Business Schools Get a B-

The New York Times took a close look yesterday at business schools in light of the recent failure of many CEOs and senior executives who sported top-tier MBAs, wondering whether the current curriculum is up to the task.

A welcome bit of candor from one MBA school:

“It is so obvious that something big has failed,” said Ángel Cabrera, dean of the Thunderbird School of Global Management in Glendale, Ariz. “We can look the other way, but come on. The C.E.O.’s of those companies, those are people we used to brag about. We cannot say, ‘Well, it wasn’t our fault’ when there is such a systemic, widespread failure of leadership.”

That’s rather perceptive, since it gets at what the degree is supposed to confer mastery of: administration. Most companies now in the regulatory crosshairs probably needed less administration and more leadership.

You can’t have a debate without traveling down the Charles River:

Jay O. Light, the dean of Harvard Business School, argues that there have been imbalances both on campuses and in the economy. “We lived through an enormous extended period of financial good times, and people became less focused on risks and risk management and more focused on making money,” he said. “We need to move that focus back toward the center.”

I would disagree as most large companies have tremendous resources dedicated to managing risk. But unless the right people are overseeing it, and being hired to run it, all the theoretical risk models aren’t worth much. In addition, some of the smoking craters left by certain financial companies were from instruments designed to control risk that went sideways.

There could be some reason for optimism, although not for the business schools:

Some employers and recruiters also question the value of an M.B.A., and are telling young people they can get better training on the job than in business school. A growing number are setting up programs to help employees develop skills in-house.

That sounds good; perhaps down the road something similar will have to be done to plug the gap left in the training we received in law school.