In a previous series of posts (“Why you can throw out that management advice book – Parts 1,2&3”), I dismissed out-of-hand the advice of the mainstream management-advice literature. These texts are just too full of contradictions, inconsistencies, and paradoxes to offer any real insight into good management, or its practice – as I hope I was able to show.

Next, I argued that much of what passes for conventional management wisdom these days is similarly useless, and for precisely the same reason. For every seemingly incontrovertible management principle, concept, or idea that you might come across, an equally valid “pearl of wisdom” exists that argues for engaging in precisely the opposite behavior (for more, please see “Is nothing sacred?”)

This week the news isn’t much better.

As I hinted at in my last post in this series, the nation’s top business schools may not have all that much to offer either. While the typical MBA program likely provides ample instruction in such subjects as marketing, finance, and accounting, when it comes to the essence of managing—the critical task of managing people—those who teach the managers and executives of tomorrow may not know as much as they’d like you to believe.

So that MBA you’re devoting so much time (and money) to obtain?

Well, it may not be such a good investment after all.

 

MBAs everywhere, but at what price?

Without question, the Master’s of Business Administration—the MBA degree—has grown in popularity, especially in the US. A recent study estimates that over 250,000 students are currently enrolled in the nation’s business schools, with over 100,000 graduating annually.[1] This is compared to 40,000 graduates in 1976, and only about 6500 in 1964.[2]

This degree does not come without significant cost, however.

According to Bloomberg BusinessWeek, the average MBA will set you back nearly $111,000 (before financial aid),[3] while a degree from a top ranked school—which is becoming increasingly necessary in today’s competitive market—will often run twice that. For example, tuition for the two-year executive MBA program at Wharton (pictured above) is currently about $192,900.[4]

The true price, however, may be even greater.

According to one study, there is “little evidence” that getting an MBA, or the grades one receives in earning it, will result in higher salaries or the attainment of higher level positions.[5] In fact, some firms found that within their own organizations, non-MBAs “did no worse and, in some cases, better than their business school counterparts.”[6] In other words, while getting an MBA may get you an interview, or even a job, the years spent obtaining the degree may put you permanently behind your non-MBA-obtaining peers in terms of both salary and career progression.

There are also the possible costs to society.

Some point to MBAs as being responsible for the corporate scandals that rocked Tyco and AIG, as well as the remarkable collapse of Enron.[7] Business schools and their graduates have also been blamed for everything from the decline of the US automobile industry and the recent financial crisis, to the current maldistribution of wealth in this country, and increasing income disparity between the rich and poor.[8] As one critic succinctly put it, MBA programs seem to encourage managers to “pursue their own advantage rather than the good of the company, much less the community’s welfare…”[9] And a study revealing that 56% of MBA students admit to cheating regularly does little to dispel such accusations.[10]

Interestingly, some of those charged with educating tomorrow’s MBAs are just as critical of the program.

For instance, Jeffrey Pfeffer (Professor of Organizational Behavior at Stanford’s Graduate School of Business) argues that “students learn to talk about business, but it is not clear they learn business.”[11] The late Sumantra Ghoshal (Professor of Strategic and International Management at the London Business School) could be counted amongst those who believe MBA programs have contributed to corporate malfeasance. “[By] propagating ideologically inspired amoral theories,” he once wrote, “business schools have actively freed their students from any sense of moral responsibility.”[12] Then there is Henry Mintzberg (Cleghorn Professor of Management Studies at McGill University) who simply concludes that “conventional MBA programs train the wrong people in the wrong ways with the wrong consequences.”[13]

The problem, as some see it, is that business schools have strayed too far from their original mission. Warren Bennis argued that “business practitioners are discovering that B-school professors know more about academic publishing than about the problems of the workplace.”[14] Others see a disconnect between what business schools teach, and what managers need to know to do their jobs well. For instance, Diedroff and Rubin found that the skills and capablities deemed most critical by practicing managers “are the very competencies least represented by the MBA curricula.”[15] Then there is the matter of qualified teachers. As Pfeffer and Fong note:

“Unlike other professions such as medicine, law, [and] architecture…many full-time faculty have not practiced the profession or craft of management.”[16]

There are those, of course, who vocally defend the MBA degree – arguing that the costs in time and money are ultimately worth it.[17] However, their reasons for believing as much are often hardly testaments to the degree’s utility. For instance, many admit that the MBA’s primary benefit may simply be the networking opportunities the business school environment provides, as opposed to anything one might actually learn there.[18] And businesses, who have no small stake in the matter considering they’re the ones hiring all these MBAs, will on occasion confess that it is not so much the degree itself they value. Instead, it is viewed as a means of prescreening applicants, or providing prospective job candidates with the appropriate pedigree.[19]

Finally, graduates of MBA programs are often anything but positive about the experience themselves. While most don’t regret their decision[20] (or at least are unwilling to admit as much), according to one study almost two-thirds of those surveyed said they used their MBA skills “marginally or not at all” in their first management assignment – arguably when their education should prove most helpful.[21]

  

Not on firm ground?

