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New Models and the Changing Contexts of Business School

April 19, 2014 • MBAs & Executive Education

By Peter Lorange, Jagdish N. Sheth and Howard Thomas

The traditional models of many business schools are being questioned given their serious financial difficulties.  Below, Peter Lorange, Jagdish N. Sheth and Howard Thomas address the importance of the examination and evaluation of new models and approaches to management education.

 

Business studies remains one of the most sought after majors both at the undergraduate and graduate levels (e.g. the MBA) and a successful growth story in higher education. However, the context in which business schools operate has undergone significant change, which makes it timely to undertake a critical examination and evaluation of new models and innovative new approaches to management education.

Four factors are particularly relevant:

 The stable, growth-oriented business environment of the past is changing.  Advanced countries have fewer undergraduate and graduate students.  Even the relatively stable executive education market seems to be in a recession.  Although it might be argued that market conditions are improving, an alternative viewpoint might suggest that instead the situation is one of less demand, more turbulence and more market-driven cycles.

If this is so, it is important to explore the possible consequences for academic leaders.  There may need to be a greater willingness and capability to be more open-minded, flexible, and have a different approach to timing decisions, ie focus on changes that involve so-called ‘in/out’, and/or long/short moves. This relates to the timing of when to enter the market as well as when to exit (in/out), as well as when to commit to a long-term contract (long) versus when to stay current (’spot’ contract or short).

Speed and agility are increasingly essential and the old stability-based managerial approaches are less appropriate. This relates to both curriculum changes and faculty responsiveness to new topics, new research and new competencies.  Business schools will need to be more proactive and even abandon some of the old approaches.

Perhaps partly as a function of more difficult times, it seems that graduate and undergraduate students and executives are demanding a greater emphasis be given to projects, thus requiring a more eclectic curriculum.  For example the development of a new product involves the areas of R&D, marketing, sales, manufacturing and finance.  Similarly to enter a new market involves marketing and sales as well as communications, manufacturing, logistics, legal expertise and so on.  Hence, close and quick co-operation across disciplines becomes very important.

Thus, the traditional functional and discipline-based curriculum design is becoming increasingly outdated.  The need for disciplinary focused academic departments and discipline-focused (so called A-Journal) research may be diminishing.  There needs to be a quick response to these changing needs.  However the move away from embedded academic traditions to a multidimensional, multidisciplinary teaching and research approach may be very difficult to implement under the current consensually-based academic governance mechanisms.

Students are being realistic about the need to prepare themselves as well as possible for the difficult job market.  Holding a generalist MBA degree may simply no longer be enough for them.  The trend towards more job-specific Master of Science degrees seems clear, as set out in the European Bologna agreement.  M.Sc. specialisms could include banking, finance, high-end marketing, human capital management, business analytics, shipping and sports management.  The demand for more general MBAs may well continue, perhaps after having taken a specialist M.Sc., provided the academic institutions design appropriate and meaningful linkages between specialist and general management degrees and maintain strong quality, academic standards and norms in their programme offerings.

The more traditional business models of many business schools are being questioned given their serious financial difficulties as a result of high fixed costs and lower demand.  Now may be an appropriate time to explore other more cost-efficient business models, which incorporate the use of educational technology while at the same time maintaining academic quality.  It may be necessary to utilise faculty more effectively, increase their classroom exposure and improve the interaction with students.  Such changes may be difficult to initiate and implement in many traditional academic contexts.

The majority of business schools receive public funding, and many exist within public universities. The issue of cash flow planning, particularly when it comes to the income side, may need closer attention.  An active focus on how to affect the income side, perhaps by introducing new programmes as well as being more attentive to a school’s breakeven point will be increasingly important.  There are ways to meet these challenges, while also maintaining a high level of quality in academic value creation.

