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A Matter of Degree? Not for Consultants

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October 1, 2000, Section 3, Page 1Buy Reprints
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THERE was a doctor from Boston and a lawyer from Chicago, a philosopher from Australia and an engineer from France. There were people who had Ph.D.'s in mathematics, sociology and astronautics. In fact, in the tiered classroom filled with 50 clean-cut, casually dressed people in their 20's and 30's, there seemed to be just about every graduate degree imaginable, except one: the M.B.A.

Yet within a few weeks, this hyper-educated crowd would go forth as certified management consultants, advising the executives of multibillion-dollar companies. Their projects would, most likely, have little to do with their academic backgrounds. Lawyers would help packaged-foods companies develop new products, and physicists would tell Internet start-ups how to stand out from the crowd.

To prepare, the neophyte consultants had come to the campus of Babson College here in this western Boston suburb for a three-week crash course in the basics of business. It was run by their new employer, the Boston Consulting Group.

When it was over, the class would be unleashed on corporate America. ''This,'' said one student, Susan Meine, a lawyer from Atlanta, ''allows me to get a business education without getting a degree.''

To a growing and surprising extent, this is also how the entry level looks at the most prestigious management consulting firms, ones that count the world's biggest companies among their clients and that have long been dominated by M.B.A.'s. More than half of the consultants at McKinsey & Company do not have a Master of Business Administration degree, a share that is up sharply from a decade ago. Some 20 percent of Boston Consulting's new hires in the United States fall into the same category this year -- four times the level in 1995. Other firms are following suit.

Perhaps most striking are the results: the lawyers and doctors and philosophers perform no worse than their business school counterparts, according to internal studies done by the firms. If anything, they are promoted faster, on average.

All of this raises an interesting and disquieting question: What is the point of an M.B.A., anyway? If there is a single job for which business school -- with its broad curriculum and a teaching method heavy on case studies -- prepares someone, it is consulting. Yet the very consulting firms that are most popular among M.B.A.'s -- as well as with companies -- are now turning increasingly to people with none of this training.

Part of the explanation is simple. With the tightest labor market in at least 30 years, particularly so for high-paying professional jobs, companies of all kinds are searching in new places for talented people. Consulting firms are especially hungry; they have seen their revenues nearly double in the last four years, according to Kennedy Information, which tracks the industry.

The consulting firms still hire hundreds of M.B.A.'s and say they would sign up even more if many of the most desirable candidates were not instead joining dot-com companies that can lure them with equity stakes.

But another aspect of the shift is more complex. Partners at places like Bain & Company and McKinsey have increasingly recognized that their profession does not require much specific training.

''Frankly, business is in some ways not that difficult to learn,'' said Rajat Gupta, McKinsey's managing partner. ''We can pick up people who have not studied business and can teach them, if they have the intellectual firepower.''

THE underlying issue -- whether business practices are best taught in an academic setting or should be learned on the job, as they are in an apprenticeship -- is at least as old as the M.B.A. Since Harvard started awarding the degree in 1910, some educators have derided business schools as intellectual deserts. The harshest critics say the two years spent earning an M.B.A. are little more than an extended job search and a chance to build of network of contacts.

The skeptics note, for example, that Harvard Business School offers business cards bearing the school's crest to its students shortly after they arrive. Stanford, the nation's most selective business school, does not even hold classes on Wednesdays -- which allows many of the students to hit the university's immaculate golf course.

Outside the leafy walls of universities, however, the degree has become known as a golden passport, a credential that is nearly a requirement for joining upper management. The current chief executives of General Motors, Goldman Sachs, Hewlett-Packard, I.B.M., Merck and Nike, for instance, all hold the passport -- as does, for the first time this year, a major-party nominee for president, George W. Bush. The M.B.A., its many supporters say, gives people a business grounding that they would otherwise need years to learn.

Over a two-year curriculum, a business school exposes its students to hundreds of corporate scenarios and allows them to learn valuable lessons by making mistakes that would be unacceptable at a for-profit company, professors say. That is why many companies, whether investment banks or packaged-good conglomerates, are doing little to diversify their graduate-school hiring.

STILL, from some perspectives, these are not the best of times for the M.B.A. The strong economy has left many potential students satisfied with their current jobs -- or eager to join start-ups. If Bill Gates or Jeff Bezos didn't need an M.B.A., some people wonder why they do, either. Also, with technology rapidly and fundamentally changing so many industries, other people worry that two years spent outside the work force is too long.

