On day one of Harvard Business School’s entrepreneurship class, Professor Bill Sahlman began by displaying charts of industry valuations. The graphs told stories of rising and falling fortunes: plastics peaking and crashing in the 1970s, investment banks in the 1980s, and dot-coms in the 1990s.
Then, Sahlman showed the number of Harvard Business School students entering those industries in the years before the crashes. Each time, the influx of MBAs seems to predict the demise. The more Harvard graduates flocking to an industry, the deeper its plunge.
It was a tongue-in-cheek performance meant to put aspiring Harvard MBAs, not known for their modesty, in their places. Still, the data is real, and it raises important questions: Does the traditional MBA do as advertised and give you skills and knowledge that help you “administer a business”? And aren’t there a million successful business leaders who never bothered to get the MBA stamp of approval?
The value of MBAs
Jokes about the value of MBAs are a dime a dozen. (How many MBAs do you need to screw in a lightbulb?)* Yet hundreds of thousands of smart, ambitious people enroll in MBA programs annually. They do so not only for the promise of new expertise, knowledge, and skills that will vault them to advancement, higher salaries, or perhaps the confidence to start their own companies. They also hope to build valuable personal contacts and professional networks. They hope to signal their leadership potential to employers. Like a peacock’s feathers, the ostentatious expense of two years and tens of thousands of dollars displays their fitness for the corporate ladder.
Networking and signaling value also play roles in the decision to attend law school and medical school. But no one questions the need for doctors and lawyers to complete several years of study before they are allowed to practice their profession. The question remains: Outside of specialized fields like investment banking or accounting, is there a body of management expertise that you can (a) learn in school and (b) apply in any business organization and functional area?
Our answer is an emphatic but qualified yes! For those who can afford the time and the expense, a traditional two-year MBA might be a perfect fit to acquire that knowledge along with the network and pedigree. But make no mistake: You’d be paying for the latter. And because spending lots of time and money is actually the point—the more you spend, the more exclusive the network and the higher the value you’re signaling—you may as well go for the elite institutions only. Meanwhile, what options do you have if you’d rather dedicate your time and money elsewhere but want to learn how to manage your own business or someone else’s?
The 12-week MBA
The 12-week MBA’s premise is that you can acquire the essential skills and knowledge to “administer a business” at a lower cost and in less time. The teachings of a traditional MBA program aren’t fluff. But in an age where disruption is the only constant, it is difficult for the MBA to keep up. In the early 1900s, when the degree was invented, most businesses made money in similar ways, and you could rely on the fact that most skills you were taught would be relevant twenty years later. Today, many skills you learn in an MBA program will be outdated soon after you accept your first job.
There are two reasons for this. One is that today’s business skills evolve quickly. By the time the latest best practices on how to use social media marketing make it into an MBA curriculum, they are already outdated. The second reason is that the world of business has grown more complex. Much of what you learn in an MBA program will not be relevant in the industry, company, and function you enter. Today’s business schools teach fascinating supply chain topics that are misleading when a pandemic disrupts the global supply chain or if the job you aspire to is in enterprise software sales. The case studies about marketing you’ll work through in the traditional MBA? They’re based on marketing channels as passé as Friendster.
As the functional and industry expertise you need in management has become more diverse and complex, much of the knowledge that you gain in an MBA can be acquired in a more timely fashion and at a lower cost on the job. In fact, much of what you learn in your MBA, you’ll have to unlearn or relearn on the job.
When you strip away the two-year MBA’s function-focused and industry-specific content, we believe that you are left with two timeless and universal topic areas. The first is numbers: using the tools of accounting and finance to measure a business’s value creation. The second is people: how to work with and through others.
On what basis have we performed this distillation? For the past two decades, we’ve created leadership development and business acumen programs for some of the world’s largest and most admired companies—companies like Coca-Cola, Marriott, and Dell—as well as hundreds of start-up companies on all continents except Antarctica. Our mini-MBAs and leadership programs have helped over a hundred thousand professionals. We’ve seen firsthand the truly universal gaps when it comes to the skills required to administer real-world businesses. To promote employees to management positions from within, organizations consistently struggle to identify people with business acumen and leadership skills. Companies spend fortunes trying to fill those gaps, even though many of their employees are credentialed MBAs!
Not surprisingly, we experienced the same pain points as we grew our own two businesses during the past twenty years. We’ve also struggled to find and empower leadership teams, and yes, we’ve made just about every possible business acumen and people management mistake ourselves. Even in the narrow human resources field in which our two companies have operated, the lessons we learned about marketing, operations, and even human resource management did not transfer well from one company to the other. We’ve had to unlearn and relearn these lessons as the world has evolved. But some hard-won business acumen and leadership skills have stood the test of time. The 12-week MBA is a product of both our clinical observation of real-world companies and our time in the entrepreneurial school of hard knocks.
When Harvard established the first MBA class in 1908, it was called a “delicate experiment.” Our book and the twelve-week online mini-MBA program on which it’s based reflect our own commitment to advancing that experiment delicately and with a laser focus on what matters in a world that has evolved significantly.
The world offers no shortage of challenges that can only be addressed by organizations, whether single-digit teams or giant corporations. There are far more management positions than there are people with elite MBA credentials to fill them. And these positions ought to be filled by people with a greater diversity of backgrounds than those with the time and means to go through a graduate-school curriculum. Good business acumen and management practices are simply too important to our flourishing: individually—as consumers, citizens, colleagues, employees, or shareholders—and collectively, as organizations, communities, nations, and a precariously interconnected world.