 

The Lorange Network Model

The Lorange Institute of Business Zurich is an innovative ‘network-based’ business model which has adopted a revised curriculum based on strong modularisation.  Many modules are taught over weekends so that participants may continue to work. Executive M.Sc. specialisations including Modern Finance, Modern Marketing, Leadership, and Management in Cycles (such as in shipping), can later be expanded into deeper Executive MBA elective courses.

Many modules are offered jointly for executives and masters students.   The faculty comprises leading experts on specialised topics as well as leading practitioners with unique backgrounds and expertise who are recruited from around the world. The latter group of practitioners tend to teach shorter, two-day modules.

An intensive marketing effort has been undertaken to introduce the school to the world.  But it takes time for a school to establish a reputation based on quality.  Exciting and innovative programmes alone are not enough.

Perhaps the biggest challenge relates to administrative organisation.  New programmes based on emerging disciplines may be put in place.  Professors may be available to teach on them.  Marketing plans may be formulated which make the programmes attractive, relevant and financially viable to participants.  But to find effective new team members able to translate the vision of such a future-focused organisation is one of the most difficult tasks.

However, it is apparent that:

A website presence and social media ‘engineering’ offer unique opportunities for marketing, and connecting with prospective and present participants

Co-ordination across modules and across offerings is absolutely essential

Different models for longer-term franchising-based networks might develop and thought has to be given to the image that will thereby be created.

Figure 1 illustrates how such an ‘intelligent’ network might work centred around a ‘hub’ anchor. Each participating school represents a natural source of specialisation according to its location.  For example, a Brazilian school might focus on the young, computer-based consumer, a Middle East school on family business, a Nordic school on entrepreneurship and a Swiss school on finance. Each would provide a programme on its particular topic of excellence, say, through a two-day module.

Nevertheless, innovation and change can certainly be expensive.  This is likely to be problematic for established business schools especially when the outcomes are uncertain.

 

global-balanced-network-WEB

 

A set of guidelines for revising the modern business school’s modus operandi

Drawing upon insights culled from The Lorange Institute of Business, various questions can be raised:

Does a business school really need an exclusive pool of permanent faculty and do they really need to be permanently based at just one institution?  Is it necessary for faculty to give exclusive contributions in only one school?  Could faculty be shared among several academic institutions?  They are an expensive resource, so why not share the costs?  This assumes, of course, that each faculty member must be able to and/or willing to undertake both cutting-edge teaching and research.  Receiving institutions must be willing to pay for a faculty member’s research as well as teaching.  Is it necessary that faculty come from a pool of academic professors? Why not make use of leading practitioners as teachers and researchers? An additional benefit would be a combined thematic cutting edge and practical focus.

The concept of a stable network of part-time faculty might also enhance academic performance, both in the classroom and in research. Faculty members would need to perform well for their contracts to be continued; in this situation tenure would not exist in the same way.

However, many traditional business schools are organised around a tenure-based model, with academic departments for each major field (finance, marketing and so on) and this creates problems in implementing a new non-tenure, contract based model.  Professors normally undertake research and teach within the parameters set by each field.  Promotion is based largely on discipline-based research outputs within their specific field, published as single-authored articles in specialised peer-reviewed journals.

It is argued here that this model is no longer good enough.  The focus is more on specialised research rather than on more relevant and current business issues, such as understanding how to cope in turbulent times through creativity, innovation and attacking new markets.  This focus impedes the growth of joint work between teams of professors and students engaged in cross-disciplinary and practical research.  Professors must have authority, self-confidence and personal belief in their own expertise.  But at the same time, there should be the willingness to collaborate and share their knowledge by working in a different and more generous way.

Other dysfunctionalities are inherent in the classical academic model which may reinforce the very narrow world of the professor.  For example, specific courses, on well-identified topics, are typically repeated by the same professor every year.  There develops an ‘ownership’ associated with it.  These courses are shaped by a professor’s expert knowledge base with contents which is less relevant in today’s setting. These materials may be used repeatedly, capitalising on a once-and-for-all ‘investment’ in course development, which allows time for more individual research.

