[wordup] Do MBAs Make Better CEOs? Sorry Dubya, It Ain't Necessarily So

[Adam Shand]

URL: http://www.fortune.com/indexw.jhtml?channel=artcol.jhtml&doc_id=200297

Do MBAs Make Better CEOs? Sorry Dubya, It Ain't Necessarily So

Two experts argue that the MBA is heavy on the 'B' and light on the
'A'--teaching business functions, not the practice of administering.

Monday, February 19, 2001
By Henry Mintzberg and Joseph Lampel

George W. Bush, America's first President with an MBA (Harvard, '75), is
settling into the White House. The nation itself thus joins the ranks of
some 40% of its 100 largest companies, which are also run by MBAs. You'd
think America would be in good hands. But do MBAs make effective CEOs? No
one, as far as we could tell, has ever checked. So we began to snoop
around.

First, we considered the success stories, asking knowledgeable people to
name American CEOs who had achieved great things over long careers. The
names that came up most often were Bob Galvin of Motorola, Bill Gates of
Microsoft, Andy Grove of Intel, and Jack Welch of General Electric. The
first two never finished their undergraduate degrees; the last two have
Ph.D.s in chemical engineering.

Then we looked at the other end of the spectrum, the "failed" CEOs. A 1999
FORTUNE article, "Why CEOs Fail," examined 38 of them and found that they
had flopped because of "poor people skills" or "bad execution." Of the 33
U.S. companies on the list, 40% of the CEOs--such as Frank Lorenzo of
Continental Airlines (Harvard, '63) and James Robinson of American Express
(Harvard, '61))--had MBAs. Quite a few! Then we noticed that both Lorenzo
and Robinson appeared in a 1990 book called Inside the Harvard Business
School, by HBS insider David Ewing. They were on his list of the school's
stars at the time--19 graduates who had "made it to the top." Curious, we
examined the subsequent performance of all the alleged stars. Nine,
including Lou Gerstner of IBM (Harvard, '65), seem to be doing fine. But
ten had run into major problems. A number were forced from their jobs. In
some cases, like that of William Agee of Morrison Knudsen (Harvard, '63),
their companies declared bankruptcy soon after their departure.

We're not arguing that the MBA is a dysfunctional degree that ruins
everyone who gets it. But given how much of America's well-being is now in
the hands of these degree holders, the MBA deserves the kind of scrutiny
that its holders accord everything else.

Looking more closely at the CEOs who failed, we noticed that they tended
to do so in similar ways: They ran their businesses according to a
formula, regardless of the people involved or the dynamics of the industry
in question. There's a correlation with the degree here: The MBA tends to
be heavy on the "B" and light on the "A," teaching business functions, yet
not developing the practice of administering. These programs give students
the confidence to make decisions but not the competence to deal with the
messy reality in which decisions are executed. Students learn to analyze
situations and propose "implementation." Unfortunately you cannot
replicate true managing in the classroom.  The case study is a case in
point: Students with little or no management experience are presented with
20 pages on a company they do not know and told to pronounce on its
strategy the next day.

The MBA was introduced in 1908 and last seriously revised in the 1950s.
It's time for a new strategy. Managing today is better served by programs
designed for practicing managers who stay in their jobs as they learn from
their own experience. We have found that learning occurs not in some
high-pressure boot camp, but in an atmosphere of thoughtful reflection
(see impm.org).

As for America's new MBA CEO, he's about to get a big dose of that messy
reality. He is known for his people skills. How he handles the execution
will be the real test.

For details, see www.henrymintzberg.com. Henry Mintzberg is Cleghorn
Professor of Management Studies at McGill University and teaches only
students who are practicing managers. Joseph Lampel is professor of
strategic management at the Nottingham University Business School in
Nottingham, England.