What Future for Business Schools?

MT sat down recently with the heads of three of the UK's top business schools - Cranfield, Ashridge and Henley - to find out where management education is going.

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Last Updated: 09 Oct 2013

As pictures of handcuffed former MBA-wielding heroes fill our TV screens, louder and more insistent questions are being asked about the culture of business and the institutions where some of the most notorious exponents of corrupt practices acquired their management spurs.

Distinguished voices, including that of leadership guru Warren Bennis, have joined the debate. In a Harvard Business Review article in May, Bennis asked why business schools have 'lost their way'. His view? Too much obscure, pseudo-scientific research is being pursued by unworldly academics living in a 'publish or perish' culture. The students emerging from these schools are ill-equipped to deal with the real, messy world of management. They have theories and flowcharts and quaint analysis coming out of their ears, but little experience, poor judgment and questionable values.

The late Sumantra Ghoshal explored the same question in one of his last essays, published just before his death. With characteristic honesty, he argued that business schools themselves had much to answer for. 'It is our theories and ideas that have done much to strengthen the management practices that we are all now so loudly condemning,' he wrote.

Chuck in falling student numbers for the once gold-standard MBA, plus Henry Mintzberg's now famous critique of management education, summarised in his recent book Managers not MBAs, and for once that overused journalistic term 'crisis' does not seem an exaggeration. What do our business school heads make of it all? One aspect of their leadership would have met with even Warren Bennis' approval: they are not panicking. But they are all far from complacent about the task they face.

Running a business school represents a pretty remarkable management challenge.

There are those creative but difficult faculty members, and demanding, articulate students - who, by the way, are paying thousands of pounds for the privilege of studying there. There is the fierce competition among the 100 or more UK institutions that are in the business of awarding MBAs.

And there's the challenge of managing the bureaucracy of research assessment exercises, and attracting high-quality staff within the constraints of unwieldy and unrealistic pay scales. Above all, there's the challenge of relevance: maintaining an intelligent, productive dialogue with the business and not-for-profit community.

On the positive side, the changing demands of business and students mean that the job is more varied and stimulating than ever. All our business school heads spoke of the need to be more dynamic; to break down the boundaries between their schools and the 'real world'; to marry research and practice; to develop stronger and deeper ties to the firms they work with; to maintain more energetic links with alumni; and to build a living network with managers who remain in contact with the school between time actually spent on-site.

The heads of these three institutions are doing what any half-decent business guru would recommend: focusing on their customers. That should be good news for them, and for MT readers despairing of being stimulated or helped in any way by what business schools have to offer.

MT: Which big issues demand most of your attention at the moment?

KAI PETERS, chief executive of Ashridge: For us, the area of growth in the business education and management development field are the programmes aimed specifically at organisations, and I think the challenge there is to find the right way of co-designing activities with companies. We are very busy trying to help define strategic intent, strategic implementation, and the people issues that arise from that, with the clients.

Ten years ago there would have been executive education courses that looked like traditional courses, lasting a week, where people learned a variety of content skills. Now we have much more integrated coaching, consulting and educational interventions that try and really help that organisation move forward. It's radically different from what we've seen in the past. Opening discussions will involve CEOs as well as management development people, who will try and define the agenda for that organisation for the next five to 10 years. We then jointly design some sort of intervention based on people's individual skills, their group setting and the strategic context in which they act.

Business education is not just about going on a course - it's become much more complex than that.

MT: Do you find that CEOs are up for this more people-focused conversation?

PETERS: Well, the macro trend behind this is the move from manufacturing to knowledge industries. That means we are working with people - that's the asset that we have - rather than with machinery, equipment and so on. We need to get them to pull in more or less the same direction.

CHRIS BONES, principal of Henley Management College: That's a nice model. I think you are looking at three institutions here that are moving away from what I see as the university-based, primarily undergraduate, business education proposition, which is a manufacturing model. It has a product - a degree or a masters degree - and we define what goes into that product; if you want to have a version of that product, that's fine, as long as it's what we have on our production line. And that offer, I think, is increasingly irrelevant.

What do people want from us? They want understanding, they want partnership.

And when they talk about customisation, they don't just mean 'two of those and one of that' from a list of courses; they mean something that is quite new, created with their own flavour, their own language.

PETERS: In the knowledge environment - it's a sweeping statement, perhaps - but each organisation is much more independent, much more driven by the culture of that individual institution. What works for one mobile telephone operator will not work for another. You have to work with the culture of that group of people, their legacy, their ambitions, their history, their future, to try and get them to be actively involved. If they buy in, something will happen. But if a consultant comes along and floats 'the future of telephony' on their desks, everyone says: 'Oh, another report', and carries on doing whatever they are doing.

