The Dean's Perspective

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Envisioning the Business School of the Future: Some Insights

by Richard G. Donnelly and Prabir K. Bagchi, George Washington University

Business schools have become important components of contemporary tertiary education throughout the world. Business schools have also become the subjects of endless criticism, as the world economy shows severe strains. Several scholars have argued that management research has little relevance in the real world and that management education has little effect on business performance (Ghoshal, 2005; Pfeffer & Fong, 2002; Mintzberg & Gosling, 2002). In a widely acclaimed book, Mintzberg (Mintzberg, 2004) observed that most business school teaching had only stressed dry, functional disciplines, and thus produced generations of managers who were largely incapable of dealing with real-life business issues let alone moral challenges. Some have pointed out how business schools' hiring of inexperienced assistant professors, freshly minted out of doctoral programs and having no real-life business experience, has resulted in graduating students who are ill-equipped to deal with the complex, unquantifiable issues that will haunt them in their work life (Bennis & O'Toole, 2005). The intellectual rigor that legitimized business schools and turned the M.B.A. into a respected credential has fallen by the wayside, argues Khurana (Khurana 2010) in his recent book. Instead of producing young professionals, he says, business schools are treating students as consumers and their education as a commodity. Others researchers (Starkey & Tiratsoo, 2007) observed discontent among faculty members due to "commercialization" of business teaching and stress on carrying out meaningless research. We have also seen criticisms about the value of the MBA degree in the popular press. Recently the Harvard Business Review published its list of the 50 best-performing CEOs in the world. Of these, only 14 CEOs had MBA degrees. Furthermore, out of the original pool of 1,109 candidates, only 32 percent had MBAs. Is the lure of the MBA degree fading?

Other indicators of trouble with business education also abound. In their recent book, Rethinking the MBA, Datar et al. suggest that business schools played a contributing role in the financial meltdown of 2008 (Datar, Garvin, & Cullen, 2010). They argue that too many MBAs didn't learn the "importance of social responsibility, common-sense skepticism and respect for the risk they were taking with other people's money." Certainly, reliance on marketplace signals has not been very useful in identifying shortcomings in business education or pointing the way to improvements. The short-term perspective of many in top management, driven by the Wall Street mentality of "seeking profit at all costs," has irreparably harmed the structure of business programs. Wall Street-initiated financial bubbles have led to unsustainably high compensation structures for financial analysts and managers. This has attracted hordes of bright young men and women to careers in finance, adding fuel to the fire and warping the better curricular balance of MBA programs of a decade ago. The imbalance has been further warped by the fact that, led by faulty assumptions and flawed analyses, U.S. manufacturing industries have been ceding many of their operations to the Chinese without much concern for the long-term consequences for the American economy. The result? Finance programs with emphasis on multi-layered derivatives, swaps, and other similar instruments have found growing favor in business curricula at the expense of offerings emphasizing global strategy, excellence in operations, and innovation and new product development, the GDP-enhancing aspects of business. The contrast with engineering and applied science curricula is too stark to overlook. New science and technology skills and knowledge in the hands of fresh engineering graduates opens new opportunities and builds the economy. Financial manipulation tools in the hands of fresh business graduates are more likely to be used to redistribute assets in a zero-sum game.

All in all, business curricula have followed market demands rather than driving them. With business schools typically treated as cash cows by their parent universities, curriculum commoditization and mass production of graduates around a common core curriculum is a cost efficient way to run a business school. This has resulted in programs that are largely indistinguishable across business schools, however, and this very limited differentiation also contributes to the loss of luster of graduate business education. Compounding this, it seems that a growing fraction of students in graduate business programs want the degree so they can get a better job more than they want the learning so they can do a better job. Increasingly, these students have little time for in-depth studies, some are full-timers holding a job or part-timers a second job to finance their education, many are being required by their employers to attend meetings and to travel regardless of class schedule. Schools that must make growing enrollment targets to generate the cash flow expected by their universities simply acquiesce to these student expectations. Faculty are culpable in this -- courses are too often diluted, expectations significantly lowered, and grade inflation allowed to take hold. Finally, competition among business schools also drives administrators to allocate scarce resources to extra-curricular activities—non-curricular services to obtain better rankings -- thereby reducing investments that would improve pedagogy.

