Readers of this series know it is about what causes the valuation of for-profit firms to increase. But in this wide-ranging article, I want to describe how business schools and the training of business managers and leaders is a key ingredient in our economy of helping to grow the valuation of for-profit firms. Without ‘good to great’ managers and leaders, who are allowed to actually practice their crafts inside of their firms, our system of free-market capitalism is at stake. Business schools’ role in the training of business managers and leaders has some room for improvement.
I will make some enemies with this article. Not by getting on a soapbox but by busting some myths that are out there, in my humble opinion of course. I may not have a complete set of solutions to offer, but I think I will have a different way to think about what business schools should be doing. And as I will also publish this article to my Linked In network who includes some of my graduated MBAs, I do not want to suggest to them that I think their degree is deficient in some manner. Current business schools do a pretty good job given the current paradigm of the mix of academic “research”, teaching, service and yes training. That some business school professors hate to think they “train”, this is part of the problem in my view. Current and graduated students are captives of this current paradigm, which can be and needs to be improved upon.
A few definitions: when I say academic research I mean research done by business school professors only. Research in medicine, physics, etc. is a different animal and is, from what I can tell, very worthy of the investment to do it. Also, by business education and training, I am referring to the graduate level, although some of the points could apply to undergraduate business school education and training as well. The MBA degree is the degree I will focus on.
At the heart of the issues and myths I will discuss is the prior and current madness about “academic research” and how it is related to a faculty member’s overall performance. In my view, at least 95% of academic research by business professors is worthless to practicing managers and leaders. This is not a new assertion by any means. Others have penned this notion for years. When was the last time a manager or leader read an Academy of Management Journal or Strategic Management Journal article? Answer: probably never unless one was assigned, inappropriately in my view, in an MBA class. I can assure you its contents were promptly forgotten after the course was finished and certainly upon graduation.
Here is the reality: young Ph.D. candidates in “rigorous” business schools are inculcated with learning research methodology and a very esoteric language known pretty much to those Ph.D. students, their professors and other members of their respective “academies”. Academies are groups of professors in the various functional areas of business. There are academies of management, finance, marketing, supply chain and so on. This happened first about fifty years ago when business schools wanted to up their games and not be seen as trade schools. Here was the beginning of the problem. Business schools wanted to be seen as medical schools where rigorous research methods were applied to “inform” practitioners in a very sophisticated way. But something went terribly wrong. Instead of informing business managers and leaders with knowledge that would “save the patient”, all of the efforts went to produce a system where business academics only talked to each other for the most part. Crazy you might be thinking, but this is true to a large degree.
But what do business professors do research on you might ask? Answer: good enough topics on the face of it: strategy, organizational behavior, marketing, etc. But the requirements of the research method almost force a researcher to focus on a rather minute segment of the problem or opportunity they are trying to shed light on. The research, the findings and the “implications” almost always end up being very trivial. And recall this is cast in a language that is very difficult for a practitioner to understand. Still, this might have some merit. But here is another reality: except for a hand full of business schools, the research budgets are so small as to make the work almost meaningless. The sample size of firms to be studied is almost always too small for adequate “statistical validity” and real generality of findings.
But it gets worse. Here are a couple of facts: most business academics have never spent time in the practice of business either in industry or as true consultants. Some business academics have never set foot in a business. Wow. Would we want our medical doctors to be trained only by medical professors who have done some “research” and published articles and books and who never were in practice working on actual patients? I think the answer is a resounding No.
Now in the medical fields, there is basic research being done about the human body, about diseases and the like that will eventually inform practicing medical doctors with new breakthroughs for their practices. These basic medical researchers by and large have never worked on a patient. But this does not happen in business schools for the most part. There may be basic research being done in finance or economics by finance and economics professors who have never practiced, but this is a very small percentage of the “research” being done. All other business academic research is applied research or should be in my view. But the esoteric language discussed above and the fact that most business school professors have never “practiced” means this research has a huge probability of not informing practice. It has been estimated that only four people read a “top tier” academic business article. Wow.
A business professor’s performance is graded in three areas: research, teaching and the catch-all “service”. Service usually means serving on department, college or university committees. Sometimes a portion of service can be to serve on respective outside academy committees. But also service can be “consulting in the real world” to aid a professor’s teaching value. For the most part, an academic claiming he or she is a consultant is pure rubbish. It is really training and development by taking current MBA lectures and recasting them somewhat for a particular firm’s needs. Not bad but this is not “real consulting”. Real consulting is having a budget and a time frame in which to make recommendations to the client. From my time in strategy consulting, my and my team’s average budget was $300,000 in fees to be delivered in no more than four months. And this is four months of full-time work by a team of consultants, not one day a week that is usual for academics who “consult”. Also in real consulting, the consultant can be sued for non-or suboptimal performance. There are very few business school deans who will allow their faculty members to generate the risk that they and the business school could be sued. Better to stick with training and development.
So what can we conclude about the state of affairs of education, training, and development of current and future leaders and managers by business schools? Here is my one-liner: academics at Tier 1 and 2 research business schools cannot admit to themselves that the biggest value they have to students and our free market system of capitalism is their teaching. And I can attest there are many, many great teachers out there. The “sage on the stage” charismatic teacher lifts students’ desire to continue to learn after graduation. The more introverted but great teachers leave a lasting impression of the value of critical reasoning and thinking. Not that the “sage on the stage” professor cannot do this, but my experience is the more introverted great professor is a treasure waiting to be found by students.
Many business schools are forging new ways to teach that are more competency and experience-based and this should continue in my view. The recent desire of students for 100% online MBA education and many business schools offering this option is really another topic for another time. But suffice to say advancements in online MBA education are making this reality better for students’ learning and development that will make them valued employees.
However, the stranglehold that “research” has on business professors to get tenure and have a true career has to change in my view. We are wasting millions of dollars every year in the pursuit of publishing in “A” or top-tier journals. What started as a way for business schools not to be seen as trade schools has become a monster. BTW this is not sour grapes on my part. I was granted tenure as associate professor of strategy at a university that had very fair publishing standards in “B” journals. But it was still a big game in my view. I thought then and know now that my biggest contribution was in teaching.
What can replace the esoteric language required in the “A” and “B” journals to give business professors their sense of working on important problems? We need something that will allow informed conversation about the very essence of business performance and customer and financial value creation. This could be a “discovery process” between business school professors and interested practitioners that will allow the interweaving of deep thought and frameworks that get at root causes of business performance in the messy reality of business practice. I had major back surgery almost four years ago, and my orthopedic surgeon blended his skill from already doing many back surgeries with new advances in improving back surgeries. I hope good business school deans are forging this kind of agenda in their schools. I know what I would do if I was a dean at a business school.
This article is part of a series on what causes a firm’s value to increase.
Dr. William Bigler is the founder and CEO of Bill Bigler Associates. He is a former Associate Professor of Strategy and the former MBA Program Director at Louisiana State University at Shreveport. He was the President of the Board of the Association for Strategic Planning in 2012 and served on the Board of Advisors for Nitro Security Inc. from 2003-2005. He has worked in the strategy departments of PricewaterhouseCoopers, the Hay Group, Ernst & Young and the Thomas Group. He can be reached at firstname.lastname@example.org or www.billbigler.com.