Why you shouldn't bother with an MBA
economist.com
economist.com
A big part of me believes "you don't need an MBA to be successful in tech" (etc etc etc).
However, every week I use tools & skills that I picked up during my MBA. Yes, sometimes it has to do with modelling and such stereotypical MBA skills. Many other times my MBA has a much larger impact - recalling the themes that were incessantly driven into me in my Managerial Leadership class, or enforcing the rigor that my Marketing prof required of his students when writing positioning statements.
I believe my MBA has increased the likelihood of me being successful. That's what matters to me. I agree that it's not for everyone.
The value of an MBA will be what you yourself put into it. It was never the case that you could just sign a check for tuition and get a high dollar figure salary.
The fact is, that short of a start up with traction, getting an MBA is the best way to get exposed to a wide variety of business challenges, from operations to sales to organizational behavior, and yes, even finance for entrepreneurs and fund raising.
MBAs aren't going anywhere, and they have been evolving with the business climate over the past 100 years. They certainly aren't for everyone, but I don't think this article does much to accurately paint the pros and cons to help someone decide if it's right for them.
Well, in its proper context, the article is a counterpoint to The Economist's entire "Which MBA?" section and/or issue (http://www.economist.com/whichmba/). In the context of an entire section devoted to helping you decide which MBA you should do, this brief argument against doing an MBA at all is a helpful piece of contrarianness.
Presented out of context on HN where "MBAs suck" is conventional wisdom rather than contrarian iconoclasticism, though, it loses much of its effect.
(In my opinion, as someone with a PhD and 5/32nds of an MBA, the answer to "should I do an MBA" is "Do you want to do an MBA?".)
Tim Cook has an MBA from Fuqua, one of the top MBA programs in the US. Was that really that hard to fact-check?
Is he the only one? I don't know.
http://en.wikipedia.org/wiki/Category:Apple_Inc._executives
It actually saddens me that this article is being voted up. It's more evidence of the phenomena of people upvoting articles whose thesis they agree with rather than those which enlighten an issue. The article adds virtually nothing to an already tired discourse.
[1] - http://en.wikipedia.org/wiki/Cognitive_dissonance
[2] - http://en.wikipedia.org/wiki/Implicit_memory#Illusion-of-tru...
[3] - http://personalmba.com/
I count 4 MBAs out of 11 current execs: Cook, Oppenheimer, Johnson, Williams.
By comparison, there's 5 with science or engineering degrees, 1 with a J.D., and 1 with no degree.
The key here is what you do with your time. A structured education is hardly ever going to be a waste of time. It may not bring instant promotion and salary increases commensurate with the cost, but to call it a waste of time would be quite incorrect.
Like the Rent vs Buy argument for property, the 'Rent' case is only better if you invest the amount saved. The MBA vs No-MBA argument is better for the No-MBA side if you invest time and effort into learning and growing as an individual. MBA vs Watching TV is a no-brainer, as they say, you should always opt for studying.
For some people, the structured learning environment and connections made during the course are invaluable. People tend to discount or forget this when evaluating the worth of MBA courses.
I have generally been skeptic of increases in higher education- but this doesn't really explain the pros and cons of an MBA.
I find that to be a shocking figure after the 2 years and huge amount of money that people generally invest in getting an MBA.
The author has a Harvard MBA.
For some people, seeking to transition between industries, an MBA can be very helpful. If you are working as a marketing person for General Mills and then decide that you want to break into ibanking, an MBA is great. It allows you to re-enter a very standardized recruiting process versus having to haplessly apply to random jobs. The same goes for people who work in fields where hiring and promoting is very standardized. At certain F500 companies/investment banks/PE firms it is expected that after 2-4 years of working you'll go back and get your MBA (if you want to be promoted). It's pretty dumb, but that's the way it works. Certain star performers can sidestep that but it tends to occur less frequently.
At the same time, for certain careers which are based more on merit (trading, entrepreneurship) an MBA might be less helpful. At best, for a non-business person, you will learn some basic skills and gain a good network. But it's a pretty high cost.
