Earning an MBA to improve your ability to formulate corporate strategy
There is probably no one who has not heard of the MBA.
However,
what it actually teaches,
and what benefits you gain by earning one,
are things most people probably do not know.
First, let us introduce Wikipedia's description of the MBA.
“The MBA is a higher-education course that emerged in the United States at the end of the 19th century, based on the idea of approaching business management scientifically and modernizing management. The Wharton School was established in 1881 as the first business school, and in the 1920s Harvard Business School developed an educational approach called the case method, which trains the ability to analyze situations and make management decisions, and which came to be adopted by many business schools. Because MBA programs aimed to train business practitioners rather than researchers, courses were developed early on with the convenience of practitioners in mind. Two years of study is standard, but programs exist in various forms, such as one-year accelerated courses, part-time courses held in the evenings and on weekends, and correspondence courses. Many of these are designed so that practitioners can study without interrupting their work.
In addition, as the value placed on independent entrepreneurship grew stronger, the MBA also took on a stronger role in training entrepreneurs, and MBA programs specializing in entrepreneur development have appeared. A recent trend is the rising popularity of European business schools as an option emphasizing diversity and internationality.”
As described above, the MBA has developed for the purpose of business management and the development of entrepreneurs.
Here (if I may digress a little), allow me to share a memorable episode from the past.
A few years ago, I happened to run into the former president of a former business partner in my hometown.
This former president's company had gone bankrupt more than ten years earlier, and his whereabouts had been unknown since then.
Later, over a meal, he told me why the company had gone bankrupt and how he had lived since then.
The reasons for the bankruptcy seemed to involve complex factors, so I will omit the explanation here, but after the company failed he went through personal bankruptcy, divorce and cancer, and for a time even considered suicide; he had lived through a truly harrowing life.
And finally, he said something like this:
“You know, being a company president ought to require a license. You need to study to run a company or start a business.”
At the time I listened casually, but thinking about it later, I believe these were very important words.
In an MBA program, you comprehensively study management as a whole, including corporate strategy, marketing, finance and HRM.
There are also case studies, which use real examples from various companies,
“If I were in this position, what solution would I devise for this challenge?”
and so on—practical simulation training is carried out.
The great thing about an MBA is that through such training you can master the fundamental ways of thinking about management.
I see and hear of many Japanese executives who say management is best done by intuition, but the proportion of MBA holders in successful overseas companies is very high, and if you look overseas even once,
your thinking will change to “If you don't at least have an MBA, you're not even in the conversation.”
If you are confident that you are a genius executive, you may ignore the MBA, but for ordinary people like us, isn't the best course to raise the success rate of running or starting a business through MBA study?
*There are many other benefits to earning an MBA, which I will introduce in the future when the opportunity arises.
Why executives of Japanese companies dislike the MBA
There are various reasons why MBAs have not caught on in Japan, but I believe the following two are the main ones.
Executives do not trust MBA holders
Even at the business school I attended, there were cases where one could understand how prejudice might arise.
That was the group of people who work for large companies and aim to get promoted by earning the degree. They should have graduated from reasonably good universities, so they are good at studying.
Because this type of person only needs to get the degree, they are not enthusiastic about study premised on practical application. They earn their MBA and graduate by making full use of memorization skills, study techniques and armchair logic. I have no way of knowing what became of them after graduation, but I can surmise that it is probably people like this who become the “all-theory types” and, as a result, become targets of criticism from executives.
An MBA is, after all, a qualification for studying knowledge, information and know-how about management and putting it into practice, and a “true MBA” holder is someone who can make full use of it. In short, the difference lies in whether or not one studied in a way that can be used in management. In overseas companies, it seems that without a degree at or above the MBA level, there are cases where one is not even invited to meetings, let alone promoted to an executive position.
Young Japanese people who do not want to become leaders
A survey of attitudes toward study among high school students in Japan, the United States, China and South Korea also shows a stark difference. Among Japanese high school students' future plans, going on “up to a four-year university” is overwhelmingly common, and while more than 50% of high school students in the United States aim to “become a leader,” in Japan the figure is in the single digits, far behind China and South Korea as well. This suggests that Japanese people have low motivation to study in the first place and hardly think about wanting to become leaders.
Given this climate, Japanese businesspeople hardly study at all after graduating from university. They may think that once they get into a good university and join a top company, they are set for life, but in today's Japan, where even lifetime employment is in doubt, it has already become clear that this idea is an illusion.
Yet there is a tendency to treat joining a company as the final goal. Once they are hired, all they think about is surviving successfully within the company. In Japan, few businesspeople aim to become leaders—that is, executives or senior managers—and apart from those who need special qualifications and a small number of ambitious people, most stop studying once they have achieved the goal of getting a job at a top company.
The fate of Japanese companies that do not pursue higher education
Executives in Europe and the United States know how important it is to hone management skills through higher education such as the MBA, and they have put this into practice to get where they are today.
The Japanese of the past had diligence that spared no effort, an honest and sincere character, intellect, and the wisdom and technology to create high-quality products. There are many examples of Japanese ideas and technological capabilities that shocked the world, such as Sony's “Walkman,” Nichia Corporation's “blue light-emitting diode,” and Toshiba's “flash memory.”
In the era when Japan grew after losing everything in the war and going through high economic growth, wisdom and technology, effort and grit were enough to get by. The executives of that time had a track record of taking on the world with their unique intuition, technology and drive. However, that era may now be drawing to a close.
Since the number of young people who even want to contribute to their company as leaders—let alone as executives—or who want to learn and aim higher is small, it is only natural that fewer people who actually rise to the top emerge in Japan than in other countries.
