The debate about the effects of business schools continues over at Harvard Business Review Online. As I've written here, I am largely on to other things. I did learn some interesting lessons along the way, and -- consistent with trying to have strong opinions that are weakly held -- revised my opinions in the face of new arguments. Perhaps my main three conclusions are:
1. Yes, economic assumptions can be dangerous and the worst are sometimes passed along during MBA education. But to simply say that all economists have the same assumptions and they are all evil is too much of an oversimplification. There are many nuances, and many faculty who weave economic assumptions into their teaching and research promote selflessness and cooperation.
2. I do believe that raw individual self-interest and the capitalist way of life are accurate descriptions of how people behave at times and have much practical value. But I don't believe that these are hardwired (following much research)or are the only assumptions that people do or should act on. My view at this point is that applying many economic assumptions is useful, but only in moderate doses and with proper precautions.
3. The question of whether what MBAs learn about economic assumptions or anything else that has any impact at all is important to ask. So many other powerful forces are at work -- self-selection bias, societal norms, business culture, the legal system, and on and on -- that pinning the blame or credit on what MBAs or others who get management education learn or don't learn strikes me as hubris on the part of faculty. In particular, I would argue that the assumptions held and implemented by people who design and run companies matter far more -- if they accept and implement practices that reflect beliefs, for example, that instilling nasty "I win you lose" competition is the path to success (that your co-worker should be your enemy, as one CEO put it) or that people are self-serving with guile (and, perhaps by extension, "it isn't cheating if you don't get caught")-- then the negative effects can be quite large.
Finally, over The Curious Capitalist at Time Online Justin Fox picked out some of the main elements of the debate, quoting Steve Kaplan and me. But I thought this quote from Dev Patnaik was especially thoughtful, as it made me stop and think -- perhaps we need to start teaching people that they don't always have to be so damn sure of themselves. Even if business schools and others that provide management education have no impact at all, he makes a crucial point:
Business schools moved to a model that emphasized quick thinking, confident elocution and a style of reasoning that looked more like combat than it did contemplation. Indeed, the entire case study approach values explicit data (economic or otherwise) at the expense of intuition, snappy answers at the expense of thoughtful questions, and competition at the expense of collaboration. Students are rarely encouraged to confess “I don't know, but wonder if…” They're instead encouraged to look like they know the answer, whether they know it or not. We didn't just teach students that economists view people as self-serving with guile. We taught students that they should be self-serving with guile if they wanted to do well in our classes. And we taught them the “soft skills” they needed to get really good at it.
Bob, I'm wondering whether you read this recent working paper by Max Bazerman, et al, titled "Goals Gone Wild" (http://hbswk.hbs.edu/item/5969.html). He and his coauthors argue that big, hairy, audacious goals (a la "Built to Last") are overused and lead to significant problems for companies and society.
Setting "audacious" goals for companies can cause our self-interest to go a bit haywire. We assume that meeting the goals will be good for the company (why else were they set?) and for us. As a result, perhaps we discount our moral compass and plunge headlong in pursuit of what appears to be good for all.
The result - in pursuit of audacity we take outsized risks, step on people and look back years later with regret.
Bazerman is right, IMHO. It's time to dial back the goals culture.
regards, John
Posted by: John Caddell | April 24, 2009 at 06:39 AM
Very helpful explanation of what you have learned, and a good example of strong opinions weakly held. Adaptation is admirable.
Oddly, on a one-to-one basis, I have noticed a level of contrition from MBAs--in essence, a quiet admission that "we got some things wrong". I don't think it's fair to pin the whole thing on MBAs, b-schools, or economists, but I do find it interesting on a small-n basis to hear what the people close to this think.
Posted by: Joseph Logan | April 24, 2009 at 01:52 AM
I think this is one of your best posts i've read. it's admirable. also, the insight from Dev is superb. i'll add one more thing --- while teaching ethics at bschool is an intellectual exercise in my humble opinion, bschools could spend more time asking students to reflect more about what "success" means to them. reflecting on that question at school and after graduation can help link personal values with decision-making, especially when overwhelming pressures make choice B (i.e. financial reward) easier than choice A (alignment with personal values).
Posted by: peter sims | April 23, 2009 at 07:45 PM
Great point. I'm a current MBA student at one of the big programs. I very much agree that in most classes we are taught to have an answer -- any answer -- and I personally struggle with this all the time.
The reality in the MBA program is that this behavior is rewarded in the traditional MBA career track so of course, that is how many people become (if they weren't that way already). For example, in management consulting and some finance interviews, you are expected to solve a case during the interview. We are coached on how to make it look like we know the right answer or the right approach even if we do not. Even the companies themselves preach this. They want people who LOOK confident. Yes, they want smart people also, but it seems to me that the appearance of confidence is a key hiring criteria.
In some ways, my MBA education has been rewarding. However, in many ways I feel like a lot of what we are taught is much more style than substance. The phrase, "a solution in search of a problem" comes to mind when I think about the approach that we are taught in the MBA program.
When you're not the "MBA type" it can get rather lonely in these programs. As someone who doesn't really fit in to the typical MBA crowd, I find it very hard to hold my ground. In this culture, you really feel like you're doing something wrong when you aren't as assertive about knowing the right answer all the time.
Posted by: Michael Spitzer | April 23, 2009 at 03:59 PM
Hi Professor Sutton,
Very interesting point and I think you are right that this is very inter-related with the debate on the role of Business Eduction.
I think a chief underlying philosophical struggle in the debate is whether Business Education is an academic degree or a trade degree - that is, do you come out of a Stanford Business School at age 28 literally prepared in a holistic way to do some specific job? I have always assumed the answer was no - because what would you expect a 28 year old to be able to do? I always thought of it as a graduate level set of courses on theory.
But to your point, there are definitely proponents of this notion of "inferential intuition." That is, if we simply pass written stories of a lot of examples of a phenomenon by the student, we can inspire the inference of "business intuition." Now, students have to prove (through comments in class for example) that not only are they paying attention and contributing to intellectual exploration, but that they are also arriving at the holy destination of "business intuition." We have in a sense created an artificial goal that actually suggests that the experience of Business Education is a terminating event.
Instead, if Business Schools focused their sense of certainty around those things that are actually certain: i.e. that Assets minus Liabilities equals Equity and how Internal Rate of Return is calculated, etc, then it becomes clear that the educational experience was just an exercise in intellectual empowerment and not a goal in and of itself.
The real journey of acquiring practical intuition and judgment does not terminate at the end of the program, but rather *commences* at graduation.
Posted by: Murthy | April 23, 2009 at 01:39 PM
Marvelous - adaptive resilience at work !
I think those are excellent earnings.
Now if I can just persuade you and your colleagues that a)using real world tests if critical and b) that Drucker needs to be re-visited since he anticipated all this over 45+ years ago but has been ignored ever since.
Given the challenges that bizzed and colleges in general face it's time for re-thinking IMHO.
Posted by: dblwyo | April 23, 2009 at 11:32 AM
Maybe we can have the economic assumptions the same but approaches different—observing and studying in a process and action view. Instead of jumping into conclusion in a research or class to show smartness, an “always in Beta” status quo can be accepted wisely, leaving rooms for further modification and improvements. While taking case studies with a down-to-earth action view, the virtue of individuals and value of cooperation will be manifested. These take researchers ourselves to work harder in contemplation, digging implicit data, while still confessing to others “there are strong findings, but which are weakly held” due to the evolutionary nature. It is a worth-doing direction, although against the self-serving and capitalist economic assumptions.
Posted by: Yuying Lee | April 23, 2009 at 11:27 AM