I went to a decently-respected, and rather expensive, private college. Lots of wealthy folks sent their kids there (and the high tuition allowed the school to hand out big scholarships to kids like me, who couldn't have afforded it any other way). One of my friends was the son of an executive, worth more money than I or any ten people I know will ever be; once he was visiting his son, and being introduced to his friends. Anyway, at one point he said something that stuck with me, and given the mix of people he was talking to I'm pretty sure he wasn't just trying to make the liberal-arts folks feel better about themselves:
The thing about business degrees is this: I can hire someone who studied history or literature or whatever, and in six months teach them what they need to know about business. But if I hire someone who got a business degree, I can spend all the time in the world and never be able to teach them how to think.
While in the past, most companies grew under the direction and helmsmanship of a corporate suit A-list CEO, the return on investment is no longer there: 20 years ago, investors in a million dollar startup would get nervous and push for an MBA to steer the ship. When Google got big, there was a lot of clamoring from investors for "adult supervision". In contrast, while there were a few calls for Zuck to relinquish the helm to MBA-led adult supervision, he has resisted them while successfully growing his company to apparently a 50-billion dollar valuation. I only expect this trend to continue. The next big tech startup will never have a corporate non-tech type at the lead until it reaches it's current-day Microsoft-esque peak and slow decline. (One can argue that this is already the case, given that Eric Schmidt is actually a tech geek in corporate clothing.)
And this effect is not just at the top CEO-level: it is mirrored across the slightly lower tier of upper-management: the very tier that most aspiring MBAs hope to occupy at the pinnacle of their career. High performing tech departments are no longer being as gingerly managed by MBAs --- or if they still are, the leadership and powers are slowly being devolved more and more to the nerds. Quant managers in investment banks are already more compensated than the CEOs of those banks themselves. People no longer blink in horror when a boffin (what an antiquated and obsolete word!) is made a CEO.
Of course, most _mature_ well-established companies are and will probably continue to be run by MBAs in well-oiled corporate boardrooms. But the compensation is not the same for someone who takes a billion dollar company and grows it at 2% year on year as it is for someone who takes a 100 million dollar company and turns it into a billion dollar company.
In the past, MBAs used to be handed on a silver platter these gems in the rough by nervous investors eager to get some security (imagined or real) in their growth assets. This is no longer the case. And therefore, MBAs no longer have this easy source of high growth opportunities to lead to success. They are going to have to make these gems in the rough themselves, because those who are making the high growth companies are not relinquishing control (like Zuck.) to them to steer and get lavishly compensated for.
And if there's anything I've learned from the tech industry, it's that MBAs don't create value, aren't original, and don't actually start things --- and they are finally losing their cash cow of having high growth ventures handed to them. I wouldn't be surprised if in 10-20 years the MBA would either be radically different (evolved into a little corporate training and social skills for nerds seminar) or obsolete and viewed as a mature, well (but not outrageously so) compensated professional training programme like a degree in Accounting or Medical School. I have even bet on this being the case in choosing CS grad school over an MBA program in the recent past.
MBA's from mediocre or unknown schools aren't going to get one a highfalutin job with some bank or the upper echelons of the S&P500, but they might teach some useful management skills and decisions making skills that could be useful to techie's and others who want to run their own companies.
I'm not so sure. Reading Henry Mintzberg's writings, one gets the sense that MBA programs are dangerous. They don't actually impart useful skills but they convince their students that they do. I mean, consider Harvard Biz school's case study methodology. You get a bunch of people who know nothing about a company or an industry to read 20 pages of material, reduce all its problems to a single strategic question, then pronounce a decisions and that's it -- this is like a parody for designing a process that allows ignorant people to screw things up, all the while relishing their elite ignorance.
As well, there's something good to be said about being able to bring in outside perspectives to right sinking ships, thanks to not being chained to pervasive biases that may unknowingly be held by those who were "insiders" for a while. IBM's perhaps one of the most extreme examples. They brought a CEO with a non-technology background to right the ship. And he did.
