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Do CEOs need to have a MBA?

Do CEOs need to have a MBA?

As the world experiences a Fourth Industrial Revolution that is "essentially varying the way we live, work, and narrate to one another—in its hierarchy, scope, and convolution, a transformation… unlike anything civilisation has faced before"—one might envisage that business institutes would be hothouses of modernisation and altering, with every professor profound to help comprehend and master this developing new world.

Illogically, it's the opposite. For the most part, today's business institutes are busy teaching and investigating 20th-century management values and, in effect, leading the procession towards yesteryear.

Despite separate thought-leaders in business institutes, there has been little change in the essential curricula of business institute teaching as a whole. The disengage between what is taught and the immense ongoing societal drama underway continues. Moreover, it's difficult to discuss, because it puts in question occupations, capabilities, profession tenure, ethics, aims, expectations of the entire business institute world and more.

“MBA programs are not the open forums advertised in admissions brochures… Business institute instruction is routinely blinkered… An MBA class will consider a business issue… in isolation. Its challenges are delineated; its society-level implications are waved away. The principals' overriding goal—profit maximisation—is assumed. With mechanical efficiency, students then answer the question of how to move forward. Individual choices are abstracted into numbers or modelled as graphs…”

It's not that individual business institute lecturers haven't comprehended and made an example for change.

Among many others:

· In 2010, business guru and former business school dean Roger Martin at the Rotman School of Business hailed the advent of customer capitalism over shareholder primacy.

· More recently, two distinguished Harvard Business School professors–Joseph L. Bower and Lynn S. Paine—declared in Harvard Business Reviewthat profit maximisation is "the error at the heart of corporate leadership." It is "flawed in its assumptions, confused as a matter of law, and damaging in practice", and in effect, "pernicious nonsense." Business schools press ahead with core curricula based on this error, seemingly impervious to issues.

· In 2013, professor Rita McGrath at Columbia Business School challenged the orthodox business school theology of sustainable comparative advantage.

· In 2014, professor William Lazonick at the University of Massachusetts Lowell won HBR McKinsey Award winner for the best HBR article of 2014. Lazonick has courageously led the charge in identifying the problems inherent in maximising shareholder value through massive share buybacks.

These improvements have not led to an essential alteration to the fundamental syllabuses in most business institutes.

Fourth Industrial Revelution

In the fourth industrial revolution, an enormous drama is now playing out in society, affecting almost everybody. In its quintessence, the Revolution is honest: organisations are linking everyone and everything, universally, all the time. They are becoming capable of supplying instant, intimate, frictionless, incremental worth on an enormous measure. They are creating a world in which individuals, visions, and money intermingle quickly, effortlessly and inexpensively.

What is allowing the Revolution is that rarest of things, a gradual hypothesis shift in management. Firms prominent in the Revolution are being run very differently from the cumbersome industrial behemoths of the 20th century. They are motivated on continuous modernism for customers and organised to be light-footed, adjustable, and able to alter on the flutter to meet the fluctuating whims of a marketplace driven by end-users. Think Amazon, Apple, Facebook, Google, Microsoft, Alibaba, Airbnb, Etsy, Lyft, Menlo Innovations, Saab, Samsung, Spotify, Tencent, Tesla, Uber and Warby Parker. In these firms, profits are the consequence, not the ambition, of the enterprise. For them, the future is electrifying and inspirational.

"The First Industrial Revolution used water and steam power to mechanise production. The Second used electric power to create mass production. The Third used electronics and information technology to automate production. Now a Fourth Industrial Revolution is building on the Third, the digital revolution that has been occurring since the middle of the last century. It is characterised by a fusion of technologies that is blurring the lines between the physical, digital, and biological spheres."

For those companies that continue to be run like the encumbering 20th-century mastodons, based on profit maximisation and an attitude of controlism, the situation is very different.

The examples here are also abundant. “Market-leading companies,” as analyst Alan Murray has written in the Wall Street Journal, “have missed game-changing transformations in industry after industry—computers (mainframes to PCs), telephony (landline to mobile), photography (film to digital), stock markets (floor to online)—not because of ‘bad’ management, but because they followed the dictates of ‘good’ management.”

What has changed?

Computers instead of typewriters?

In effect, the "'good' management of yesteryear" that these firms are practising—profit maximisation and a philosophy of controlism—is outdated. It was a relatively decent fit for much of the 20th century. However, then the world transformed, and ‘good' management began to falter. It couldn't manage with the fast swiftness and intricacy of a customer-driven marketplace. This "‘good management' of yesteryear” is, by and large, what is being taught in today’s business institutes.

Let's be clear: the dissimilarity between leaders and losers isn’t a difficulty of access to knowledge or technology or big data or artificial intelligence.Both the effective and the ineffective firms have access to the same technology, data and AI, which are now mostly commodities. Traditionally-managed firms use the same technology and data but typically get narrow results. It's not technology or data or AI that make the difference. The difference lies in the excellent way these firms implement technology, data and AI.

It used to be that top businesses picked up MBA graduates as fast as institutes could slap mortarboards on their domes. These young guns drove commercial reorganisation, product improvement and marketing and instigated new styles of management. They were a representation of modern society, and anyone serious about a profession in business sought to earn those three letters.

Today, the supremacy of the MBA is not so absolute. Many in corporate America and academia say the degree that once well-defined bright, and sharp leadership now symbolises a discipline that has confused touch with the business world. They dispute that MBA programs have become too absorbed on research, and that in-house training at large firms has more practical applications. They claim the programs have failed to create the kinds of leaders who can deal with globalisation; some say they don't cultivate leaders at all, just functionaries. Other opponents think a focus on profit and share value, rather than on ethics and sustainability, developed the type of conventional thinking that led to the fall of Enron and the last recession.

In the United States, for instance, 36% of CEOs have an MBA, and 60% have some master's level or a doctorate. However, world CEOs are far more prone than their U.S. equivalents — or the general higher educated populace — to have spent part of their studies overseas, with 32% of global CEOs bragging some research- overseas experience compared to 11% of U.S. CEOs, and 6% of all other students.

"Studying overseas is one of the best ways to get to know foreign cultures and different perspectives," Study. EU CEO Gerrit Bruno Blöss says. “While international study and work experience can’t replace actual diversity, it enables top management teams to look at strategic challenges from different points of view. Of course, this is true at all hierarchy levels of a company, not just in the boardroom.”

When it comes to entrepreneurship, the question of whether to participate in an MBA degree becomes even stickier. Can the essential skills for successful entrepreneurship be educated? Can those with MBAs operate efficiently only within large organisations? Are recent entrepreneurial MBA degrees worth the time and money?

What is your feeling on the matter do you feel you need an MBA to be a CEO or do you think experience in working through industry and learning how to extract the best out of the teams, the better choice?

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