24 Nov 2008  HBS Centennial Colloquia Reports

Harvard Business School Discusses Future of the MBA

The MBA industry is in turmoil. Many business schools are revisiting their offerings to see if they still have relevance in the 21st century. And HBS is using its centennial year to convene worldwide experts on business education and plot its directions for the next 100 years. From HBS Alumni Bulletin. Key concepts include:

  • Critics claim MBA programs put too much emphasis on theory and not enough on leadership in a global environment.
  • A number of top MBA programs have retooled their offerings. HBS is looking at several change proposals, including the development in students of "soft skills."
  • Whatever curriculum changes HBS ultimately adopts, the School will remain committed to the case method.

 

For the school that so boldly launched the MBA 100 years ago and went on to become the bluest of blue-chip brands in business education, it seemed only fitting that Harvard Business School should mark its centennial year by examining the future of the degree it invented.

"It was our view that you need to think critically about what you are doing every 100 years or so, whether you need to or not," Dean Jay Light wryly observed in opening remarks to an unprecedented campus gathering last March of business school deans, corporate recruiters, and executives. It was a welcome moment of levity given the seriousness of the topic at hand. Some of the schools represented had already implemented major MBA program reforms. Others were considering them. But everyone had one thing in common: Each had assisted HBS professors Srikant Datar and David Garvin in their painstaking research to render the most complete contemporary picture of MBA education.

"The level of cross-school cooperation was unprecedented," Datar said afterward. For Datar and Garvin, the two-day session was a "thank-you" to the participants for their generous support and a dress rehearsal for a faculty colloquium in May intended to frame the issues for potential curriculum changes at HBS. (To ensure open discussion, comments made during the two colloquia were not for attribution.)

For their research project, Datar and Garvin interviewed 30 deans and associate deans and roughly 100 students in large and small groups. They wrote case studies on MBA programs at Chicago, INSEAD, Stanford, Yale, and HBS, plus a case on the Center for Creative Leadership (all are available from Harvard Business Publishing); collected data on aggregate trends in MBA enrollments and program designs; and compiled a detailed curriculum analysis of eleven business school programs. To complete the picture, they also interviewed leading academic critics and 28 executives and recruiters. The findings presented a mixed diagnosis of the health of MBA programs but on balance were, in the words of one HBS faculty member, "depressing."

Such pessimism seems more than a little counterintuitive. In a global economy, corporations have a seemingly insatiable need for good managers, one that will only grow in the years to come. To meet that demand, business schools around the world turn out about 500,000 MBAs a year, with upwards of 150,000 of those in the United States alone. At HBS, the business of business education is thriving. Applications are on the rise again after trending downward for several years. Only one out of nine applicants to the Class of 2010 got a coveted acceptance letter. Almost no one passes up the opportunity; 91 percent of those accepted started class this fall, a yield unmatched by any rival. HBS MBAs are in high demand in the job market. So where's the rub?

"Conventional MBA programs train the wrong people in the wrong ways with the wrong consequences." –Henry Mintzberg, McGill University

Despite these positive indicators, there are deep-rooted concerns about the "industry." For example, a number of well-respected academics have leveled withering critiques at business schools in recent years.

Warren Bennis at USC's Marshall School of Business argues that they are "institutionalizing their own irrelevance" by becoming too focused on scientific research that has little connection to business reality. Ten scholars echo Bennis's criticism in the December/ January 2008 issue of the Academy of Management Journal in which they question the value of business school research.

Henry Mintzberg of McGill University in Montreal devoted a book to his contention that "conventional MBA programs train the wrong people in the wrong ways with the wrong consequences."

Leadership, central to the mission of HBS and other top schools, can't be taught in a classroom, he contends. Mihnea Moldoveanu (DBA '97) of the University of Toronto's Rotman School of Management maintains that the MBA is in crisis "because it selects for and cultivates traits and skills [tied to specific disciplinary knowledge] that are increasingly vacuous and superfluous." And HBS professor Rakesh Khurana contends that many business schools have been complicit in creating recent corporate scandals by turning out graduates fixated on shareholder value at the expense of all other stakeholders in society.

If academic critiques were not discouraging enough, Datar and Garvin distilled more bad news from their research.

"There's an escalating drumbeat of concerns from alums, from students, and from customers—the companies that recruit MBAs," Garvin explained in an interview. Among their findings:

  • In the 1960s and 1970s, MBAs graduated with valuable, current business and management knowledge. If companies wanted new hires with cutting-edge insights, they'd hire an MBA. According to several deans, that's no longer true.
  • Financial services and consulting firms, which hire roughly two-thirds of all graduates from top-ranked MBA programs, increasingly have in-house programs for developing and promoting talented employees who have only undergraduate degrees. One anecdote drove the point home. When Datar asked a partner at a top consulting firm whether he would recommend that a bright, young associate with five years of experience pursue an MBA, the answer was, "No, absolutely not. She would advance just as quickly staying with us."
  • A number of recruiters said that what they value most is the screening process top schools use to pick students, and a few preferred to recruit straight from a school's admission list.
  • In an increasingly globalized world, deans and recruiters generally believe that business schools have not gotten globalization right. They want students with heightened cultural awareness and a more refined global outlook.
  • Notwithstanding mission statements to the contrary, many deans and recruiters complain that MBAs don't understand the practice of leadership or have sufficient awareness of their impact on others.

