:00:00. > 3:59:59phones were examined as part of that operation and that has led to these
:00:00. > :00:22.entirely separate arrests. Do we need corporate chief
:00:23. > :00:29.executives to study the art of business? Today we will discuss the
:00:30. > :00:36.MBA, the degree that has taken over the world in the last few decades.
:00:37. > :00:43.It can cost you $100,000 to do on. Is it worth it? Each week,
:00:44. > :00:45.influential business leaders gather in London for the BBC Radio 4
:00:46. > :01:09.programme, the Bottom Line. My three guests. One does not have
:01:10. > :01:13.an MBA, one has an MBA and a successful career too. And one has
:01:14. > :01:20.an MBA and now works in the MBA industry. Glenn is the associate
:01:21. > :01:27.dean of the University of Chicago booth School of business. Tell us
:01:28. > :01:35.about booth, and tell us about what you are doing in London. Chicago
:01:36. > :01:40.Booth is the faculty of business. We thought that there would be an
:01:41. > :01:43.opportunity to expand beyond our borders out of Chicago. We thought
:01:44. > :01:50.that people would benefit from our education. The cost of coming to
:01:51. > :01:56.Chicago, relocating, were too high. Take us through what the different
:01:57. > :02:06.options are. You have a lot of options. There are many programmes
:02:07. > :02:10.offering an MBA. The traditional full-time MBA which was born in the
:02:11. > :02:17.United States and is still very much the dominant wine is a two year
:02:18. > :02:21.programme. We offer and Executive MBA programme, a part-time
:02:22. > :02:27.programme, taught over the course of approximately two years, yet towards
:02:28. > :02:31.working executives. They are going back to their careers and their
:02:32. > :02:37.family and coming to us on a regular basis. The average age is roughly
:02:38. > :02:43.around 28. They come in with about four or five years of experience. On
:02:44. > :02:49.the other end, the executive MBA, the average age is 36 or 38. They
:02:50. > :02:54.are coming in with 12 or more years of experience. All of them will come
:02:55. > :02:59.into the programme with some experience. You did do your own MBA
:03:00. > :03:05.as well. I went to the Kellett School. It is also in Chicago. Is it
:03:06. > :03:13.is also in Chicago. Is about arrival of the one you were working at now?
:03:14. > :03:18.Yes. Colin Drummond. You are a business person with an MBA and the
:03:19. > :03:27.chairman of a recycling firm. You graduated from Harvard business
:03:28. > :03:34.School, the best in the world. Many people would say that. Tell us what
:03:35. > :03:40.you have been up to since then. I went back to the Bank of England
:03:41. > :03:47.after doing the MBA and got hired by the Boston Consulting Group. I got
:03:48. > :03:55.paid much more there. After being into businesses, British heavy
:03:56. > :04:03.industry, I went to south-west water to build up some of their
:04:04. > :04:06.businesses. To pass at Harvard you had to stand up in front of 60 or 70
:04:07. > :04:10.people, get your point across crisply, while they are all trying
:04:11. > :04:19.to do the same. You learn to think on your feet. My third guest is Kim
:04:20. > :04:22.Windsor. She is the head of her own living company but has a sequence of
:04:23. > :04:32.top positions, turning around fashion brands. All without the help
:04:33. > :04:41.of an MBA. You are an alumna of Marks Spencer. Did you think about
:04:42. > :04:46.doing an MBA? No, I did not even think about doing a degree. I knew
:04:47. > :04:49.what I want to do with a young age. I was very lucky that I got through
:04:50. > :04:55.to Marks Spencer and their management scheme. In a way, there
:04:56. > :04:58.was a huge proportion of that training scheme which was quite
:04:59. > :05:05.similar to some of the things that take place in an MBA. What are some
:05:06. > :05:13.of the core things? You picked all of that up. Yes, absolutely. I
:05:14. > :05:17.watched who was really good in each aspect of the business. Have you
:05:18. > :05:26.ever felt inferior to the people around you because you did not have
:05:27. > :05:30.an MBA? No. Whatever the merits of these degrees for the individual and
:05:31. > :05:40.the rest of us? Glenn, what is in an MBA? What are the titles of some of
:05:41. > :05:43.the compulsory courses? There are certain foundational courses, which
:05:44. > :05:47.include macro economics, statistics, accounting. They provide
:05:48. > :05:52.the fundamental knowledge that people need to use in the courses
:05:53. > :06:00.that follow. That is where you learn a little bit of everything that you
:06:01. > :06:06.need to do business. I did a degree called an MPA, about public
:06:07. > :06:14.administration. I did do a course on operations management while doing
:06:15. > :06:18.that. What will you learn on that? An important piece of any business
:06:19. > :06:21.is how you get to market and the different channels that you go to
:06:22. > :06:27.get your products to market. Understanding supply chains, one
:06:28. > :06:32.aspect of operations. Another aspect of operations with the production
:06:33. > :06:35.lines. Some people do not work in a business weather is a production
