Out of the Classroom
and Into the Street

Summer 2010 By MATTHEW BUDMAN

Charting a new course for B-schools and MBAs.

MATTHEW BUDMAN is editor-in-chief of TCB Review.

Who will be running your company in ten or twenty years? And will she have an MBA? More than likely: Sure, top B-school grads may have helped drive the global economy into the ditch, but they still constitute a deep pool of future corporate leaders, well-rounded and ready for anything, right?

Sort of. At a time when business desperately needs leaders capable of thinking through tough situations, who understand how organizations work and how cultures can clash, B-school programs are producing too many graduates underprepared for a high-level corporate environment.

So Harvard Business School professors Srikant Datar and David Garvin have set out to change the course of business education. With co-author Patrick G. Cullen, they interviewed corporate executives as well as B-school deans in researching and writing Rethinking the MBA: Business Education at a Crossroads (Harvard Business Press). They’re looking to shift attitudes and curricula away from imparting knowledge and toward teaching problem-solving skills and exploring value systems. With any luck, then, the next generation of MBAs will be more self-aware, more ethical, more flexible in thinking. That’s not to say that there won’t be a next economic crisis, but perhaps B-school graduates will be working to prevent it rather than to perpetrate it.

Datar and Garvin spoke from Garvin’s office at Harvard Business School.

Over the last thirty years, the number of MBAs earned has grown more than sixfold, to 150,000 in 2006-07. Are there too many people in business school now?
Srikant Datar: Our main concern is with quality and what is being taught rather than quantity. It’s hard to say whether there should be more than that or less than that.
David Garvin: I’m not sure I would think about it in terms of absolute numbers, since business is increasingly complicated these days and the need for some level of graduate training in business is quite high. You could certainly argue that people already in business could use some additional seasoning, and we’ve seen an increase in people from NGOs and not-for-profits in MBA programs. So there’s a set of people who historically would have gone to law school or to a public-policy school, and they’re increasingly shifting to a business education because they do see the value.

Yet you’re not exactly defenders of today’s B-school programs.
Garvin: The issue is the imbalance or incompleteness in what those 150,000 people are getting in their MBA training: We’d like to see business schools change their programs to focus less on knowledge and more on students’ skills and sense of purpose. We believe those MBAs would be far more effective after graduation.
Datar: In business programs, the focus has been very much on knowing, and certainly theories, frameworks, and principles are all very important. But within the knowing category, we argue, there should be more of certain types of thinking skills that are not emphasized nearly enough: critical thinking, integrative thinking, understanding the limitations of markets and models.

So should MBA curricula focus less on, as you put it, “analytical frameworks and quantitative techniques” and more on “softer, hard-to-measure organizational skills”?
Garvin: There are two parts to our argument. One is that the teaching of techniques and frameworks—the harder analytics—needs to be coupled with a sense of skepticism, a sense of when these models apply and when they may not, and the ability to think critically about how one uses the analytical tools. And second, business schools need to include more soft, capability-building activities, more managerial activities, more personal-development activities than programs have historically included.

To that point, you discuss how MBAs “are often surprisingly naïve about organizations”—they don’t understand how processes and politics work. Can that be learned in a classroom?
Garvin: Business schools need to dive deep into experiential learning—field projects of various kinds that immerse the students in real-world business settings—because that’s the way you learn about politics. That’s what action learning is all about—you immerse people in the field, give them projects, and then they say, “Gee, there are feudal loyalties here. Department X doesn’t talk to Department Y. They’re not looking for the best answer—they’re looking for an answer that’s good enough but implementable.” And that’s the kind of thing that comes from experience in a learning setting.

Then again, you talk about the unavoidable gap between B-school research and “the knowledge needs of practicing managers.” Should programs be trying to close that gap altogether?
Datar: We definitely don’t want to go back to the way business schools were in the 1950s, with largely anecdotal training rather than training based on research. But the focus today is too narrow. We’re arguing for a broadening of that research lens to areas such as field-based research, synthesis of ideas, and trying to communicate theories to managers. These would be extremely valuable in helping MBAs understand what happens in organizations.

How quickly are B-schools moving in this direction?
Datar: It’s definitely noticeable. If you look at the journals from ten or fifteen years ago, there’s a real shift.
Garvin: But change comes slowly, because it’s bound up with the practices of refereed journals in the field, the scholarly associations, and promotion practices. What we’re really suggesting is that, as part of accepted, high-quality research, there be something like a scholarship of practice, with the same tight intellectual and scholarly standards, but a shift in the kinds of questions and the kinds of problems being addressed. And we are seeing that: A number of the leading journals now accept clinical field studies as papers, and many new academic books have a strong scholarly element but are also very much aimed at practical problems. They take research and translate it.

Considering the range of areas in which executives often work today, do you feel B-schools offer enough of a multifunctional perspective?
Garvin: One of the hardest things to teach is what Srikant referred to as integrative thinking, or the multifunctional perspective. And in many ways, that’s still an ideal that is very tough to reach, because what do general managers do? They coordinate across a set of functions and activities and somehow make it into a synthetic whole. That’s a very difficult skill to teach, and even after fifty years of aspiring to provide a general management education, business schools struggle with the best way to do that.

