The Business School is not Dead

An article from latest Schumpeter, the Economist column on business and economics, discusses the state of business schools today. It is not pleasant. The writer says that like doctors who smoke, and dentists with rotten teeth, the business school has professors who constantly flout their own rules:

…it is a rare profession where failure to obey its own rules is practically a condition of entry. Business schools exist to teach the value of management.  [link]

In other words, as the title of the article succinctly states, “Those who can’t, teach.” I cannot completely disagree with this line. Not everyone who teaches in a business school has practical experience, but I can also argue that that is not a prerequisite to teaching business. In fact, sometimes, practical experience gets in the way of good teaching. You very easily can miss the forest for the trees.

Also, many times, the field is relevant. In a technical field such as finance, there are many things that can best be taught by people who are familiar with the tools and their evolution — which can only be learned through both research and usage. Some of my best teachers taught me not only how to use the tool, but where it originated from as well, which clearly displays its weaknesses. All models have their weaknesses, and it is good to know what they are. This is important in finance, but also in other fields. In other words, research is important to both practice and teaching. And you don’t necessarily have to be a practitioner to do that well, though an awareness is of course important.

The writer says in that same article:

The most fashionable phrase today is “disruptive innovation”: professors solemnly warn people that entire industries face powerful new forces and that comfortable incumbents are at the mercy of swift-footed challengers. But when it comes to their own affairs, business schools flout their own rules and ignore their own warnings.

In the interests of full disclosure, I can say that I have never used that phrase while teaching. However, he has a point. Many times, business schools will ignore their own warnings. It is easier to give advice than to take it, and it is even harder to implement it.

Though I am not so sure that the business school is being disrupted. Yes of course, I am aware of the tectonic technological changes (or “disruptive innovations”) going on around us: massively open online courses (MOOCs) for one, and online teaching for another. But in my experience, the average student still gains the most from a face to face setting rather than online. Just ask our Hybrid EMBA students (Hybrid meaning half-online, half face to face).

The author also discusses rising costs as a problem. Certainly these are going up, but I don’t believe it is a make or break issue. Prices are flexible, and have to change with demand and supply. I believe we will see this happening in the future. In fact, he even discusses some schools that are doing that:

The obvious solution for schools outside the top tier is to compete on cost or innovation. Though the average fee for an American MBA course has risen by a third over the past four years some schools, such as Cornell and Rochester, are offering shorter courses and others, including Maryland and UCLA, are forgoing the annual fee increase. Ashridge, near London, focuses on short courses for executives.

There are schools like my current one that focus primarily on teaching. We are not an elite school, and I believe that our main advantage over the more elite schools is this focus on teaching. Which brings me to his next point, with which I absolutely cannot disagree:

 Professors [at the elite level] have too little incentive to focus on teaching: the best will perish unless they publish in the right journals. And they have too little incentive to produce usable research. Oceans of papers with little genuine insight are published in obscure periodicals that no manager would ever dream of reading. Innovation is fuelled by bringing ideas from different spheres together. But academics specialise in dividing the world into tiny sub-disciplines. And when you get to the fat middle of the market these problems rise to the level of dysfunction.

Alas, such is the nature of the beast, and I have no arguments here. I am guilty of participating in this as well, but to survive in the field, this is necessary.

But one thing we can take away from this is that perhaps we can all learn from each other. In other words, the elite schools can do a little more to focus on teaching, and the teaching schools can do a little more to focus on research. And maybe, just maybe, that might result in the playing field becoming a little more level and the Economist writing fewer articles of this nature.


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