Such courses may become predictable boring, irrelevant and disconnected from current practical challenges.  There have to be better options.  Team-teaching might be more realistic and would broaden the focus and achieve more cross-disciplinary outcomes.

For change to occur, it helps to have a receptive faculty willing to endorse a meaningful change agenda for the benefit of the whole school.
Unfortunately, professors are rarely free to innovate. Curriculum changes, especially major ones, must typically be reviewed by a faculty committee which is usually a slow, bureaucratic and sometimes intimidating process.  This may partly explain why outdated teaching approaches persist.

It may be time to value a more collaborative faculty culture.  Perhaps, working with a network of part-time faculty might facilitate this further.  Thought may need to be given to how to credit jointly undertaken/authored research, joint teaching and so on.  At annual review time, there should be an acknowledgement of individual and collaborative efforts.

Academic institutions have become increasingly bureaucratic and demand more from faculty.  This includes procedural red tape, and the requirement of greater student interaction, more frequent meetings, increased paperwork, leaving less time for teaching and research. Bureaucracy needs to be reduced, perhaps by simplifying formal structures including reducing the number of departments, streamlining processes, producing more explicit agendas and stronger leadership in meetings and demanding more purpose-based conclusions. Traditional academic departments might be combined, leading to fewer silos.  Maybe even the hierarchy of academic titles might be reduced or even eliminated, further reducing the number of silos.

Full-time study programmes are usually seen as of higher quality than their part-time equivalents, especially at the undergraduate level, but also sometimes with MBA programmes. This perception is ripe for revision.  Students can learn both on the job and in business school.  Such a combined effort can enhance the experience and provide a deeper and more practical understanding.  Relevant inputs can be speeded up from both sides.  Academics would have access to practical ‘living case’ inputs and managers would be able to draw on academia for ongoing innovations.  This could almost occur simultaneously.

A variant of this might be having senior and junior executives taking the same courses and sharing the classroom.  A more youthful perspective can broaden senior executives understanding of such issues as career expectations, consumer trends, IT-based technology and so on.  Junior executives can learn much from the wisdom and experience of their senior colleagues. It is the blend of these perspectives – the positive tension – that must be sought.

Currently too much teaching takes place in a lecture hall environment where a professor ‘talks’ to the students and there is limited or no exchange of ideas.  Why could the classroom not be more of a debating forum, a ‘meeting place’ where there is a sense of dynamism and excitement?  There has been some movement towards this kind of setting, especially in the MBA field, but more could be done.  In an effective ‘meeting place’ where there is a sense of openness, new propositions could be freely launched, potentially benefiting faculty member’s research. Ideas could be ‘tested’ against existing propositions, and against practical experience and dilemmas.

Innovation is a key driver.  Research that is close to business is an important element in this.  Innovation is more feasible in a school with less bureaucracy, fewer silos and more managerially focused students.

Many academic institutions are conservative with faculty having a fair amount of input: there is a sense of a ‘bottom-up’ dominated culture.  But there must be a ‘top-down’ counterbalance, typically in the hands of the dean. It is this ‘top-down’ / ‘bottom-up’ balance that is so critical for success. However, good leaders may stay away from contexts that seem impossible to lead.  For change to occur, it helps to have a receptive faculty willing to endorse a meaningful change agenda for the benefit of the whole school.

Good governance is critical. Seniority and tenure should not necessarily be the major determinants when it comes to inputs on governance. Instead there should be recognition of a faculty member’s demonstrated ability, willingness to contribute to teaching and research, to the establishment and to the maintenance of a community which values collaboration.

Good governance today implies a lot of ‘virtuality’, taking advantage of emergent technology.  Meeting face-to-face may be difficult, impractical and expensive – and it may no longer be necessary. A minimal number of faculty meetings per year would suffice, in combination with virtual ‘meetings’.  Questions brought to them should be focussed: key value-creating dimensions should dominate, such as are we innovating enough and how can we do more? Do we have a productive enough learning culture, a ‘meeting place’, and how can we do better?  Part-time faculty must feel included and be committed and also see themselves as part of the team.  Governance is therefore central and must be effective.