MICHAEL OSBALDESTON, director of the Cranfield School of Management: I don't disagree with a lot of what Kai and Chris are saying, but much of it reflects executive education. There are other aspects to what business schools do. The role of research - a traditional academic activity - is a huge challenge: how to make it relevant, to build research into programmes, to build research into services.

Another part of the spectrum is the MBA programme, which is at the heart of a school like Cranfield. The MBA is a huge challenge at the moment.

It's an oversupplied marketplace. It's a product that is hugely variable in its quality, not only in the UK but around the world. I was reading an article in a US magazine recently that talked about 'MBA meltdown'.

MT Is there really a meltdown going on?

OSBALDESTON: I think meltdown is an over-the-top term, but MBA applications have fallen across the world, particularly in American business schools.

Our potential students are looking much more closely at the quality of the MBA on offer. It really is a buyer's market.

BONES The MBA market for the 26-year-old guy who wants to double his salary is in meltdown. There are significant falls in numbers. But the distance-learning/MBA-at-work numbers are still growing. And the average age of our MBA student is 35. It's a very different type of individual making a different decision - somebody moving out of a functional role to the next level, quite often in partnership with their employer.

PETERS: We've redesigned our MBA. Some MBAs don't focus on organisational issues or individual issues. You're going to struggle to be successful in business if you don't have people skills, the ability to influence without power, the ability to reflect on yourself, and motivate and lead.

MT: Can you expect 25-year-olds to emerge from an MBA course able to manage?

OSBALDESTON: You can't expect it and you shouldn't expect it. But, interestingly, the market for a one-year masters, a kind of pre-experience business qualification, is going very well.

BONES: Employers are wary of recruiting young people who have merely gone to study management. It doesn't build any critical faculty, unlike an academic degree. If you study management, or marketing or HR, you are taking it verbatim from somebody else, because you have no experience, no context and no ability to challenge, and employers have worked that out. The whole point about management is that it is a practice. We take you out after a degree of experience to reflect on that experience.

PETERS: I think all three of us run courses where we ask questions rather than give answers. That may sound a little abstract, but when you work with organisations, that's the sort of conversation you have.

BONES A key difference between us and consultancies is that we are not selling solutions. We are selling evaluative frameworks, we are selling critical thinking models, we are selling processes to get through to good answers, but ultimately we don't claim to be experts in your content.

We're not building a dependency relationship; we're trying to build a capability development relationship.

OSBALDESTON: Our role is to challenge you, to challenge everything you have learnt so far, and then encourage you to take risks and experiment.

There are other programmes out there in the marketplace about which we would have significant doubts.

PETERS: At different stages of your career you have different questions.

Pre-experience courses that are about knowledge transfer can make sense.

But I maintain that it's unrealistic to load up 21-year-olds with module after module on leadership or strategy.

BONES: If you have little experience but loads of knowledge, you get Enron.

Most of us would endorse the Mintzberg critique of the MBA.

OSBALDESTON: And if you look at his work, he is quite complimentary about what is going on in UK and European business schools. Most of the better thinking about MBA redesign, and what it might become, is taking place on this side of the Atlantic.

PETERS: The advantage in Europe is an understanding and acceptance of diversity, of shades of grey. It comes from understanding that Spain is different from Germany, that France is different from the UK; that there are multiple languages.

OSBALDESTON: Whenever you see the league tables of the top 50 business schools around the world, the number of those that come from the UK or Europe is really quite significant. There is still a feeling out there in British industry of 'if only our business schools would do this, if only they'd do that', but some of our schools really are punching above their weight.

MT: What explains the negative perception that some business leaders have about you all?

OSBALDESTON: If we have a marketplace that doesn't understand the richness of what we have to offer, then we have to ask ourselves why we haven't communicated more effectively with this marketplace, why we aren't closer to it and why we aren't making them more aware of the good things that are going on.

PETERS: You could almost say that there are two fundamental product lines. There's a business-to-consumer market - MBAs, open programmes - that gets all the media attention; but at Ashridge, that's only 10% of what we do. The other part - the executive education, the consulting activity, the research activity - doesn't generate the same volume of media coverage. The CEOs who get involved and say: 'I'm going to differentiate my organisation by having leadership, strategy and management competence, I'm going to spend my time working with my people and engaging with them', their businesses outperform the market.

BONES: One criticism that can be rightly aimed at the sector as a whole is that we don't always look very businesslike. That's a challenge we have to take on.

PETERS: We're SMEs, not General Motors. We shouldn't think that we are bigger than we are.