"In April 1993, IBM hired Louis V. Gerstner, Jr. as its new CEO. For the first time since 1914 IBM had recruited a leader from outside its ranks. Gerstner had been chairman and CEO of RJR Nabisco for four years, and had previously spent 11 years as a top executive at American Express. Gerstner brought with him a customer-oriented sensibility and the strategic-thinking expertise that he had honed through years as a management consultant at McKinsey & Co.. Recognizing that his first priority was to stabilize the company, he adopted a triage mindset and took quick, dramatic action. His early decisions included recommitting to the mainframe, selling the Federal Systems Division to Loral in order to replenish the company's cash coffers, continuing to shrink the workforce (reaching a low of 220,000 employees in 1994), and driving significant cost reductions within the company. Most importantly, Gerstner decided to reverse the move to spin off IBM business units into separate companies. He recognized that one of IBM's enduring strengths was its ability to provide integrated solutions for customers – someone who could represent more than piece parts or components. Splitting the company would have destroyed that unique IBM advantage.[25]"
http://en.wikipedia.org/wiki/History_of_IBM
Not that John Sculley managed to do anything remotely as good for Apple when he was recruited by Jobs from Pepsi. ;)
- superficial books they've picked up at the airport and read on the plane.
- soundbites they heard on cnn.com.
- random advice from other "executives" at parties.
Having been on both sides of case-based teaching, I'd say its a useful pedagogical device - imagining that 50 Harvard MBA students actually just "pronounce a decision" is kind of laughable, if you've ever participated in a case discussion. The cases are tools for discussion, and being able to convince others with a cogent powerful argument and build consensus is what is being taught. Something that is quite useful in management.
Not to mention that you get exposed to actual thinking beyond the "7 Habits of Highly Effective People" crap. My B-School experience actually included seeing Henry Mintzberg speak.
"The next big tech startup will never have a corporate non-tech type at the lead until it reaches it's current-day Microsoft-esque peak and slow decline. "
And hopefully not even then.
http://en.wikipedia.org/wiki/Doctor_of_Medicine
http://en.wikipedia.org/wiki/Bachelor_of_Medicine,_Bachelor_...
The Economist is UK based.
1) There are a lot of industries outside of technology and even within technology, the facets vary greatly. Trying to say what a startup needs vs. what Apple needs vs. what Facebook needs is a largely useless exercise. Saying "MBAs are a dying breed because Facebook didn't need them" is pretty irrational, as is judging someone based on whether or not they have an MBA. If Mark Zuckerberg dropped everything and knocked out an MBA in a year or two, would he somehow no longer be the person he was before he did the program?
I guess what I generally don't get is the idea that the MBA brands you as an undesirable idiot in this community. It's as ridiculous as thinking that just having an MBA qualifies you for huge responsibilities
2) MBA programs are capable of evolving and they are. Many MBA programs are now focusing much more time on leadership and teams and give students the ability to exercise these areas much more than they used to.
As a company (or recruiting company) you essentially "poach" people who have gotten into Booth, Wharton, Kellogg, etc. So you approach them once they have received letters of acceptance from these schools and offer them a nice job in your company. The individuals that actually would accept your offer (and of course the offer would be good) would even be in the ideal talent pool of aforementioned top MBA universities. Down the line someone may question "well yes Mr. Smith did get into Wharton, but he never went". My answer would be "Any person smart enough and business minded enough would realize their investment in this offer is much more advantageous to their career than attaining their MBA".
Who wants to create a recruiting business that does this? ;)
Sidenote - I was surprised that the author of the Economist article didn't use Josh's quoted research from Christian Schraga who estimated the ten-year NPV of a top MBA program is approximately negative $53,000 [1]. If these assumptions are correct, it would take approximately 12 years to just break even.
[1] - http://mbacaveatemptor.blogspot.com/2005/06/wharton-grads-ca...
Joe Schmoe with no real experience can try to mumble something that he learned back during his Marketing 303 class, but nobody will care. If the university is worth anything, Joe Schmoe would not be accepted in the first place.
