Graduate Management News
 
 
 
Recap

Hamel Challenges B-Schools to Stay Ahead of the Curve and Change the World

 

To stay competitive and produce leaders who will help companies adapt and succeed in a world of accelerating change, the real challenge for business schools is not to “get better” but to “get different,” said management guru Gary Hamel in his GMAC® MBA Leadership Conference address. He told the audience of MBA program directors that there is some validity to criticisms of business schools as places where theorists teach well-off students to apply academic approaches to real-world problems. Business schools must alter the status quo or become obsolete.

Business schools have not produced the kinds of new business models and practices that change management or industry, said Hamel. They have been operating under traditional, unchallenged assumptions about what their mission should be, what a leader is, and what the relationships between a business school and the marketplace should be. They have capitulated to the demands of students and have adapted to change in the market, not led it. They have used the wrong criteria for judging their success at producing the kinds of managers who will be able to help companies adapt to the needs of a fluid business environment.

Many of the changes business schools have made recently have been very positive, Hamel acknowledged; these include reforms in curricula, developing better leaders through teamwork and residencies with companies, incorporating technology into the pedgaogy, and embracing an ideal of globalism in reach and subject matter. But these adaptations and innovations have really come in response to demands from corporations and students that date back a decade at least. Hamel argued that although we cannot predict what changes will come in the next decades, we can predict this with a fair amount of certainty: Change, which has been accelerating through every phase of history as we know it, will continue to accelerate. Business schools and their students must prepare.

Faced with the problem of rapid change, there are five things business schools must do to succeed.

1. Get ahead of the management change curve.

Management practice is changing faster than management pedagogy. Business schools must be on the cutting edge or lose their relevance.

Part of getting ahead of the change curve is producing graduates who understand how organizations change. Traditionally, organizations have been designed for perpetuation rather than renewal, and leaders have been educated to change organizations by imposing new structures and models from above. But “renewal is too important to be left to the leaders in organizations,” Hamel said; change has to come from all levels of an organization.

If the challenge to organizations of the future is to be adaptable and resilient, the challenge to business schools is to “build leaders who understand how to build organizations where responsibility for change is woven through the woof and warp of the organization.”

2. Become a catalyst for management innovation.

Hamel believes it should be the mission of the business school to advance the state of the art in the field of management. Business schools, like schools of medicine and engineering, should produce innovations that change the field. Recent ideas that have altered the field of management (e.g., game theory and Six Sigma) have come from industry or scholars outside of business schools.

Hamel said in order to achieve the aim of advancing the field of management, business schools need “aspirational faculties” that believe in possibilities. He also suggested that schools partner with industry to create an environment that encourages (and funds) innovation and the testing of hypotheses in real management contexts.

3. Give students the “source code.”

Business school education as we know it is predicated on traditional notions of how companies should be structured and managed and what the job of their leaders should be. But how can business schools and management itself change if these guiding principles are never examined and challenged? Hamel stated the guiding principles of management as follows:

  • Replication—avoid needless variety
  • Hierarchy—give more power to those with the most experience
  • Specialization—group like activities into specialized units where people can reinforce one another’s learning
  • Divisionalization—divide organizations into units to minimize the interdependence between units
  • Planning and control—reduce variability by responding to external forces
  • Extrinsic rewards—reinforce group interests with monetary rewards

 

 

 

 

 

Although there is nothing inherently wrong with these principles, Hamel said, each one has its downside. If taken to extremes, an emphasis on hierarchy can kill the motivation and innovation of lower-level employees. Excessive specialization can result in the isolation of business units and factionalized organizations. A focus on extrinsic rewards can lead to greed. Business school students should be encouraged to question the assumptions on which current management practice and management education are based and the emphasis these concepts are given. Only by understanding the “DNA” of management can they begin to reengineer it.

4. Engage the critics.

Hamel advised business schools and their students to take to heart the criticisms leveled at the schools, their graduates, and corporations. He listed a number of books that could serve as a jumping-off point for discussions, including Naomi Klein’s No Logo, Joseph Stiglitz’s Globalization and Its Discontents, Barbara Erenreich’s Nickel and Dimed, Eric Schlosser’s Fast Food Nation, and Arianna Huffington’s Pigs at the Trough. He suggested that business school faculty and students engage around such questions as the following:

  • Is economic growth toxic to the environment?
  • How is the public interest distinct from large corporate interests?
  • How can we prevent large corporations from hijacking the political process?
  • To what extent does consumerism weaken family structures and social values?
  • How did we end up with corporate governance structures that breed cronyism and avarice?
  • Given their power, should corporations make their decision processes more transparent to the outside world?
  • Should the goal of economic efficiency trump every other interest, including social and cultural interests?
  • Should we be concerned that corporations are manipulating our children (e.g., through marketing)?

Hamel asserted that the proper role of business schools is not to prepare students to serve corporations, but rather to prepare them to mediate between corporate interests and social interests. “Businesses exist in a social context,” he reminded the audience, “and [their] legitimacy must be earned daily.”

5. Serve the world.

In addition to producing the kinds of leaders who will help make organizations more nimble and responsible, business schools must take it upon themselves to make graduate business degrees more accessible and affordable to a greater segment of society, Hamel argued.

“We are making Bentleys, and the world needs bicycles,” he said.

The traditional model of business school, delivered on campus by a centralized faculty, makes the MBA prohibitively expensive and impractical for most people. The assumption that the end goal of an MBA is a credential may also be limiting the way business school administrators think about possible business models for their programs.

The MBA in its current incarnation is not serving the needs of the vast majority of struggling entrepreneurs and other business people, suggested Hamel, including those in developing nations, who may be most in need of management education. The high-end MBA is still valuable, but schools should consider offering lower-cost, more flexible options for business school education.

Hamel recommended that business schools restructure their cost and delivery models and create partnerships with companies worldwide and with schools in developing nations to help extend the reach and positive influence of the MBA.

Getting Different and Better

Ultimately, Hamel said, business schools must escape traditional dogma in order to bring forth the innovations that will allow them, their students, and corporations to meet the five major challenges described above. He acknowledged that this will not be easy, given the independent nature of faculty, the complex relationship between universities and the business schools they house, and the difficulty of bringing about institutional change. But if program directors are willing to entertain the possibilities, there is hope for change, Hamel suggested.

“Humans are more often limited by lack of vision than by lack of resources,” he said.

GMAC® is a registered trademarks of the Graduate Management Admission Council®. All rights reserved.
GMAC
Click here to visit the gmac.com home page
Click here to Read Our Archive