:06:36. > :06:41.line, but it is interesting to understand how you make a production
:06:42. > :06:47.line deficient. Have you maximise output? -- how do you maximise
:06:48. > :06:52.output? I thought that was interesting but I learned about
:06:53. > :06:57.sequencing tasks, so that you are not wasting time. I think about that
:06:58. > :07:01.a lot. We have a cappuccino maker at home. You put the milk in the
:07:02. > :07:08.microwave, heat it up, get the copy out of the fridge, fill it with
:07:09. > :07:15.water. And I think about that course every time I make a cappuccino. Am I
:07:16. > :07:26.wasting time? Did you do a course like that? The thing that stays with
:07:27. > :07:33.me is cash, the primacy of cash. Was a course without title? It diffused
:07:34. > :07:43.its way through a lot of different courses and I think of one, Central
:07:44. > :07:50.was a notorious business collapse in the US. They showed five different
:07:51. > :07:56.accounting treatments of the company on the day before it collapsed. Four
:07:57. > :08:00.of them were showing a terrific, well-managed company. The fifth
:08:01. > :08:06.showed as it -- showed it as it was. What I learnt from that was the
:08:07. > :08:11.importance of getting to the fundamental cash flows of the
:08:12. > :08:20.business. Kim, you are listening to all of this, do you now regret as we
:08:21. > :08:25.sit here and not doing an MBA? All of those things I have been heavily
:08:26. > :08:30.involved in my period at each of the businesses. If you are running a
:08:31. > :08:35.business and it is up to ?800 million and you are trying to build
:08:36. > :08:38.it higher, the decision you are making not whether you are going to
:08:39. > :08:45.fall with somebody get along with them, you are making decisions that
:08:46. > :08:48.are going to affect a huge proportion of the value of a
:08:49. > :08:54.business but also huge numbers of people that are employed by the
:08:55. > :08:57.business. When I was at Marks Spencer, running the biggest
:08:58. > :09:05.division, we built that business from 800 million to billions in a
:09:06. > :09:10.few years. We were making substantial decisions. You are
:09:11. > :09:20.talking about employing 50,000 people across the chain. This is the
:09:21. > :09:24.same with any business I have run. I am not positive or negative. My
:09:25. > :09:30.choice was to follow my passion. Colin, you have already said that
:09:31. > :09:36.you have to give a presentation in front of 60 people. But talk is
:09:37. > :09:39.through the case method. Business schools have chosen to model
:09:40. > :09:46.themselves on law schools, which came before. There was a lot of case
:09:47. > :09:49.study in law, where you would go through a case and learn about the
:09:50. > :09:59.legal implications. That is effectively what you did? The
:10:00. > :10:03.professor would walk in and point to someone and ask for their
:10:04. > :10:08.conclusions. If you had not read the case you would look very bad. The
:10:09. > :10:13.person who is asked to lead off would say if you words and then it
:10:14. > :10:18.would be thrown open to discussion. I found it quite brutal in my first
:10:19. > :10:22.semester. My mate had been in the US Navy in Vietnam and he said that
:10:23. > :10:30.this was much more frightening. The same in Chicago? Yes. It is the
:10:31. > :10:35.point in time when you learn to appreciate articulating a point of
:10:36. > :10:38.view, supporting it, " that is and you get knocked down. There will be
:10:39. > :10:44.people in that class who worked in that business and understand a lot
:10:45. > :10:49.more about it than you do. The business is not theory. You deal
:10:50. > :10:56.with a lot of real issues and build up a lot of resilience. If you look
:10:57. > :11:00.at many business decisions every day, you are flogged until you fall
:11:01. > :11:07.asleep. You build up a lot of resilience. Until you are actually
:11:08. > :11:15.up there as a CEO, taking the actual decisions, that is really the tough
:11:16. > :11:26.thing. Let us take an example of a business case. Let us take one of
:11:27. > :11:33.New Kirk. It was a disaster. Coca-Cola introduced a new variant
:11:34. > :11:41.in the 19 95. It's tested well but sold badly. Consumers did not like
:11:42. > :11:45.it and Coca-Cola had to withdraw it. If this was a case study in a
:11:46. > :11:56.business school, what point would you draw out of it? Colin Drummond,
:11:57. > :12:07.I call on you. I have not studied it. Assuming you
:12:08. > :12:12.are one of these brutal business professors, I would start thinking
:12:13. > :12:17.with what did Coke really stand for? What did people buy it for? Could
:12:18. > :12:27.they tell The Taste apart? Was there some mystique? You would have to be
:12:28. > :12:37.clear on defining your brand and think how far you risk moving away
:12:38. > :12:41.from it. Did he do well? Sitting on the outside, messing with your core
:12:42. > :12:46.brands does not make a lot of sense. You can put a lot of people in the
:12:47. > :12:51.room and they can convince each other to do something that now seems
:12:52. > :12:55.very dumb. You have shown one of the advantages of the case meant that.
