Elon Musk's recent disruptive comment on the "M.B.A.-ization of America" struck a chord with me. Hard. Personal.
I've spent the last 7+ years in Private Equity backed companies where there is a silent discrimination against c-level executives that don't hold an MBA. The belief that the ills of a company will be solved by replacing someone in the c-suite without an MBA, with an MBA.
Musk says too many MBAs are polluting companies’ ability to think creatively and give customers what they really want.
And similar to my post last week about getting out of the glass palace and eating what you cook, he encouraged executives to step away from their spreadsheets and get out of the boardroom and onto the factory floor.
Furthermore, this recent article by HBR - 4 Things That Set Successful CEOs Apart - nails what boards and investors should be looking for in their c-suites.
And it's not pedigree...
HBR research shows, leadership success is not a function of unalterable traits or unattainable pedigree.
Nor is there anything exotic about the 4 key ingredients of a successful CEO:
- The ability to engage stakeholders
I don't hold an MBA from a university. I hold an MBA from 20+ years of working at Fortune 100 companies. Working in operations with increasing levels of scope and responsibility. Hired for the merits of my accomplishments since graduating with my four year degree. The steady stream of promotions. The operational wins. The growth and scale. Not to mention the tremendous training I received from those foundational 15 years with Fortune 100 companies like PepsiCo, Clorox and HP.
To be clear. I have nothing against pursuing or having an MBA. I was actually accepted into an MBA program. I saw the benefits primarily in the connections I would gain and the holistic view I would learn about business operations.
So why did Elon Musk's recent disruptive comments stop me in my tracks? Why is it creating a slew of backlash from not only educational institutions but investors alike?
What data exists to back up the claims and desire to hire MBA holders for top executive roles?
My research says nothing. The contrary.
Institutional Investor published this article titled, "The MBA Myth and the Cult of the CEO." An excerpt from the article I found very interesting:
A central premise of business education is that leadership and management can be taught in the classroom. Harvard Business School attracts the very best students and, presumably, is good at educating them to be better business leaders, so corporate America should want more Harvard graduates running companies — and this logic should extend to MBA programs beyond just Harvard.
But regression results suggest a different result entirely. We tagged CEOs by the MBA programs they attended, formed monthly portfolios of companies broken down by the business school each CEO attended, and compared the returns of these portfolios to the broader market.
We found no statistically significant alphas — despite testing every possible school with a reasonable sample size. MBA programs simply do not produce CEOs who are better at running companies, if performance is measured by stock price return.
Lastly, the research looked at how CEOs who had previously worked at investment banks and elite consulting firms performed.
The result: Neither bankers nor consultants produced statistically significant alphas.
This suggests that the “best and brightest” do not have a statistically significant edge when it comes to managing public companies.