Reflecting on these findings, Garvin concluded, "Business as usual isn't good enough."

The Ford Foundation changed everything

What's usual today dates back nearly fifty years to a 1959 Ford Foundation report that sparked a revolution in American business education.

The report characterized MBA programs as "vocational" in content and "indefensible" in quality, citing the low caliber of students, faculty, curriculum, and research. Most teaching was based on business anecdotes. The remedy advocated by the report was to ground the programs in strong disciplinary knowledge.

The report's impact was swift and dramatic, writes Khurana in his sweeping history of American business education, From Higher Aims to Hired Hands (Princeton University Press, 2007). Within five years, business school faculties became specialized along traditional academic disciplines, with particular emphasis on economics and quantitative analysis. And that's largely where they remain today.

At the time, it made sense to structure business education around academic disciplines, explains Joel Podolny, dean of the Yale School of Management and a participant in the March colloquium. (He previously was a professor at HBS.) "The strict disciplinary model of management education arose at a time of large, vertical corporate bureaucracies, when management careers and management problems were carved up by function," he continues. "A typical manager would spend his entire career within one function—say marketing, finance, or accounting—and he would be given only a piece of a larger puzzle on which to work."

But times have changed, says Podolny: "As organizations have become flatter, those running them are looking for leaders who can see opportunities and address problems that cut across functional boundaries." Even managers in large organizations have to think and act more like entrepreneurs in their ability to synthesize information and coordinate people and resources on an increasingly global scale, he says.

As the business landscape took on a completely new look beginning in the mid-1990s, academic critics found an easy target in the mismatch between the fundamental disciplinary focus of most MBA faculty and business reality. Enron and other corporate scandals early in this decade added legitimacy to complaints that business schools, and their graduates, had lost their way. And with the exception of top-ranked schools, two-year MBA program enrollments began to decline in favor of executive and part-time MBA programs. Against this backdrop, a number of schools concluded that business as usual was bad for business education, and they plunged into self-examination projects. Yale and Stanford, among others, recently redesigned their MBA programs, and their efforts provide valuable insights into issues facing HBS.

For its part, HBS never traveled as far down the disciplinary road as other top business schools. While the School did hire more faculty with strong disciplinary research backgrounds, it remained steadfast in its mission to deliver a general management education, facilitated by the case method of teaching and a corresponding faculty commitment to remaining close to actual business practice. Moreover, the School continuously evaluated and updated its curriculum.

"The general criticism of MBA programs you read today—that MBA education at most schools has drifted too far into theory and has relatively little relevance for practice—I actually think that's a valid concern," Light says in an interview. "But I don't think that's the issue for us."

Why? Because the case method of instruction is at the other end of the pedagogical spectrum from ivory-tower disciplinary research, explains Light. By its nature, the case method requires students to range across disciplinary and functional boundaries. For faculty, writing cases, some 400 a year, means less time in the ivory tower and more time elbow to elbow with owners and managers.

Even Warren Bennis, who popularized the ivory-tower critique, agrees that HBS is different. In an interview, he noted that the School often has been criticized for the opposite problem—in essence, for being "too practical."

Light also questions Henry Mintzberg's argument that MBA students can't grasp the meaning of leadership because they have never led anything.

"He can't possibly mean our students," says Light. "Just go talk to them. They know what leadership is. In our classrooms we have plenty of students who have had real positions of leadership and know what it's about."

The real issues for HBS, Light continues, are found in the changing nature of business itself. It's more global, more technology dependent, and less hierarchical. Knowledge-based industries are overtaking older, more basic industries. And the pace of change is quickening.

"So we have to understand how the world is changing and make sure we're preparing our students for the future," says Light.

That was the challenge faced by the roughly 100 HBS faculty members who attended all or part of the May colloquium. Most agreed that business schools are skilled at "know what"—teaching disciplinary and functional knowledge. But they fall down on "know how"—teaching students how to think beyond information silos and to be more self-aware as leaders.

It's the "know how" that's most valued in the business world, Datar and Garvin found in their research. How to bridge the "knowing-doing" gap became a focal point of discussion. By the end, a consensus "bordering on unanimity" emerged, says Garvin, namely, that bridging the knowing-doing gap at HBS means supplementing the curriculum in three areas: globalization, experiential learning, and leadership development.

But how? "That's the big question," says Datar. "To put it in the context of HBS, do we believe that every one of these things can be taught in a ninety-person classroom in a case-discussion format? That is the fundamental question we are grappling with."

Curriculum reform at HBS

Acknowledging that HBS can do more in the areas of globalization, experiential learning, and leadership development isn't an admission of doing little or nothing. Far from it.