Perhaps the most scathing criticism of the MBA program and the institutions that grant them, however, is that voiced by J.C. Spender, Research Professor at Kozminski University (Poland).[22]

In a paper titled “The Business School Model: A Flawed Organization Design,” Spender makes the following remarkable claim: “…we [the management academia] lack a theory of the firm to ground our notion of managing.”[23] This is an observation he then takes to its logical, and equally extraordinary conclusion:

“Without a notion of the firm we surely cannot even claim to be teaching management.”[24]

Now think about this for a moment.

According to Spender, the problem isn’t that the MBA curricula is overly theoretical, and thus too far removed from reality. Nor is he suggesting that business schools encourage their graduates to emphasize profits, growth, and increasing shareholder value at the expense of all else.

Nor does he simply accuse MBA students of being a bunch of cheaters.

Instead, he seems to be saying that, when it comes to managing and how best to run a company, the professors and academicians who teach at the nation’s elite business schools really don’t know what the **** they’re talking about.

I mean, seriously – Spender really seems to be going all in here.

In this same paper, Spender goes on to review some of the existing “theories of the firm” – for instance, that its function is to “make profits,” or that it serves as an “apparatus for converting capital into economic return.”[25] After pointing out that many of these theories rest on the assumption that human beings are “rational,” which he seems to think is problematic (or at least an oversimplification), Spender then advocates for adopting something called a “Knightian view” of a “judging man” as the basis for any new theory. Unfortunately, this too is problematic in his mind because…well, you get the idea.

It gets kind of complicated.[26]

None of this, however, would seem to diminish from Spender’s initial claim: That the management academia have yet to agree on what makes something a “business.” And if this is indeed true, it would then seem to follow that they might not have a clue as to what it means to manage a business.

 

It depends…

Now as I’ve pointed out on several occasions, I do not have an MBA. Nor have I ever attended business school.

A good friend of mine has, though (he graduated from Wharton, no less), and last I checked, he didn’t seem to regret the experience. I’ll add too that I’ve always been of the opinion that the best money you’ll ever spend is on education – regardless of what you choose to study. And I have to believe that the instruction that MBAs receive in such topics as marketing, finance, and accounting (which are typically part of the program’s core curriculum[27]) is of some benefit to anyone who aspires to be an effective manager, especially at the executive level.

Nevertheless, I can’t help but sympathize with Spender’s criticism. And that’s because not so long ago I came to a similar conclusion myself…albeit by an entirely different path.

Back in 2011, while I was preparing to present a paper at the International Critical Management Studies Conference in Naples, IT, one of my proofreaders remarked that my arguments seemed to support a “contingency theory” approach to management.[28] To which I immediately responded:

“Really? What’s that?”

If you haven’t heard of contingency theory before either, I wouldn’t be surprised. So far it seems to be mostly confined to academic circles – and perhaps for good reason.

Its origins lie in the work of organizational sociologist Joan Woodward, who in the 1950s attempted to identify commonalities in the organizational “structure” of a variety of businesses. Through her studies, she was able to demonstrate empirically the existence of “a link between technology and social structure” – something no one had ever done before.[29] In layman’s terms, this means Woodward found that many organizational parameters (such as span of control, centralization of authority, etc.) are “contingent” upon factors specific to the organization in question.[30] Or, to put it even more simply, Woodward found that there is no “one best way” of organizing/managing a business.[31]

Each enterprise is unique unto itself.

Fast forward 60 years, and this perspective is still held in high regard today—particularly amongst the management academia. As recently as 2007, for instance, organizational theorist Gareth Morgan proclaimed that contingency theory “has established itself as a dominant perspective in modern organizational analysis.”[32] His own summation of this management philosophy is very similar to Woodward’s, but is nevertheless worth noting:

“There are no right or wrong theories in management in an absolute sense, for every theory illuminates and hides.”[33]

Furthermore:

“There is no one best way of organizing. The appropriate form depends on the kind of task or environment with which one is dealing.”[34]

In other words, when it comes to how to best manage any particular business, according to a contingency theorist: “It depends.”[35]

 

…but it depends on what?

The weakness of such a “theory,” however, is perhaps immediately obvious.

