Excessively narrow specialization in business school faculty does not serve the needs of the supposed beneficiary, the MBA student.
My previous piece on how the MBA might be reshaped in a world of Gen AI led to interesting feedback from friends and academic colleagues. Venky Nagar, a longtime friend and a chaired professor at the University of Michigan, suggested I write about how academic research, divided into increasingly narrower departmental and area turfs, makes worldviews of professors and their courses hyper-specialized. Hence, learning the most difficult part of management- which is to combine all individual subject frameworks into a holistic problem-solving mindset – is left to the student.
The silo problem
Each area in the business school potentially has anywhere from three to ten “top tier” academic journals. Young professors will not get tenure at research active schools (most of the top ones) unless they publish articles that effectively slice the subject-matter salami into microns. Without naming names, I was going through the list of published articles in one of the top journals in accounting and was left shaking my head wondering who would spend three years of their life working on questions no one in the real world has, just to get into a top tier journal and advance the marker by one to get closer to the safe number of papers that one needs to get tenure. To be fair, perhaps I did the same thing back in the day. The evaluation system, or how we recognize and reward faculty, is the culprit and the system has become too entrenched for any individual dean or faculty member to disrupt. As Andrew Hoffman, the author of the “The Engaged Scholar” points out, change is difficult to enforce because younger talent will simply defect to other schools if one school were to try and change the evaluation system unilaterally.
Capstone courses become very hard to pull off in business schools, especially past curriculum committees, because different areas and departments of a business school have different ideas on what to teach. Charlie Munger put this eloquently, when asked how he would teach at a business school:
“The more normal business is a business like, say, General Motors, which became the most successful business of its kind in the world and wiped out its common shareholders… what, last year? That is a very interesting story—and if I were teaching business school I would have Value-Line-type figures that took me through the entire history of General Motors and I would try to relate the changes in the graph and data to what happened in the business. To some extent, they faced a really difficult problem—heavily unionized business, combined with great success, and very tough competitors that came up from Asia and elsewhere in Europe. That is a real problem which of course… to prevent wealth from killing people—your success turning into a disadvantage—is a big problem in business.
And so there are all these wonderful lessons in those graphs. I don’t know why people don’t do it. The graphs don’t even exist that I would use to teach. I can’t imagine anybody being dumb enough not to have the kind of graphs I yearn for. But so far as I know there’s no business school in the country that’s yearning for these graphs. Partly the reason they don’t want it is if you taught a history of business this way, you’d be trampling on the territories of all the professors and sub-disciplines—you’d be stealing some of their best cases. And in bureaucracies, even academic bureaucracies, people protect their own turf. And of course a lot of that happened at General Motors (italics added).”
A colleague I showed this to commented, “I think the Charlie Munger quote is naive. Drawing the graphs can show you a problem but not the source or how to change it.” This is perhaps right. But the kernel of the idea suggested by Mr. Munger is promising. Perhaps the idea was that business school faculty tend to focus too much on cross-sectional cuts of a company at a particular inflection point. Perhaps a time-series view of the firm, with detailed commentary on how the firm got in trouble and how it got out of it or failed should be the focus of our teaching. As an aside, the Acquired podcast is the best resource I know to explore the historical evolution of businesses. They have a six-hour three-part series on NVIDIA for instance. Of course, Acquired, like a lot of the business press, tends to focus on successful businesses not failures.
Business schools confuse math with smarts and managerial wisdom
Warren Buffett and Charlie Munger, sum this up brilliantly: Mr. Munger says “some of the worst business decisions I’ve ever seen are those with future projections and discounts back. It seems like the higher mathematics with more false precision should help you, but it doesn’t. They teach that in business schools because, well, they’ve got to do something.”
Mr. Buffett adds: “If you stand up in front of a business class and say a bird in the hand is worth two in the bush, you won’t get tenure…. Higher mathematics may be dangerous and lead you down pathways that are better left untrod.” My version of this is saying, “common sense is not all that common.”
