Taking an MBA in the current climate isn't just about taking shelter from the storm. It may also be the most intellectually exciting thing you have ever done. David Williams investigates.
MBA programs have traditionally had two benefits in a recession. They provide an opportunity for graduates to avoid the worst of the downturn in the employment market while simultaneously enabling them to invest in new skills that will give an advantage when the upturn comes. This time is different, however, and there is a third benefit. The downturn has been so profound that it is marking a watershed in attitudes to areas as fundamental as CSR and sustainability, corporate governance and the relationship between business and government. Taking an MBA at this time places graduates at the intellectual eye of the storm and an opportunity to be part of redefining where business will go from here.
I have been a professor and a dean now for thirty years, says Roger Jenkins, Dean at theFarmer School of Business at Miami University, and in my judgement I have never seen a more exciting time to enter an MBA program or to graduate from one. The MBA classroom has never been as vibrant as now because you have thrown away the textbook. You can pick up the Wall Street Journal or the Financial Times and you have real-life cases happening around you. Really good MBA professors have never had so much fun in their entire lives.
It is a very intellectuality stimulating environment at the moment, agrees Dr. Rob Straw, vice director of the Executive School of Management at the University of St. Gallen. You are right up close to the volatility of the market, working with and talking to people who are immediately involved in the crisis, and yet you are not personally affected. You can see the sweat but aren't sweating yourself.
I love it, says Bennett P. Collier a first-year student on a full-time MBA at the Tuck School of Business Dartmouth. My opinion and that of my fellow students is that the downturn presents a great opportunity. We can evaluate where the US is and where the global economy is, and, instead of making small incremental changes, we can do some revolutionary thinking and put people on a path to making long-term changes. Being at a top institution gives us some opportunity to help solve the problems that are out there.
Perhaps the most profound area of intellectual change going on at the moment is in the broadening out of the concept of sustainability to include the sustainability of a business itself. People who run MBAs are avidly redesigning programmes in order to prepare people for all of the implications of their business decisions, argues Peter Rafferty, director of International Business at Vlerick Leuven Gent Management School. We need to widen out CSR to include the long-term impact of business decisions on communities and have to educate MBA students differently so that their concerns aren't just about profitability or the long-term survival of their own organisation.
Vlerick has already taken steps to ensure a new consciousness takes shape as MBA's progress through their program. Starting with the September 2009 intake, all students will carry out a project which seeks to identify the environmental or community impact of a business or an industry. Students will examine the activities and consequences of decisions taken by managers and design tools to enable measurement and evaluation of progress towards desired goals. Had such tools been available to the banking sector we might never have got into the sub-prime crisis in the first place.
This is no longer simply a 'green agenda,' says Camiel Notermans at Nyenrode Business University. It's all about building businesses that will last because they are built on secure foundations that take into account the needs of all stakeholders from employees and shareholders right through to the environment itself.
This year, for the first time, we've actually had students asking for extra hours to be added to courses dealing with these areas, points out Patrice Houdayer, Dean of Academic Programmes at EM Lyon Business School. And it's also clear that they understand the importance of these issues well beyond their PR value. These are still hard-headed people who want to get the best return on investment from their studies, but they do genuinely believe that they can help to shape a more responsible and consequently more sustainable future.
Perhaps the second fundamental topic of debate that MBA students are involved in is the way companies will be governed and regulated in the future. Business schools have been looking at the importance of governance as a topic and at weaknesses in the present system for a long time, says David Wilson, professor of Organisation and Strategy at Warwick University Business School. We have been looking at the effectiveness of the board for example, its structure and processes, and at the relationship between the board and other senior managers in an organisation. But it has taken a recession to bring these weaknesses into stark relief. Having access to the debate on the shape of future governance systems is one of the key benefits that anyone taking a business degree today would gain.
Dean Jenkins at Miami Farmer agrees. There is no question in that in the near term, in the next four or more years, understanding the role of government and being able to collaborate with government is going to be is going to be an important set of skills to have, he says.
New attitudes to finance
A final key area of insight which current MBA students will gain is in to new attitudes towards finance. The misapprehension is that people coming into business school will learn to do the algorithms better, says David Wilson at Warwick. But business schools have long gone beyond simply looking at applied mathematics. An area we have been looking at for some time now is what is called behavioural finance: why people and markets behave as they do, for example the influence of herd behaviour and the effects of rumour and innuendo on a situation. This whole area is very strong in business schools now, and it has been given an added piquancy by the crisis when many of these behaviours became evident. Taking an understanding of behavioural finance out into the world will be something that this generation of graduates will be the first to do.