Transforming business school futures: business model innovation and the continued search for academic legitimacy

Citation

Cornuel, H.T.a.E. (2014), "Transforming business school futures: business model innovation and the continued search for academic legitimacy", Journal of Management Development, Vol. 33 No. 5. https://doi.org/10.1108/JMD-02-2014-0016

Transforming business school futures: business model innovation and the continued search for academic legitimacy

Article Type: Guest editorial From: Journal of Management Development, Volume 33, Issue 5.

Introduction

The business school is certainly one of the major success stories in higher education over the last 40 years. Despite this success there have been many more recent comments and criticisms and about the purpose, role and academic stature of business schools. Thomas et al. (2013, pp. 8-9) outline thoroughly the nature of these criticisms in the following manner: “Critics accuse business schools of doing arcane, irrelevant and impractical academic research; doing a poor job of preparing students for management careers; pandering to the market and the media rankings; failing to ask important questions; and in the process of responding to the demands from their environment, losing claims of professionalisation as they ‘dumb down’ the content of courses, inflate grades to keep students happy, and pursue curricular fads”. Others argue that contemporary management education does a disservice to the profession by standardizing content, being too analytical and not action oriented, focusing on business functions (instead of the process of managing) and training specialists (rather than general managers). Indeed, they point out that educators do not appear to recognise that management is an art and not a science (Mintzberg, 2004). They also criticise business schools for being too insular and not global in their thinking and values, and for not fully integrating experience, theory and reflection into group (rather than individual) decision-making processes. And, these critics perceive that business schools do not encourage managers to incorporate an integrative, team-based philosophy and do not provide sufficient ethical and professional guidance.

Some academics strongly defend the research emphasis in business schools developed in the years following the Ford and Carnegie Foundation reports (Gordon and Howell, 1959). For example, Cooley (2007) argues that “The research mindset brings a unique and powerful focus to business education. It is forward looking rather than backward looking. It moves education away from teaching students a collection of facts to teaching them how to think. It moves them from a stultifying ‘best practice’ mentality toward developing analytical ability” (Thomas et al., 2013, p. 9).

Building on this theme, Robert Chia argues in his extensive writings that for too long business and management studies have been taught in narrowly-based “business schools” construed as stand-alone, entities rather than as “schools of business” or “schools of management” that are inextricably linked to a wider university tradition. He believes that this necessary re-contextualising of business and management studies into the scholarly tradition of rigorous research and reflective contemplation reminds us that universities are social institutions whose purpose is not simply to solve today's business problems but to envision possible societal futures unthinkable under current paradigms or thinking frameworks.

In a recent keynote presentation at the EFMD Deans Conference (30 January 2014) in Gothenburg, Sweden, Adrian Wooldridge (the Schumpeter columnist in The Economist (see Economist, 8 February 2014, p. 58)) echoed many of the criticisms of business schools and even wondered whether in fact the business school has yet achieved the form of academic respectability in the general environment of higher education advocated by Chia. He sees the key stumbling block as the stifling impact of what he calls the “academic guild” with its attendant PhD machine and specialisation in narrower and narrower disciplines. He argues that this often results in research which has little impact on business problems and lacks important depth and, particularly, an interdisciplinary character.

More significantly, he regards the business school community as beset by intellectual inertia and conservatism, as exemplified by its narrow focus on business principles of the maximisation of shareholder value. As a consequence the perspectives of alternative stakeholders and the role of business in its national, global, governmental and societal context are inadequately addressed. This institutional conservatism is evident in the adoption of a dominant academic design in the business school curriculum and generates a “herd” mentality weakening curricula innovation. He also notes that this behaviour is emphasised and reinforced because a majority of Deans themselves come from the “academic guild” and not the practical management domain.