Mr. Buffett on the persistence of bad ideas in finance: “The famous physicist Max Planck was talking about the resistance of the human mind, even the bright human mind, to new ideas…. And he said science advances one funeral at a time, and I think there’s a lot of truth to that and it’s certainly been true in finance.”
Unfortunately, tenure, even in the best schools, gets rewarded to professors who write articles filled with complex math or esoteric theories in sociology and psychology. More often, in my experience, many published papers in top academic journals ask and answer banal questions, or they chase 1 in 1000 scenarios. One must wonder why such research is necessary when it would likely be ignored by a manager or policy maker. This leads to a question of whether B-school hires faculty that have one kind of talent (“academic rigor”). However, the intended beneficiary (MBA student) is looking for talent of a different kind, getting into the organizational trenches with one’s team, identifying the true underlying problem, and cocreating a workable solution.
The origins of irrelevant research that only academics care about can be traced to the talent pipeline stage. PhD students increasingly have barely worked in the “real” world for six months of their life. These students eventually become professors, referees and editors. Naturally they cannot distinguish a relevant question that has something to say to the real world, from an implausible question or chasing an event or an eventuality that occurs 0.1% of time in the real world. I was joking with an incoming editor of a major journal that he should consider appointed a consulting editor, who may be a CFO or a CEO or a board member, to opine on the plausibility of a research question before giving the paper a revise and resubmit decision.
This is not to say all published work is useless or that we don’t accidentally discover faculty stars who can do the math or esoteric theories and can simultaneously imbue students with a practical problem-solving mindset. But the faculty hiring process is not necessarily fit for purpose. I am also not advocating that we fill the school with practitioners. Academics have a lot to add to managerial practice and public policy, if the incentive structure were different. Academics are relatively impartial in policy debates as we are on no one’s payroll (usually). Academics can also study hundreds of cases to draw somewhat generalizable insights whereas practitioners are somewhat condemned to only experience small samples in their professional lives (working at say five or ten employers, at the most).
To me, it’s not a question of either/or between academe and practice. It’s an “and” which means scholars should try to solve applied problems, simply to repay the debt that we owe society on account of parents hard earned tuition money and for taxpayer support.
How do practicing managers resolve this problem in the field?
I asked a senior manager at a large tech company how he resolved this problem as an MBA. Her first job was in finance and that was relatively easy as the training in accounting and finance was very useful at being successful at the job. Transitioning to a product manager (PM) was harder. PMs are the ultimate generalists. Their duties span the entire value chain covering everything from financial analysis up to the delivery of the project or the feature on the site. PMs are the Swiss army knives of technology businesses.
This ex-PM said that she failed in the first six months. She got yelled at on numerous occasions. The school of hard knocks was the only resort left. Gradually, she built relationships with key stakeholders in the company. She set up one on one time, especially with the prickly characters, and learned what makes them tick or get ticked off. The manager had to rely on persuasion skills to get buy in and credibility. Eventually the pieces start fitting together and the manager becomes a generalist.
I countered whether these skills are even teachable at a business school. The manager replied, “yes and no.” She rightly pointed out that business schools do not simulate how business really works. More could be done to avoid slicing the business into six areas in a business school (accounting, finance, economics, marketing, operations research, and organizational behavior). Perhaps, the first year of the MBA program could be spent specializing. The second year, after the summer internship, could be only about inter-area courses with no narrow specialties. The areas need to be tied together in the second year towards restructuring a troubled business or creating and launching a new product. This manager says professors, in his experience, rarely wanted to coordinate even teaching cases, let alone get together to tightly integrate their skills into creating a final product, even if fictional, at a business school.
The manager went on to suggest that personal characteristics largely dictate whether the graduated MBA student manages to integrate across areas. Of course, you must be intellectually curious but intellectual horsepower per se is somewhat overrated by academics. The ability to execute, or get things done, is certain to determine if you will succeed or fail. Getting anything done is hard and takes persuading, cajoling, or even sucking up, depending on who is at the receiving end.
