From Our Partners: The MBA Summit: What Amazon, Google & McKinsey Really Want From MBAs

Ross School of Business Dean Scott DeRue

Byrne: And Peter, I know that when MBAs come to Amazon, they’re immediately given responsibilty, often their own area to experiment in, right?

Faricy: That’s right. When I was getting my MBA here, there were a lot of companies that had management training programs. And a lot of them were very well-regarded, super good companies. You kind of imagine that the mental motto was to get your MBA for a couple of years, be part of a management training program, and eventually you would be put into an operating role. At McKinsey in a different way, but certainly the tech companies, the models have changed radically. The operating role begins the day you begin with Amazon. And we do expect people to be able to hit the ground running. So I think there’s even more importance while you are getting your MBA to learn how to handle ambiguity, to learn how to actually get things done, to learn how to experiment. We want to know that you’re ready to become an operator and that you’ve learned how to work well with others. Because there aren’t training programs to teach you that once you get on the ground. We kind of expect that when you’re coming in.

The reason we hire MBAs is that we expect that they have built those skills over time and that they’re ready to roll. And so it’s exciting. I think in many ways, this may be a great time to be an MBA because if I think back to the time when many companies had training programs, they just sort of delayed your getting to do what you really wanted to do. You really want to lead something. You really want to build something. And right now I think is a great time because, trust me, if you work for any of these three companies, you’ll feel very valued very quickly.

Byrne: And I think it’s worth pointing out that in the last quarter of a century, there’s been a major reduction in rotational programs at many companies. These firms have become much leaner and I think that’s one of the major reasons why the MBA is the most popular graduate degree in America and why the business major is the most popular major because employers really want those who can contribute immediately in the workforce.

So let me ask Grant at Google whether he thinks the business model for the MBA is ideal the way it is or should it change?

D’Arcy: You actually expect people to come in a little bit closer to combat-ready. That said, you also have an element where you want people to be willing to take risks, to be willing to try things, to be willing to potentially fail and not to lack the ability to pick themselves up afterwards. So, where I think the business model has evolved that has been quite helpful is in providing a safe space to encourage risk taking. Encouraging that bias toward action in an environment that is mostly harmless if you fail is critical. That way, when you come out to Amazon, when you come out to McKinsey, when you come out to Google, and you face challenges and fail, because you will, you will know exactly how to pick yourself back up. And you know that you have both hard and soft skillsets to rely on to push that forward.

Byrne: And this speaks to the whole medical school analogy where people have a residency. Today in one MBA program after another business students have projects and assignments, with deliverables that give students valuable experience and make them accountable. Scott, do you think that’s an essential part of an MBA experience and a good example of how business schools are changing?

DeRue: Without question. The analogy that it’s a medical education I think is an astute one. It’s the same concept as a teaching hospital. You develop the skills of resiliency, being tolerant of ambiguity, understanding how to learn from mistakes by actually doing it. The other reason that becomes valuable is around how many students are using the MBA as a platform to make some switch in their lives. Often I talk about experiential learning as an opportunity to try before you buy because you may not have worked in consulting or you may not have worked in tech. So it’s an opportunity to develop those skills while you’re in school but also to experiment with who you want to be.

Put those two things together and the teaching hospital model becomes really important. Because in residency, you’re going to a surgery rotation and then you’re going to a pediatric rotation, etc. So you are able to develop those different skills. At Ross, one of the things that we’ve really committed ourselves to is building the most robust portfolio of experiential learning opportunities so that we’re developing talent to meet these needs and to meet the needs of those students who are coming in for the education.

Byrne: And in fact you just made a major change in how you do that. Want to describe your newest innovation in experiential learning?

DeRue: Sure. Our our aspiration for the school is that every student who walks through our doors has the opportunity to start real businesses, invest real capital and real assets, whether it be equity, real estate, or new ventures. So we have students running investment funds with real capital. We want every student to have the opportunity to advise real companies on real strategic issues. So when they go work for McKinsey, they’ve already done it. Our students will do roughly 200 consulting projects this year for organizations all around the globe as part of the curriculum.

And one of the biggest innovations we’ve done in the last year is we’re building businesses inside the business school. We’re doing this in partnership with leading brands and leading companies where we want our students leading real teams, real functions, and real businesses. Students learn marketing as we develop the marketing strategy and implement it for a real business. And students are getting this ongoing experience with companies. We’ve got both undergraduate and graduate students now working in teams across functions in actual companies, building businesses.

At Shinola, which is a Michigan-based company, we’ve got 24 Michigan Ross students in their headphone business which launched this past holiday season. The students report to the head of their audio business who reports to the CEO, who happens to be an alum. And we’ve got faculty embedded with the team as part of the curriculum and they are working in four functions: marketing, supply chain operations, digital e-commerce, and back office finance accounting. And we’ve got marketing faculty teaching marketing strategy as they build and implement it for the audio business for Shinola.

We’re doing that with Shinola. But we’re also doing it with Ford. We’re doing it with one of the largest affordable housing developers in the country. We’re building a job placement and training service for survivors of human trafficking. Our goal is to have a dozen of these businesses up and running and we have eight right now. So we’re building what I think is going to be one of the most robust portfolios of experiential learning through the start, invest, advise, and lead framework. The goal is to build talent that can be ready on day one for these organizations.

Byrne: Peter, at Amazon, what’s your point of view about how well-educated MBAs are and how well-prepared they are? Is there something else business schools can do to improve the talent they produce?

Faricy: I think we’ve hit it on the panel. I think the one thing I’ll say to the audience is that if you get into one of these business schools, Yale, Berkeley, and Michigan Ross, you’re very, very smart. There’s no question about your intelligence level. You have the intelligence to be successful at any one of these companies up here. I honestly think if I were to simplify it, the make-or-break part is whether you develop the skills to be able to get stuff done? You know, it’s one thing to be smart intellectually. It’s another thing to be book smart. But do you have the ability to work with others and put together an inspirational plan? So experiment a lot, fail a lot, learn a lot, and be persistent, and you’llend up with something wonderful in time.

One of the areas I would love to see all business schools focus on more is purposeful failure. Most of our academic careers are all propped up to be successful. You want your children to get good grades. You want to get good grades. The professors want you to get good grades. Everything’s kind of centered on don’t get a bad grade. Somehow we need to change the incentive system so that part of getting a good grade is demonstrating the ability to experiment, to fail, and pull back and see what you’ve learned from it. Because the reality is if you want to invent something truly unbelievable and inspirational, you’re going to fail nine times out of 10. And so we want to train people to be really good at failing, learning from that experience, and bouncing back up, and going again.

And so I’d love to see, Scott’s model of you could start a business, you could invest in a business, you could consult in a business. I think that’s an awesome place to start. Allowing students to learn from these experiences is going to make them super well-prepared to hit the ground running.