B-schools under fire - business schools - CE Roundtable - Panel Discussion

Chief Executive, The, April, 1993

It's odd how CEOs complain about MBA types yet their own companies continue to buy the product. Could business chiefs and business school deans have two different conceptions of the necessary skills for future managers? CE brought the two groups together for a frank and at times contentious exchange.

Somewhat late in the game, business schools are finding they are businesses themselves. What's worse, their ultimate customers--corporations and the CEOs who head them--are not at all pleased with the product they have been turning out. With the M&A activity of the 1980s having all but disappeared and the financial services sector continuing to wither, the demand for finance and accounting specialists, long the B-schools' flagship product, is declining. Instead, businesses are clamoring for "hands-on" specialists equipped to fill slots in engineering, manufacturing, marketing, and human resources. Also deemed critical are "softer" teamwork and communications skills, along with negotiating and planning capabilities.

Many CEO roundtable attendees say they prefer to fill their needs by sending managers already on staff to one of the thousands of "executive education" programs that have sprung up. Most of these are taught at night or on weekends to accommodate working professionals. Small-business CEOs have forsaken the full-time MBA programs altogether as a source of talent. And the specialty of B-schools--research--seems to be little valued by corporate chieftains.

Though critical in the extreme, consider this assessment of a prestigious American school by Henry Mintzberg, professor of management at Canada's McGill University: "The Harvard Business School has ruined more companies than all of the Japanese companies put together." Implied: Schools outside the U.S. are generally more capable at tailoring their programs to the needs of corporations. Britain's Henley Management College, for example, runs MBA programs for consortia and individual clients such as Royal Dutch/Shell. In line with another MBA trend, Shell has created its own executive education program, considered by many to be the best of its kind. Nokia Group, Finland's telecom giant, offers an executive training program to which other European firms send their own talent.

While acknowledging the need for substantial change, B-school deans say the disparities between the supply and demand for their product are also partly the fault of CEOs, who often send mixed signals to campuses. For one thing, the academics note, CEOs continue to hire MBAs in substantial numbers despite their complaints. Moreover, the entry-level salaries of financial executives continue to outstrip those of operations managers.

But there's another factor at work: the hiring clout of corporate recruiters and middle managers who are firmly entrenched in their positions. "I've briefed my human resources executives on the skills critical to our company," one CEO laments. "Yet they continue to hire the same people in the same way. In effect, they're saying, 'We know better than you.'" The upshot: Chief executives need to be firmer in making sure their instructions are carried out or to understand better what their organization really needs.

On the flip side, MBA programs also have come under criticism for a "ready, fire, aim" approach to curriculum development. Consider the attempt to introduce soft skills courses by Case Western Reserve's Weatherhead School. After deciding to offer a package of 22 skills, the school asked human resources vice presidents, CEOs, and its students and faculty to list the skills they valued most.

"Ideally, the clusters would overlap," says Scott Cowen, dean and professor of accounting at the school. "In reality, they rarely touched at all."

Would an established manufacturer launch a product without first attempting to sound out its customers? In an era when vendors are climbing in bed with suppliers and companies increasingly rely on cross-functional teams to move ideas from the drawing board to the marketplace, the message is clear: B-schools must extend their antennae and work harder to customize their product. Those that don't--or don't do so quickly enough--are doomed to failure.

"There are over 600 B-schools in the U.S.," says Harry L. Davis, deputy dean at the University of Chicago's Graduate School of Business. "In 10 years, I think there will be 500. We have overbuilt relative to demand. Many schools will continue to have a tough time filling their seats in the future."

It's apparent that the MBA as we've known it is headed for significant change. Management education in the future will be less academic, more tailored to specific industry concerns, and will be conducted closer to the company over shorter periods integrated with career development. "I'm looking for people who can add real value," says Scott Fetzer's Ralph Schey. "That means people who create products or services or those who can sell them. If it means hiring a drama school graduate to do that, so be it."