No other professional field of education has been under the lens of criticism so intensely -- as one dean commented, "No professional field of study has been more consistently inspirational both to its friends and critics" (Gordon & Howell, 1959; Pierson, 1959). Given this state of affairs, this paper examines possible steps to revitalize business education to earn back the trust of business and society. How should business schools react to these criticisms of business education questioning its relevance for business and society? If change is inevitable, who should lead the charge? Has the U.S. model for business education run its course and has the time come for alternatives? Should there be different pedagogic models for different regions and different countries?

Relevance of Business Education
Experts have observed that business schools have emulated the procedures of the physical sciences in order to gain respect in society. Driven by good intentions, the research priorities and curriculum may have swung too far away from the ground realities in business. Increasingly, doctoral programs are being populated by students who have just received their undergraduate degrees. Their inexperience tends to limit them to performing theoretical research. Graduates from these programs have little or no exposure to real-life business, except occasionally through the narrow windows of the surveying and interviewing embedded in their research plans. These bright and capable novice researchers fill the beginning academic ranks and eventually become the tenured senior faculty members and academic leaders in most business schools. The management education designed and delivered by this faculty can be somewhat less than "well-rounded," failing to include realities of the workplace, marketplace and industry that only hands-on experience can provide. Some faculty members may have become comfortable in publishing more theoretical papers assuring them tenure, but are not equally adept at teaching leadership, operations, and other human issues that managers have to frequently deal with in real life (Bagchi & Donnelly, 2008).

As a result, business school graduates often have greater expertise in business modeling than in managing operations involving human intentions. Often, newly minted MBAs are, as individuals, skilled analysts. But as they assume more responsible roles, they need to move from an individual to a team mindset, and be able to get work done through others. Making this transition effectively often requires experience or know-how that they seldom get in school. This is nothing new, but the gap between classroom-delivered theory and the real-life practice of management and operations seems to have widened in recent years. One researcher laments,

"It's not just that our business schools manifest tragic gaps between theory and practice, between research and teaching, and between normal science and interpretation. That would be bad enough. Instead, practice, teaching, and interpretive synthesis are viewed as vastly subordinate endeavors." (Hambrick 2005)

Management courses may have become more rigorous, and include more mathematical modeling or statistical tests than in an earlier period. But how valuable is rigor without relevance? Some may argue, and rightfully so we believe, that rigor without relevance is worthless. How, then, can business schools properly address the changes in curriculum and academic research that reflect the needs of the marketplace?

Leading Change in the Business Curriculum
A common complaint in the marketplace about MBAs is that they are completely in the dark about organizational realities. It is difficult for them to fathom the power, politics, and challenges of making and implementing decisions in organizations. In fact, some would argue that MBAs are naïve about organization dynamics and that their knowledge of leadership issues and challenges, and the increasingly important topics of business ethics, corporate accountability and sustainability are spotty at best. Moreover, their capacity for integrative thinking -- embedding applicable learning from functional courses and solving problems from a general management point of view -- is severely lacking.

As globalization takes hold, students need to learn to work comfortably and effectively in a broad array of countries and with people from widely varying cultures and business practices. While there has been a recent proliferation of study-abroad programs in U.S. universities and business schools, and they expose students to different cultures and value systems albeit for short time periods, pedagogists have been looking for ways to enable students to live and work more comprehensively and more intimately in various societies. Such in-depth exposure, say via internships or real-life projects abroad, may help future managers to learn the intricacies of management at a more granular level (or how-to-get-it-done level) in various countries. Some institutions have tried to achieve this via the multi-campus alternative, and some cite successes. INSEAD, for example, exposes students to various cultures and value systems through their campuses in Fontainebleau in France, Singapore, and Dubai, and by allowing them to enroll in courses in any of these campuses. While this may be expensive, INSEAD academic leaders have found it to be effective. Should business schools pool their resources to offer a similar experience?

