The major problem managers face today is complexity, and the current MBAs on offer are not equipping their graduates with the right knowledge and tools. Managers today must be able to understand how things interdepend and evolve in order to navigate complexity. Here we offer a solution.
Why MBAs are stuck in the past
Many business schools continue to offer the same curriculum to their students, even though they are aware that much of it is out of date (See Financial Times article The MBA is Losing Its Magic). 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 whole.
A new kind of thinking
Managers 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 managers 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 a manager does 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. Managers need to be able to interact with their staff on an emotional level, with intelligent emotions. 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 Tools from the Theory of Constraints, Throughput Accounting, and statistical methods that have been around for decades. We already have all the material. 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?
For more highlights of a systemic approach, see our new book The Human Constraint’. This is a business novel + website that reflects the urgent need for a shift in thinking and is based on almost 20 years of on-the-field experience with a systemic approach to business. Its accompanying website offers highlights of Deming’s Theory and the Theory of Constraints applied to specific problems. See www.thehumanconstraint.ca for free chapters and purchase.