January 25, 2010 12:01 am

Stefan Stern: A flying start

In his warmly-received new book How Markets Fail: The Logic of Economic Calamities, John Cassidy draws a distinction between what he calls “utopian economics” (the narrow, academic material based on the assumption that humans act rationally), and “reality-based economics”, which is altogether more practical and down-to-earth.

I was reminded of this distinction by something CK Prahalad said at last November’s Drucker Global Forum, which was held in Vienna to mark the centenary of Peter Drucker’s birth. Prof Drucker, he observed, always looked ahead to what future management practice might be like. In his writing, he advocated a “bias for action”. But while he was enormously prolific, and influential, Drucker had never really been embraced by the academic community. And so, Prof Prahalad said, should business school academics not ask themselves if their focus on rigour meant that their work would always have less relevance for practising managers than the less lavishly footnoted texts of Peter Drucker.

. . .

This is not a new debate, of course. In May 2005, Warren Bennis and James O’Toole published their sharply-worded Harvard Business Review article, “How Business Schools Lost Their Way”, which also questioned the usefulness of some academic research into management.

While marvelling at the “scientific” method of some academics, Bennis and O’Toole expressed doubts about its worth. “Some of the research produced is excellent,” they wrote, “but because so little of it is grounded in actual business practices, the focus of graduate business education has become increasingly circumscribed – and less and less relevant to practitioners.”

Bennis and O’Toole were damning. “Business schools are institutionalising their own irrelevance,” they said. There was a “faulty assumption that business is an academic discipline, like chemistry or geology. In fact, business is a profession, akin to medicine and the law, and business schools are professional schools – or should be. Though scientific research techniques may require considerable skill in statistics or experimental design, they call for little insight into complex social and human factors and minimal time in the field discovering the actual problems facing managers.”

The situation was clear, they said. To get tenure, an academic needed to publish articles in peer-reviewed journals. But publishing something more practically useful in a professional journal or, God forbid, a newspaper, would do your career no good at all.

This debate continues. In a new paper for the Journal of Management Enquiry, entitled “Crossing Boundaries to Increase Relevance in Organisational Research”, Harvard Business School faculty members Jeffrey Polzer, Ranjay Gulati, Rakesh Khurana and Michael Tushman urge colleagues to broaden their approach to achieve both rigour and relevance.

Clearly, business school professors need to have a substantial understanding of their subject, reflected in conventional academic work. But Prof Prahalad has a point, too. A bias for action in research, helping to “operationalise new concepts”, as he put it, would be helpful.

. . .

In a budget-constrained world, “relevance” is likely to matter more and more. Eric Abrahamson, a professor at New York’s Columbia Business School, set out the danger for business school academics who fail to maintain their relevance in an Academy of Management Review article in 1996. In the sometimes faddish world of management, he wrote, it could be important to be seen as a “fashion-setter”.

There was a constant race to be relevant. “Fashion-setters who fall behind (eg business schools or certain scholarly professional societies) are condemned to be perceived as lagging rather than leading management progress, as peripheral to the business community, and as undeserving of societal support,” he wrote.

Aspiring fashion-setters need to stay in touch with “the emergent collective preferences of managers for new management techniques”, Prof Abrahamson noted. They need to find the language to describe these techniques, and then communicate effectively with the business audience.

The testing year of 2009, just ended, has underlined the force of this argument. Managers have had a terrible time. If they were able to consider new ideas or analysis, they will have been grateful to read something to the point, and practical. It brings to mind that image of the German actor Gert Frobe, appearing in Those Magnificent Men in Their Flying Machines. Frobe plays the Prussian Colonel Manfred von Holstein, who tries to pilot his plane by reading a theoretical manual on flying. He is only partially successful.

Academics at business schools need to make sure that they are “keeping it real”, in the same spirit as the “reality-based economics” advocated by John Cassidy. Students need to acquire not just the ability to analyse and form judgments, but also practical, real-world skills. After all, business schools do not want to provoke any more scepticism and mockery, such as that found in the cartoon of the new MBA graduate on his first morning at work, asking his personal assistant to “bring in the first case study, please”.

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