So the guy emphasized to me that the real value from an MBA is not the fancy 3 letters, nor the fancy job prospects, though those are all nice bonuses. He emphasized that the real value was the professional network that would be accumulated (the better the school, the better the network as a general rule), and correspondingly, the wealth of information and future opportunities that could be gathered from that professional network.
So it sounds very similar to a comment someone made about why they found university to be valuable in that other thread about whether to attend university.
On the flip side, I knew a director of marketing from when I worked in telco. He had an MBA from Phoenix University online. His class included a hotel clerk, for reference in terms of their student quality. But he wasn't expecting anything out of it. He came from an engineering background and had gradually transitioned into sales and marketing. But he found as he moved up the chain in sales and marketing, he lacked some of the fundamental aspects of business that many of his peers seemed to possess (simple things, like even vocabulary; what the heck does managerial accounting mean, and how does it differ from regular accounting?). So he enrolled into Phoenix just so that he could talk shop properly with his peers. He's a lifer at that telco, a rising star, so getting an MBA from Harvard wouldn't help him achieve his goals any better than Phoenix would. His goals were just to keep growing inside the company, not seek a high-profile exec position somewhere else; Phoenix provided him the tools he needed to do exactly what he wanted.
So in the end, it depends on what you're looking for.
And yes, for people like lawyers, medical doctors etc. this does happen, for example the MMR vaccine fiasco resulted in this:
http://news.bbc.co.uk/1/hi/health/8695267.stm
Can you imagine that happening with MBAs?
Oh, the article? Pretty bland.
(1) The Article.
(2) An MBA.
(3) Professional Education.
(4) Business.
(1) The Article.
The author seems angry about MBA programs, and he doesn't support his claims with solid data.
(2) An MBA.
If an MBA didn't take quite a lot of time and money and, possibly, opportunity cost, then, sure, get an MBA.
If someone has a clear objective where an MBA is important, then maybe get one.
If someone wants to be in business but really has no significant background in business from family or experience and, say, didn't major in business as an undergraduate, then maybe get an MBA.
Some of what is taught in some MBA programs is not easy to learn from experience or independent study and might be useful later in business. Examples include optimization (e.g., linear programming), statistics (random variables, distributions, expectation, variance, independence, central limit theorem, law of large numbers, conditioning, hypothesis tests, confidence intervals, the general linear model), an overview of information systems (likely not worthwhile for readers of Hacker News!), accounting, mathematics of finance (e.g., Black-Scholes), business law, organizational behavior.
(3) Professional Education.
I never wanted to be a college prof but, due to some strange circumstances, for a while was a prof in one of the better MBA programs. I concentrated on optimization and computing.
Since I was in such a program, I wanted to try to do something useful. So, I tried to offer professional education to the students. But I learned that business schools are very much against being professional, say, like law or medicine.
Instead, business schools have physics envy and want the profs sitting alone in their little offices with the door and curtains closed and thinking up some business world version of Newton's second law F = ma or Einstein's E = mc^2. So, they want research.
Of course, so far no business school prof has found anything like F = ma, but there are journals run by B-school profs where B-school profs can get whatever they do published. The journals do have some value as examples of make-work, junk-think, busy-work, prof-scam!
Shockingly, the business schools very much discourage the profs from having significant contact with real business.
If medical education were like business education, then all the med school profs would be at best second rate experts in biochemistry doing third rate work on imaginary cures for imaginary diseases and would never see real patients, and no one would go to a hospital no matter how much they hurt. Law schools? The profs there would never see clients, file a legal case, or appear in a courtroom and would do statistical studies about whatever in legal cases pursued by others. Gee, maybe they'd do research on the ratio of nouns to verbs in legal briefs!
Instead, in medical school, the students actually get a good start on medicine, that is, how to take sick people and make them well, and that utility totally blows away anything in an MBA program.
