Are MBAs passé? An American export whose teachings have little relevance to the real world of business? Or are they essential qualifications for future business leaders seeking a well-rounded CV? For John Wells, the new president of Swiss business school IMD, the answer is easy. Having studied physics at Oxford, the 55-year-old Brit later completed an MBA himself in 1979, and began an international career in business that included serving as a divisional CFO at PepsiCo twice as well as starting up two companies and being part of a management buy-in. In 2002, he returned to his alma mater to teach management practice. For the most part, he says, today’s business schools are serving their students well. Yet he has a sympathetic ear for critics of the MBA.
Wells agrees that business schools generally deserve low marks for churning out graduates with heads crammed with too much theory and too little practice. They have also nurtured legions of graduates who earn themselves the sobriquet “Mediocre But Arrogant” once they make it to corporate life. What’s more, he says, many schools have failed to update their curricula to reflect the changing skills needed by business, which today should include a good grounding in ethics and corporate social responsibility. As he contends, academics are partly to blame — many having “hijacked” business education and making it self-serving rather than a means of improving business practice.
But there’s reason for optimism: “Some schools are interested in being rigorous and relevant. I believe IMD is bang on in that area and that’s why I’m here,” he says. Here, Wells discusses the state of the MBA and offers advice to CFOs who plan to tap the class of 2008.
You were once a divisional CFO at PepsiCo. From a CFO’s perspective, what do you think of the quality of today’s MBA graduates? Do they serve the needs of finance chiefs?
When I started in finance many years ago, the CFO was very much the conscience of the organisation, but he didn’t really have a chair at the strategy table. That limitation was removed by an MBA education, which trained you to take a general management view and generate strategy. So the influence of the CFO increased significantly. However, it got to the point where people who had MBAs but no accounting qualifications were actually being made CFOs of public companies. That’s a problem.
So pressures — such as big options packages that focus everybody in the organisation on short-term stock prices — might influence people not to present a fair view [of their company's performance] and “non-accountant” CFOs are unable to see if it’s a true and fair view. It’s little surprise to me, in these circumstances, that we got instances like Enron, where the role of financial engineering to mislead shareholders was absolutely staggering.
Now you can simulate that experience at business schools, but there’s nothing like having to audit, then run [a business], and then have external auditors come in to give you a nose for whether something’s right or wrong. Schools, generally speaking, only teach the rudiments of accounting. I don’t think they can do much more than that. [But I also] don’t think, on average, they do a good job on the complexity of financial instruments and the risks they create on both sides of the balance sheet.