Despite these institutional failures, Wooldridge believes that business schools are central to management in the twenty-first century but suggests they are underperforming. Therefore, they need to re-invent their business models and shift to a model framed around the more inclusive concept of “schools of management”. In particular, he points out that as a consequence of the strength of the “academic guild”, the balance of the business schools output is too narrow and tends to overly reward the “wrong” things of a disciplinary, academic character. He emphasises that they need to have more practitioners/business people on their faculties and need to focus more on training essential management principles, ethics and leadership character.

However, it is important to ask why this sense of academic legitimacy and attendant institutional values (stressed by the “academic guild”) is important to business schools? (see Thomas et al., 2013, pp. 47-48)

First, legitimacy is viewed as important for its long-term survival. The evolution of the business school (Thomas et al., 2013, Chapter 1) illustrates how, in order to integrate and survive as part of the university system, an intense and rigorous approach to management education was adopted. But, as Schoemaker (2008) stresses, the paradigm offered by the Ford/Carnegie reports (Gordon and Howell, 1959) “with its strong focus on analytic models and reductionism is not well suited to handle the ambiguity and high rate of change facing many industries today”. Second, there are performance implications with regard to the current focus on so-called A-Journals and academic journal citations. What is the impact of this volume of academic research?

There is growing evidence that current university business school research serves increasingly as a commodity product, which is disjointed from the liberal pursuit of knowledge, a principle on which universities were founded (Willmott, 1995), and from the needs of managers to solve management problems. Indeed, the extent to which business schools compete for the highest rankings, the best cadre of students and faculty, the greatest number of citations in the highest impact journals and secure the largest possible slice of research funding suggests that schools exist in an era of “hyper-competition” (Starkey and Tiratsoo, 2007). This presents a serious problem of maintaining organisational legitimacy.

Improving business schools’ societal and corporate legitimacy may be addressed in a number of ways. First, much work should be done to improve the context of research, the practical engagement with managers and the dissemination of research through translating findings adequately. Second, the key performance metrics and mechanisms of business school research need to be critically appraised with regard to whether they demonstrably enhance the state of the management discipline or management practice. Above all else, there is now the increasingly common argument and proposition is that the field of management education should be much broader, including careful examination of managerial skills of problem search and framing, strategising and implementing change (see Muff et al., 2013; Thomas et al., 2014).It should not be beset by narrow functional specialisation. It is clearly characterised by paradox and ambiguity (Schoemaker, 2008) and, hence, requires holistic thinking, and important skills of synthesis as well as insights into analysis and analytic thinking.

Indeed, adopting Newman's (1852) principles of liberal education into the management curriculum would require the renewed development of the important intellectual skills of analysis, criticism and synthesis. For Newman these skills were fundamental and their objective was clear. They allowed the individual to become introspective, open-minded, insightful and possess the ability to absorb knowledge critically in framing problems and making decisions. Such liberal education courses are currently not common in existing business school curricula.

Typically, the domain of basic management foundations and knowledge about the structure and functioning of organisations is usually the core focus of many existing management programmes. Most curricula address the following elements: “the social and organisational environment (the domain of social scientists); the economic and financial environment (the domain of economists, business cycles, lawyers and accountants); and the strategic and quantitative elements of marketing, operations, logistics and public/corporate policy (the domain of managing growth and organisational direction)” (Thomas et al., 2013, pp. 93-94).

Unfortunately, most current programmes overemphasise domain knowledge and underemphasise the multi-disciplinary nature of the management task. “Without proper grounding in Newman's intellectual and synthetic skills, Mintzberg's (2004) armoury of interpersonal skills and, given the global environment, Hirsch's (1987) skills of cultural literacy and sensitivity, thorough grounding in domain knowledge is clearly insufficient. And, the urgent challenges of change in management processes and the global business environment will force a redesign of many existing curricula” (Thomas et al., 2013, p. 94).