So, what happened? In WWII, the US military concluded that research in physical science was crucial. Then the top 24 or so US research universities got an offer they couldn't refuse: Take big bucks from the US Federal Government as grants for research that is promising for US national security (eventually, or medical care) or cease to be a competitive research university.
Then the B-schools, somehow, got dragged into the same thing: The profs needed no business accomplishments or experience, had no on-going contact with actual business, taught theory sometimes close to business but usually not, and did research that has little promise of utility in business or anything else for at least 100 years.
In simple terms, the business school profs commonly don't know enough about business to run a lemonade stand.
Far, far too close for comfort is the clip
http://www.youtube.com/watch?v=YlVDGmjz7eM
from a business school class in Dangerfield's Back to School. The clip is perceptive on several points:
(A) The prof's idea is to set up a business "from the ground" up "with a 30,000 square foot facility" and an "efficient administrative and executive structure". Uh, generally that's a lot of money spent and likely at risk before any revenue. So, it is more common in practice to start small and, if successful, then grow.
(B) Dangerfield asks, "What's the product?". The prof wants to say "That is immaterial for the purposes of our discussion here". Well, maybe "immaterial" is okay from 100,000 feet up or when just talking with the general contractor, but anyone actually in business cares a lot about the product and would want to discuss it. The prof makes a stab, "tape recorders" and from Dangerfield gets a big lesson, "Are you kidding? The Japs'll kill us on the labor costs." The lesson: It's not trivial to think of a promising product. Quite generally the "product" is from important up to crucial. So, Dangerfield doesn't want to discuss spending big bucks without the product clearly in mind, and here he is correct.
(C) Dangerfield asks, "Why build? You're better off leasing at a buck and a quarter, a buck and a half, a square foot, save your down payment". One lesson here is that the prof is being too simplistic on the build/lease decision. For a growing business, building is likely a monument to ignorance. Another lesson is, Dangerfield has actual, current costs for leasing; in a real business of that scale, the CEO knows costs in fine detail. The clip is accurate: Commonly profs don't know real costs. E.g., I ended up leading the college in buying some computing; from the work I'd done before being a prof I knew the current costs in good detail, and the other profs in information systems didn't. For a student to toss out actual cost data in class can be embarrassing, intimidating, and infuriating for a prof!
(D) Of course the high point of the exchange is where Dangerfield interrupts and says, "Oh, you left out a bunch of stuff.", and with contempt the prof responds, "Oh, really. Like what for instance?". So, Dangerfield rattles off several points of costs in the real world! Could be very good to know! The clip shows a student taking notes furiously; that's accurate: Commonly the students really do want the real stuff. Finally the line, "How about Fantasy Land" is on target and a hoot.
It's a well done clip and parody of B-school and indicates that the movie makers and much of the audience got the points quickly.
The profs are pursuing a scam and know it: The smarter ones see how to game the system and do but are ashamed of all they do. The still smarter ones leave for something else in academics or just for actual business.
Instead, for a much better model, business schools should become plainly professional and borrow from medicine. If some problem in a real business in, say, supply chain optimization becomes important, then a B-school prof with such a problem should contact the campus applied mathematics, civil engineering, or operations research department much as a medical school prof might contact someone in biochemistry or cell biology.
A business school prof is someone who teaches students how to avoid the pitfalls in business they avoided by being business school profs.
(4) Business.
For someone who wants to start a business and make it successful, there are various directions:
There are the businesses common on Main Street, and likely the best way to learn such a business is to have a father who is successful in that business and learn from the father while working in the business.
There are businesses successful due to parts of globalization; some of these opportunities are too new to learn from a father, and how to learn is not clear. Travel the world on a tramp steamer and spend a few days in each of 100 foreign ports?
And for readers of Hacker News, sure, software.
For such possibilities, I have a tough time seeing that an MBA would be worth the time, money, effort, or, especially, the opportunity costs.
So, instead of just cursing the darkness, what might B-schools do?
