EDUCATION:An MBA will stand you in good stead if you want to build on your knowledge of business, plus it will gain you some contacts for life, writes Philip Delves Broughton

PEOPLE APPLY to business school for all kinds of reasons, but they break down into two broad categories: those who know exactly why they're going; and those who just sort of do.

In the first category are those from companies with a long tradition of sending employees to business school. These tend to be banks, consulting firms and large corporations where access to upper management requires an MBA. It also includes people who have a specific career change in mind. They want to give up making engine parts and become investment advisers or financiers. They know what they need to learn and arrive on campus with a purpose.

The second category includes people who know they want a change but don't know what kind. They hope that business school will provide an answer or, at the very least, give them some fresh options.

In economic times like these, they are also the people looking for a haven, somewhere respectable to sit out the storm. Business schools are, after all, counter-cyclical; applications rise when the economy turns sour and fall when the economy booms.

In Ireland and around the world, business school applications are going up. Not only are there more people wanting to sit out the bust, but there are more business schools ready to admit them, as universities have realised their economic benefits, versus, say, another chair in medieval literature.

I gave up my job as a foreign correspondent for the Daily Telegraphnewspaper in Britain in 2004 to attend Harvard Business School (HBS). The general economic climate was all right. But the future for newspapers as businesses was not. But that was a small part of my decision to go and get an MBA.

The larger reason for me to return to business school was that I wanted control over my time, my financial resources, my life - and I imagined a general competence in the business would stand me in better stead than sticking with what I had been doing up to then.

But still, why go to business school? There is a basic paradox at the heart of every MBA course. It is that business success, all other things being equal, has little to do with formal education.

Look at the range of people who make great fortunes; from mafia bosses to computer science PhDs, people who sell vegetable peelers on late night television to quantitative geniuses who trade derivatives. People who are barely literate can do much better than those with an alphabet soup of graduate degrees.

Business in this sense is not like law or medicine where every practitioner needs to know a certain body of facts. At most levels, it is a more primal pursuit requiring character, guts, instinct, leadership and the application of pure common sense. The last thing it is about is frameworks, spreadsheets and academic papers.

They are just tiny props in a far bigger drama. Consequently, many people have argued that business cannot be taught, only experienced and learned.

In his book What they don't teach you at Harvard Business School, the late sports agent Mark McCormack wrote: "In fairness to Harvard Business School, what they don't teach you is what they can't teach you, which is how to read people and how to use that knowledge to get what you want."

He said that early in his career, he had made the mistake of hiring Harvard MBAs assuming they would have the confidence and expertise to solve certain problems. Instead, he found them to be "congenitally naive or victims of their business training".

"The result was a kind of real-life learning disability - a failure to read people properly or to size up situations and an uncanny knack for forming the wrong perceptions." He concluded that graduate degrees were no guarantee of "business smarts".

McCormack isn't the only one to have relished attacking Harvard MBAs.

During the summer, between my two years at Harvard, I spent an hour with an investment banker in Boston who spent the entire time referring to the business school as "Cambridge Community College" and finding it funnier every time he said it.

Scarcely a week went by at the school without some business titan coming through and saying Harvard MBAs were all well and good, but they needed to talk less and do more. The school needed to produce more problem solvers and fewer windbags.

And yet, applications continue to pour in from students willing to spend tens of thousands of dollars a year for those coveted letters: MBA.

This conundrum of what's the point of a business school has been wrestled with for a century, ever since Harvard set up the first graduate school of business. The rationale for the new school was articulated by the president of Harvard, Charles W Eliot in 1908.

"Business in the upper walks has become a highly intellectual calling, requiring knowledge of languages, economics, industrial organisation and commercial law, and wide reading concerning the resources and habits of the different nations. In all these directions we propose to give professional instruction."

The goal of the school was not only to educate future businessmen, but also senior diplomats and government officials who increasingly needed knowledge of business and organisations to do their work. In its early years, the school struggled to define its purpose and place at Harvard and within the broader business class.

In June 1909, Edwin Gay, the first dean of the school, wrote to a friend: "We believe that there is science in business and it is the task of studying and developing that science in which we are primarily interested. It is our aim to give our young businessmen the breadth of horizon, as well as the equipment of information and grasp of principles which will enable them . . . to be better citizens and men of culture as well as broader men of business."

Gay resolved to adopt the case teaching method from the law school. Rather than hearing lectures, students would learn business by analysing real situations and discussing them in class. From this, they would derive general principles applicable throughout their careers. The method was known as "learning by doing" and has persisted to this day.

Gay's successor, William Donham, emphasised that it was important for the buildings to help students socialise and become "something more than money makers".

The success of the business school as an academic enterprise is evident. Its endowment is close to $2 billion (€1.36 billion). Aside from the 900 MBA students enrolled each year, hundreds more business people are cycled through the executive education programme. Harvard Business School Publishing is a $100 million (€68 million) a year business all by itself. The school employs 200 faculty members and maintains research offices in Hong Kong, Paris, Tokyo, Mumbai and Buenos Aires.

