Slowly the crisis started to appear in the MBA life. I was just wondering whether crisis is taking a revenge on MBAs. The number of failures in the financial sector is increasing. It has already taken a number of institutions under its blanket. The knock on effect is felt in other industries too. Ironically by this time, I had started reading the book by Mintzberg titled "Managers, not MBAs". Slowly the belief started to shift. The question "who is behind this crisis"? was pricking me. Sooner, I began to search for the answers. My quest for finding the answer landed me in "the list of failed banks" . 48 banks since 2nd Feb 2007 till 21st March 2009 in US, 69 since 2000 and 17 since January 2009. I was interested to know who their CEOs and their educational qualifications. I started researching on this hardly available data. First major bank failure in 2008 was Lehman Brothers, the failure which shocked the already battered economy across the world. My interest was on the CEO of Lehman's at the time of failure. Incidentally the CEO, Richard Fuld was an MBA from NY university. Merill Lynch was acquired by BoA under distressed conditions. Stanley O'Neal, an MBA from Harvard Business School was running Merril at that time. John Thain, another former CEO of Merril Lynch was ousted by BoA after he was found to have been involved in the losses of the brokerage firm which BoA bought. Troubled Citibank is currently headed by Vikram Pandit, an MBA from Harvard Business School. On November 23, 2008, in addition to initial aid of $25 billion, a further $25 billion was invested by US government in the Citi bank together with guarantees for risky assets amounting to $306 billion. Kennedy Thomson of Wachovia was forced into retirement after mounting losses and subsequent sale to Wells Fargo. He was an MBA from Wake Forest University.
There is a need to relook into the education system as a whole. Does business school teach the required skills to handle the extra ordinary situations? Does business schools teach to be just over ambitious? Mintzberg in his "Managers Not MBAs" writes, people will be arrogant when they have confidence but lack competence. The way these mutli national big banks went after the subprime mortgages suggest their leader's arrogance in reading between the lines. Recently Warren Buffett lambasted the business schools for failing to produce the responsible MBAs. Commenting on Failed CEOs, Mintzberg says "Inexperienced students who seek "practical" applications in the class room seem to become disconnected managers who seek easy answers on the job". A food for thought....
Question: Do you think a drastic change is required in the management education system? If so, what are your suggestions?
