Brian Micklethwait's Blog

In which I continue to seek part time employment as the ruler of the world.

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Tuesday March 10 2009

Yesterday I was mildly rebuking Garry Kasparov for being a bit obvious about things like tactics without strategy not being a good thing.

On the other hand . . .

When I was a student at Harvard Business School, between 2004 and 2006, I recall a distinguished professor of organisational behaviour, Joel Podolny, telling us proudly of his work with Fred Goodwin at RBS. At the time, RBS looked like a corporate supermodel and Podolny was keen to trumpet his role in its transformation. A Harvard Business School case study of the firm entitled The Royal Bank of Scotland: Masters of Integration, written in 2003, began with a quote from the man we now know as Fred the Shred or the World’s Worst Banker: “Hard work, focus, discipline and concentrating on what our customers need. It’s quite a simple formula really, but we’ve just been very, very consistent with it.”

The authors of the case, two Harvard Business School professors, described the “new architecture” formed by RBS after its acquisition of NatWest, the clusters of customer-facing units, the successful “buy-in” by employees. Goodwin came across as a management master, saying: “A leader’s job is to create the conditions that enable people to believe, in their hearts and minds, in the value of what they are doing.”

Then just last December, Harvard Business School revised and republished another homage to RBS - The Royal Bank of Scotland Group: The Human Capital Strategy.

It is tragic to read now of all the effort put in by those under Goodwin, from “pulse surveys” to track employee performance to “the big thank you”, a website where managers could recognise individual excellence in customer service.

Every trendy business school idea was being implemented, it seemed, while what really mattered - the bank’s risk assessment, cash flow and capital structure - was going to hell. To be fair, neither Podolny nor the authors of the case studies were finance professors, but it’s still pretty shocking that a school that purports to teach general management should fail to see the gaping problems at a firm they studied in such depth.

The guts of this piece is that an MBA, from pretty much anywhere, is a highly trained business tactician, with at best a random grasp of strategy, but just as likely a grasp of strategy fatally loosened by concentrating too much on tactics.  All spelling and grammar, you might say, but nothing to say, or worse something deeply stupid to say, on account of not having thought it through.

However, a commenter says this, which strikes me as shrewd:

I think the author is missing the point - in spite of all this I still want a Harvard MBA because it opens doors. It’s a sure path to success, allowing those upon who it has been bestowed the opportunity to run companies, governments, economies (and to publish books) and to do it well OR poorly.

That “who” should be “whom”, but the point is a very good one.  The MBA, in other words, is an exercise in upward social mobility.  You have to have one to be in the new Ruling Class, but it is no guarantee of wisdom.  This reminds me rather of Sandhurst.  You have to go there before they let you command a British army, and they teach you the nuts and bolts of how to do that.  But you still might completely cock it up.  The Sandhurst comparison illuminates that merely switching our future rulers back to Latin and Greek, etc., will not guarantee better results.

Michael Jennings has been telling me that, like a Harvard MBA, Dubai (which is where the above commenter, “Sama”, comments from) is, from the point of view of city building, also all tactics and no strategy.  They’ve been building fantastic skyscrapers there like there’s no tomorrow, and there won’t be much of a tomorrow for most of them.

That is a really good article. It is so good that I have linked to it at the professional site that I work for.

http://www.wealth-connect.com/index.php?do=/public/blog/view/id_142/title_challenging-the-value-of-mbas/

Posted by Tom Burroughes on 11 March 2009
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