13.1.2010 MBA world needs to broaden its horizons

It has been a tough year to be in the business school business. The global meltdown in the financial markets has meant fewer jobs, deeply anxious students and greater scrutiny of the role of business education in precipitating the crisis. We have been found wanting.

One publication, The Economist, went so far as to characterise MBA graduates as "jargon -spewing economic vandals". It is not easy to mount a compelling defence.

For too long, MBA programmes have produced shallow, narrow and static thinkers - some of whom have gone on to vandalise, not enhance, our world. We need a better approach - an MBA that produces thinkers who are deep rather than shallow, broad rather than narrow and dynamic rather than static.

MBA education specialises in teaching models that help us price an option, value a company or understand customer segments. While students accumulate a robust toolset, they do not develop a deep understanding about how to choose among and adapt those tools to ambiguous, complex and fast-changing contexts. Hence, students leave MBA programmes with an overdeveloped sense of the power of their models and an underdeveloped sense of their limitations. As a result, their models get stretched and stressed, overapplied and underexamined.

MBA students need to understand thoroughly the assumptions and limitations of the models we teach. They need to learn how to examine the models they are taught, testing, refining and deepening them. They must be encouraged to view the models from finance, economics, marketing and strategy, not as distinct, complete and unquestioned frameworks, but as tools that have better and worse uses, specific limitations and opportunities for refinement. They need to become sophisticated users of their models.

It is easier to perform research, create models and teach courses within individual functional disciplines. But the world is a messy place, not tidy and compartmentalised. Our students need to understand that the narrower the territory a model covers, the less relevant that model is to informing productive action in a messy world. Finance theory is extremely rigorous and quantitative, as long as we assume that all actors are utterly rational. But it faces real challenges when we acknowledge that people can be flawed, emotional creatures.

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