On top of that, if you are a warm person and have a sense of humor and can regulate your emotions in a tense meeting, you are more likely to succeed. People who are not inherently comfortable with human interaction sometimes tend to become hyper specialized after the MBA.
MBA schools do not teach how to execute
Deep simulations of business situations are rarely taught in business schools. The manager who I spoke with suggests that is why many B-school graduates follow the consulting track where you see numerous business models in the first three years of their careers. By the time they are somewhat senior, they jump to “strategic” roles in the company. The consulting types rarely take on roles that involve operations or getting their hands dirty because they are unable to execute the plans they think up. Unless you do the work, you don’t understand the challenges. They are not operators and in most US firms, operations are messy. Partly because US firms are obsessed with cutting headcount and substituting people away for technology, even if the technology is not ready to be able to do what the human did.
It is interesting that the CEO of Oliver Wyman, the consulting firm, states the following in this Wall Street Journal piece: “companies don’t want a suit with PowerPoint. They want someone who is willing to get in the trenches and help them align their team and cocreate with their team.”
A retired professor shares his experience with curriculum integration
A retired professor, who would like to remain anonymous, shared his experience with an attempt to integrate the curriculum across academic areas: “with the support of the dean, I introduced a capstone case, focused on just one interesting company X. The idea was to have each area consider the same company from their lens in the core curriculum and learn why this company X messed up.
I had to fight with and or persuade the principal faculty member in each area as he or she believed they knew better. One of those faculty members admitted years later he was arrogant and screwed it up. It worked well for a year or two with something in each core class and a lot of connections were made across areas by the faculty and the students, but then it could not be sustained. The problem, of course, came down to enforcement by the dean’s office as faculty were too narrow and siloed in how they taught. We also tried several initiatives to get faculty to partner with alumni. They worked off and on, but the practice withered away after a while.”
Reacting to the Munger quote, this professor said, “the other thing with the integrated case was that we took a longitudinal view. I introduced it at orientation with a history of the industry and its place in the industry. Also, different areas often had a multi period perspective and themes were carried across courses to connect the dots. In fact, we reported the links in each case. I should add that some faculty embraced it but most did not. I also presented the approach at alumnae events, and they loved it.
In my view the only way to change it is to make “impact” of your research and possibly teaching as a necessary condition for tenure, promotion and pay.”
What is the way forward to get faculty to integrate ideas across disciplines?
Apart from what the retired faculty member suggests, we could consider a few other ideas.
- Promote courses that genuinely try to serve as integrative or capstone courses. The course titled, FAIME, developed by Trevor Harris, that I now teach at Columbia is one such example.
- Could the school create incentives for faculty to alter their production function after tenure? A now retired dean at a top B-School used to meet with just tenured faculty right after they got tenure and would say to them, “you have worked thus far for the profession. Now, it’s time to work for the school. Take a year off, go explore something that you really care about. Spend a year at a company or go interview 30-50 experts in that area. Write a book, create a new course, and become a guru in that field when you come back after a year.”
- Another strategy, which I have written about before, is to place faculty for short three month sabbaticals as professors in residence with a firm. Most business schools have extensive executives in residence programs. Why not try and invest in the mirror image of that for faculty? The same retired faculty member counters, “why would a firm want to do this?” Yes, perhaps firms run by alums will be willing to indulge a few interested faculty from their alma mater. In such cases, alumni time and hands on experience and advice they can impart to faculty are potentially more valuable than charitable giving to the school. Think of this as an inter-generational knowledge transfer model. We, the faculty, taught you useful things when you were at B- School. Perhaps you can teach us useful things about business now that you are successful.
- Finally, the school could invest in start-ups of faculty members. Business schools routinely invest in student-led start-ups. Even if the startup fails, the experience might yield valuable lessons.
My worry is that inaction is not a strategy. Perhaps the pressure will come from the ultimate paying customer, the employer, and from Gen AI. Will B-schools be able to place the thousands of MBAs that graduate every year into entry level consulting and banking jobs under the business-as-usual template? Will Gen AI perform the integration across disciplines that an incoming MBA student may be ill-equipped to handle?