Given the state of business education, how should the required changes be initiated and who should initiate them? Our experience suggests that for positive change to take hold, it must be initiated and enacted from within, by individual universities and their business schools. Business schools must redesign their curricula to offer students practically relevant business education. Improved curricula need to include a strong dose of ethics' topic matter, reinforcing the need for individual commitment to people, the proper relationship between business and society, and the importance of loyalty and truthfulness in the relations between management, the work force and the local community. The tricky part is that this added emphasis must not come at the expense of another key element of business education that is also changing -- the attention to increasingly powerful analytical and decision-making tools. Business graduates need these tools for the better situation analyses and more comprehensive "what if" scenario creation they will be expected to support. While change must come from within, there is no denying that business school leaders must solicit active help from businesses, government and non-profit organizations. In fact, this will be a real test for business school leaders. Will they be able to convince business and government leaders that the strength and commitment of their participation will greatly influence the success of this mission? Can they obtain the proactive involvement of business leaders worldwide and steer the pedagogic reengineering process towards increased use of experiential learning projects -- domestic and global (multi-disciplinary action projects)?

Is it Time to Change the U.S. Business Education Model?
Over the past two decades MBA curricula have been studied and revised at almost every major school of business. With all this attention by thoughtful educators and academic leaders it might be expected that significant progress would have been made towards curricula that work. And yet criticism has been rising and dissatisfaction growing as the second decade of the new century opens. This inevitably raises the question of whether all this curricular revision has missed the mark, or whether the level of criticism is unwarranted. Either or both may be true.

Curricular revision has become something of a rite of passage for new deans. Although it dictates a timing that is often uneven, this is probably mostly a good thing. New deans bring a fresh perspective, new energy, and a new network of alums, business leaders, and contributors. Also, perhaps especially important in an industry in which governance is shared, new deans enjoy a honeymoon period during which they are accorded significant discretion by their faculties. The confluence of these factors makes the arrival of a new dean a practical time to revise curricula.

But new deans these days are asked for much more by their university presidents than mere curriculum revision. In particular they are asked to undertake fundraising campaigns that will bear much fruit for their schools and parent institutions. This demand is more acute for business school deans than for new deans of any other schools, because of the tendency to treat business schools as cash cows. What does this require of new business school deans? That they pay less attention to curricular revision and more attention to fundraising than they might have a decade or two earlier. Indeed, the typical cash cow character of the business school of the 2010s drives university presidents to think first about a new dean's ability to fund-raise and second about academics and pedagogy. A strong academic track record in a dean candidate becomes less of a crede ntial, while an ability to relate to the business world and sell to potential benefactors rises in importance. As a result, new deans not only have less time to devote to serious curriculum advance, they may be less qualified to do so. They may also be less able to recognize genuine curricular advance and less prone to insist on it. Faculty breathe a sigh of relief and go back to their research and teaching. So, all the curricular revision that has been taking place may well represent less progress than mere counting would imply.

On the other hand it may be that the level of criticism is inappropriate. If the MBA graduates of today's business schools are expected to quickly contribute to solutions to the problems experienced by the contemporary business world, then employers and business leaders are bound to be disappointed. The problems faced by businesses are greater in intensity and more dynamic than at any past time. Turbulence rules! Changes in the nature of competitive advantage, in the identity of competitors, in the impacts of global forces and the regulatory actions of nations, unexpected advances in technology, the growing aspirations of the developing economies, all combine to make the business environment a much more difficult place in which to succeed than 20 or even 10 years ago. A global-scale economic decline exacerbates the problems.

The quality and utility of the skills sets that MBA graduates bring to their employers are surely unequal to the task of managing confidently in turbulent business environments. But that has to do more with the inadequacy of the skills sets that exist than of the level of mastery of the skills by graduating MBAs. What kinds of skills sets would business leaders imagine would be useful in navigating in such turbulent waters? As the saying goes, we can't even forecast tomorrow's weather accurately, how can we expect to forecast the much greater complexity of the course of future business? Or more to the point, economic theory 'perfected' over decades still finds us unable to agree on how to reverse economic decline. What works best? More spending by governments and more taxing, or less taxing and more spending by the private sector? If we can't get this great big question answered, how can we expect our models and tools to be much of a guide for business decision making? MBAs may be learning adequately well the skills and concepts that the state of the art allows. That this is not adequate to the challenge can't always, or perhaps even very often, be blamed on learning deficiencies in business school.

