09/15/2009 05:12 am ET | Updated May 25, 2011

The "Precision" of B-School Rankings Can Claim Victims

Most of us hate uncertainty. We thirst for numerical guiding lights, we demand precise diagnosis. We con ourselves into believing that someone, somewhere, must have the answers, down to the third decimal. And yet, in embracing quantification, we may be sowing the seeds of untold malaise. The numerical sheep can get slaughtered when the math is later proven to have been arrogantly flawed. Take global Business School Rankings that are regularly released by top-notch imprints such as the Financial Times, The Economist, and Business Week, and which are followed semi-religiously by huddled masses all around the globe. People who have never visited any of those schools, or possibly never heard about many of them, become instant believers and yield to the sacrosanct decision that put school #3 above school #27. However, it is entirely obvious to even the half-informed individual that those rankings contain unpardonably grave mistakes. They simply tend to put among the top echelons some schools that are obviously inferior to many of their peers when it comes to career opportunities, academic quality, resources, location, and reputation. Should a student obligingly follow the advice of the measurers he could be inflicting mortal damage to his future by renouncing the lower-ranked but much better place for the higher-ranked but underperforming one.

The latest Financial Times rankings (released January 26th) are a powerful case in point. Let me mention those institutions that I feel are being unjustifiably relegated to an unseemly back-row position. Among those most ominously ranked below their clearly less-stellar brethrens are Yale SOM (a shockingly humble #19 rank), Northwestern's Kellogg (incredibly at #21), and Cornell Johnson (unbelievably at #34). All three could rightly claim unfair treatment on the part of the FT. All three are left with no option but to contemplate how schools that can boast much less (overall) success are puzzlingly portrayed as glowingly superior by the number crunchers who sort out the institutions. SOM, Kellogg, and Johnson have been affording for decades the very best job opportunities to their students, who inevitably tend to belong to the cream of the crop of global MBA applicants. It is also hard to exaggerate the resourcefulness of those schools, all very well-endowed entities housed inside legendarily elite (and wealthy) universities. And say whatever you want about the practical validity of what business professors teach and research, there can be no doubt as to the superiority of SOM, Kellogg, and Johnson over the vast majority of their peers when it comes to that department. Finally, the trio offers its inhabitants country club-like campus experiences, with perks that are most definitely off-limits for students at those lesser schools that are so mysteriously ranked higher. Anyone who blindly follows the metrics and refuses a place at SOM, Kellogg, or Cornell because of their relatively lowly standings in the ranking would, in effect, be saying goodbye to the best possible career prospects, network-building opportunities, personal experiences, and (possibly) educational programs available to graduate business students worldwide. And all, perhaps, in return for attending a place that, nothwithstanding its better rank, may depressingly disappoint on all those counts (while, crucially, charging the same budget-breaking tuition).

Why do the outrageously flawed rankings (don't even get me started on the insult to human intelligence of having Carnegie Mellon´s Tepper at #51, well below several schools that are obviously inferior) go on living? The scandal is akin to that of rating agencies assigning AAA status to those subprime-related toxic securities that caused the credit crisis. Blindly following the advice of "experts", people are led into underperforming paths disguised as avenues of soundness. Investors who buy AAA securities that turn out to be utter junk lose their shirts; MBA students who attend highly-ranked schools that turn out to severely disappoint also suffer painful losses. Without the numerical deceit, investors may have instead bought obviously sound securities (say, Treasury Bonds) and students may have instead opted for obviously sound schools. Some say that subprime-damaged investors should sue the deceiving rating agencies en masse. Should hampered, deceived MBAs do the same when it comes to the misrepresenting b-school rankers?