Suppose, for instance, that “contingency theory” ruled the day in a discipline such as medicine, or engineering. In other words, imagine if a surgeon, when asked whether a patient’s infected leg should be amputated or can in fact be saved, simply said: “It depends.” Or an engineer muttered something similar when asked whether an aging bridge was still structurally sound—and therefore safe to cross—or needed replacing. In either instance such an answer would be considered at the very least unacceptable, if not downright ludicrous.

Of course “it depends.” But it depends on what?

Despite this obvious weakness/flaw, business schools and the management academia appear to have embraced contingency theory wholeheartedly. As evidence, Dr. Morgan (now one of the theory’s standard bearers) was afforded the honor of giving a plenary/keynote lecture at the Academy of Management’s annual national meeting in 2014 – a lecture I happened to attend. And unfortunately, what he had to say then did little to dispel my own skepticism concerning the current state of modern management theory. At one point in his presentation I recall him insisting that “all management theory is metaphor,” before shortly thereafter arguing that “all metaphor is false.”[36]

Now I am not a classically trained organizational theorist, nor a management scientist, so I’ll certainly allow for the possibility that there are subtleties to contingency theory that are perhaps currently beyond my capacity to fully appreciate (although not because of any lack of effort on my part, I’d argue). At the time, however, I couldn’t help but think:

This guy doesn’t know what the **** he’s talking about.

 

The one best way

Nevertheless, contingency theorists like Dr. Morgan would have us believe that there is no “one best way” to manage. Each firm is unique, and every theory “illuminates and hides,” as he so eloquently put it.

If only I could take him at his word.

You see, despite any insistence to the contrary, contingency theorist do believe there is one best way to manage. In fact, I’d go so far as to say they believe there is only one way to manage – as I’ll explain in the next post in this series.

They just seem to be blissfully unaware of this fact.

That’s right, this one best way of managing is so deeply ingrained in our collective organizational psyche, that it is perhaps no wonder that to this day it remains essentially unquestioned, and unchallenged. Virtually everyone—CEOs, managers, frontline employees, academicians, you (and even me, for at time)—all embrace this age-old, “one best way” to manage, either without realizing it, or because it’s so hard to imagine another option.

The only problem, of course, is that this “one best way” is wrong.

 

Next in the series: The “one best way”

 

 

Endnotes

[1] “MBA share in the US graduate management education market” by Marina Murray, Business Education & Administration, 3.1 (2012): 29-40.

[2] Mintzberg, Henry. 2005. Managers Not MBAs. San Francisco: Berrett-Koehler, p. 29.

[3] “Debt is Piling Up Faster for Most Graduate Students – but Not MBAs” by Patrick Clark, Bloomberg Business (online edition), posted March 25, 2014. http://www.bloomberg.com/bw/articles/2014-03-25/student-loan-debt-piles-up-for-graduate-students-but-not-mbas. Retrieved July 1, 2016.

[4] This includes books, program-related housing, and meals. From Wharton’s official website (locked address): https://executivemba.wharton.upenn.edu/financing-your-mba/tuition-fees/. Retrieved July 1, 2016.

[5] “The End of Business Schools? Less Success Than Meets the Eye” by Jeffrey Pfeffer and Christina T. Fong, 2002, The Academy of Management Learning and Education, Vol 1: No. 1, pp. 78-95.

[6] Ibid., p. 81.

[7] Khurana, Rakesh. 2007. From Higher Aims to Hired Hands: The Social Transformation of American Business Schools and the Unfulfilled Promise of Management as a Profession. Princeton, NJ: University Press; and “Bad Management Theories are Destroying Good Management Practices” by Sumantra Ghoshal, 2005, Academy of Management Learning & Education, Vol. 4, No. 1, pp. 75-91.

[8] Spender, J.C., and Robert Locke. 2011. Confronting Managerialism: How the business elite and their schools threw our lives out of balance. New York: Zed Books.

[9] “Is It Time to Retrain B‐Schools?” By Kelley Holland, N.Y. TIMES, Mar. 15, 2009, p. BU1.

[10] “Survey Finds Widespread Cheating in MBA Programs” by Katharine Mangan, Chronicle of Higher Education, September 19, 2006.

[11] Pfeffer, J., op. cit., p. 85.

[12] Ghoshal, S., op. cit., p. 76.

[13] Mintzberg, H., op. cit., p. 6.

[14] How Business Schools Lost Their Way” by Warren G. Bennis and James O’Toole, Harvard Business Review (online version), May 2005, p. 7. https://hbr.org/2005/05/how-business-schools-lost-their-way. Retrieved July 7, 2016.

