Friday, May 28, 2010

Changing faces of MBA curricula ....

“VALUES” are all the rage at business schools nowadays. In May2010 around 300 graduating MBAs at Harvard Business School will take an oath, pledging to play a positive role in society once they graduate. At the last count, this is slightly fewer Harvard MBAs than took the oath when it was introduced last year. There are now over 3,000 signatories from more than 300 institutions.

It will be unsurprising if, this time next year, taking the oath is compulsory rather than voluntary at Harvard, given Nitin Nohria’s recent appointment as dean of its business school. Even if Mr Nohria decides not to pick a fight over the ethical pledge with the many sceptics on his faculty, he has made no secret of his support.

On the other side of the country, another dean of the Haas School of Business at Berkeley is making an audacious bid for leadership in the somewhat implausible crusade to turn business schools into moral wellsprings. The MBA students who arrive after the summer will take a course that has been thoroughly revamped, in an effort to achieve a cultural shift and will go much further than any MBA oath could achieve.

Business schools have trailed behind leading companies in managing their internal culture. These schools have long trailed behind leading companies in managing their internal culture. One camp aims to map the competitive landscape, and position their organisations at the point on the map that offers the greatest opportunity. The other camp prefers to focus inwardly on an organisation’s values and core abilities, and then to pursue success by playing to those strengths.

Haas already has a reputation for producing a different sort of MBA from other elite schools. “Business schools are known as breeding grounds for over-confidence, for hubris, for arrogance, for self-focus. But recruiters tell us that one of the defining features of our students is ‘confidence without arrogance’.” Indeed, a similar phrase, “confidence without attitude”, is now one of four core defining principles behind the redesign of the MBA course, along with “question the status quo”, “students always” and “beyond yourself” (ie, “considering the long-term impact of our actions and the facility for putting larger interests above our own”).

Yale has scrapped conventional subjects; Haas is trying to teach the old subjects in a new way

The reforms at Haas are being billed as one of the most radical shake-ups of an MBA programme since both Yale and Stanford changed theirs in 2006. But whereas Yale scrapped conventional subjects such as marketing, accounting and strategy in favour of more nebulous themes such as the customer, innovation and business and society, the Haas approach involves teaching the old subjects in a new way, by emphasising 15 specific skills, including experimentation, revenue-model innovation and risk-selection.

Only about a fifth of the curriculum will be different, but most of the changes will be at the beginning of each course, so students will feel a big change. There will be three new core courses, out of 12: problem framing, exerting influence without formal authority, and leading people. The other nine are being revamped. For instance, the focus of the statistics course will now be to get students to think about what data they would like to have to make a decision, and how they would get that data—to “turn them from consumers of data into experiment designers, producers of data.”

In marked contrast to the rumblings of discontent heard at Harvard, Haas’s changes seem to have gone down remarkably well with its faculty. When Mr Lyons put his redesign to a vote four months ago, 54 of his teaching staff approved, four abstained and no one was against. The changes have also been well-received by both alumni and incoming students, who will now be more rigorously assessed for compatibility with the culture to create. At the very least, this seems intelligent marketing for Haas in an increasingly competitive MBA marketplace. What difference it will make in practice to the quality and character of its MBA graduates, only time will tell. As with the MBA oath, talking the talk is a lot easier than walking the walk.

Elite MBA schools have recently been plagued by self-doubt and the financial crisis has dealt them with a double blow. It has damaged their reputations, because so many bankers are MBAs. It has also dented their market: Wall Street laid off 240,000 people in the 18 months from the middle of 2007.

The business-school boom depended largely on the idea that MBAs were entry tickets to the world’s two most lucrative professions: investment banking and consultancy. These trades not only consumed more than half the graduates of the leading schools. They also underwrote the schools’ finances: students were willing to pay $100,000 in fees and living expenses (and forgo even more in income) because they were all but guaranteed jobs in these high-paying industries.

But banks and consulting firms are could start to recruiting people without MBAs, particularly mathematicians and computer scientists. They are also getting keener on growing their own. Why lose a hard-working 25-year-old for a couple of years when you can train him internally and keep him at the coal face? Banks are increasingly dominated by traders who think MBAs are a waste of parchment.

Criticism of MBAs extends beyond consultancies and banks. People in many industries worry that business-school professors are more concerned with pure theory than with practical management (promotion is usually earned by publishing articles in academic journals rather than by teaching, advising businesses or gaining managerial experience). The professors themselves complain that their students are spending ever more time looking for jobs and ever less time studying.

These problems are already taking their toll on the two-year courses that once constituted the ideal of business education. Students are gravitating to one-year MBAs, which are offered by 70% of European business schools, and more specialised courses. Lower-ranked business schools are already finding it harder to fill their places. The elite worry that the trend will eventually catch up with them too.

Yet business schools have an important asset: they are remarkably flexible compared with the rest of academia. Even before the financial crisis they had begun to implement far-reaching changes. Both Stanford Business School and the Yale School of Management have changed their curricula radically in the past few years. Others will surely follow.

Business schools are facing the need to go globalisation. INSEAD led the pack by opening a second campus in Singapore: all its students have a chance to study in Asia as well as Europe. Almost everybody has leapt on the bandwagon. The Booth School has outlets in three continents. Most schools have research centres across the world.

Business schools have also struggled to make their courses less theoretical. Yale has replaced conventional subject-based courses (marketing and so forth) with “integrated” courses based on “constituencies” (such as investors, customers and employees). The University of Michigan’s Ross Business School gives students a chance to work with, say, hospitals in India and energy companies in Mozambique. Most schools are trying to employ more people with practical experience.

One problem is that these changes add to the already exorbitant costs of MBAs. Yale’s curriculum reform cost $2m-5m. Stanford’s entailed increasing the faculty by 10-15%. But in straitened times business schools will have to do more with less, drawing on professors from other faculties and on outside business people. In 2008-09 Harvard Medical School had a faculty of 10,884 to cope with an entering class of 165 students because it draws on such a wide range of talents. HBS looks unnecessarily exclusive by comparison.

The new generation of deans will undoubtedly preside over dramatic changes. But the changes already made have produced one huge benefit: a much more variegated environment. Business schools are offering a greater variety of courses taught in a greater variety of ways than ever before. Perhaps they are finally becoming as vibrant as the subject they study.

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