Is The MBA A Good Investment?

Best Growth Stock – It is necessary to reshape the future of the MBA. According to a recent study, the perception grows that this title has lost the value it had.

At first glance, the management education industry looks healthy and prosperous, “say Srikant Datar, David Garvin and Patrick Cullen, professors at Harvard Business School. For years, the title of Master of Business Administration (MBA) has been for many a “golden ticket” to enter the best companies and get bulky wages. The dynamics of this industry in recent decades the envy of many economic sectors: students, the cost of tuition and MBA programs at the international level not have grown steadily.

United States alone, the number of graduates with a mastery of these rose from 21,561 in 1970 to 150,211 in 2007. Likewise, while the late 90’s were created about 50 such programs each year, only in the first half of 2007 came to 641 globally. As for tuition, for the U.S. case, the average cost of an MBA has doubled in less than six years. Today, an MBA in the country could cost more than $ 100,000.

At first glance, this is an industry that seems profitable, growing and without further signs of weakening. However, Datar, Garvin and Cullen does not think so. After an exhaustive review of programs, data and methodologies of the most prestigious MBA in the world, which included deans, students and employers, concluded that there are reasons to worry about the future of these, according to findings published in the book: Rethinking the MBA: Business Education at a Crossroads.

“Sometimes, respectable schools are having trouble filling their classes,” he says in the book one of the deans interviewed. A human resources manager, for his part, said: “We found that our best young talent could make the jump in the company without an MBA. Those two years of training are simply not necessary.”

By sifting through the data from the MBA, the authors find new trends. For example, note that a few years ago, when mentioning the MBA degree, by default, was understood as full-time program of two years. However, today this format only represents 40% of programs accredited by the Association to Advance Collegiate Schools of Business (AACSB). In Europe, the mode of full-time MBA a year is now the dominant program, while also gaining importance in the world a variety of substitutes as executive MBAs, part-time, distance or specialized.

In analyzing the figures of the top 20 MBA in the world, their results have not changed substantially over time, but Datar, Garvin and Cullen show that things are different as one moves down the rankings. For business schools in positions 21 to 36, applications for MBA programs full-time fell from 5,527 in 2000 to 4,642 in 2008, ceding ground to the executive programs and part-time. “Students are voting with their feet,” say the authors, they argue that these formats do not have the same academic quality. This trend is important because according to them, this would be the gag of a much larger movement, sooner or later, will come to all MBA. “The reality is that it is not safe for anyone after earning his MBA degree will get a good paying job. If you want to remain relevant, business schools should reevaluate their beliefs more entrenched,” say the authors.

Growing dissatisfaction

This book joins a number of criticisms of various experts regarding management education. The message they enact is very simple: companies feel that students are not prepared to face the challenges of business. Prior to the global financial crisis, were MBA graduates of protection in sectors like financial services and consultancy, ensuring high salaries. For example, over 65% of Harvard graduates chose these sectors.

But after the crisis, most of these jobs disappeared. Many MBA programs have been exposed by the market and discovered they were not forming enough entrepreneurs and leaders in various industries. Several publications have concluded that business schools have earned a place in the universities for their academic rigor at the expense of a lack of reality in business. However, Datar, Garvin and Cullen go beyond this argument. In addition to emphasizing the great difficulty of excessive technicality in management education, identify other specific areas in which MBA programs are weak.

“Today, an MBA provides new knowledge much less than in the past. In most cases this knowledge is already out. There is a process of commoditization among the MBA, the technical part, companies are sometimes better young people in college. ” Paradoxically, although they are critical to its excessive technicality MBA in interviews, these authors found that entrepreneurs do not feel that these programs provide good theory at work. This is a first challenge: to grow in knowledge management for business life.

Additionally, the authors identified specific areas for improvement. The first is that, although leadership is the essential mission of the best business schools in the world, really are failing to train leaders. A dean interviewed said: “We are training people in what we are good, but are weak to motivate, build teams, make projects.”

In addition, the book’s authors argue that the MBA has a long road ahead in its international component. Another dean said that “globalization is something that nobody has really managed to capture.” Just a MBA, Insead, France, has a full-time program in another country, in this case China. Moreover, “many MBA courses seem a supermarket marketing, strategy, finance,” says another dean.

Take much creativity to integrate learning and innovation in new teaching methodologies. The authors show that there are business schools such as Yale University, who are leading this process to integrate concepts. Moreover, companies complain that students fail to think creatively. This demonstrates the incredible difficulty of promoting creativity and innovation at the academy.

The crisis highlighted other areas for work: understanding the scope of the theories and markets, the political component in organizations, ethics and risk management. In much of the corporate scandals and rampant greed of the financial crisis have been involved in MBA programs.

Finally, the classic argument between knowledge and practice in management training, these authors add a third essential element: the self. Based on several case studies show that leaders in this industry are waking up to new challenges, as has happened before in this field.