Clearly and as noted by Wooldridge (2014), since the financial crisis of 2008, business as a capitalist institution has received much criticism, especially with respect to its obsessive focus on creating shareholder value as opposed to shared value (Porter and Kramer, 2011, Currie et al., 2010). Business schools are now at a strategic crossroads and at a turning point in their evolution. There is growing mistrust of capitalism as business leaders are seen to reward themselves with increasingly high salaries and bonuses. They are often perceived as greedy and not seen as creating greater good for society. Traditional approaches of philanthropy and corporate social responsibility (CSR) are often perceived as “Trojan Horses”, involving “lip service” to CSR and generating undirected debate rather than action. (Thomas et al, 2014, p. 174)

Further, the new generation of business students are now questioning what companies are doing for sustainability and community when they make their career choices. There are new movements seeking to broaden the purpose of business into a “triple bottom line” (profit, people and planet) focus, for example, Conscious Capitalism (2008) advocated by Raj Sisodia and supported by John Mackey at Whole Foods or Connected Capitalism advocated by Neville Isdell, a former chairman of Coca-Cola (2011) (Thomas et al., 2013, p. 138).

In Europe a number of business schools have increasingly advocated the virtues of stakeholder capitalism. They have been reinforced by management education organisations such as EFMD, European Academy for Business in Society (EABIS) and the Global Leadership Responsibility Institute (GLRI) and the World Business Council for Sustainable Business (WBCSB).

Instead of leading this change, most business schools seem to be trapped by old paradigms of the role of business education in society (Thomas et al., 2013, p. 139); (Thomas et al., 2014, p. 169). They are either unable or unwilling to change. The inability to change arises partly from conservatism and orthodoxy and partly from isomorphism engendered by accreditation standards. Unwillingness to change may arise from current strong levels of market demand and from the denial of the new realities of the business environment.

In addressing necessary change, Simon's (1976) essay on the business school as a problem in organisational design provides a set of design principles for evaluating new business school models and approaches. (Thomas et al., 2013, p. 164)

“He views the business school as a professional school that should follow the goals of the university, including both the pursuit of knowledge for its own sake and the application of knowledge to practical pursuits”. It therefore must embrace the world of practice and identify the information and skills (particularly from the social and mathematical sciences) that can improve practice. In linking academic and practical management concerns, the business school must, however, be fundamentally rigorous in research and teaching.

Simon stresses that management is an “art” and hence this requires the business school faculty to work across boundaries and disciplinary “walls” to encourage better communication between discipline- and practice-oriented faculty and address solutions to management problems and issues that are interdisciplinary in character.

In essence, following Simon's advice, the research and teaching capabilities of the business school must be directed towards addressing major business problems and issues in an ambiguous, complex and multi-disciplinary world (Schoemaker, 2008) in a holistic manner.

Some issues are clearly appropriate in judging whether business schools understand the nature of changes in the twenty-first century. Have they kept pace with global and technological change? Do they provide multi-disciplinary perspectives in problem solving? “And do they really understand the current “firing line” challenges of managers and entrepreneurs?” (Thomas et al., 2013, pp. 164-165). These issues and themes are addressed in the papers published in this special issue.

Themes in the papers in this volume

There is a clear sense that the “one size fits all” dominant design in management education, derived mainly from the Gordon and Howell reports of the late 1950s (Gordon and Howell, 1959), has resulted in a “paradigm trap” over time with its inherent dogmas and dominant logics (Thomas et al., 2014 p. 168). It is time for continued debates about futures and the papers discuss a broad range of philosophical and curricular innovations that may catalyse new directions and futures for management education.

There is a clear order, and flow, in the set of papers in this volume. Spender, Chia and Estad et al. focus on new models of management education anchored around the value of the university-based business school and principles of liberal management education. Thorpe et al. address specific ideas about business model innovations from an UK perspective whereas Canals focuses on the global leadership skills required by the modern “go-anywhere” global leader. Finally, Thomas et al. examine and provide a range of scenarios for the future of management education which acts as a framework and guideline for assessing appropriate future directions in the field.