Well, as I said, borrow from medicine. Or, health care is important: Medical school teaches students how to deliver high quality health care; to do this, the profs need to be experts in health care and relevant parts of the human body, disease, and how they work. This expertise was difficult to get and to confirm, formulate, and teach but is crucial. The research, say, in biochemistry, is important but not nearly the same thing.
Well, business is important: B-school should teach students how to do well in business; to do this, the profs need to be experts in business and how businesses work, the problems they encounter, and how to solve the problems and do well. This expertise will be difficult to get, confirm, formulate, and teach but is crucial. The research, say, in statistics is important but not nearly the same thing.
At least for the most common knowledge about business, you can learn what you need to know whether you get a BA or MBA in business or neither of these two.
My opinion is that there are two kinds of knowledge that can hurt you, (1) good knowledge you don't yet know but need and (2) bad knowledge you know, believe, and act on. By far the most dangerous is (2). Thus one of the best parts of education is to learn what high quality knowledge is, looks like, walks like, talks like, etc. so that you can become a critical consumer of knowledge. For this a good undergraduate degree is usually important.
The most solid knowledge going is math; it is also very widely applicable although good, new applications are not easy to find. A close second and closer to reality are the physical sciences. Engineering is also quite solid.
Actually, one really good application of math in business can give your career one heck of a boost into orbit. That is, you don't have to look for a good application each day or in each spreadsheet.
Generally the bottleneck of people in physical science, engineering, computing, or business who want to do things that are quantitative (or want to do academic research) is how much math they know.
So, don't expect the best education to be just vocational training you can apply on a job tomorrow.
My opinion is that the most important knowledge to get, both in life and for business, is about people. The materials available, say, from the social sciences, are not solid at all, but the subject is so important that you have to make do anyway. There it is especially important to look for high quality sources.
Fictional literature and movies commonly do illustrate some important correct points about people; sadly about as often they pass out confusing nonsense about people! So, can take such fiction as conjectures to be considered. If you actually carefully evaluate a lot from movies, then you will learn a lot about people. Still many important lessons about people are not in the movies; some of the lessons are in books and elsewhere, and some of them you have to get from your own observations.
For the rest about business, you can get some of it in school and the rest out of school or just get all of it out of school.
Again the B-schools don't really have the more difficult knowledge about business it would be good for you to know assembled, confirmed, formulated, organized, etc.; it would be good if they did; but you can, as people have done in various fields for centuries and still do, dig out much of it out of school.
For business, read the blogs of venture partners Fred Wilson, Ben Horowitz, and Mark Suster. Realize that heavily they are looking for publicity for themselves, etc., at least for more 'deal flow'. They may also be trying to do something like "win you with honest trifles in order to deceive you in deepest consequence": Of course, this is a slightly modified quote from Shakespeare who didn't provide any evidence that people actually do this, but you can observe on your own that sometimes they do. So, take such blogs with many "grains of salt". Still, can learn some things there, about business and, indirectly, about people. Also read the blog by Steve Blank. Sure, also read Paul Graham! These blogs have some advantages for people on Hacker News who are interested in business -- the blogs are up to date and focused on starting businesses in the hottest part of computing.
There is likely much more and much better on the Internet. Finding it is a challenge.
Likely a little more solid would be
Jim Collins, Good to Great, ISBN 0-06-662099-6.
and his other books. Generally his work is not considered solid enough to be academic research, but it's better than nothing.
I would suggest that generally take anything from the old news media as valuable only indirectly; e.g., it says something about people that they will pay attention to that stuff! So, you need to understand what the newsies are doing: Largely it is deceptive manipulation. They distort in various ways, some with long traditions, often close to formula fiction entertainment, to get eyeballs for ad revenue.
Generally books written by people successful in business, e.g., Andy Grove at Intel, should have some value and not be just efforts at polishing their public images.
For people, the best single book I found was
E. Fromm, The Art of Loving.
So, he explains a lot about what motivates people. E.g., he has (rough quote from memory):
"The fundamental problem in life is getting security in the face of the anxiety from our realization that we are vulnerable to the hostile forces of nature and society. Only four ways have been found to get this security ...."