:12:56. > :13:05.She think you would learn anything from a study of new Coke? -- New
:13:06. > :13:09.Coke. There was an example I was involved with in the late 1990s.
:13:10. > :13:14.They decided to do a consultant review of the way of buying, the
:13:15. > :13:20.supply chain, the critical path, everything. I met six gentlemen who
:13:21. > :13:29.came in to do the review. They were definitely coming from a background
:13:30. > :13:32.of a theoretical management consultant style. When they talked
:13:33. > :13:36.everything through with me I was concerned that there were two MAC
:13:37. > :13:42.key aspects missing in what they were putting together. One was the
:13:43. > :13:56.product and Mum was the consumer. I was puzzled, how could you read to
:13:57. > :14:02.it? -- redo it. The product has to be the centre of the heart of any
:14:03. > :14:07.retail business. You cannot teach people to have a passion, can you?
:14:08. > :14:14.Kim has had this advantage in being interested in what she is doing. I
:14:15. > :14:24.think it is worth more than the MBA, essentially, if you had to have
:14:25. > :14:31.one or other. When I do recruitment now, I never ask if they have an
:14:32. > :14:38.MBA. In senior level recruitment I am looking for a commendation of
:14:39. > :14:41.passion and knowledge and what they bring to the business. --
:14:42. > :14:47.combination. In a senior level it does not feel highly. If a Harvard
:14:48. > :14:56.MBA rings me up, I would probably give him an interview. He has been
:14:57. > :15:04.through the same. It is a hymn. It is still twice as many men to women.
:15:05. > :15:08.Before we move on, some statistics. I'm happy to acknowledge The
:15:09. > :15:16.Financial Times as my source. 29% of the world's largest companies are
:15:17. > :15:20.led by an MBA. That is nearly a third of the top 500 companies. The
:15:21. > :15:30.top school, which is reckoned to be Harvard, 24 of the top 500
:15:31. > :15:34.companies, that is 5%, have chief executives from Harvard business
:15:35. > :15:41.School. I wonder whether the big advantage of business school is not
:15:42. > :15:44.in recruitment, it is not that you have learned anything useful, it is
:15:45. > :15:49.that you have proved that you could get into business school. I am an
:15:50. > :15:54.employer, a trying to choose between 500 very able people, and what I am
:15:55. > :16:00.doing is free-riding on the screening or selection process at
:16:01. > :16:03.the top schools have. It is something that has been thrown at
:16:04. > :16:14.Harvard as an issue over the last 20 years. I do not know. When
:16:15. > :16:23.recruiting, in more entry-level jobs, if someone had a good MBA that
:16:24. > :16:26.would be a tick in the box. If they were an Irish rugby international
:16:27. > :16:31.that would be a tick in the box. There are many different things that
:16:32. > :16:36.set you out. When I went to Harvard I thought it would be something that
:16:37. > :16:45.would set me out. It is about a in tuition. Then you have to allow into
:16:46. > :16:50.that living and costs and book costs in all sorts of things. We estimate
:16:51. > :16:56.that it would be a little less than $100,000 per year Allin. Use a
:16:57. > :17:04.$100,000 per year for tuition and living. Possibly a little bit less
:17:05. > :17:09.than that. You can make allowances for how you live. That is not
:17:10. > :17:15.counting for the fact that for the EU are doing it you are not actually
:17:16. > :17:21.earning any money. -- could be here you are. I have discussed this with
:17:22. > :17:26.my sons. I have not encourage them to do MBAs. I have encouraged them
:17:27. > :17:32.to get a job and establish on the career ladder. For people leaving
:17:33. > :17:36.university, it is so much tougher than in the 1970s and 80s. It is
:17:37. > :17:42.important to get yourself established in a company or a career
:17:43. > :17:48.with experience behind you. A question for me it would be, with
:17:49. > :17:51.the heavy proportion of MBAs train a big companies, how much is coming
:17:52. > :17:56.down to the traditional headhunters who make it very easy when they are
:17:57. > :18:04.looking to place CEOs, is it on their list? As a CEO, I look at a