Last year, the number of applications fell at nearly every highly ranked business school, markedly at some. The number of applicants to Stanford has declined 23 percent in the last two years. Over the same period, the downturn was 10 percent at the University of Pennsylvania's Wharton School -- proclaimed the nation's best in Business Week's recent ranking. At the University of Virginia, applications fell 24 percent.

Deans of business schools point out that many of the declines have followed record high numbers of applications. On the other hand, those decreases would have been even steeper without the continued influx of foreign applicants, who now make up one-third of the student body on many campuses.

Companies, for their part, are increasing the amount of training they offer on their own, said Richard Schmalensee, the dean of the Sloan School of Management at the Massachusetts Institute of Technology.

''At the moment, there is some erosion in the notion that the M.B.A. is a required ticket of admission'' to a successful business career, Mr. Schmalensee said. ''What I can't tell is how much of that is cyclical and how much is secular'' or, more structural.

Arguably, no development presents as much of an intellectual challenge to the rationale for business school as the consulting firms' new hiring and training practices. Consulting has been and remains the most popular job for fresh M.B.A. graduates. Despite the appeal of dot-com start-ups, the demand for jobs at firms like the Boston Consulting Group is high enough that its partners recruit at only about a dozen business schools -- and they make offers to a small number of the candidates they interview. In other words, even for an M.B.A., the odds of landing such a job are long -- and the pool of potential hires for the consulting firms is deep.

But rather than dip too much further into it, the firms are turning to people with almost no business experience. Booz Allen & Hamilton, after years of ad hoc hiring of non-M.B.A.'s, started formally recruiting Ph.D.'s on campus last year and expects that one-third of its new consultants this year will not have M.B.A.'s. This fall, Bain is visiting M.I.T., Stanford and a handful of other universities to woo doctoral students for the first time.

Instead of spending two years learning about finance and marketing, as business school students do, the new breed of consultants spends a few weeks in programs like Boston Consulting's version. They skim through subjects that get months of attention in an M.B.A. program.

Booz Allen and McKinsey call their versions the ''mini-M.B.A.'' McKinsey runs one program each month somewhere in Europe or North America; they are less frequent at Booz Allen.

The graduates -- or mini-graduates, as it were -- are thriving. The London office of Boston Consulting, for example, recently found that its non-M.B.A.'s were receiving better evaluations, on average, than their peers who had gone to business school, according to one consultant there.

The new consultants do not even seem to need much time to catch up to their M.B.A. counterparts. McKinsey, long the most aggressive firm in courting other degree holders, recently looked around the world at its consultants who had been on the job for one, three or seven years. ''At all three points,'' said A. Mini Harris, the manager of the firm's recruiting and herself a Stanford M.B.A., ''the folks who don't have a business background are at least as successful.''

That said, the statistics indicate that business school is still a good investment for its graduates. Most graduates of the very top schools make more than $125,000 in their first year after receiving their degrees. Even at less selective schools, M.B.A.'s often graduate to jobs that pay twice what their previous positions did.

But the hiring experiment by the consulting firms does raise the issue of why companies seek out M.B.A.'s. Is it for what they have learned? Or because the admissions offices of business schools have picked out smart people who show an interest in a business career? ''It is a prescreened pool,'' said Jill Rupple, a partner at Diamond Technology Partners, a consulting firm that hired 85 M.B.A.'s last year and few lawyers, doctors or Ph.D.'s. ''That is one of the traditional reasons strategy firms have gone to business schools.''

FROM their founding, business schools have been subject to questions of legitimacy that their fellow professional schools in law and medicine have rarely faced (but that schools of journalism and education often have). Some academics have fretted that commerce is an inherently unscientific field and that the study of it sullies a university. Many business people have harbored doubts that intellectuals have much to teach them anyway.

Nearly 120 years ago, however, Joseph Wharton, a wealthy Philadelphia ironmaster, dismissed such doubts, giving the University of Pennsylvania $100,000 to create the first modern business school. It was 1881, and Mr. Wharton, 55 at the time, was concerned that colleges were not adequately preparing their students, the future elites of the management ranks, for the rapidly industrializing American economy.

Management education, Mr. Wharton wrote to the university's trustees in proposing the new venture, ''would greatly aid in producing a class of men likely to become most useful members of society, whether in private or public life.''

Dartmouth followed in 1900, by setting up the first graduate school of business, while the faculty at Harvard was intensely debating whether to do likewise.

Charles W. Eliot, its president, soon became convinced that companies were promoting unqualified people, based on nepotism or guesswork, and that the nation's economy could suffer as a result.

''A young man who is going into business had better take an academic course, in my sense of the term, if he has any mind to train,'' the president wrote in 1901, according to the official history of Harvard Business School. ''That is an indisputable proposition, and there is no use discussing it.''

