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Management has been one of the great innovations of the 20th century and business schools are where the foundations of management and leadership can be learnt in a systematic way. Many schools are still relatively young, but there is evidence of the positive effects they have had on graduates, companies and societies.
But corporate needs are changing and society’s expectations of companies and business leaders are also evolving. Managerial problems in companies, governments and society are becoming bigger and there is a need for better management education and research. Business schools should be there not merely to profit from those opportunities, but also to drive change and promote personal, corporate and social progress.
But before schools can do this, they need to address their own deficits.
●Business schools need a deeper sense of mission and must better explain what they want their role in society to be, if they truly want to have a positive impact.
●On average, academic institutions do not have a good track record in governance. The absence of shareholders, the tenured-faculty status and the sheer complexity of measuring performance make business school governance an uphill task. The fact that some professors have become “stars” – with conflicts of interest with their own schools – and the almost exclusive emphasis on research of some schools, make corporate governance more complex. Each school must develop its own governance model, with the role of faculty, alumni and the board well defined. Whatever model is chosen, it must pass the test of accountability and should become a reference for other universities.
●As demand for management education increases, but the supply of PhD graduates in business-related areas remains stable, a faculty shortage may be looming. Business schools could do a better job in terms of developing faculty. In drawing a finer balance between teaching and research they could help young professors become more productive.
●The growth of management studies has taken for granted a basic hypothesis of finance: that the only goal of companies is to maximise shareholder value. The founders of some of the main business schools in the US and Europe thought that companies had a wider role in society, believing that educating entrepreneurs and general managers was important for the good of society. But schools have lost sight of this. They have to rethink the foundations and the purpose of companies and the role of senior managers in society. They also need to better integrate an ethical view of management across the curriculum. Financial incentives have a role, but the hypothesis that they alone can drive individual and social progress contradicts evidence. Society needs a more humanistic view of the firm and management.
●Business schools became relevant because they developed knowledge about the main areas of management. But as some schools became more interested in promoting research similar to other disciplines (economics etc), some research output became increasingly irrelevant to management practice. Many business schools also have a limited offering of executive programmes, which does not help faculty connect with real world problems. Relevance is a big challenge for some schools.
●The business school financial model is based on either endowment (US) or fees from executive education (European) – or a combination. The limits of relying on an endowment for covering regular expenses are clear. But the limits of using executive education as a revenue booster are also important. Executive education is an important service business schools offer companies. Having two organisations for degree and non-degree programmes may create problems; such as the lack of relevance of faculty members who only teach in degree programmes, or the disconnection between executive education and the school’s wider mission.
The current crisis is a great opportunity to reflect on one’s mission and strategy. It is an important challenge for each school and a collective one for the business school industry.