B Muthuraman, Managing Director of Tata Steel, has this to say about MBA, "My views on the subject are a bit radical. A typical MBA programme, as taught in B-schools, is focused on imparting knowledge about subjects like marketing, finance, organisation behaviour, operations etc. In my view, knowledge about these subjects contribute to only 20 per cent of what makes a good manager; 80 per cent of good management is based on what I call the behavioural traits of a person – it is the mindset and attitudinal make up of a person that makes him or her a successful executive and leader." Mr Muthuraman has captured thoughts of many managers and executives succintly in this statement.
This statement is however partially true. There are two implicit assumptions in this comment. One, becoming a manager is about developing the behavioural traits of a person. Two, 80% of the knowledge taught in MBA is not useful.
The first assumption is completely valid. Becoming a effective manager is about developing the behavioural traits, and no business school, howesover good it may be, can help you develop those traits. It cannot 'simulate' the real-life situations a manager faces in an organisation. Being a manager is how you respond 'on-line' to the situations in an organisation, not analysing and responding after the 'off-line' analysis of the situation. A MBA can help you develop good analytical skills which are highly useful for financial analysts, management researchers and other similar professions.
The second assumption is however invalid. When a MBA learns the different subjects of marketing,finance and operations, he learns the 'interlinkages' of these elements and how they impact the total organisational topline or bottomline. If he is thorough enough, a MBA learns that pursuing a visible lagging metrics like 'profitability' actually depends on the enabling leading measures like 'customer satisfaction' and 'defect percentage' although the lag time between the two metrics may be quite large.
More importantly, through learning these 80% of subjects, a MBA learns to use 'active sensemaking' of organisational situations instead of relying on 'passive sensemaking'. Because of this, he does not fall prey to the normal intelligent looking explanations of low turnover and high attrition. Neither is he impressed with the impressive 'figures' of high customer acquisition, because he knows figures can be maneovered quite easily. Instead of accepting facile explanations of situations, he learns to diagnose and detect the right elements behind a situation.
Like an engineer who uses his 'knowledge' of interlinkages of natural elements to detect a root cause, a MBA uses his knowledge of interlinkages of man-made and natural elements to detect the right leverages. When an engineer, in a specific job, is unable to use more than 10% of what he learnt in engineering, we appreciate that rest of the knowledge indirectly contributes to his conclusions. In the same way, application of MBA knowledge in a job may be less than 20%, but it is still relevant indirectly because a MBA is looking at an 'organisational whole'.
And if a MBA synthesises his knowledge and experience ( which like engineers forms a miniscule population), he can deploy it to design the soft architecture of the organisation;which is a hallmark of a good leader. If a gifted leader takes this 20 years to achieve this, a not-so-gifted MBA can achieve it in lesser time. This is what education offers, i think.