Elites in China, South Korea, and ASEAN countries such as Singapore and the Philippines speak English as a matter of course when they go into business negotiations. Japan, on the other hand, has become more inward-looking, and I hear that the rate of studying abroad has fallen compared with before. That point alone shows how unlikely it is for Japanese people to become global talent. The gap between ASEAN countries and Japan is widening year by year, and it can be predicted that Japan will eventually become a “higher-education laggard” even within ASEAN, and that Japanese corporate management skills will steadily decline.
If, going forward, you want to run a business that does not fall behind the rest of the world, Japanese executives themselves must study through higher education such as the MBA and acquire the ability to devise corporate strategy.
In this respect, the difference in motivation to study between Japanese and overseas executives is stark, and Japan has already fallen behind.
The rate of MBA attainment among overseas executives is very high; like English conversation, the MBA exists as a “common language” and “common understanding” among executives, and it is becoming a prerequisite for becoming an executive or executive candidate. The MBA is now something like a driver's license for executives.
Many readers may be unfamiliar with it, but overseas these days, executives are increasingly earning the Doctor of Business Administration (DBA), a degree positioned above the MBA. If the MBA is an ordinary driver's license, the DBA could be described as a Class 2 license or a heavy special vehicle license. At companies operating globally, the DBA may eventually become an essential requirement for executives aiming even higher.
Japan has something similar, the doctorate in business administration (Ph.D.), but although both are doctorates, they are different in substance. Ph.D. stands for Doctor of Philosophy, and in the field of management in particular it is called a Doctor of Philosophy in Business Administration or Doctor of Philosophy in Management. It is a doctorate derived from philosophy and has a strong connotation of being a researcher, which makes it very different from the DBA, which focuses on practice.
Unless Japanese executives not only hone their personal skills but also pursue degrees as proof of them more actively, they will eventually fall behind other countries.
The Dark Side of Japanese MBA Schools
So far I have discussed the importance of the MBA from various angles, but let me tell you one more inconvenient truth about MBA education in Japan.
There are many universities and affiliated business schools in Japan where you can earn an MBA without going abroad. There appear to be some 30-odd schools at present, but of these, only five have received official accreditation from international accreditation bodies such as AACSB, an international accreditation organization for MBA education (as of July 2020).
Those five are Keio University Graduate School of Business Administration, Koshi Furuya University of Commerce Graduate School, Ritsumeikan Asia Pacific University Graduate School of Management, International University of Japan Graduate School of International Management, and Waseda University Graduate School of Business and Finance. The other universities have not yet received official accreditation. Even though they are very famous universities in Japan, they are unaccredited. Even if someone calls themselves an “MBA holder,” only after studying at a school that meets international quality standards can they proudly say, “I earned an MBA!”
Incidentally, even the name of the MBA is not standardized in Japan. I will omit the names of the universities, but there are names such as “Master of Business Administration,” “Master of International Management” and “Master of Management of Technology”; I found as many as 11 different names just from what I checked myself.
Moreover, since these programs have not received international accreditation, even if they call themselves “MBA,” what is taught is not an MBA that meets the official standard. I do not know the real reason why they are called “MBA,” but the current situation in Japan is that “self-proclaimed MBAs” hold sway, and moreover no one questions this.
Some may wonder whether third-party accreditation is really that necessary. But suppose, for example, your friend Mr. Tanaka opened a “Tanaka Driving School” without national certification and gave you a laminated driver's license there—would any of you have the courage to drive on public roads? (laughs)
Admittedly, unlike a driver's license, the unaccredited MBA schools mentioned above may not be breaking the law. (Though they may risk conflicting with the Consumer Basic Act and the like.)
Since management is an important form of driving, a school that has not received international accreditation would have no rebuttal if told that its teaching is “self-taught.”
Here is a real example.
A person who was busy job hunting explained the MBA they held when taking the entrance exam for a foreign-affiliated company. The school was a Japanese MBA school without international accreditation. Despite their desperate appeal, their résumé was reportedly returned with the comment that it was “not worthy of evaluation.” Several of my friends who completed the same domestic MBA were deeply discouraged when they learned of this. When they vented their anger at the school, it turned out that neither the professors nor the administrative office were even aware of this fact. Furthermore, many professors of Japanese master's programs in business administration are researchers who came up through the Ph.D. route, and few tend to have practical experience in corporate strategy. As a result, classes become highly academic and drift further and further from real business.
Confronted with such realities, I can understand why people would not want to trust the MBA. And if MBAs who are actually of no use exist within a company, it makes sense that executives' and senior managers' distrust of the MBA would turn into conviction.
In Closing
What I feel most in the field of strategic planning is that literacy in “corporate strategy and management” varies greatly from company to company.
We often struggle to unify not only ways of thinking about management but also the language used.
Once, on a business trip, I was seated next to a Mexican man on the plane.
He could not speak English, and I could not speak Spanish.
We could not hold a conversation at all, and we had no choice but to give up on communicating for the rest of the flight. (laughs)
Not having a common language of management is just like this case, and it is not hard to imagine that business owners, executives and those in charge of corporate planning will certainly be left behind in today's business arena.
In running a company, I hope you will at least study MBA-type material, even if only from books, or, if you go to an MBA school, choose an accredited school and study there, so as to raise your company's management capabilities.
(This column is excerpted from “The World's Easiest Course in Formulating ‘Corporate Strategy’” by Hiroshi Ashida.)
Hiroshi Ashida
Column articles are scheduled to be published on the 1st of every month.
Column scheduled for December
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