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Business schools are breaking out of the traditional MBA mold.
George W. Bush has one. So does Nike founder Phil Knight and noted mutual fund manager Peter Lynch.
Microsoft chairman Bill Gates does not. Neither do billionaire business leaders Warren Buffet and Michael Dell. In fact, Gates never graduated from college.
It’s a Master of Business Administration degree. Depending on whom you talk to, an MBA is either a prestigious key to reaching the higher rungs of the corporate ladder, or an unnecessary and often ill-conceived degree that guarantees nothing.
On the one hand, business schools in the United States are pumping out more than 100,000 MBA grads per year, and businesses are hiring them (although at a cautious rate that parallels the country’s slow economic recovery). On the other hand, there is a growing list of detractors—not only of the people coming out of the business schools, but of the way business master’s programs are traditionally taught: with an overemphasis on the technical side of accounting and management and a woeful lack of exposure to the human element of real-life business.
The United States alone now produces upwards of a million MBAs per decade who believe that they have the capacity to manage by virtue of having spent two years in an academic school of business,” writes Henry Mintzberg in Managers Not MBAs (Berrett-Koehler Publishers, Inc., 2004), a 460-page critique of the degree. “The MBA trains the wrong people in the wrong ways with the wrong consequences.”
Aware of this prevalent criticism, administrators of Portland State’s School of Business Administration reformed its MBA program in an effort to break the mold of this degree with the stodgy reputation that’s been around since 1900. The new program, now in its first year, is called MBA+. The “plus” stands for the teaching of core personal attributes such as integrity, listening skills, and creativity.
Business school dean Scott Dawson says other schools teach some of these skills, but are not integrating them into their core classes to the extent PSU is.
Portland State’s reform process started three years ago when the School of Business Administration took a hard look at how its MBA program was serving the economic needs of the region. A committee of faculty members was formed to look at some of the common criticisms of business degrees and also look at successful, creative companies. What kinds of people were they attracting for key managerial posts? What attributes did they have? Could they be provided by the typical MBA?
As it turns out, the answer to that third question was “no,” according to Rodney Rogers, the school’s associate dean. Wall Street Journal articles, books, and at least one highly critical academic study showed that there was little in the “typical” MBA curriculum that provided the kinds of personal qualities companies needed to thrive in the highly competitive world of business.
One study the committee looked at asserted, “We have built a weird, almost unimaginable design for MBA-level education that distorts those subjected to it into critters with lopsided brains, icy hearts, and shrunken souls.”
The school put together focus groups that included local business representatives, then hired a company from San Diego, Organizational Systems International (OSI), to identify the kinds of “competencies” they wanted their MBA graduates to have. OSI works with Nike, Dow Corning, Wendy’s International and other major corporations, but had never before helped a university with such a project, according to OSI operations manager Crystal Jeffers.
“We wanted to make our program distinctive. There are people coming out of MBA programs who can recite chapter and verse how to read a balance sheet, but they don’t have the art of managing a business,” says focus group member Roger Rollins, a project manager for Freightliner who earned his MBA at PSU.
The art of good management is a product of the kinds of competencies the new MBA+ program is requiring of its students. Incoming students are given a “360-degree assessment” by their peers, as well as people who have worked above and below them, so students and their academic advisers have a benchmark on where they stand. The rest of the two-year MBA experience is taken up with developing the competencies—especially the ones that need the most work, based on the benchmark—as well as learning the technical business sciences.
PSU administrators say their approach is unique among business schools in the region in the extent to which it is emphasizing personal or “soft skills,” which are typically scheduled as electives, but are now required learning at Portland State.
In doing so, the University joins a growing national trend.
“Many schools are focusing more on leadership and other soft skills, largely in response to what recruiters say they are finding lacking in MBAs,” says Wall Street Journal writer Ron Alsop. He points to University of Minnesota’s Carlson School of Management, whose Leadership Edge program provides 360-degree assessments and helps students work on their personal skills.
Associate dean Rogers says there is another reason PSU redesigned its MBA program.