[15] “How Relevant is the MBA? Assessing the Alignment of Required Curricula and Required Managerial Competencies” by Rubin R.S. and E.C. Dierdorff, 2009, Academy of Management Learning & Education, 8:2, p. 208-224.

[16] Pfeffer, J., op. cit., p. 91.

[17] “The End of the MBA as We Know It?” by Michael Connolly, 2003, Academy of Management Learning & Education 2:4, p. 365-367.

[18] “The Most Important Thing About Your MBA is the Alumni Network,” by Vivian Giang, Business Insider, Nov. 28, 2012. http://www.businessinsider.com/most-important-thing-about-your-mba-the-network-2012-11. Retrieved March 12, 2012.

[19] “A matter of degree? Not for consultants,” by D. Leonhardt, New York Times, October 1, 2000. http://www.nytimes.com/2000/10/01/business/a-matter-of-degree-not-for-consultants.html?pagewanted=all. Retrieved Oct. 22, 2015.

[20] “The MBA Degree: Is it really worth it?” by John A. Byrne on Poets and Quants, March 17, 2014. http://poetsandquants.com/2014/03/17/the-mba-degree-is-it-really-worth-it/. Retrieved July 6, 2016.

[21] Hill, Linda. 2003. On Becoming a Manager. Harvard Business School Publishing: Boston, MA, p. 258. Original reference cited: Porter, L.W., and L.E. McKibbin. 1988. Management Education and Development: Drift or Thrust into the 21st Century? New York: McGraw-Hill.

[22] Also a Visiting Professor at ESADE (Spain) and Lund University (Sweden).

[23] Spender, J.C. “The Business School Model: A Flawed Organizational Design.” Journal of Management Development. 2014, Vol. 33: No. 5, p. 432.

[24] Spender, J.C. “The Business School Model: A Flawed Organizational Design.” Journal of Management Development. 2014, Vol. 33: No. 5, p. 434.

[25] Ibid., p. 433.

[26] So far as I can tell, Spender’s argument is this: Replacing “rational man” with Knight’s “judging man” would “humanize” any analysis of the firm, which would then make our understanding of it more accurate, or at least more reality-based. However, he observes that doing so would also require developing a “theory of judgment” in order to arrive at a theory of the managed firm, which, he suggests, is probably as complicated as it sounds. Nevertheless, Spender sees value in thinking this way. “This paper works towards a novel theory of the managed firm (TMF) in which management’s uncertainty-resolving judgments will be key,” he writes (p. 429). [Personally, I couldn’t agree more. As I’ve repeatedly insisted, judging—that is, knowing when to do something—isn’t just important to managing well. It’s what managing well is all about. (For more on this, please see my post: “It’s not what you do. It’s when you do it.”).] In the end, however, Spender seems content to fall back on some familiar themes – that managing is an “art,” not a science, for instance (For more on the error of this line of thinking, please see: “Managing: An art? Or a science..?”).

[27] For example, Wharton (locked address): https://executivemba.wharton.upenn.edu/academics/core-curriculum/. Retrieved July 1, 2016.

[28] At that conference, I presented what amounts to the material covered in my posts “Why you can throw out that management advice book – Parts 1,2&3” and “It’s not what you do. It’s when you do it.

[29] Woodward, Joan. Industrial Organization: Theory and Practice (2nd Ed.), Oxford University Press, 1980 (1st Ed.: 1965), p. 50.

[30] From Wikipedia’s “Contingency Theory” entry at: https://en.wikipedia.org/wiki/Contingency_theory. Retrieved July 8, 2016.

[31] Woodward, Joan, Management and Technology, Problems of Progress in Industry No. 5, (Her Majesty’s Stationary Office, Ministry of Technology, London), 1958 (Reprinted 1970), p. 10.

[32] Morgan, Gareth. 1986. Images of Organization. San Francisco: Berrett-Kohler Publishers, Inc. and SAGE Publications, Inc., p. 44. (Page numbers refer to the Executive Edition, published in 1998. Most recent edition published in 2007.)

[33] Ibid., p. 13.

[34] Ibid., p. 44.

[35] “It Depends: A Contingency Theory of Accommodation in Public Relations” by Amanda E. Cancel, Glen T. Cameron, Lynne M. Sallot, and Michael A. Mitrook, Journal of Public Relations Research, 1997, 9(1), p. 31-63.

[36] Personal notes from Gareth Morgan’s keynote/plenary lecture at the 74th Annual Meeting of the Academy of Management (Organizational Development and Change Division), Philadelphia, PA, Monday, August 4, 2014, 3:00 pm, Pennsylvania Convention Center: Room 114 (Auditorium Lecture Hall).