We’ve been saying it for years, but now even the Harvard Business Review is saying that MBAs need to update their programs.
The article quotes Scott Cook, founder of Intuit: “When MBAs come to us, we have to fundamentally retrain them — nothing they learned will help them succeed at innovation.”
The HBR article goes on to list the problems in the way Business Schools have been created and continue to operate:
“Business schools have historically been organized into watertight departments, such as finance, accounting, production and operations management, marketing, and human resources. This department structure mimics that of a 20th-century automobile or industrial company.”
The author of the article points out that this way of teaching does not prepare MBA graduates for the changes that digital-based business has brought about:
“…digital natives use knowledge, talent, subscriber networks, and innovation as their key assets. This is unlike the 20th-century giants — General Electric, U.S. Steel, General Motors, Ford, Goodyear Tire, and ExxonMobil — that rely on land, buildings, machines, warehouses, and physical infrastructure to produce physical goods.”
Game changers: digital technology and climate change
Beyond the relentless transformation that digital technology is introducing into companies, everyone is now much more aware of the need to address climate change and societal issues in business.
The New York Times Dealbook Newsletter states:
“A decade ago, the hottest M.B.A. courses typically covered topics such as game theory, valuing securities and negotiating mergers. Today, some of the most popular classes are about climate finance, impact investing and social entrepreneurship.”
MBA courses are trying to keep up by adding on courses to their core programs, but this does not get to the heart of the problem. It is simply adding on a patch to something inherently flawed.
Why MBAs are stuck in the past
While students will always need to understand things like marketing and how to read a balance sheet, business schools are not able to offer the subjects in a sufficiently integrated way for today’s reality because they are structured hierarchically and in silos. Even if schools consider themselves to be interdisciplinary, this structural limitation prevents them from innovating what they teach and the way they teach it in a significant way. Their courses are offered in ‘pieces’ that are then assembled together, but they never form a holistic, systemic whole.
Whether it is digital transformation, innovation or climate change, these are all facets of one core issue that leaders and executives face today: complexity. Leaders and executives today must be able to understand how things interdepend and evolve in order to navigate complexity. The current MBAs on offer are not equipped to offer their students the right knowledge and tools to interpret and manage complexity.
Without an understanding of complexity, systems science and some network theory, MBA graduates don’t understand their context, let alone how to manage and operate a company today. On top of that, innovation can be taught. Based on over 25 years of research and in-the-field implementations, at Intelligent Management we believe we can offer a solution to anyone wanting to educate business people for today and the future. We have an entire curriculum to propose for leaders and executives in 21st century that constitutes a transformational program for a systemic approach to business and operations.
A new kind of thinking
Leaders and executives today need to be able to think in a radically different way if they are to keep up with and anticipate change. A simplistic way of putting it is to say that they need to be able to connect the dots. An accurate way of describing this is to say they need to be able to think systemically. They need to have a holistic understanding of the reality they are in, they need to know that when they make a decision and act on that decision, there will be repercussions. They need a way to “see” those effects before they happen.
A new way of counting
The kind of management accounting that students are taught in MBAs is necessary because of the way tax reporting is done and balance sheets are written. However, it is not the most useful way of understanding cash coming in and cash coming out. When leaders and executives lose a sense of the real money they are handling (money in and money out) as opposed to more fluid accounting numbers, they can put an enterprise at risk.
A new way of understanding
A company is made up of processes, such as sales, production etc. These processes display a behaviour and this behaviour can be measured. There are statistical methods for understanding precisely whether a process is in statistical control or not. If leaders and executives do not have this detailed level of understanding of the processes under their responsibility, then they cannot possibly know when and if it is the case to make changes for improvement. Without this knowledge, they risk doing more harm than good.
A new way of caring
Processes, apart form purely mechanical ones, are operated by humans. As humans, we have fears, desires, needs and a whole range of emotions. Leaders and executives need to be able to interact with their staff on an emotional level, with intelligent emotions, especially in an increasingly digitized and decentralized world. This kind of skill can be learned and developed.
A new curriculum
In order for a manager to act proficiently and effectively in today’s complex environments, they need to be able to understand and navigate complexity. An MBA curriculum today should therefore:
- enable a systemic understanding of organizations and the interdependencies they are part of
- teach systemic thinking skills for complexity
- teach accounting methods for throughput management
- teach statistical methods to understand and manage processes
- teach management skills to manage conflicts and interact with staff in a meaningful way
This curriculum for an MBA for complexity can be built right away with the Thinking Process from the Theory of Constraints, Throughput Accounting, and statistical methods that have been around for decades. All the material already exists. (See ‘A New Curriculum for Business and Management‘).
Students already know that expensive business school programs are not providing what they really need today. The question is, how long will it take business schools to understand they need to offer this kind of program?
Intelligent Management works with decision makers with the authority and responsibility to make meaningful change. We have helped dozens of organizations to adopt a systemic approach to manage complexity and radically improve performance and growth for 25 years through our Decalogue management methodology. The Network of Projects organization design we developed is supported by our Ess3ntial software for multi-project finite scheduling based on the Critical Chain algorithm.
See our latest books Moving the Chains: An Operational Solution for Embracing Complexity in the Digital Age by our Founder Dr. Domenico Lepore, The Human Constraint – a digital business novel that has sold in 43 countries so far by Dr. Angela Montgomery and ‘Quality, Involvement, Flow: The Systemic Organization’ from CRC Press, New York by Dr. Domenico Lepore, Dr. .Angela Montgomery and Dr. Giovanni Siepe.