Hjort wrote:
I think it is crucial to keep in mind that no school dominates the production of CEOs. Even the largest overall producer (HBS) accounts for less than 10% of the CEOs of the S&P500. The four "firm" market concentration ratio of top CEO producers (HBS, Stanford, Penn, Chicago) is still less than 20%. Even if the two largest producers merged, the HHI would increase by about 50 points (with a pre-merger HHI well below 300 no less).
It is tempting to think that perhaps the higher echelons have a higher concentration of HBS graduates. However, this does not appear to be the case as even the 100 largest firmst have about the same percentage of HBS MBAs.
It should be noted that HBS produces 900 grads per annum, so it could replace the top 100 CEOs several times over.
Further, HBS grads probably have a considerable head start over their competitors from (say) NEF schools in terms of academic attributes, personal network/family connections, and wealth/income.
To be clear, I am not positing any sort of nihilistic or "prestige doesn't matter" argument. Institutional reputation is certainly an enabling factor to advancement, but there are many roads that lead to top leadership positions. I (politely) urge applicants to subject assertions along the lines of "I need to attend School X because it provides unique opportunities" to a very high level of scrutiny.
Hey Hjort, I've some ideas which could arguably help complement your analysis on the "CEO count issue".
Let me use two "example people" to explain my point.
Person 1) Top performer, outstanding visionary, excels in every quality that a successful business career demands. Eg: Bill Gates, to name one, but I'm sure there are several examples.
Person 2) Reasonably good performer in his profession, maybe a visionary in some area, well above average in several criteria, yet not quite truly outstanding in every aspect. Eg: HBS or Stanford admit X.
Person 1, will arguably not need a top MBA education to fulfill his potential. He can afford to join a lower ranked school or skip B-school (or even college) altogether and will still succeed in business life. He would be able to become a founder and/or CEO of an important organization, nevertheless.
Person 2, will need his top MBA to increase his chances of succeeding. He may still not make CEO, but I can argue that his chances are greater after the MBA than they were before the MBA.
My hypothesis: the closer a person is to "average" the more he needs a top MBA to increase his chances. The problem is that B-schools would not like to have their classes full of just average people, for obvious reasons. So they end up selecting the best candidates from their applicant pool, which means they still miss the few overachievers who never apply to B-school because they don't need to attend B-school anyway. Additionally, in some cases, a thorough knowledge of an industry is considered a must for a CEO. In such a case, B-school students, which typically change jobs more regularly, would be at a disadvantage.
So I think one reason why no B-school (not even the top schools combined) has a major representation in the CEO position is because most CEOs did not need B-school in the first place.
I assume that as time goes by, attending B-school will become much more of a requisite for several jobs, so outstanding visionaries will still need to go through that process anyway (in the same way as people hoping for several jobs need to attend college nowadays). If and when such process takes place, we would probably see the B-school representation in the CEOs numbers rise.
There's another theory that argues that an MBA can be counter-productive for some positions (and there was a study which argued that an MBA was counter productive for the CEO position in particular). But since I do not subscribe to that theory I won't be ellaborating on it.
Hope I conveyed my theories clearly. What do you think?
Cheers. L.