How Business Education Must Change

Former U.S. Federal Reserve Chairman Alan Greenspan recently noted that in many cases, “old-fashioned corporate decision-making hasn’t caught up with new Information Age tools.” Indeed, companies must increasingly function as nodes in vast knowledge networks, and it is obvious that many of them are not up to the challenge. The problem, in part, is that business schools do not seem to be researching and teaching how to best make use of networks, optimal links and information. A Web search on the topic of organizational networks identified only four U.S. business schools that have made this a priority. Since there are approximately 1,000 schools offering MBA degrees, it appears that many business schools have missed a turn in the road to the new paradigm.

One of the reasons for this can be traced to the history of business schools. The rapid growth of the economy after World War II created a demand for executives with MBAs. But in the 1950s, studies of the curricula produced strong criticism by the Ford and Carnegie Foundations that courses were too descriptive and lacked analysis. This resulted in many schools changing their MBA courses to require skills in calculus, set theory and probability to form a better basis for understanding statistical analysis. This emphasis had an impact on the research that was conducted in business schools. By the late 20th century, articles that were strong in quantitative methods but weak in relevance to business were favored for publication. As a result, many business schools have increasingly de-emphasized the executive’s perspective and, most recently, managers’ need to respond to the growing role of information as a defining factor in organizations.

Moving business schools into the future and restoring their relevance begins with an understanding of how business organizations are evolving from hierarchical organizational design to horizontal networks that are linked by sharing information, knowledge and skills. Ideally, business schools would be more active components of a global network of other university departments, companies, government agencies and nongovernmental organizations. This would allow schools to present students with an experience more likely to prepare them for the new management challenges, and it would tie academics more closely to the executive perspective.

In addition, business school course content would need to be changed to expand student experience in innovation and creativity. Most of today’s courses on “entrepreneurship” simply teach students how to apply core business methods to a new venture. They focus on “managerial’’ entrepreneurship, that is, what happens after the idea has already been developed. While these courses are important, it is vital to supplement them with classes that focus on innovation itself. “Innovative’’ entrepreneurship course material needs to instruct students in the process of generating new ideas. These methods, such as the Osborn-Parnes model that takes managers through a six-step innovation cycle, have been used for 60 years. However, they are increasingly becoming the province of the consulting industry, which is tightly focused on the executive perspective but often at the expense of rigor.

There will be great resistance to change in some programs, but change is undeniably needed. Warren Bennis and James O’Toole have noted that “Today, business practitioners are discovering that B school professors know more about academic publishing than about the problems of the workplace. It’s no wonder there’s been such a marked increase in the number of in-house corporate universities and for-profit management education organizations.” And the gulf may continue to widen. Some PhD programs are requiring applicants to have already published two articles, but no business experience is required. In contrast, many MBA programs require two to five years of business experience for acceptance.

If that trend continues, these students will find that they have more professional experience than their teachers.