MBAs are obsolete

At what point does something become obsolete? The photograph on the left, of a trader using an abacus in Hong Kong, was taken as recently as 2013. So if the abacus is still in use today, how could it be deemed to be already obsolete?

Obsolescence is not about usage, per se, it is about comparative disadvantage: a crucial distinction in management. So the dereliction of the rust belt in the US looks like technological obsolescence but it is actually a simple example of a national, comparative disadvantage in management.

The Hong Kong trader could easily have adopted more efficient and readily available technology (by having a calculator with a till roll). We should not be looking at the technology though for the incipient signs of the roots of obsolescence so much as the trader’s resistance to the simple and obvious need for change. Admittedly, this would be a miniscule improvement in his efficiency but across a globalised world those inefficiencies of obsolescence mount up and disadvantage every single one of us. This is a very obvious and self-evident point but try telling this trader to ditch his abacus; a technology he was brought up with and trusts implicitly to be telling him the truth.

Double entry book keeping was invented over 500 years ago but is still in use every day, in every accounting department, in every corporation in the world. We used to believe it was telling us the truth. Credit rating was deemed to be the truth of creditworthiness. Corporate governance was once believed to be in safe hands. So is this fundamental building block of accounting, financial management and corporate governance also obsolete and, if so, at what precise point did this obsolescence actually occur?

One could argue that it announced its own obsolescence in August 2010 with the formation of the IIRC (International Integrated Reporting Council).  As Deloitte puts it – “to create a globally accepted framework for a process that results in communications by an organisation about value creation over time.”  Of course this point has never been recognised or acknowledged by the professional accounting bodies, such as ACCA, who have trained legions of accountants over many, many years. What professional institution would be stupid enough to admit its obsolescence and announce the cancellation of its professional members’ meal tickets?

To be fair, the IIRC council and large accounting firms like Deloitte who make up its membership, are not even aware of just how inadequate their methods have become in the face of globalisation. Look very closely at Deloitte’s statement again – a trained maturity analyst would easily spot their deliberate mistake.  Can you?

A single word reveals all – process. Accounting is seen as a process and ‘reporting on accounting’ is just another process. Yet IIRC’s very existence is its admission of accounting’s failure to integrate into the whole system.  Accountants, and the corporations they serve, can all be accurately defined as ‘disintegrated’ organizations: no wonder the world’s economic system appears to be in chaos. It is not just the accounting function that is disintegrated though: the same criticism could be aimed at every other silo function. Only when all the silos work together, as a whole system, will they become a whole value creation SYSTEM. IIRC needs to change its own purpose and modus operandi if it is to bring about the systemic changes needed.

MI’s fundamental philosophy of leadership, governance and management, and its professional standards, are predicated on governance and management of the whole system; not separate or individual parts of it. We aim to train whole system managers with their own specialist expertise: a totally different management development concept. This crucial distinction of perspective is stark and compelling.

For example, MI does not perceive ‘the banks’ to be ‘the’ problem; we view the whole of the global financial, economic and social system as the problem; of which the banking system is just one, admittedly crucial, part. The banking system cannot be ‘cured’ by different authorities working separately.  Looking at the world through the eyes of the MI professional, we see the whole ‘banking’ system as comprising every government in the world, every regulator, every central bank, every other retail and investment bank, and every person who ‘uses’ a bank: in other words, every single person on the planet.

Most of that picture is missed in double entry book keeping and conventional financial reporting. Banking CEOs who criticise their regulators, and yet also acknowledge the loss of their moral compass, need help. In fact, all silos miss the complete picture by virtue of the fact they operate as silos: this basic tenet of whole system analysis is already widely accepted. What has not been recognised thus far, by any of the individual players, is the urgent need to start re-educating boards, CEOs and managers about how to start governing and managing themselves as an integrated part of the whole system for the benefit of everyone (and that includes the environment we all live in).

Therefore, the only place to start resolving these systemic problems is to completely re-think management education. If the MBA is the de facto ‘management qualification’ of the day, taught by silo specialists in their own silos (which begs its own questions), then it has to reinvent itself as a whole system management qualification: and one which meets a universally agreed, evidence based, professional management practice standard.

Thus every MBA programme in the entire world today, that we know of, has now reached its own point of obsolescence. This does not mean that those business schools running MBAs are suddenly going to be out of business.  Nor does it mean that MBA-qualified CEOs (and their C-suite colleagues) are suddenly unemployable; any more than the abacus wielding trader in Hong Kong is. But it does mean that their professionalism and competence should now be closely questioned against the re-defined, whole system demands of their roles. The MI alternative is already starting to provide exactly that type of education and would welcome enquiries from any management schools out there seeking to become centres of whole system management education.

Management historians of the future may well look back to 2017 and regard it as the most significant turning point in global management development. Perhaps it will also come to be viewed as the year in which global management was finally placed in safe hands?

 

 

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