J.C. Spender has written extensively on management education and business schools most notably in the book on “Confronting Managerialism” (Locke and Spender, 2011) which criticises the capitalist focus of many management education curricula. In this paper he examines Simon's (1976) model of the business school as a framework to examine flaws in the business school model. He questions the rationalist trend in management education grounded in the Ford/Carnegie reports. Along with Grey (2005) he notes that this analytic positivist research tradition has created norms of what “good” research is and has developed the bulk of textbook knowledge. Yet given the proposition that management is both art and science he asks whether we have developed an adequate theory of managing i.e. “A viable theory of the firm on which to base our notions and teaching of management”. He agrees with Simon's view that to teach management well you need to add skills of managerial judgement and synthesis to those embedded in the rational analytic tradition. He speculates that if this were to happen, management education would then retrieve what was “central to management education for centuries before the rationalist trend began”.

Robert Chia has been a tireless advocate of the value of university-based business schools which he argues can, through careful, rigorous research and scholarship, positively enhance the careers of students and the development of new business practices for society. In his paper he articulates the view that university-based business schools can effectively bridge the gap between themselves and business/industry by creatively educating students and businessmen to understand and make relevant (“relevate” in his terms) the seemingly irrelevant research and teaching output. To do this it must expand the conventional business school curriculum recipe focused mainly on business disciplines and functions by drawing upon the synthetic and critical skills involved in the study of the humanities and examining more closely the implications of the social, economic, technological and global forces impacting the future roles of business in the context of government and civil society. He firmly believes that rigorous research and teaching can produce and also, through adopting approaches of careful explanation and translation of research findings, enhance the very best of business practices.

Chia's sense of the importance of the humanities in business education is reinforced by Charles Handy (quoted in Thomas et al., 2014, p. 39) who embraces the idea of a liberal management education enhancing the more formulaic core and analytic aspects of management. Tom Estad, Stefano Harney and Howard Thomas take up and explore the challenge of implementing a liberal management education using the core undergraduate curriculum of Singapore Management University (SMU) as a case example. They review the Colby et al. (2011) report on undergraduate management education as an initial framework and suggest that the two-sided nature of the liberal arts – namely, both context and reflective perspectives – must be present if the objective of an ethical management education is to be successfully achieved. While further improvements in the SMU curriculum will be necessary, they firmly believe that the SMU approach will become an exemplar model for liberal management education.

Richard Thorpe, a senior British academic, and Richard Rawlinson, a senior consultant from Booz and company, provide a series of perspectives about business model innovations in UK business schools based upon a report written on behalf of the Association of Business Schools in the UK. They address particularly the criticisms of poor preparation of students for business and management practice and the irrelevance and impact of much of the management research output. They suggest six major recommendations that should straddle the engagement gap between business schools and management practice: They are as follows:

Designing practice and practical pedagogy into courses; bringing more practitioner experience into faculty through training and hiring experimental “clinical faculty”; developing better multi-touch relationships with business e.g. training, placement, internships, research links and teaching programmes; improving meaningful engagement of impactful research; promoting research in multi-disciplinary teams and creating distinctive and differentiated roles for the set of British business schools. They believe that these six areas are mutually reinforcing and should create much better engagement and impact between business schools and industry.

Jordi Canals, an extremely well-known Dean of the highly-ranked IESE Business School in Barcelona, Spain, focuses particularly on the set of skills and competencies that will be required for the globally sensitive business leader of the future. Globalisation has effectively changed the dynamics of business competition and consequently the role of global leadership characteristics has received increasing attention. He focuses on two main aspects of this dynamic. He first develops a set of global leadership competencies which are designed to match the roles, and functions that global leaders need to perform in the ever-expanding global context and diverse set of global cultures. He then aligns this global leadership role with the firm's goals, vision and strategic positioning in order to build a sense of commitment, a “go-anywhere, do-well” attitude that should characterise a future global leader.

