Fear, Loathing, and the MBA

In the wake of the bear market and financial crisis of 2008, we've experienced a bull market in tougher situation. But where has all the research and analysis gotten us? Not far. The markets are on the path to recovery, but we've done little to address the underlying causes of the crisis, one of which is what and how we teach in our business schools.

Most of the people point to business schools as a part of the problem. MBA is by far the leading degree in American postgraduate education, where it represents more than a quarter of all students. The standard criticism lobbed at MBAs is that they're arrogant, brash, and brimming with unearned confidence in their own abilities. That criticism misses the point. The real reason that our MBAs contributed to this financial crisis, and the crises that preceded it, has less to do with arrogance than with fear.

MBAs are taught frameworks and models that are meant to give them ways of thinking about the world. The problem is that we don't teach those models in ways that encourage students to actually think critically about the world. Too much of business education is about edutainment, takeaways, absolute answers, and universal tools. We show students how to value a company, how to price an option, how to manage away risk through securitization. But we are largely silent on the limits of those models, the patterns of assumptions that underlie them, and, most important, what to do when those models stop working.

Model Dependence

The result is that we produce graduates who are capable of dutifully applying the models they were taught, but who are unlikely to question them and largely incapable of adapting them and building new ones. As such, MBAs cling desperately to their models out of fear. If the models they have don't work, there is nothing to replace them and no way out of the problem. That is why I don't believe that arrogance drives MBAs to hold steadfast to their models as they fail; it is paralyzing terror.

MBA graduates hew close to their old models even as they lead deeper into crisis because they can't see what else they can do. That is the predominant shortfall of MBA education; too many outputs with too little process, too much about results with too little about causes, and too many conclusions with too little reasoning. It is no wonder our graduates don't leap confidently and decisively to build new models when the old ones start to fail.

To build new models, MBA students need to be taught to deeply examine the models we present to them—not just to the end of regurgitating them on an exam, but with the aim of understanding how, why, and when the models work. Students need to actually play with the models, testing, challenging, breaking, and rebuilding them. They need to imagine and explore, as a designer might, what could be true, as much as what is true. They need to learn to seek out and listen to the naysayers, to seek to understand what those in opposition to conventional wisdom see about the world that the rest of us do not.

Integrative Thinking

Our MBA students need to be integrative thinkers. Integrative thinking, on one level, is simply the ability to use the tension of opposing models as the root of a new and better choice. Integrative thinkers, rather than choosing between marginal or less-than-appealing options, will seek to create a new model that contains elements of the existing models but that is better than each of them. On another level, integrative thinking is a specific application of a broader and more impactful way of being in the world: a way of being that says my job is not to choose but to create. This mode of thinking encourages wide exploration and deep reflection, creativity, and analysis. It is a mode of thinking that dismantles the fear response when our models start to go off the rails. The failure of a model isn't a cause for panic; rather, it is a marvelous opportunity to understand the limitations of that model and to build a new and better one.

Only when we commit to an MBA based on integrative thinking will we produce graduates who innovate new and better models rather than get trapped and limited by models that we teach; who will contribute to resolving crises rather than contributing to their creation in the first place.

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MBA Job Outlook Improving

Recruiters are skittish and the job market is more competitive than ever, but career services directors say 2010 may be the year of the turnaround

This year's class of MBAs arrived on campus in September expecting a challenging fall recruiting season and now many are bracing themselves for an even tougher spring ahead. 

With uncertainty about the economic recovery looming, students trying to secure full-time offers are entering a job climate that looks eerily similar to last year's brutal MBA job market, career services officers say. Compounding the problem, fewer second-year students came back this fall with full-time job offers from their internships, they say, making an already tight job market even more competitive.

This fall, recruiters continued to shy away from campus and many are being cautious about hiring, according to a recent survey of 78 business schools by the MBA Career Services Council (MBA CSC), the umbrella group for business school career placement officers. Recruiting remains down, with 79% of schools reporting a decline in on-campus recruiting for full-time MBA jobs in the fall of 2009, the same number as the previous year. To assist students, career services officers are using many of the same tactics they used last year to dig up jobs. They're cold-calling recruiters, adding executives in residence to counsel MBAs, and tapping into alumni networks. Meanwhile, they're preparing students to seize on what they believe could be a last-minute flood of job opportunities that they expect will emerge closer to graduation. 

Encouraging Signs

At the same time, there are a number of signs that the MBA job market could improve, albeit slightly, in the coming months and a growing sense of optimism prevails among career services officers, says Kip Harrell, president of the MBA CSC. According to his group's survey, full-time MBA job postings appear to be rebounding; 34% of schools reported an increase in full-time postings this fall. And, perhaps even more important, fewer schools are reporting declines, with 48% of schools seeing a reduction in full-time postings, as compared with 70% of schools last year.

The still-shaky job market is a bitter pill for many MBA students, who came to B-school 18 months ago in the hope that the recession would be long gone by graduation and are now finding that it isn't. The surge in B-school applications at the start of the downturn was one of the biggest on record, as many fled the uncertainty of the job market for what they viewed as a surefire career boost and six-figure salary. Today, that all seems like a cruel joke, but on campus a fragile optimism prevails. "We are seeing signs that the economy is turning around, so the mood at business schools now is that everyone is waiting with lots of hope," says Harrell.

Another bright spot is that internship opportunities for first-year students may be bouncing back. In the survey by the MBA CSC, 31% of career services officers say they expect internship recruiting activity to be down, while 33% expect it to be up and 36% expect it to be flat. Last year at this time, 62% of career services officers said they expected internship activity to be down.

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