Effective learning is the key driver at the business school of the future; it is its raison d’être. The ‘meeting place’ as a model for two-way dialogue between faculty and participants in the classroom has already been mentioned, and it was emphasised that the learning would flow in both directions.  In a sense this means that everybody becomes a potential teacher or student.  Professors learn as well as teach and students are no longer passive receivers of knowledge.  Everybody is committed to learning regardless of formal status.

This leads to another central question. What new capabilities will be required of the faculty?  The professor’s role changes in that it becomes one of facilitating an exchange of ideas rather than delivering one-way monologues.  Distance learning may be an appropriate vehicle for studying the basics at home and then classrooms become meeting places for shedding light on critical dilemmas for business.  These new pedagogical processes have been introduced in some settings (the Open University in the UK being one example) but these ideas are still relatively new.  It is certainly worth asking whether the classroom setting is optimal today.

Two factors further underscore the benefit of more active participation in the classroom.  First, the students / participants will bring with them practical experiences drawn from real life, which may be of relevance to specific dilemmas being discussed. Participants learn from sharing their experiences.  In turn, this knowledge can be carried back to the business setting.  There is a feedback loop to the learning in the classroom and on the job.

The professor’s role involves keeping discussions focussed and relevant, while also challenging ideas.  The physical layout of the classroom should also be more conducive to open debate.  For example at The Lorange Institute the rooms are ‘flat’, not the classical horseshoe shaped auditorium.  Students sit around tables, six to seven in each group.  Professors walk around the room and give a ‘mini-lecture’ for 20 minutes.  Key words are written on flip charts that are hung on the wall.  Groups then discuss the issues at their separate tables, for 20 minutes, using flip charts if appropriate.  20 minutes of plenary discussion follows, with the professor as the integrator.   It has been found that material which used to take 5 days to cover in a conventional classroom setting can be completed in 2 days using this approach.  This is more time effective, more collaborative and potentially more engaging for students and faculty.

To conclude, it is certainly worth considering why these changes in academic value creation are not happening faster. Why is it so difficult to introduce new pedagogy? Why is it so difficult to put the student more in the centre of the learning process?

This probably has to do partly with old-fashioned governance models that still exist in much of academia with their focus on axiomatically based research, publishing single-authored articles in narrow referred journals and tenure. Partly, too, however, it may be extremely difficult to retrain our professors for the new roles or to convince them that there may be better ways of teaching. Our doctoral programmes should be refocused to cover this. And best practice, when it comes to ‘meeting-place driven classes’ should be much more widely shared.

About the Authors

Peter Lorange is President of Lorange Institute of Business Zurich. He was President of IMD from July 1993 until April 2008. He is Professor of Strategy and was the Nestlé Professor and then the Kristian Gerhard Jebsen Chair of International Shipping at IMD. Professor Lorange has written or edited 20 books and some 120 articles. His area of special interest is Global Strategic Management, Strategic Planning and Entrepreneurship for Growth, and he has conducted extensive research on multinational management, strategic planning processes, shipping and internally generated growth processes.

Jagdish N. Sheth is the Charles H. Kellstadt Professor of Marketing at Emory University. His areas of research include consumer behavior, multivariate analysis, competitive strategy and globalization with a special focus on emerging markets. He is a Fellow of the American Psychological Association(APA),consumer psychology and Past President of Association of Consumer Behavior(ACR). He is recipient of all the top three awards bestowed by the American Marketing Association(AMA).

Professor Howard Thomas has had a global career in business and management education. He has been a business school Dean at University of Illinois, USA; Warwick Business School, UK and Singapore Management University, Asia. His teaching and research interests encompass strategic management and management education.  He is a highly-cited scholar, who is a Fellow of the Academy of Management, USA, the British Academy of Management, the Strategic Management Society and the Academy of Social Sciences.

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