In the 2011-12 school year, more than 366,000 undergraduate business degrees and 191,000 graduate business degrees were awarded in the U.S., more than any other type of undergrad or masters-level degree, according to the National Center for Education Statistics. The same trend is occurring globally.
Does the world really need more people with business degrees?
Clearly you can have a rewarding life and career without an MBA. And you can certainly become rich and powerful without one, as Bill Gates, Jeff Bezos, Richard Branson, and Amancio Ortega can testify.
But when you’re creating the next Google (GOOG), Tencent (700:HK), or Apple (AAPL), you’re going to need people with the training, skills, and network that business education is uniquely good at providing. There’s a reason all of those companies hire people with MBAs.
We need leaders who fully grasp that markets, while highly efficient, are not fair, kind, or wise
Even more important than the skills argument, however, is the intellectual argument for an MBA education, where there is critical knowledge to be gained. Business has evolved to be the dominant social institution of our age. Business is the cultural, organizational, and economic superforce in human development.
And yet the current state of this social institution is fundamentally flawed: It falls short in its potential to serve our global society. Today’s predominant business models drive public companies, for instance, to focus on predictable, short-term shareholder returns that may be detrimental to employees, communities, or the broader social good. They also fail to motivate industries to reduce their environmental impact.
Think about the 2010 BP (BP) disaster in the Gulf of Mexico. Would that have happened if short-term cost pressures weren’t driving shortcuts on safety? Or consider the recall at General Motors (GM). One has to ask: Did the pressure to deliver quarterly numbers for shareholders play a role in delaying the recall?
We need leaders who deeply understand markets, their connection to the public sector, and the philosophical, cultural, and social implications of business’s growing global influence. We need leaders who fully grasp that markets, while highly efficient, are not fair, kind, or wise. The prevailing market price, while efficient, is not inherently just—it can, in fact, be rather cruel: for example, when a large retail chain comes to a town, forcing small businesses to close. We need leaders who are ready to confront the challenges of growing income inequality, unemployment, environmental impact, and cultural homogenization that current business practices do not yet adequately address.
We need leaders who can take the lessons learned over the last 50 years in the private sector about effective management practices and apply them to improve the performance of organizations in the government and nonprofit sectors.
The inability of government to address fundamental social issues only enhances the need for the private sector to step in. In the next 20 years, if not sooner, we will reach a tipping point where business and government leaders will have no choice but to join forces. We will need leaders who can hold government accountable for managing public resources and protecting the public trust—and who can leverage the power of markets to create lasting social value.
Intelligent, highly driven individuals will reinvent markets, fuel growth, and work across sectors to build strong, transformative organizations. But markets or governments won’t do this on their own; the incentives just aren’t there.
That’s why the world needs more, not less, business education. It depends on it.