we need to generate a discussion about these things to get them right. I hope that through my blogs, I can keep the discussion going on this subject, and learn from such discussions.