Page 3 - MS Perspectives 2014 YIR

Why Do MBA's Fail?

Dr. Eric Flamholtz
President & Founder, Management Systems

The MBA is a very prestigious degree. It costs a great deal to complete an MBA
program. There is not only the outlay cost of tuition and living expenses, but the
opportunity cost of income foregone during a typical two year program.

Yet in spite of the prestige of the degree, many people with MBAs experience
difficulties or even fail on the job. Getting an MBA form an iconic or highly
prestigious school does not prevent this problem. For example, Donald Burr, the
founder of People Express, who held an MBA from Harvard Business School, built
the company to more than 1 billion in revenues and then watched it fail go into
bankruptcy and disappear.

I spent much of my professional career teaching MBAs. I did this in three leading
academic institutions: Columbia University Business School, The University of
Michigan's Ross School, and the Anderson School at UCLA. These and others are
fine academic institutions and have distinguished MBA programs. As a result of this
experience I believe I understand the strengths and limitations of MBA programs.

So why do MBAs fail? They fail because, at best, the MBA degree deals with 1/3 of
the critical dimensions that are required for managerial success.

The Three Critical Dimensions of Career Success

Based on research and extensive "clinical" work with managers and organizations
over more than thirty-five years, we have formulated a framework that identifies
three critical dimensions that a person must manage effectively in order to be
successful at a given level of the organizational hierarchy. These three dimensions
are:

1. The person's concept of his or her role;

2. The skills demanded by the new role;

3. Certain attitudes or psychological factors (which we term the "inner
game of management")1

We believe that each of the three critical dimensions account for approximately 30
percent of managerial success, or collectively 90%. There is approximately 10
percent that is attributable to a variety of other factors.
Each of the three critical dimension is described in turn below.

1 Eric Flamholtz and Yvonne Randle, The Inner Game of Management, American Management
Association, 1987

1