I'll let you get the book to find his four ways!
Then, when you find someone doing something and you don't see just why, see if one of those four ways gives an explanation!
Of course, Fromm was a Freud student; anyone who could make sense out of Freud has to be bright! Since Fromm was an early clinical psychologist, he had the advantage of listening to a lot of people explain their problems. Then, apparently, being a bright guy eventually he got some understanding of people. Solid knowledge? HECK no. Still it's likely important.
Not everything in B-school research is worthless! There is at least one guy at Harvard's B-school who writes on negotiating and likely does have some good, useful, practical, and non-obvious things to say!
And there are no doubt other examples from B-school profs.
Also remember, that often in business you are trying to innovate, that is, do something new, so that there can't really be a vocational training course that just passes out innovative ideas ready for a Series A. Parts of education can help (and parts can hurt) your ability to innovate. Mostly, then, the challenge of innovation is yours.
Finally, there is an attitude: If you have made enough progress in business to need some good knowledge of accounting (or other specialized topic), then hire an accountant! The hard part is doing well enough to need an accountant. Hiring and working with a good accountant is much easier!
This was not my experience at UMass Lowell's undergraduate College of Management program (graduated 04). One of my professors was CEO of a manufacturing company in South Korea, teaching at the same time because he loved to teach. Another one came directly from Gillette (now P&G) and shared tons of personal experiences which were extremely insightful. A third professor was a consultant to numerous companies. I can go on and on, but virtually all of my professors had strong ties to the business world, and that made them extremely good teachers. While I can't speak of their MBA program specifically, many of my professors taught those courses too.
There were some academic professors, but they were the exception rather than the rule. In fact, come to think of it, I can't name one of the top of my head. In other departments, sure, but not in their management program.
I think it's safe to say that every college is different, and you'll get a unique mix of backgrounds and experiences from Professors pending on where you go. There very well may be academic-only business schools, but that's not everywhere. Some schools are terrible, while others are great.
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One thing that I wish I had more exposure to in college was working directly with businesses. There were internship programs, but during my Junior/Senior year the economy was utter crap, and opportunities were virtually non-existant. As you pointed out this is something you see in medical and legal education, and I wish I saw more of it in business school. I agree with you that it's an area that needs improvement if it hasn't been universally implemented yet.
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(A) The prof's idea is to set up a business "from the ground" up "with a 30,000 square foot facility" and an "efficient administrative and executive structure". Uh, generally that's a lot of money spent and likely at risk before any revenue. So, it is more common in practice to start small and, if successful, then grow.
This touches on the "level of abstraction" that some business types fall into. It's basic South Park Underpants Gnomes logic: Phase 1: Collect Underpants. Phase 2: ???. Phase 3: Profit! (http://cart.mn/aYOY1h - maybe NSFW)
Basically, skip over the most difficult parts and focus on the easy ones. It's "easy" to walk out with a business degree and not understand Phase 2. Real world experience hopefully fills in that gap. Definitely another opportunity for business school improvement.
When it comes to web-startups though, I can't say this loud enough: LEARN HOW TO HACK! Otherwise you're nerfed because you can't do Phase 2.
Yes, in the Dangerfield clip, it's possible to argue that the prof was being appropriately general and abstract. But, then, to what end for the costs for the plant? Is this to test ability to add some numbers? No. Is the detail enough actually to help someone work with an architect and general contractor to get the building constructed? No. Is it useful in business to address business planning in such an abstract way, that is, so distant from actual details such as Dangerfield was mentioning? No.
There is a role for some abstract work in business, but the lecture in the clip was not an example.
E.g., long in some schools of agriculture, e.g., Iowa, a question was, say, for growing corn, what corn variety, planted when, with what density, with what soil chemistry, with what fertilizer would be best? Broadly the key was the special case of the general linear model called experimental design and/or analysis of variance. It's powerful stuff, a nice tool to have, broadly applicable, and can be presented quite abstractly. In the end, the corresponding software knows nothing about the real problem, from an ag school, P&G, some ad agency, etc. Still, real examples are important.