Graduate business schools have sprouted at universities across the world, churning out tens of thousands of MBAs each year. But year after year, Harvard Business School sits atop or close to the top of the media's business school rankings. It is a behemoth, a global brand.

The HBS MBA, one hears repeatedly, is the "union card of the global financial elite". The same can now be said of many other MBA courses. For ambitious Europeans, there is Insead in France; the London Business School; Bocconi in Milan; the Instituto de Empresa in Madrid; and the Smurfit school in Dublin.

Each offer the basic course in business fundamentals - finance, accounting, strategy, marketing, operations - but more importantly they offer students access to their networks.

This was something I did not fully grasp when I applied to Harvard, but for many of my peers, far more important than any of their classes was who they would get to know. Every school nurtures its alumni network and encourages each new generation of students to tap the alumni for advice and even jobs.

In this sense, going to business school is like accessing the best career network out there. People who are far above you on the career ladder will help you simply because you share an education. And this will continue for the rest of your life - assuming you don't pull a Jeff Skilling, the fallen chief executive of Enron and Harvard MBA, who tarred the entire MBA brand.

On a far more practical level, however, especially for those like me with no prior business experience, the MBA course was a wonderful practical education. I had never opened an Excel spreadsheet before arriving on campus, so learning finance was a tough battle, especially since many of my peers had spent the previous years working on spreadsheets for 18 hours a day.

Courses like supply-chain management and marketing provided a riveting insight into how the world around me worked, how my car got made and my breakfast cereal was sold to me.

I had always been one of those journalists who found business rather dull. Suddenly, having to study it for 60 hours a week, I began to find it fascinating. Who knew that airlines were such a fundamentally lousy business? Or that plumbers were the most vital audience for anyone running a shower company?

Harvard, unlike most European schools, runs a two-year MBA programme. In the first year, everyone studies the same required courses which provide a basis for general management. They are not intended to turn everyone into financiers or accountants, but to teach you enough about the functional area of business to make an informed decision. In the second year, you are free to choose from dozens of different courses. I focussed on strategy, technology, finance and operations. As an academic course, it was great fun. But did it make me a better business person? Or even a business person at all?

This addresses the other side of the MBA, which is especially pertinent to those who go to do it without any clear sense of why. At Harvard, my fellow students were a ferociously talented bunch who referred to themselves as "insecure overachievers". Even by their late 20s, their CVs were a glittering list of academic and professional achievements. Yet their greatest fear was not living up to their potential. A classmate called HBS a "factory for unhappy people". They were graduating racked with fear of not becoming wealthy or powerful, or of seeing their personal lives wrecked by work.

It was also obvious that the MBA culture had created a voodoo around business to serve its own interests. Businessmen talk of "leverage" when they mean debt, outsourcing and cutting jobs at home. Even at HBS, students talked about "takeaways" rather than lessons, "going forward" instead of the future, and "consensus building" rather than agreeing.

Management consultants and bankers have forgotten how to talk in paragraphs, but communicate in bullet points and PowerPoint presentations - which of course carry a higher price than plain English.

If you can make business seem this baffling, you can charge more for helping people to understand it. Except it isn't voodoo. Business is just not that complicated and MBAs do it a disservice by making it so.

Looking back on business school, I was happy I went. Business is no longer a closed world to me. I have the brand on my resume and access to the network of alumni. I have learned the language of business, the modes of thinking. I know about risk-management and strategic planning, hedging and diversification, returns on assets, sales and investment. If a banker starts talking about "bips above the curve", I know he is comparing borrowing rates to the Treasury Bill yield curve.

I have learned about the importance of process in every aspect of a business, of not just getting the right outcome, but doing it the right way so that you could achieve the right outcome again and again. For the first time in my life, I understand how capital was allocated, whether it was a company building a new factory, or venture capitalists backing the next big thing. This is empowering because it has taught me about the availability of money for good ideas and how and where you go to find it. And then of course there is the confidence. You emerged from the course unintimidated by business and its practitioners.

But HBS had also challenged me in ways I never imagined it would. It was far harder than I imagined to resist pursuing the most well-worn paths to financial success, even knowing the personal tolls these might take. I started to forget that I had been good at something before business school while surrounded by people who were good at business school and maybe not much else.

The MBA cannot take anyone and turn them into a business genius. Frankly, if you were really good at business, you wouldn't need to get an MBA.

It was difficult for me to persuade companies that, having been a journalist, I truly wanted to go into business, even with my MBA. Since graduating, however, I have been able to use what I learned both as a writer and in business, working in film financing, new media, even helping someone put together a plan for a private bank. It has made for a diverse and interesting working life.

Philip Delves Broughton is the author of What They Teach You at Harvard Business School: My Two Years in the Cauldron of Capitalism(Viking)