Soapbox: Why business schools are running in place?

The prophets of doom are circling above the b-school landscape, some gleefully predicting the end of their amazing 40 year run of popularity and influence, and others more solemnly anxious about what their future may be. While their specific concerns may vary, the prophets all see significant disruption in the world of higher education in general and the world of business education in particular. And they are right.

Both worlds, tightly connected, are facing massive change in their traditionally insulated – and some would argue insular – production systems and business models, and it is not clear to what extent – and even whether – many of the incumbents will be able to adapt successfully.

While every business school claims to be on the cutting edge of innovation, the truth is that change has so far operated at the periphery and has hardly touched the core of the business model. Across the globe, business schools continue to add physical facilities, research faculty, IT Infrastructure, and to invest in branding and marketing, all this in the hope to defend or improve their position in the rankings.

Inertia instead of innovation

Business schools have responded, in chorus, to disruptive trends with ‘more of the same’ strategies. The decline in the number of candidates to the GMAT, the closure of some full-time MBA programmes, the struggles of schools like Thunderbird, and the defensive mergers of others have not distracted the great majority of business schools from the pursuit of business as usual.

Why are business schools having such difficulty adapting to the new realities they are facing? A very commonly accepted answer blames inertia on the professoriate, and sees professors as both fiercely protective of tenure and its privileges and reluctant themselves – both individually and collectively – to make any significant change in what and how they teach and in what and how they choose to research.

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One of the boldest, but by no means only, advocates of this perspective is Peter Lorange who wrote an article in this column in November of 2008 titled “Faculty jobs for life must go”. Others, like Wharton colleagues Christian Terwiesch and Karl Ulrich, authors of another article in this column titled “Business Schools must decide response to the digital revolution” in November 2014, see the development and spread of Moocs as heralding the downfall of education as we have known it and threatening the survival of incumbent players.

Complex ecosystem poses problems

We have a different view. Sure, recalcitrant professors are part of the problem, and sure, new technologies enabling radically different approaches to teaching are part of the solution, but the inertial forces are more numerous and in many ways more deeply rooted than professors. They include companies that hire graduates, alumni that contribute large sums to their alma maters, ranking producers who influence how prospective candidates compare schools, and accreditation agencies that award or withhold their stamps of approval on schools. All these stakeholders, not only the professors, benefit, in different ways, from the status quo.

Any serious reflection about change in business schools must acknowledge that they are embedded in a large, complex ecosystem where forces of inertia have, so far, outweighed forces of deep change. To break from the pack, to stop running in place, exposes bold innovators to the risk of losing legitimacy and revenue. Breaking from the pack requires vision, courage and a huge appetite for risk, a troika that is extremely rare.

Case study: Yale

To illustrate, consider the case of the business school at Yale. Founded in 1976 as the Yale School of Organization and Management with a mission to prepare leaders who could function effectively at the interface of the private, public and non-profit sectors, it was explicitly innovative, designed to be an alternative to the traditional business school.

To signal this difference, it granted an MPPM degree, a Masters in Public and Private Management. Central in its curriculum was a required course called “Individual and Group Behavior”, designed to develop students’ “soft skills”. And at its head was William Donaldson, an individual whose distinguished career in business and government was a model of what the school sought to develop.

Where is the school today? It is now the Yale School of Management, granting an MBA, with a curriculum, mission, faculty, and striking new Norman Foster-designed facility that are decidedly “mainstream”, much more so than its founders ever intended.

What happened to the original charter and the innovative dream behind it? They were profoundly transformed by the pull of the various parts of the school’s ecosystem. The MPPM degree created confusion in the marketplace. No one knew how to calibrate it. No one knew what the “product” would be and how various needs would be met with the product. Over time, as mimetic forces played out, a sort of regression toward the mean ensued, and the school became a “me too” player.

Case studies: Cambridge and the IMPM

And Yale is not alone. In 1991 the University of Cambridge launched a ‘sandwich’ three-year MBA where students remained with their employer and alternated academic learning with practical application. Six years later this innovative approach, the ‘most practical MBA in the world’, was terminated and replaced by a 12-month MBA degree.

Even more recently, in 1996, Henry Mintzberg, a vocal critic of the traditional MBA degree, initiated IMPM, an “International Masters in Practicing Management” programme. While the initiative was highly publicised, it has not created a new model in business education. Rather, it is now presented on the website as “the managers’ EMBA”.

Call for fundamental change

The challenges encountered by Yale, Cambridge and the promoters of the IMPM illustrate how difficult it is to develop and sustain new and innovative approaches - even if you are a de novo and are presumably able to start with a “clean sheet of paper” - in an ecosystem that reinforces stability and rewards continuity. Also, it explains why the efforts of most schools to adapt to a rapidly changing environment today represent at best incremental tinkering with the model that has served so well for so long.

Little wonder, then, that they have such difficulty moving beyond tinkering as they struggle to adapt. How many casualties lie ahead in the world of business education as b-schools continue to run in place? Probably not as many as the most vocal critics predict, but certainly more than the most ardent defenders imagine.

Hamid Bouchikhi is professor of management and entrepreneurship at Essec Business School, in France. John Kimberly is professor of entrepreneurial studies at the Wharton School, University of Pennsylvania, in the US.