The B-school where I was a prof had rule: No more than one day a week consulting. And any outside contact with business was a black mark as in evidence that the prof didn't really care about research. To the best of my knowledge, no one on the faculty had any significant on-going contact with business, and only a tiny fraction of the faculty had any significant business experience at all.
I wanted the B-school to be like a research-teaching hospital where the halls were full of people from real businesses with problems looking for solutions. So, I wanted to look at the problems and assign them to, say, undergrads, grad students, grad student research, faculty research, or maybe hand them off to profs in, say, engineering. For the student projects, have faculty supervise the work. Hopefully have the problem presented in class, maybe by the person with the problem, and later, by the students, also the solution. The students would make some real business contacts and get some internship experience.
The usual standards for peer-reviewed research are "new, correct, and significant". Well, if the business person is doing something new and significant, then any "correct" solution for the business problem likely also satisfies "new and significant"! Also, once have a solution for one real problem, the chances that the solution applies to another real problem are increased! If find a third problem the solution solves, then are on the way to some progress. So, for research, starting with a real problem can be one heck of an advantage in several ways.
Fees? Med schools have worked all that out, along with professional peer review, ethics, etc.; so borrow that.
The work I did for the school in computing helped the school a lot, and the deans knew that I was really interested in real business and not research in the form of generalized abstract nonsense; I was relatively well qualified to do such research but just wanted contact with real business instead or at least first as in the recipe for rabbit stew that starts, "First catch a rabbit.".
So, to thank me for the computing work I did, the deans passed lots of consulting to me, and I doubled my income. Yes, lots of business people do have problems and do contact B-schools; it's just that mostly the B-schools tell the business people to go away.
I very much wanted to bring the consulting into the school for the students, in classes, etc, but made only partial progress: After I did the computing work, I gave a grad course on it. The first half of the course I lectured on speeds, capacities, costs, and principles of operation and other overview topics in computing. The second half of the course was all presentations from vendors! The class was well attended by grad students, faculty, and staff! Everyone got current on a lot in computing! The final was to write a paper. A few students got together, formed a team, went off campus, dug into some deep stuff, and got close to some significant business opportunities!
The first lecture in the course was to pop the covers off the computing I'd had the college buy and show people the main pieces. Students were thrilled.
Seeing what the school, profs, chairs, deans felt they wanted in research, I, uh, did them a favor! We needed to do some faculty recruiting, and resumes came across my desk. So I saw and picked one with some rare and powerful qualifications and led the recruiting effort, and the person was hired! They quickly wrote a lot of highly regarded papers in applied math and became famous, not so much in B-schools but in some parts of applied math. Their work was novel and curious applied math, actually at times close to the question P versus NP in computer science. But the work was done with no contact with actual business, and it will be a very long time until that work actually impacts business. Still, just as research, that person totally knocked the socks off everyone else in the school.
The points, I'm saying, about B-school being professional with good contact with real business is no secret at all; it is widely, thoroughly understood. The problem for the B-schools isn't understanding the points but liking them. To like them, have to give up on physics envy, etc. And with the contact with business, have to be vulnerable to accusations, say, from elsewhere on campus, that the school is just being used for something crass that has nothing to do with contributions to knowledge for progress in business. People who so criticize contact with real business and have a child with a really big tummy ache should take them to a research prof in biochemistry instead of a gastroenterologist!
But just contact with business is not enough: Instead it is important to identify important principles, test and confirm them, organize the knowledge, and teach it. So it's research analogous to mapping out new geography and finding the main features. This work is actually not easy to do; problem is, it's important. Medicine did it, with a lot of hard work, bloody hands, horror stories, but finally some of the best progress in civilization. It can be done, but B-schools are not much trying to do it.
That being said, there are two different responses I would give to someone considering getting an MBA. If you're looking to climb the ladder in an old school company an MBA is par for the course. If you're using the MBA as an excuse to put off being an entrepreneur you're shooting yourself in the foot with a silver bullet.