MBAs and the Economic Crisis: Spawning a New Generation

As the debate rages on regarding the role of MBAs in the economic crisis, we look at some of the standpoints to consider and what the bottomline is. 

The famous American author Mark Twain wrote in 1897 to the New York Journal, which had published his obituary, the famous words, “The report of my death was an exaggeration.” He went on to live another 13 years, to the ripe old age of 74. In similar style, reports of the death of the MBA, such as Lucy Kellaway’s column in The Economist of November 2009, are little short of an embellishment of the truth.

Nobody suggests that the recent economic downturn has had zero impact on business schools. The opposite is true. Deans and academics in top MBA programs worldwide, with a few exceptions, have been leading the clarion call for change. They want to be among the first to rectify the situation, most effectively and with a greater level of accountability.

It’s impossible to calculate accurately how many MBAs were at the core of the economic crisis, but in any case this over-simplifies the case and turns it into an unhelpful blame-game, a kind of corporate witch-hunt. It’s equally possible to argue that MBAs were at the forefront of trying to prevent the crisis. Perhaps even that they saw it coming but were prevented from action by those who were not so qualified - we will never know.  Either way, the blame is shared by a relatively small group of people, including MBAs, politicians and various government regulators. What is agreed on is that reforms are absolutely necessary.

Social responsibility

In fact, what The Economist rightly called “a fundamental reappraisal,” of business school is what program designers, deans and academics have been engaged with since before the crisis began. This is because the contemporary batch of MBAs increasingly demand it. Statistics, such as the influential QS TopMBA.com Applicant Survey show that MBA candidates are more concerned than ever before with redressing the balance. Becoming good corporate citizens with sustainability and social responsibility at the forefront of business practice is key.  Other studies show that the number of MBAs considering working for controversial employers such as in tobacco and defence are down.

This process of improvement has been going for several years, even pre-dating the financial crisis of recent years. Business schools are constantly striving to find ways of improving their courses, especially in areas such as corporate governance, accountability and social responsibility, as their customers, the MBA students, demand it.

In India, over the next few years, the influx of overseas MBA programs are likely to heavily influence the nation’s own influential home-grown courses in this way too. Concern for the environment, sustainability and corporate social responsibility will be at the very least hot topics for debate at the IIMS and other business schools in the country, particularly for those which cater for any international students.

It is this group of talented and socially aware individuals that smart business school leaders are aware of. Sandwiched between this movement and the needs of the corporate world, post-recession, MBA programs are more than aware that change cannot come soon enough.

People, Planet, Profit

In what seems to fall under the umbrella title of ‘responsible leadership’ schools have started to lead the way by bringing the major stakeholders in business schools, namely the students, the faculty and the recruiters, together to forge responsible partnerships. The ‘People, Planet, Profit’ conference at ESMT (European School of Management) in Berlin in June 2010 was such an example and featured notable speeches from Nagavara Ramarao Narayana Murthy, chairman of Infosys, which espouses a progressive attitude to responsible leadership and heading away from the greed that characterises some corporate entities.

It is this, the ‘me-too’ generation of MBAs, that one presumes Lucy Kellaway of The Economist was referring to when she wrote “In 2010 the decline of the MBA will cut off the supply of bullshit at source.” In fact, the process of cutting this kind of bullshit began some time ago. We won’t get rid of it completely, regardless of what business schools do, but the will is there.

There are practical applications for this in terms of selecting MBAs for top schools. After all, unlike some cattle truck universities, business schools are highly selective about whom they bring in. Some schools, such as Tuck, keep to a class limit of about 35 students despite, one might think, an opportunity to cash in with double the class size. Diversity is essential to business schools and Generation Y offers a new category of diversity for schools to explore.

But Lucy Kellaway is right that times are tough. Salaries in some sectors, banking particularly, are down. Others not as commensurately high as a few years ago and jobs in high-flying city corporations are harder to find than before. However, applications to business school, fuelled by the recession, still soar. 2009 was a record year for applications to many business schools and 2010 is expected to at least match it. More MBAs than ever before are bringing their skills to bear in vast projects in India and China. More are looking outside the traditional high-earning sectors where money is the bottom line. More are taking roles with low-paid NGOs in developing countries through organizations such as MBAs Without Borders.

And that, we can only conclude, means that reports of the death of the MBA have been greatly exaggerated indeed.