Why are business schools so well-regarded generally? Steven Conn set out to explore that question, and to shine a light on what he sees as the many failures — historically and currently — of graduate and undergraduate management education.
In Nothing Succeeds like Failure: The Sad History of American Business Schools (Cornell University Press), Conn, the W. E. Smith professor of history at Miami University of Ohio, argues that business schools do society more harm than good, that they have little new to say or teach, and that they are full of money-grubbing students and mediocre teachers. They are and always have been bastions of mediocrity that consistently fail to meet the expectations of their academic and societal missions, Conn writes.
And he makes a pretty compelling case.
A CRITICAL EYE LOOKING THROUGH A HISTORICAL LENS
MBA degrees, Conn writes, originally were envisioned in the same mold as law or medicine degrees. But those fields do productive research for the betterment of society, and they follow strict ethical standards. That’s hardly the case in B-schools.
Conn may be a professor of history, but he is supported by voices in business education. In April 2018, Martin Parker, a management professor at the University of Bristol in the UK with more than 20 years’ experience teaching in business schools, wrote in The Guardian: “Business schools have huge influence, yet they are also widely regarded to be intellectually fraudulent places, fostering a culture of short-termism and greed.” There are 13,000 business schools in the world, Parker wrote in We Should Bulldoze the Business School, and that’s 13,000 too many. Another prominent critic, Jeffrey Pfeffer, wrote the 2015 screed Leadership BS (HarperBusiness), which one critic called “a scathing indictment of ‘the leadership industry'” that examines non-functional leadership training and execution. Leadership BS “sets the record straight on the oft-made prescriptions for leaders to be honest, authentic, and modest, tell the truth, build trust, and take care of others. By calling BS on so many of the stories and myths of leadership, he gives people a more scientific look at the evidence and better information to guide their careers,” according to the book’s liner notes. Pfeffer, professor of organizational behavior at Stanford Graduate School of Business, proposes a “hippocratic oath of leadership: first do no harm.”
P&Q talked with Steven Conn about how he sees B-schools through a historical lens, and what he thinks needs to happen to make B-schools more productive members of academic — and regular — society.
P&Q: Why would you, a history professor, be interested in business schools?
CONN: All campuses have business schools. They’re often separated from the main campus in fancy new buildings. I didn’t have the faintest idea what went on in them, and I wanted to find out.
What were your most surprising findings?
A few key issues kept popping up. One thing was that from the 19th century to today, nobody has known what constitutes a business education, and that’s an ongoing debate. There’s no body of knowledge or meaningful standard of ethics, like there is in medicine and law.
The second most surprising finding was that, since the earliest days, the most severe critics of B-schools are businesses. In reports going back to 1920, they have complained: “These college boys have big heads and don’t think they should be working in entry-level positions.”
Meanwhile some faculty members have lamented that B-schools got the worst students on campus: “They don’t know how to write or think in a critical way,” is a recurrent theme.
In 1959, the Ford and Carnegie foundations each launched surveys of business schools. Both studies found conditions to be appalling. They said that the schools are stocked with mediocre students and subpar teachers. They likened undergraduate business programs in particular to little more than vocational schools. The private sector business press, such as Businessweek, Forbes, and Fortune, were vocal about this, too.
The universities responded with vague platitudes, and some hired better faculty, but then everything just slid back the way it was before.
Why do you and others find undergraduate business programs to be particularly bad? And why might graduate programs be better?
I question business schools on a graduate level, but they certainly shouldn’t exist as undergraduate programs. The job of undergraduate education is to teach students to think critically. This is why schools like Harvard, Northwestern, and Chicago don’t have undergraduate business programs. But most do, because deans don’t want to give up undergraduate students and the extra revenue they bring.
So what are students supposed to learn in business schools?
That’s the main question. If what they teach is basically management accounting, marketing, and operations, P&G can teach you all you need to know in about six weeks. At one point, businesses trained their own employees. John Wanamaker, a retail magnate, had his own in-house school.
The primary reason students get an MBA is that it offers the highest potential income for the least amount of work. This has been an open secret for a long time. A lot of people see an MBA as purely transactional, a way to get a job or a promotion.
It’s not just about money. You don’t need a four-year college degree to become an accountant. You’re also gaining cultural capital, so you can hobnob with doctors and lawyers.
How do business schools handle financial disasters, such as, most recently, the mortgage crisis?
I found that not much happened at these places. There was no reflection or stock-taking or thoughts about how to change. Unlike medicine and law, there is really no way to hold firms accountable.
In 1999, Fortune magazine asked why CEOs fail. Forty percent of them had MBAs. If 40% of doctors killed their patients, it would be a national scandal.
When Enron, which was run by MBAs, blew up, nobody could sue them for malpractice, even though people lost their life’s savings. In the mortgage and banking crisis, people lost their houses, yet no one went to jail for it. But every time there’s an attempt to regulate the industry, people go ballistic.
It seems since most exotic derivatives come from MBAs or quants or both, that business school would be the perfect place to dissect and avoid such problems?
In the ‘20s, Harvard Business School famously developed the case study method, which was stolen from law schools. One case was Enron, and not coincidently it was filled with Harvard MBAs. When it collapsed, it was simply removed from the curriculum.
Students are taught a generally uncritical attitude, which helps to create a yes-man environment. So no one thought the real estate market would be any problem at all.
Basically, business schools don’t have any mission to create social good. Curing cancer is a public good. Getting women equal pay is a public good. It’s the kind of thing research is supposed to do.
If you’re in marketing and come up with an ad campaign for opioids, it’s a fundamental difference in purpose. So one question is: Is the goal of business schools just to work for corporations?
How would they justify that?
By the 1990s, B-schools were teaching the primacy of shareholder value, which essentially gave them carte blanche to ignore virtually everything but stock valuation.
Now private equity funds and venture capitalism is what’s being taught in American business schools. In the wake of the 2007 collapse, Adair Turner, chair of the UK’s Financial Services Authority, characterized all of this derivatives wizardry as “socially useless activity.”
Banking used to be dependable; now everyone wants to be a buccaneer and invest in all this stuff that is socially destructive. This is what “finance” means in business school.
What about courses in ethics and sustainability?
B-schools offer those as electives, which is always just window dressing. Ethics has never gained any traction at business schools. I doubt that you would see evidence of them teaching about how income inequality is created.
Likewise, business schools only give lip service to sustainability as we face growing urgency about climate change. Only the insurance industry is active in climate change, because they have to pay for the damage. I don’t see the private sector leading in any way on this.
What about diversity?
Law and med schools have worked hard to create gender equity and have practically achieved it. At the turn of the 20thcentury, business schools are still reproducing the corporate culture, which is very white and male.
From the standpoint of the corporations, B-schools exist to recruit from. This is partly because the recruiters themselves are MBAs. The world of finance is a bro culture, and that’s replicated in business schools to some extent. Mediocre white MBAs can slide right into mediocre corporations.
How could one change that?
Injecting social goals into business school projects would help. There’s a correlation between the fact that business runs the country, and no one of any consequence is punished when people lose their houses and their savings. That leads to the kind of resentment we have now. When there is gross inequality like we have today, people tend to be more dissatisfied and violent.
Capitalism is not the problem. In Scandinavia, they have created societies with higher levels of contentedness. And for example, the German workforce has great benefits and are highly paid, and it works. Why do we say that it’s impossible?
Pick up Steven Conn’s book here.