Are B-school programs sufficiently global in scope?
Garvin: In the interviews we did for Rethinking the MBA, that was the number-one concern of both executives and deans. It was universally voiced as a question mark in how we move forward. And the question was: How can we develop truly global managers? What everyone is looking for is a global mindset: cultural intelligence and the ability to work with people of different nationalities, with different norms and values, and get things done. And that, again, frequently requires some sort of immersion experience, on-the-ground activities, multinational field studies. Schools have this front and center on their agenda, but it’s a difficult nut to crack.

Also front and center: ethics. A number of people have blamed B-school curricula for at least some recent corporate scandals and the economic crisis in general, saying that students aren’t learning ethical business practices. Is that a fair criticism?
Garvin: Well, we can’t very well claim that our graduates are responsible for certain successes in their organizations without shouldering some responsibility for some of these issues. But this is a complex problem with a multiplicity of causes, so while business schools need to shoulder their responsibility for some of the issues we’ve seen in the crisis, so too do central bankers, regulators, designers of incentive schemes, those in leadership positions without MBAs, and so on. I have taught the HBS ethics course for three or four years now, and one of the things we teach students is the power of situation in shaping behavior. Sometimes the situational pressures to cut corners are great, and students need to understand those pressures so they can learn to actively resist.
Datar: Business-school deans took certain lessons from the crisis. One was that we need to understand the limitations of markets and models—how much of this is science, how much of this is driven by human intentions, how well do markets work, and do the assumptions we typically make about when they work always bear out or not? And we need to discuss the roles and responsibilities of business.

Other business schools are following Harvard’s lead in making ethics an integral part of the curriculum. Do you expect that to have a tangible impact on future business practices?
Garvin: I would certainly hope so. Let me give you three concrete examples from my HBS ethics course. First, we spend a tremendous amount of time up-front teaching students the notion of fiduciary duties and fiduciary responsibilities. That is in many ways eye-opening for them, but I would hope that if they rise in corporate office positions and ultimately assume board responsibilities, those notions of fiduciary roles will play an important part in shaping their behavior. Second, and this is very pertinent to the headlines of the last few months: We spend a number of days in class talking about what constitutes fraud, and we give students different gray-area decisions to wrestle with. And third, we spend a certain amount of time comparing failure stories like Enron and WorldCom with classic success stories like J&J and the Tylenol disaster under Jim Burke and Solomon Bros. after Warren Buffett stepped in to right the sinking ship.
Datar: We’re trying to get students to do deep self-reflection and think about what constitutes correct and incorrect behavior. It’s the precise reason why people teach their children values: You do it because you know that at some point in their lives they’ll be confronted with some event that neither you nor they expected, and what you hope is that they’ll rely on those values to make the right choices, because none of us is smart enough to explain every little detail that they might encounter. But these courses need to promote self-reflection.

Doesn’t deep reflection go against the trend of students being interested only in the quick buck? In Rethinking the MBA, you talk about how THEy’re spending less and less time on coursework and how they’re focused more than ever on their post-degree earnings.
Datar: Yes, it used to be the case that 75 or 80 percent of the class got jobs after they finished their second year of the curriculum and were then recruited by firms. Now, in many industries, they get recruited in their first semester—perhaps for a summer job—and then 75 percent of those summer jobs get converted to full-time jobs in their second year. That’s a shift that has naturally caused more of the focus to be in the direction of networking and recruiting and job search rather than the education itself.

Was there a time when people earned MBAs simply for the love of knowledge?
Garvin: If you talk to our alums who have been out twenty, thirty, forty years, they had a very different perspective on their business education: Yes, it was the start of a career, but it was an opportunity to learn deeply across a wide range of subjects. The level of intensity around recruiting activities and job-search activities in the ’40s and ’50s and ’60s was far, far less, and the scales were weighted in a different fashion, with far more attentiveness to what was going on in the classroom.

How do executives perceive MBAs who have undergone a very different education than they themselves had?
Datar: Every executive we’ve talked to loved their particular experience and wishes today’s programs were more along the lines of their own. On the other hand, they’re fully aware that realities, such as early recruiting, are different now. I think that at the end of the day, so long as people are trained reasonably well for the jobs they’re being hired for, they’re still OK with the way things are. But it’s a question: Is there a tipping point at which MBA programs are too far out of line with what you want students to learn?
Garvin: Clearly the demand is still there; executives are voting with their job-search processes and saying, “We do value MBAs.” But executives would like to see some unmet needs fulfilled, whether it’s graduates’ presentation skills, a clearer sense of the limitations of frameworks that they’re given, or the ability to work effectively in team environments. Deans and executives are in agreement that they wish the MBAs coming out of our programs could do more.

More of what?
Garvin: Business schools could offer more in the way of skills training and leadership development. In interviews, a universal theme that we heard from executives was the desire to give MBAs a greater sense of self-awareness about their impact on others and others’ impact on them, about their ability to work together collectively, about the clarity of their communication skills.

Even so, though, you still believe that executives scouting high-potential future leaders should be looking primarily to MBAs?
Garvin: If I were an executive and I wanted to hire somebody who was going to become a leader in my organization, I would go right to the top business schools. They have by far the most talented students, and those students come out well prepared—even though they could be better prepared in a number of different areas. Those are the folks I would want in my company running the show in ten or twenty years.