OSBALDESTON: We should be businesslike, but we are not businesses.

PETERS: We should be efficient and effective, promoting creative thinking about the future and about organisations, in ways that are efficient and effective - which means working with groups of 30 students rather than 500. We all know how to maximise profits but, as Michael says, that's not what we are here to do.

BONES: We are doing some research now on how you measure our 'value-add' - I think it has to do with building intellectual capital.

PETERS: I wish you luck, but if you are talking about leadership development over the next 10 years, it is hard to measure.

MT: What new directions are you moving in?

OSBALDESTON: We've just opened a 'knowledge interchange' at Cranfield, and I think there is going to be more and more demand on all of us to provide this sort of learning service to clients, for people to be able to work when they are away from the school.

PETERS: I think the way in which the business school can help is in realising the direction that the industry is moving in - helping to create discussion and dialogue within an organisation. We can also help them to skill up. The goal is to be able to say we have made an impact for that organisation, and they are more effective, happier and successful as a result.

BONES: At Henley, I hope that we help managers to make the right choices - right for themselves, right for the organisation. That means acquiring business techniques along-side personal development - reflection, self-discovery, understanding the impression you make on people. This includes the discussion about the ethical content of what we do, managing relationships with society, suppliers and so on.

MT: Sounds a million miles away from the US business school model.

BONES: In fairness, I think the US schools have been traumatised by some of the big corporate misdemeanours. I think there is probably more thinking going on about that now than we are aware of.

OSBALDESTON: I'm sure attitudes have changed there. And don't knock their ability to raise funds and generate knowledge.

PETERS: Where is innovation happening in business schools? Something we have been doing here that has been growing is organisational development consultancy. As executive education moves away from traditional courses, it gets increasingly difficult to say where education stops and where consulting starts or where behavioural psychology starts.

We deliver at the site of the client with the management team - without a script, without prefabricated PowerPoint - a knowledge transfer. You're working on a discussion basis, working for clients. This is where your bedside manner really counts. Engaging with people there really matters.

But, traditionally, business school academics have been more introverted, dedicated researchers.

MT: We've talked mainly about the domestic scene, but what about the increasingly international dimension to business and business education?

OSBALDESTON: Our students are drawn from all over the world, our clients are increasingly drawn from all over the world, we are working with organisations like Shell that are in 135 countries around the world. Despite our size, they expect us to be international too - international in who we employ, international in the way we think, international in where we draw our research and materials from. And the only way I can move rapidly down that line is through partnerships, and I've been building partnerships around the world with targeted organisations.

Strategic alliances with like-minded institutions is the way to go for us, whether it's about students going there, faculty coming to us, or joint activities. Even to the extent of saying - as we did a month ago to an Australian client - that we would set up a Cranfield faculty in a Chinese business school with a largely Australian bunch of people.

ASHRIDGE

2004/05

Income: £30 million

Full-time faculty 102

Fees full-time MBA, £29,500; executive MBA, £28,850

STUDENT NUMBERS: All MBAs 150

Diploma in General Management 58

Masters in Organisation Consulting 36

GLITTERING ALUMNI: Trevor Bish Jones chief executive, Woolworths Group; Priscilla Brewin vice-president, western Europe, McDonald's; Sue Shipley partner, Odgers Ray amp; Berndtson; Lord Cecil Parkinson former chairman, Conservative Party ; Ronnie Irani, Essex and England cricketer; Gill Edelman chief executive, I Can

CRANFIELD SCHOOL OF MANAGEMENT

2004/05

Income £32.4 million

Full-time faculty 124

Fees full-time MBA, £26,500; executive MBA, £33,000

STUDENT NUMBERS: Full-time MBA 126 Executive MBA 79, MSc 165, PhD 60, DBA 37

GLITTERING ALUMNI: Andrew Harrison CEO, easyJet; Andy Bond chief executive, Asda UK; Nigel Doughty chief executive, Doughty Hanson and chairman, Nottingham Forest Football Club; Miles Flint president, Sony Ericsson; John McFarlane CEO, ANZ Banking Group

HENLEY MANAGEMENT COLLEGE

2004

Income £23.2m

Full-time faculty 56

Fees full-time MBA, £31,000; part-time MBA, £26,950; distance-learning MBA, £13,300; flexible evening MBA, £26,950

STUDENT NUMBERS

Full-time MBA 50

Part-time MBA 159

Evening programmes 145

DBA and PhD 90

GLITTERING ALUMNI

Barry Gibbons former CEO, Burger King; Sir Geoffrey Holland, vice-chancellor, Exeter University; Mike Blackburn former CEO, Halifax

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