“Portland needs a high-profile business school, and right now we don’t have one,” he says. “We’re getting much better. But looking at the West Coast, you have University of Washington, Stanford, Berkeley—all high-branded business schools. We don’t have that in Oregon.”
Business leaders told Rogers that attracting talented managers and having them stay in the Portland area requires that Portland have a business school where not only they, but their spouses, too, could earn a graduate degree. “It’s important for the economic vitality of the region,” he says.
Focus group member Juanita Petersen, administrative department director for laboratory services at Oregon Health & Science University, earned her MBA at Portland State in 1991, and says it has made a big difference in her career.
“Having a science background, it was very eye-opening to see the whole human resource and financial side of things. It has allowed me to be more competitive when management positions open up,” she says.
MBA grad Rollins sees great value in the degree too, even if the common perception of the degree is somewhat inflated.
“People have an expectation that it’s a fast-track to CEO. That’s unrealistic. I do think the MBA is getting to be not exactly a requirement, but a nice credential to have,” he says.
And it’s a credential that can make a big difference in pay. The average starting salary for an MBA grad in Oregon is $64,600, according to Vinitia Mathews, director of graduate placement and career services. Someone entering the marketplace with an undergraduate business degree in Oregon can expect a starting salary between $33,000 and $45,000, she says.
By comparison, the average starting salary for a Stanford MBA graduate is $125,700. But this grad is also spending a lot more money to get the degree. Rogers says private Ivy League schools can easily charge four times the $21,500 that a PSU student would pay for an MBA.
The elite school pedigree can also carry some baggage that can turn off potential recruiters if the graduate is not careful. In his annual Wall Street Journal article ranking the nation’s top business schools, Alsop quotes recruiters who visited some top schools and came away disappointed. Students at UCLA’s Anderson School were described as arrogant and disrespectful, with several making salary demands during the first interview. Recruiters repeatedly used the words “chip on their shoulder,” “snobbish,” and “arrogant,” to describe students they met at Harvard.
“But the feeling isn’t universal,” Alsop writes. “‘I think there are actually a lot of nice people at Harvard,’ says Gates Bryant, a Wall Street Journal survey respondent and consultant at Parthenon Group in Boston. ‘The problem is that some Harvard graduates have the wrong expectations. They expect to be managing projects and people right off the bat.’”
PSU is betting that by instilling and reinforcing strong personal qualities that its graduates will be able to offer the best of both worlds: the technical know-how of business, and the people skills to make it work on the job.
“Executives are derailed more often by their lack of emotional intelligence than their technical knowledge. All the technical stuff is absolutely necessary, but it’s not sufficient,” says Carolyn McKnight, PSU’s director of MBA programs.
McKnight was brought in to her current position at PSU after working 25 years in the business world, most recently for Planar Systems in Beaverton. A big part of her job is to give feedback and coaching to students who are learning leadership skills such as conflict management and strategic thinking. While the teaching of these skills represents a departure from the traditional MBA curriculum, it makes perfect sense to McKnight.
“I don’t think this is radical at all, coming from industry. I think it’s obvious,” she says.
Companies are fluid, ever-changing entities, and to manage them well, you have to be flexible, imaginative, and ready to admit that maybe somebody else’s ideas are better than your own, says McKnight. Managers may have MBAs from the best schools in the country, but if they don't know how to be flexible and deal with conflict they’ll drag their organizations down.
“No company has this nailed. It’s not something you check off. It’s a practice,” she says.
By incorporating these soft skills into all phases of the MBA curriculum, McKnight and others say PSU is taking the very same steps that a flexible company would take in making positive changes: It’s listening to what other people are saying and is showing a willingness to break the mold.
Does that mean you have to have an MBA to be successful in business? No. Bill Gates runs Microsoft just fine, even if he dropped out of Harvard. But he still appreciates academic credentials when he sees them. His wife, Melinda, earned her MBA at Duke University, Class of ’87.
John Kirkland, a Portland freelance writer, wrote the articles “The Far Out Story of Vortex I” and “Top of Her Class” in the winter 2005 PSU Magazine.