:18:05. > :18:09.balanced CV. I would not them on or take them off because of it. I would
:18:10. > :18:16.look at what they bring. In the 1970s and 80s MBAs were much rarer
:18:17. > :18:19.and the need was higher. If you looked at the things in Britain that
:18:20. > :18:26.needed to be shaken up, or America where General Motors, back then
:18:27. > :18:35.there was a clear need for better business practice. There were fewer
:18:36. > :18:41.MBAs. Almost inevitably they have got a make-up in Korea. As time goes
:18:42. > :18:49.on, I would not be surprised if that percentage fell back. -- career. We
:18:50. > :19:05.need to talk about the tyranny of the top schools. Yours is in the top
:19:06. > :19:15.ten. Maybe in the top hundred, it makes an enormous difference than in
:19:16. > :19:23.the ones between 9000 and 10,000. We keep hearing the same names. Harvard
:19:24. > :19:34.is top, Stamford, Wharton... I am not sure what you mean of the
:19:35. > :19:37.tyranny of the top schools. It is the availability of the top
:19:38. > :19:46.professors delivering courses online. One of our top finance
:19:47. > :19:51.professors does this. In the end 37,000 people registered for his
:19:52. > :19:55.class. They were predominantly outside of the US. This is not a
:19:56. > :20:01.good argument, but it is interesting. The MBA is a very
:20:02. > :20:10.Anglo-Saxon invention. It started in the United States. The proportion of
:20:11. > :20:14.top American executives that have an MBA is considerably higher than
:20:15. > :20:19.those in Britain, which is higher than the Japanese and the
:20:20. > :20:28.continental European MBA rates. Have business schools contributed to the
:20:29. > :20:33.surge in chief executive prices? No. I think what has contributed is
:20:34. > :20:38.the complexity of the issues and problems they need to solve. The
:20:39. > :20:47.stage in which you carry out your job is much more complex. To me it
:20:48. > :20:53.makes perfect sense. It makes sense to give them more money. In the
:20:54. > :20:58.Anglo-Saxon countries we are paying a much more than they seem to pay
:20:59. > :21:01.them in other countries who had equally consecrated businesses and
:21:02. > :21:11.challenges and often really good quality management. -- equally
:21:12. > :21:17.complicated. There are more interesting points, their right
:21:18. > :21:24.twice as many male to female MBAs. It is much more of a male rich than
:21:25. > :21:29.a female route. In all the entrepreneurs I know, none have an
:21:30. > :21:34.MBA. The heads of the corporate businesses have the MBAs. I wonder
:21:35. > :21:38.if there is another angle. It is a little more traditional and
:21:39. > :21:46.corporate. Does the MBA in Courage the view of business where a huge
:21:47. > :21:51.premium is put on being sharp elbowed and being blunt and to the
:21:52. > :22:00.point and getting your point across the other people the class? --
:22:01. > :22:06.encourage. Maybe there are lots of good business people who are not cut
:22:07. > :22:14.out for business School and maybe it is squeezing out different systems
:22:15. > :22:19.and ways of doing things. There may be something in that. A positive
:22:20. > :22:23.side is that it makes you very humble. You realise that quite a lot
:22:24. > :22:30.of the time you are wrong. If you get into debates, it key thing you
:22:31. > :22:36.want to get the right answer, you can we want to get that... I think
:22:37. > :22:46.you are the exception. Humility is not the characteristic that comes of
:22:47. > :22:51.their body. I think that is unfair. If you want to get a company to work
:22:52. > :22:57.well, you need to involve everyone as far as possible. The best chief
:22:58. > :23:04.executive is a lazy one because he gets everyone involved in the
:23:05. > :23:09.thinking. Let us draw to a close. My guesswork Kim Winser, Colin
:23:10. > :23:14.Drummond, and Glenn Sykes -- my guests were. Thank you to the three
:23:15. > :23:23.view. Thank you for listening. I be back next week. Do not forget,
:23:24. > :23:28.downloads of The Bottom Line are available. Details are on the
:23:29. > :23:31.website. We also like to get your e-mails.