To provide better guidance for deciding on change in business education, we need to probe much more deeply the root of the dissatisfaction among the employers of our MBAs. It seems likely that we could be learning much more from exit interviews of graduating MBAs, from two- to four-year post-graduation debriefings, and from employer surveys in revealing the true dimensions of the dissatisfaction problem. If it turns out to be the case that many MBAs can't work in teams, can't make a presentation, and can't write well, then curricular reform is pretty much a no-brainer. We know what to do. And we've been doing quite a bit of this in the curricular revisions of the past two decades. If the problems are more along the lines that employers are saying, "Our new MBAs can't forecast what will happen to sales of our new products in highly competitive markets," then academe probably has little to offer even in the way of potential curriculum reform, if limited to traditional classroom settings. We just don't have the models or tools to teach from. More hands-on experience through internships and practica in collaboration with businesses may be a partial answer, though, as we argue below.

Different Pedagogic Models for Different Regions and Markets
Better understanding of the nature of the dissatisfaction with graduated MBAs is essential to addressing the pedagogic variety issue properly. Certainly, some curricular elements are more or less universal in their applicability and all MBA curricula ought to address these effectively. Core concepts and basic tools fall into this category. Also universal are the foundation skills expected of all college graduates -- teaming, presenting, writing. That's the easy part to identify, and should be relatively easy to address in MBA curricula, as has already been done in many cases.

The variability of the business environment from region to region and market to market would be the guide to the applicable pedagogic model. Schools that include a strong emphasis on global business need to include attention to regional and market characteristics at an introductory level for all of their MBAs and at a higher and more specialized level for their MBAs coming from, returning to, and choosing to locate to foreign regions through employment at multinationals and international non-profits. Courses on the regional economy and regional markets would help greatly, as would courses addressing regional differences in culture and society.

But, as mentioned, turbulence rules! In a sense this probably eases the challenge of creating specialized curricula for specific regions. Over-specifying the emphasis for a region would be tantamount to underplaying or ignoring turbulence. So a curriculum designed for a turbulent business environment may be the best way to address regional variability. In our mind this would include curricular emphasis on what it takes for a business to respond to change and indeed to lead change whenever possible. There are two elements worthy of note in this context: (1) discovering and making the best possible use of available data, and (2) being prepared to lead innovation in one's markets or react to innovation accomplished by competitors. It seems true that many MBAs experience inadequate attention in these areas through their curricula.

Responding quickly and appropriately to change requires an understanding of the dynamics of regional markets and different industries. Dynamics are tough to teach in any curriculum, and especially so with regard to the dynamics experienced by businesses. Theory allows addressing dynamics in engineering science, and theory is honed until it predicts experimental outcomes adequately well. Then it can be taught relatively easily. But in business our models may be able to fit to past data, however to predict what might happen in a turbulent market in the future may be extremely unreliable. Teaching from a historical perspective can help, and one of the best ways to learn from the past is the business case. Business case teaching seems to be on the ascendancy in MBA programs, probably as a result of the recognition of the inadequacy of theoretical business models. But case teaching has many challenges of its own. And "times change" so past lessons from even the richest, best-written cases may not be adequate prologue for understanding business dynamics today and for the future.

An educational tool that may help to strengthen teaching of market and competitive dynamics is the computerized business simulation. These are all based on simplified models, of course, although newer adaptive or self-learning simulations promise a somewhat closer approach to reality. The most powerful contribution of the simulation may be that learning occurs differently every time a simulation cycle is executed by the student managers making the business decisions. This exploration of decision making under conditions of inadequate information, followed by promptly experiencing the consequences, is said to have sound educational benefits. Whether the outcomes of a round of competition are wholly realistic or not, the experience of competing in a simulation game may well train the minds of MBA managers-to-be to think more divergently, more intuitively and perhaps more creatively. This capability, when married with good analytical tools, seems to be one of the hallmarks of top management teams in businesses that are consistently successful innovators among their cadre of corporate competitors. Using cases and simulations in courses taught by instructor teams of regular university faculty along with experienced local professionals and managers would importantly add to the richness of the learning experience. We believe, then, that a useful way to address regional and market variability in MBA curricula is to focus on business dynamics to a greater degree. But that approach will likely not be enough.