Professor Krishna Palepu, senior associate dean for International Development, contends that most people don't fully appreciate how much HBS has already done to advance a global agenda in the MBA Program. Beginning in 1996, HBS has opened six research centers that today facilitate faculty research in Asia, Europe, Latin America, and Silicon Valley and provide the springboard for upwards of 130 cases a year.

"Our research center strategy has put us in a much better position than most other schools," says Palepu.

The centers are the linchpin in the faculty's quest to develop materials, frameworks, and theories that will prepare students to function in a global economic environment. Palepu explains: "If you have global frameworks that are robust and travel across boundaries, you don't actually have to teach management country by country. So the first order of business for us is to get the global content right so that when our students graduate they can work for a company that is operating in multiple geographies." In that regard, Palepu and other faculty foresee the possible addition of a required course on global management issues, plus more emphasis throughout the curriculum on international issues.

"We have to understand how the world is changing and make sure we're preparing our students for the future." –Jay Light, HBS

Beyond the classroom, global preparation also involves travel, study, and work abroad. This is where experiential learning comes into play. At HBS, students already have access to several winter break Immersion programs created to provide noncredit educational experiences that complement classroom work. Last January, four programs took students abroad to China and Vietnam, India, the Middle East, and Europe. Light and many faculty members see an opportunity for HBS to expand the Immersion programs. There's no substitute for the experience of actually being on the ground in another country, notes Datar. The question remains whether such experiences should be required.

Leadership development, the third fertile area for HBS curriculum innovation, goes to the very heart of the School's mission to educate leaders who make a difference in the world. Who those leaders are has changed dramatically over the past generation, from a largely white, male, domestic student body to one today that is 38 percent female, 27 percent ethnic minorities, and 33 percent international.

How HBS teaches leadership has changed, too, evolving from narrowly focused industry- and discipline-based courses to more diverse, integrative courses that reflect real-world complexity. In 2004, the School inaugurated its most ambitious leadership course ever. Leadership and Corporate Accountability, a first-year requirement, presents managerial challenges from a cross-disciplinary perspective. The course, developed by faculty experts in ethics, law, finance, accounting, and organizational behavior, aims to give students an analytical framework for thinking about tough, contemporary business issues by combining economic, legal, and ethical perspectives and requiring students to wrestle with the often conflicting needs of multiple stakeholders.

What more should HBS do? Deans and recruiters told Datar and Garvin that MBAs in general need more soft skills, such as self-awareness and the capacity for introspection and empathy. They also found MBAs lacking in critical and creative thinking, as well as communication skills. "These skills lie much more on the 'doing' side of the scale than the 'knowing' side," says Datar.

Such soft-skills development by its very nature involves labor-intensive small groups and requires "high-touch" faculty involvement with students. And that's a potential issue. While faculty may be interested in pursuing such options, there's a counterbalancing concern about being stretched too thin. There's also concern that faculty steeped in disciplinary research might not be good at, or even interested in, taking on soft-skills development.

One work-around, suggests Palepu, is to become more flexible in staffing. "There's already a continuous shortage of faculty at all the top schools, and I don't see that abating any time soon," he says. Without more flexibility, not much can change. "Right now we're saying either 100 percent is done by our faculty, or it's not done. But what if we said 80 percent is done by the faculty?" That would leave 20 percent for skilled nonfaculty practitioners to advance certain teaching objectives, Palepu explains.

Garvin cautiously suggests a similar approach, turning to Harvard Medical School for an analogy. "The Medical School has 17 affiliated teaching hospitals, so when it offers small-group teaching and tutorials, the school draws on doctors in the affiliated hospitals," says Garvin. "We may need to consider a similar model where faculty are heavily invested in the design of courses and then guide others, perhaps alums or skilled adjuncts, in the delivery of project-based learning."

Faculty committee studies options

The School's next steps are now in the hands of a faculty committee headed by Professor Joe Badaracco, who chairs the MBA Program. Datar and Garvin are members along with seven other faculty members. The group's challenge is to hammer out details for implementing changes in the three areas where there's broad agreement for action.

Ideas abound. In response to an invitation from Light, 50 faculty members sent the committee detailed curriculum proposals ranging from two to several pages. Thinking through their ramifications poses a daunting task. For example, adding small-group, soft-skill development may sound simple, but doing so for some 900 students would have a significant impact on faculty teaching assignments, recruitment, and research, as well as on the School's facilities.

"Our research center strategy has put us in a much better position than most other schools" –Krishna Palepu, HBS

Whatever curriculum changes HBS ultimately adopts, one thing is certain. The School will remain steadfast in its commitment to the case method.

Reflecting on the discussions that took place during the faculty colloquium, Garvin says he detected "no sense at all that the case method is in need of repair." The program changes under consideration would "supplement and complement the case method to do some things that it's not designed to do." Adds Datar: "Figuring out the exact mechanisms for how we do that is the job ahead for the committee."

For his part, Dean Light sees the work as important to the School's second century.

"Throughout our history we've had periods of frank self-reflection," he notes. "The Centennial has provided an opportunity to assess the impact of significant innovations over the past few decades in the context of a rapidly changing world—to step back and see the forest and the trees."