Rethinking the Value of a Business Degree

Did you learn how to think or just memorize some stuff?

Last week the Wall Street Journal carried a story about how “undergraduate majors are a dime a dozen on many college campuses. But according to some, they may be worth even less.” The reason for this provocative statement is the growing number of faculty members, school administrators and perhaps most crucially corporate recruiters, who are questioning the value of a business degree at the undergraduate level.

According to the Journal the biggest complaint is that “undergraduate degrees focus too much on the nuts and bolts of finance and accounting and don’t develop enough critical thinking skills through long essays, in-class debates and other hall marks of liberal-arts courses. Companies say they need flexible thinkers with innovative ideas and a broad knowledge base derived from exposure to multiple disciplines. And while most recruiters don’t outright avoid business majors, companies in consulting, technology and even finance say they’re looking for candidates with a broader academic background.”

In a couple of recent posts I argued for the need and benefit for greater arts and science backgrounds in business (An Arts and Science Approach to Business Part 1 and Part 2) so I am biased towards this view. I would also disclose that I received an MBA (from Ivey). As a means to an end and resume enhancer the MBA was useful but I personally did not learn how to think or wrote at business school; these skills were primarily derived from my Arts and Science undergraduate courses and from on-the-job and extracurricular practice and application.

In many ways, a business course is not unlike reading about cooking or baking. You can learn the textbook theory of baking and one can even have a discussion about baking but until you actually cook and bake do you really learn. Better yet, if you get the chance to work in a professional kitchen your understanding and capabilities of cooking and baking increase geometrically. Indeed, apprenticing under a master chef is perhaps the only way to get good at cooking and baking.

According to The Journal,

Schools are taking the hint. The business schools at George Washington University, Georgetown University, Santa Clara University and others are tweaking their undergraduate business curricula in an attempt to better integrate lessons on history, ethics, and writing into courses about finance and marketing…Such changes should appease recruiters, who have been seeking well-rounded candidates from other disciplines, such as English, economics and engineering. Even financial companies say those students often have sharp critical-thinking skills and problem-solving techniques that business majors sometimes lack.

“Firms are looking for talent. They’re not looking for content knowledge per se,” says Scott Rostan, founder of Training the Street Inc., which provides financial training courses for new hires at a number of investment banks. “They’re not hiring someone just because they took an M&A class.”

Business degrees have been offered since at least the 1800s, but they were often considered vocational programs. Some experts argue that the programs belong at trade schools and that students should use their undergraduate years to learn something about the world before heading to business school for an M.B.A.

I would encourage schools to think about turning their approach upside down; rather than add some liberal-arts courses to business degrees, they ought to consider adding a few useful business-related courses to a core liberal-arts undergraduate program and make that the primary way that an undergrad has exposure to business. The “nuts and bolts” of business — understanding certain acronyms or mechanical concepts such as calculating the cost of capital or doing a net present value calculation — could be left to online training services, specialized “trade schools” or for employers to teach through in-house training and apprenticeship.