Do you need an MBA to be a good company chief? Argument about this has been raging around business circles in recent months. No, say business school critics, pointing to examples such as Steve Jobs, of Apple, and Terry Leahy, of Tesco. Yes, say MBA enthusiasts, pointing to Meg Whitman, formerly of eBay, and John Chambers, of Cisco Systems.
Research has done nothing to settle the fight. According to a recent analysis of top-ranking CEOs by the US pay consultancy Equilar, fewer than half the people in this position have an MBA, and only handful of these have an MBA from any sort of elite business school.
Equally, researchers at Pace University, in New York, found no relationship at all between a CEO’s educational background and his or her company’s performance.
However recent work done by INSEAD researchers has indicated that the long-term performance of CEOs who have MBAs outranks that of their colleagues who lack such a training, while other analysts point out that, with MBAs burgeoning from the 1980s onwards, many more of tomorrow’s CEOs will have MBAs compared to the company leaders in post today.
And ask CEOs directly how much they feel their MBA has been useful in doing the top job and the picture becomes more complicated still. Most are convinced that they would have ended up where they are whether or not they had taken an MBA. But at the same time, they feel that the experience of studying for it has helped them approach problems more thoughtfully, feel more confident and independent in their judgments, and often speeded them on their way to the top.
“I did my MBA 20 years ago and, while there’s no doubt it was useful at the time, it’s hard to say just how much direct use it has been in doing the job I do now,” reflects Warren East, CEO of ARM Holdings, the Cambridge-based global technology company, and a graduate of the Cranfield School of Management. “It taught me teamwork, it taught me how to respect other people who have other skills, how to prioritise and keep things in proportion, and it also gave me some very useful tools to have in my kit bag. I’m an engineer by background and used to tangible things, but a lot of problems in the commercial world are intangible, so it was helpful for me to be given some more tangible ways of approaching them.
“I think it gave me the confidence to do the jobs I went out and did afterwards and so, in that sense, it probably helped get me to where I am more quickly than I might otherwise have done. And in my executive team now there are a handful of MBAs around the table and sometimes people without an MBA will say they can tell that we all share something by having this common background.”
“For me, it gave me self confidence, independence and a set of skills – in that order,” says Alexander Ribbink, formerly the chief operating officer of TomTom, and now a partner in Prime Ventures, an Amsterdam-based venture capital firm, who did his MBA at the Rotterdam School of Management.
“It did a lot for my self-esteem in business. It made me feel I was not just a lawyer, but that I also had commercial skills. It gave me mental support and personal freedom – I no longer felt that I had to be just in the pay of whoever hired me, like you are when you are starting out. I knew if I didn’t like what they said I could turnaround and walk away.
It taught me what questions to ask, and where my own weaknesses were, and it allowed me to have all kinds of expert conversations with people in other fields than my own – people who decide to make that extra investment in themselves that you make in doing an MBA are usually a very interesting group of people.
“Also, I feel perhaps that the world is a less friendly place now. I think that you can’t count of your employer to look after your interests and help you develop your career in the way that maybe happened in the past, so the more you can manage yourself and take your own development and ambition into your own hands, the better.”
Jane Silber, CEO of Canonical, which produces open-source computer operating systems, agrees that an MBA is useful in terms of overall personal and career development. “It’s a very valuable opportunity to think more holistically about problems,” she says. “It’s hard, day-to-day in a senior job, to stretch your mind beyond immediate problems, but this allows you to gain perspective, and explore and reach. I felt very much in need of that perspective, and that I wanted to remove myself to somewhere to do it. It’s an intellectually recharging experience and people in senior roles need that.”
She took her MBA at the Saïd Business School, in Oxford, having already held the number two job in a company, so feels that it was probably a safe bet by then that she was already on track for the top. “But an MBA certainly gives you more appreciation of areas you are less experienced in. I knew I was strong in operations and financial management and technical matters, but doing an MBA made me think more about things like strategy, culture and the people side of things.”
But perhaps the CEOs who benefit the most immediately from doing an MBA are young business leaders who are growing and developing their own companies.
Nottingham University Business School has a strong expertise in supporting and developing entrepreneurial skills. Simon Mosey, head of the school’s Institute for Enterprise and Innovation, says students are encouraged to think about the fundamental purpose of a business, and about how to spot new opportunities, adopt new technologies and look to new markets. “People have got to know how to encourage a whole culture of innovation. We look at radical innovations, and at people doing things differently.”
“With different business schools it’s always horses for course,” says Mosey. “A standalone business school like the London Business School will be good at training leaders of finance, but we’re embedded in the university and collaborative working is at the heart of everything we do, We respond to the needs and demands of businesses and public services in this area, and help them see how they can adapt to the changes in their environments.”
Scott Snaith, chief executive officer of 50cycles, a company selling electric bikes, who is currently studying for a Nottingham MBA, says he has found his studies instantly relevant.
“You can grasp concepts and see how you need to apply them to your own business if it is going to grow, and I’ve been studying with people in their mid-career, so everyone brings a lot to the course.” His business is based in Leicester but is now expanding to Bristol and Richmond. “Doing the MBA has helped me look at the business more analytically. I’ve made changes in the resource allocations and put in some key infrastructure and looked at the business management of the online side. Questions of structure and management have been key things for me.”