Thomas, Lee and Wilson examine the range of futures that business schools may face. Using the responses of a set of experts in a scenario planning exercise, they develop most likely, best-case and worst-case scenarios for the next ten years. The modal response for the most-likely scenario was one where intense competition pushes school to specialise and better differentiate their offerings, as they attempt to strengthen their position in the market. The best-case scenario was one where schools move closer to business practice in an attempt to gain relevance and legitimacy whereas the worst-case scenario involves increasing irrelevance and a shakeout of some of the less well-performing business schools.

Finally, feedback and comments about the papers in this volume are welcomed by the editors as a means of enhancing, and focusing, continuing debates about increasing the quality of management education and its relevance to the wider management community.

Howard Thomas
Lee Kong Chian School of Business, Singapore Management University, Singapore

Eric Cornuel
European Foundation of Management Development (EFMD), Brussels, Belgium

References

Cooley, T. (2007), “The business of business education”, Stern Business, pp. 23-25

Colby, A., Ehrlich, T., Sullivan, W.M. and Dolle J.R. (2011), Rethinking Undergraduate Business Education: Liberal Learning for the Profession, Jossey-Bass, San Francisco, CA

Currie, G., Knights, D. and Starkey, K. (2010), “Introduction: a post crisis reflection on business schools”, British Journal of Management, Vol. 21, pp. S1-S5

Gordon, R.A. and Howell, J.E. (1959), Higher Education for Business, Columbia University Press, New York, NY

Grey, C. (2005), A Very Short, Interesting and Reasonably Cheap Book about Studying Organisations, Sage Books, London

Hirsch, J.E.D. (1987), Cultural Literacy: What Every American Needs to Know, Houghton Mifflin, New York

Locke, E.R. and Spender, J.C. (2011), Confronting Managerialism, ZED Books, London

Mintzberg, H. (2004), Managers not MBA's, Pearson Education, London

Muff, K., Dyllick, T., Drewell, M., North, J., Shrivastava, P. and Haertle, J. (2013), Management Education for the World: A Vision for Business Schools Serving People and Planet, Edward Elgar, Northampton

Newman, J.H. (1852), The Idea of an University, Longmans Green, London

Porter, M. and Kramer, M. (2011), “Creating shared value”, Harvard Business Review, Vol. 89, pp. 62-77

Schoemaker, P.J.H. (2008), “The future challenges of business: re-thinking management education”, California Management Review, Vol. 50 No. 3, pp. 119-139

Simon, H.A. (1976), The Business School: A Problem in Organisational Design in Administrative Behaviour, 3rd ed., Free Press, New York, NY

Starkey, K. and Tiratsoo, N. (2007), The Business School and the Bottom Line, Cambridge University Press, Cambridge

Thomas, H., Lee, M., Thomas, L. and Wilson, A. (2014), Securing the Future of Management Education, Emerald Publishing, Bingley, Yorks

Thomas, H., Lorange, P. and Sheth, J. (2013), The Business School in the 21st Century, Cambridge University Press, Cambridge

Willmott, H. (1995), “Managing the academics: commodification and control in the development of university education in the UK”, Human Relations, Vol. 48 No. 9, pp. 993-1027

Wooldridge, A. (2014), EFMD Deans Conference, Gothenburg, 30 January, a fuller version available as Schumpeter, “Those Who Can’t, Teach” 8 February 2014, p. 58

Further reading

Handy, C. (1996), Training The Fire Brigade, EFMD Publications, Brussels, p. 113

Thomas, H., Thomas, L. and Wilson, A. (2013), Promises Fulfilled and Unfulfilled in Management Education, Emerald Publishing, Bingley, Yorks

Sheth, J.N. and Sisodia, R.S. (2004), Tectonic Shift, Response Books/Sage, Delhi

About the Guest Editors

Professor Howard Thomas is the Dean and a LKCSB Distinguished Professor of Strategic Management at the Singapore Management University. Professor Howard Thomas is the corresponding author and can be contacted at: mailto:howardthomas@smu.edu.sg

Eric Cornuel is a Director General and CEO, EFMD, Brussels, Belgium.