One View of an MBA Program for the Future
An MBA program seeking to accomplish global-scale learning would benefit greatly from being global in scale. The classrooms, both physical and virtual, need to be populated by students from around the globe and from the variety of industries that are rising to prominence in regional centers. The richest classroom experience would come from a student population that is extensively experienced, represents a broad cross-section of functions and, importantly, is multi-lingual. The instructors need to come from around the globe as well, and collectively bring depth in the disciplines along with insights into regional business practices and economic realities. The ideal instructor mix would include regular full-time faculty from the parent university, faculty from regionally based institutions, and adjunct faculty who have been leading practitioners in their regions. The faculty need to represent the full array of disciplines relevant to global business and growing industries, not just the core topical areas that have always been at the center of MBA curricula intended to provide local focus. They must also represent specializations of emerging importance. Hesitancy on the part of business schools to encompass newer disciplines and create innovative, perhaps cross-disciplinary teaching programs relevant to the future practice of business is an impediment to the aspirations to be global in scale.

The ideal structure of a global MBA program would involve study taking place around the world, meaningful experiences in key corporations and entrepreneurial businesses in each of several global regions, and a flow of topic matter that would build in richness as the program proceeds. A diagram of a possible program structure is given in the accompanying figure. To maximize the intensity of student interaction, a significant fraction of teaching would take place in residency settings of two-week duration. Several instructors would participate in teaching in these sessions, including members of the faculty of both the parent institution and local institutions and adjuncts from local organizations. The majority of residencies would be multi-disciplinary by design and applications-oriented in intent. Study of individual topics would take place in traditional classroom settings scheduled between residencies. A thread of continuity would be established by weaving months-long projects through the various teaching sessions. These projects would be team-based and lead to outcomes of relevance to a global region and one of its key industries. Corporate, non-profit, or local agency leadership would identify deliverables of genuine value that would constitute the topics addressed in the projects, which would culminate in a report at the time of a regional residency. As the program advanced, these projects would become more complex and more challenging in alignment with the growing topical mastery by the students.

Ideal curricular design often has the drawback of being hugely expensive to operate, so information technologies would be extensively employed to minimize international travel costs for students and faculty. All single-topic instruction would take place by distance education methods and half or more of the residencies would be virtual. Used judiciously, information technologies would make the program both educationally effective and financially feasible. While time invested by faculty to make this all work would inevitably be much greater than for traditional teaching, this may be essential to achieving greater relevance for MBAs graduating from the business schools of the future.

Bibliography

Bagchi, P., & Donnelly, R. (2007). Management education at a crossroads: Some insights for reengineering. Decision Line, July. Bennis, Warren, & O'Toole, James. (2005). How business schools lost their way. Harvard Business Review, May.

Datar, S., Garvin, D., & Cullen, P. (2010). Rethinking the MBA. Boston: Harvard Business School Press.

Ghoshal, S. (2005). Bad management theories are destroying good management practices. Learning and Management, Academy of Management, 4(1), March.

Hambrick, D. C. (2005). Just how bad are our theories? A response to Ghoshal. Academy of Management Learning & Education.

Khurana, R. (2007). From higher aims to hired hands: The social transformation of American business schools and the unfulfilled promise of management as a profession. Princeton University Press.

Pfeffer, J., & Fong, C. T. (2002). The end of business schools? Less success than meets the eye. Academy of Management Learning & Education, 1(1), 78-95.

Mintzberg, H. (2004). Managers not MBAs. Harlow, UK: Pearson Education.

Gordon, Robert A., & Howell, James E. (1959). Higher education for business. New York: Columbia University Press.

Pierson, Frank C. (1959). The education of American businessman. New York: McGraw-Hill.

Starkey, K., & Tiratsoo, N. (2007). The business school and the bottom line. Cambridge, UK: Cambridge University Press.

Mintzberg, H., & Gosling, J. (2002). Educating managers beyond borders, Academy of Management Learning and Education, 1(1).

 

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