Not everyone was so sure. ''General business is a pretty vague thing, for which it is probably impossible to give anything like a professional training,'' wrote A. Lawrence Lowell, a government professor who would later succeed Mr. Eliot as president.

Eventually, the proponents won over many of the skeptics. Harvard Business School opened in 1908, and the first Master of Business Administration degrees were awarded two years later to eight students. (Dartmouth's degree had a different name.) Today, some 900 American universities award a master's in business, and each year 170,000 people around the world take the standardized test that nearly all schools require for admission. Students then pay up to $30,000 annually in tuition.

Over the last 50 years, business schools have alternately emphasized so-called hard skills, like finance, and soft ones, like leadership, which are more popular now. Either way, the typical M.B.A. curriculum, in both length and rigor, is a far cry from the ''Business Essentials Program'' that the Boston Consulting was holding at Babson.

The teachers were senior members of the firm and professors from various business schools who came here for a few days of lectures each. Management accounting took up three days. Finance lasted two.

A Tuesday afternoon toward the end of the program was typical of the compromises that were necessary.

Pacing back and forth in the well of the classroom, a professor was leading a discussion on pricing when he turned toward the class with a question: When should a firm charge high prices and when should it set low ones? None of the soon-to-be consultants responded. So the teacher -- who asked not to be identified because his school did not want to be publicly associated with the Boston Consulting Group program -- answered his own question and quickly told an insurance industry anecdote to make his point.

In an 80-minute session that tried to cover the same material as five full M.B.A. classes, the professor said, he could not spend a half-hour helping the students arrive at every answer on their own.

Already, in one afternoon, the class had analyzed case studies about two Internet companies -- VerticalNet and Freemarkets OnLine -- and had debated which one had a more sustainable business model. Afterward, a mathematician and an aeronautics Ph.D. in the class engaged in a role-playing exercise, one of them acting as the head of procurement for General Electric and the other as a small cabinetmaker. Then the professor drew a matrix on a dry-erase board, collecting ideas from the class about which kinds of companies benefit from business-to-business Web sites.

AFTER class, the students boarded a bus for downtown Boston and watched the Red Sox beat the Oakland A's, 10-3, from the right-field stands of Fenway Park. Two nights later, the consultants shared a graduation dinner, and their 20-day sprint, filled with 17 days of classes, was over. They returned to their offices, in Toronto, San Francisco, Seoul and points beyond, to work alongside M.B.A's and have their firm charge clients $100 an hour, and more, for their time.

Typically, the consultants are eager to get to their new challenge, either to earn more money or to escape the repetitive and isolated nature of their former fields, they said. ''In science, you're not rewarded for being a good team player,'' said Kian Beyzavi, a Ph.D. in electrical engineering, who now works for McKinsey.

At Babson, there seemed to be a unanimous feeling among the doctors and lawyers that they would be at little if any disadvantage. The three-week program was helping them learn the vocabulary of corporate America, they said, and the analytical tools they needed -- like revenue models and spreadsheets -- were not all that different from ones they had used in earlier schooling.

''Basically, the way you think is the same,'' said Vladik Boutenko, who studied physics in Moscow and now works in the Paris office of Boston Consulting. ''It's a question of learning the jargon.''

James Deaker, who has a Ph.D. in operations research from Stanford, added, ''It's a lot easier to learn the soft skills.''

Indeed, at a time when technology is changing the rules for many industries, the skills of scientists and physicians are especially attractive to consulting firms looking to develop new theories. ''Oftentimes, the problems they're trying to solve really do require a deeper level of analytical skills'' than many M.B.A.'s have, said Laura D'Andrea Tyson, the dean of the University of California's Haas School of Business and the former chairwoman of President Clinton's Council of Economic Advisers.

Business school graduates have other skills, Ms. Tyson said. They can communicate ideas effectively, and their familiarity with dozens and dozens of case studies allows them to make decisions even when important data is unavailable, for example.

They have a vast ''tool kit,'' said Ms. Rupple, of Diamond Technology Partners, that helps them decide the best way to approach a wide range of problems.

EVEN in the Internet economy, where a good idea is supposed to trump any formal qualification like the M.B.A., those skills are appreciated, business school supporters say. Consider the many Internet start-ups, like eBay, that have hired chief executives with M.B.A.'s once the companies grew large.

Of course, those same companies are now turning around and getting advice from consultants who spent most of their academic careers learning to read Chaucer or to diagnose strep throat.

A version of this article appears in print on  , Section 3, Page 1 of the National edition with the headline: A Matter of Degree? Not for Consultants. Order Reprints | Today’s Paper | Subscribe

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