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Wednesday, December 28, 2011

Scrap the MBA

Part of the Big Ideas Series for The Smart CEO

What we need are Masters in Enterprise Building (MEBs)

Ask MBA (Masters in Business Administration) students what they want to do after they graduate and the answer is usually a variant of ‘Get a good job’. A good job, they will explain to you, is a job with a good salary, good personal growth opportunities, good work environment and good facilities. Large multi-national corporations will top that list. At the recent IIM-A Confluence, Satish Pradhan, executive vice-president, Tata Group likened business school placements to the Pushkar Mela. wherecandidates, like camels, are dressed up, paraded and sold to the highest bidder. . A student countered that they were ‘trained’ to find jobs.

What’s wrong with that, you might ask. For a country, where less than 10 per cent is employed in the formal economy and where the college capacity extends to less than 7 per cent of the potential college age population, access to a higher degree like an MBA is competitive and coveted. It is natural then that people see this as a rite of passage to personal financial success.

But consider this: banks are reporting higher defaults from industry and India’s growth forecasts have been downgraded from 8.5 per cent to 7 per cent. We are hitting a wall. Financial wizardry might prop things up in the short term but for real growth we need to get back to basics. And the absolute basics are that it is the innovation, ingenuity and organisation of people that can ultimately produce the growth and value that is essential for a healthier more inclusive society. It is the very people who are educated, who have to step up to the plate. And the MBA is failing us.

The Merriam-Webster dictionary defines business as a commercial or mercantile activity engaged in as a means of livelihood; also as dealings or transactions especially of an economic nature. Administration is simply the performance of executive duties. Masters in administering business or people performing executive duties pertaining to economic transactions for the sake of their own livelihood are not what we need. Scrap the MBA. What we need are Masters of Enterprise Building (MEBs). This is fundamentally different.
The dictionary defines enterprise as
1. a project or undertaking that is especially difficult, complicated, or risky
2. readiness to engage in daring or difficult action and
3. a systematic purposeful activity.
Building is the art of assembling materials into a structure.

When you say someone is enterprising, you mean something entirely different than when you say someone is good at business. Building is entirely different from administering. Semantics matter. What you call it subtly primes the way you think about it, how you relate yourself to it and ultimately what you will do with it. Simply changing the name of the program from MBA to MEB would force a complete rethinking of curriculum and the perception among students of what one is expected to do with the degree.

We live in a time and place with extraordinary challenges, both internally and globally, and nowhere in India is it simply ‘business as usual’. We operate in an unpredictable political environment where local governments can derail industry at the drop of a hat. We operate in an unpredictable economic environment where global competition and crisis inevitably rock our markets in broad sweeps in ways we cannot anticipate. We operate in severely resource constrained circumstances where basic services like power, water supply and communication cannot be taken for granted. We operate in an ecosystem of extraordinary culture and language diversity where chasms are wide. We operate in an ecosystem that is poorly educated and with few people operating in large scale formal structures. We have to go beyond administering and managing businesses to building enterprises with agility and ingenuity.

Instead of courses like Financial Reporting & Analysis, Financial Markets, Marketing and Microeconomics which are typically core courses of the MBA curriculum, the MEB would have courses like:

Economic and Geopolitical Environment: An understanding of the macroeconomic and geopolitical structure within which we operate and the role of enterprise in its ultimate transformation.

Operating in unpredictable environments: A series of case studies of industries that have gone through dramatic shifts due to large policy changes and changes in regulation (like licensing in Telecom and regulation in Microfinance arising out of the Andhra Pradesh ordinance) and of companies that have survived incidents of geopolitical instability such as riots and bombing (like the Mumbai hotel industry post 26/11).

Building effective organisation structures: An exploration of models and frameworks for scalable organisational structures. In India, over 40 per cent of employed adults are self-employed operating in microstructures of 1 – 3 people with extremely low revenue per person. In contrast, developed nations have fewer entrepreneurs (6 per cent – 7 per cent), who are more likely to create large organisational structures that can engage more people productively and result in multiplicative benefits of scale that becomes evident in increasing revenue per employee. Who does this best and how did they do it?

Other course topics might cover Integrating people into the formal economy which would follow the challenges of companies in bringing in people hitherto employed in the informal sector into a corporate structure, and Planning and execution under resource constrained circumstances – clever ways to make more from less.

I am certain that when you are acutely aware of the macro context in which you operate and are primed to understand and focus on the challenges of building, you will approach your career with a greater sense of outwardly focused responsibility and enterprise. When you ask an MEB what they want to do after they graduate, I would bet that they would be more likely to be looking for the right challenge and responsibility to be enterprising and build something. This might lead to the same job but with a whole different attitude where salary will be a by-product and not the Holy Grail itself.

And if we are successful the result is faster and increasingly inclusive economic growth. And that means better jobs and higher salaries for everyone.

9 comments:

  1. I read this article on YourStory.In, impressed and commented there

    I landed on your blog and I find a treasure here

    Thank you so much, I will be a regular reader

    Warm Regards / Ganesh Srinivasan
    Madurai born man

    ReplyDelete
  2. India is shining and its newly found image in global corporate, rides high with the success of top notch Indian professionals working abroad. The success has been so widespread owing to the home-grown management institutes. With this, arrival of 1 year MBA In Delhi has gained mass attention and working people has their best bet in it.

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  3. Highly thought provoking..!! As an MBA student I really have to thank and appreciate for sharing your thought about it. I agree completely to your points on MEB. I would look forward for an action plan for the same.

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  4. Fascinating - And I just loved the courses, especially the "Operating in unpredictable environments" - can imagine how interesting this course would be!

    A couple of other courses I can think of - "Re-Innovating for the New World" - how to institutionalize grass-roots innovation, innovating for the emerging markets, collaborative innovation leveraging social media, taking emerging market innovations to the world.

    "Strategies for the Real World" - how to build bottoms-up strategies, how to execute the strategy, how to focus on long range goals while managing short term compulsions, - and maybe this can be merged with the Operating in unpredictable environments and a course on Ethics.

    Anyway this really sounds interesting and does call for a trial! And I too look forward for an action plan for the same and volunteer to help out in any which way I can!

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  5. i everyone i am finding some MBA stud stuff something business regarding. I like your post dear. nice blog.
    Online MBA

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  6. Thanks for sharing such a nice information on Masters in Business Administration, for more details click on Masters in Business Administration.

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  7. MBA students can get good job easily. But sometimes they need to do some struggle to get job. When they get a job, they get good salary.

    MBA Colleges in Mumbai

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  8. just linked this article on my Facebook account. it’s a very interesting article for all.


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