The MBA acronym has attracted many negative alternatives. Kjell Nordström and Jonas Ridderstråle — two Swedish management professors — have replaced “Master of Business Administration” with “Mediocre But Arrogant.” Do you sympathise with such views?
To be an effective and responsible leader, you have to have humility and openness to learning. Graduating MBAs would do well to remember that they are at the beginning of a journey and they will be learning all of their lives. But some people are arrogant and some schools encourage that arrogance.
Are MBAs becoming so commonplace that they’re losing their value?
In Europe there are ever more schools offering MBAs, just as what happened in the US. There’s a shakeout starting in the US now.
I’m absolutely sure that there are too many mediocre MBAs out there and not enough top-level MBAs. The demand for top-level MBAs is very high so they are not losing their value. Recruiters just have to be very selective about the MBAs they choose and the schools they choose them from.
The other thing is that even some top schools are dropping their standards by reducing the age of their intake. That’s happening for two reasons — first, to increase the candidate pool and second, [because] their junior faculty often cannot teach experienced MBAs. Experienced MBAs already have five years’ business experience so they might know more than the faculty.
So a company that hires MBAs without doing its homework is a relatively unsophisticated company. Buyer beware. At IMD, our MBA programme focuses on students with four to ten years of work experience and we will stay focused on that model.
How can you persuade business leaders — including CFOs — that MBAs for their top teams are still worth investing in?
I have no intention of attempting to persuade business leaders to take anyone who’s got an MBA. I can’t. Some MBAs are worth investing in and some are not. You could probably go onto the web and buy an MBA for $100 — I don’t think that makes you an MBA. Many MBA programmes are excellent but that said, it doesn’t necessarily mean that’s what a company needs.
I was talking recently to some people in China whose company needed quite a few elements of an MBA programme but not all of them. If that’s what they choose to invest in to develop their people, why not take up a customised programme? Companies are becoming pretty savvy about their requirements and it’s our job to advise them on what they do and don’t need. Automatically assuming they need an MBA doesn’t make any sense.
As CFO Europe celebrates its tenth anniversary, how has finance education changed over the past decade and how will it develop over the next one?
It used to be that if you understood the capital asset pricing model, that was fine for finance. Now, most people understand Black-Scholes and financial options — techniques have become more sophisticated in line with market needs and I see that trend continuing. As a result of more complex instruments and more complex processes, we face more complex regulation and I think that’s entirely appropriate.
The debacles we’re seeing today only illustrate that point. So the CFO has to understand compliance and regulation and [business schools] really need to help them to do that. But at the end of the day, there’s no limit to the creative mind. There is no regulation that you could ever put in place that is going to stop abuse.
It’s going to become even more important to instil the values of a true and fair view and responsible, effective leadership. A CFO’s role is really tough now but for the talented, the future is very bright.