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Welcome to the FT Business school newsletter, a weekly serving of management wisdom, reading recommendations and business-related challenges. FT subscribers can sign up here to receive the newsletter by email every Monday. If you have any feedback about FT Business school, please email firstname.lastname@example.org.
Andrew Hill’s challenge
The FT's management editor sets a weekly test of your business, strategy and management skills.
I spent last week chairing the FT Outstanding Directors Exchange conference in New York — an exclusive, and off the record, discussion among serving US board directors. A recurrent theme was the problem of "refreshment" — bluntly, how to encourage directors who aren't up to the job to leave the board. It was notable that many of the female directors see this as one issue that is preventing boards from becoming more diverse.
In the UK, there's a suggested nine year limit, after which directors are no longer automatically deemed independent, but no such restriction exists in the US. This week's challenge, then, is to suggest a solution, or series of solutions, to the problem. Term limits? Age limits? More coaching and self-evaluation? Or something else? As always, send your concise suggestions to email@example.com.
Last week's challenge was to imagine how new technology — from the blockchain to artificial intelligence — could be applied to revolutionise or reform traditional approaches to management. Jade Bouhmouch suggests using blockchain for "evaluating and rewarding management performance and correcting for behavioral biases. For example, if management record their decisions and decision-making processes in a ledger that they later have no way of altering, we could use this as a trustworthy method of evaluating management decision making and the validity of the process". As explained in last week's column, I'm still waiting for a solution that overcomes the possibility of error, or worse, when the data are entered into the chain.
For further reading this week, the New York Times columnist Adam Bryant looked back at 525 of his "Corner Office" interviews with chief executives for a fascinating article about "How to be a CEO".
Every week a business school professor or academic recommends useful FT articles.
KPMG’s audit of HBOS shows why the public expects much more As the Big Four professional services firms are popular employment destinations — management students should pay attention to what is going on in their worlds. PwC has been criticised over a possible conflict of interest in its work for Ofwat and some water companies. KPMG has been cleared of its role in the HBOS failure, but is suffering reputational damage because of its work for companies associated with the Gupta brothers in South Africa. Audit firms play a key role in global financial markets by lending credence to companies’ global financial information. Protecting their reputations is therefore important for the audit firms.
Ryanair’s voluble boss suddenly lost for words Ryanair is often used an example of cost leadership, one of Michael Porter’s three generic business strategies — the company has maintained its competitive advantage by providing low fares. However, when you fail to deliver the basic product — getting people promptly from A to B at the lowest possible price — you have a major strategic problem. Michael O’Leary could think more about the resource-based view of business strategy, the “bundles of human resources” which Edith Penrose — the economist — long ago said were critically important to the continuing growth of an organisation.
Academics urge universities’ pension fund to explain shortfall Management students are rarely interested in pensions. (They should pay more attention – their pensions will almost certainly be their largest financial investment.) Management faculty, on the other hand, are very interested, especially when there is a problem with their own pension scheme. How hard must it be to manage a pension fund whose members included the country’s leading statisticians, economists and physiologists, who collectively must know more about forecasting, investments and mortality than any actuary or pension fund manager – and who are not afraid to pose questions in the press.
Jonathan Moules' business school news
Business schools are temples to globalisation, free trade and open markets. However, the political mood in many of the world’s richest nations has shifted towards isolation and separatism. How do schools deal with this, and what is going to be the impact in nations and regions where governments are trying to create independence?
It is a year since the UK referendum on EU membership that resulted in the complex and contentious process of Brexit. The Chartered Association of Business Schools, the UK’s industry body, has this week published data from its 120 member institutions, showing a significant minority of schools suffering losses of EU staff, a drop off in applications from EU countries and an increase in “no shows” of students that had a place, but did not turn up at the beginning of the current school year.
Looking at this, I have found some passionately held concerns about the UK splitting from the EU. However, what is also clear is that moving jobs or choosing a course is more complex than one issue, even one as large as Brexit. The depreciation of the pound has made British MBA courses comparatively better value in the last year, for instance. Brexit has also created some interesting job opportunities for those working in UK schools and with an interest in studying real life situations of trade renegotiation. Family commitments also make it difficult to just pack up and leave, even for those who find living in the UK harder now as a foreign national.
The UK is also not the only country dealing with such issues. The Catalan crisis has put pressure on the two leading schools in the region, Iese and Esade, as a recent business school blog noted. The Trump presidency in the US, and its anti-immigrant rhetoric, is also being blamed for part of the decline in applications to many American business schools. Blog posts are being written, such as this from admissions consultant Stacy Blackman, to help American MBA applicants looking at the alternatives overseas.
Figures from organisations like GMAC, show that there have been a flight to quality among MBA applicants for several years. Political unrest in certain locations may accelerate this process, and undermine the standing of some schools in these places if local job opportunities evaporate, but it also shows how a strong brand is far more important than geography in the business school market.
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Edited by Wai Kwen Chan — email@example.com