The scrutiny on the value that business education provides to its stakeholders has intensified globally in recent times. Gone are the heydays when twenty-somethings armed with a business degree could walk into a plum role at a large multinational company commanding a fat pay packet! Instead, a number of business schools have already or are currently considering disestablishment of the once coveted full-time MBA program.
Proponents of business education point to the central role that business enterprise has played in the prosperity of nations, lifting millions of people out of poverty and in turn creating a wealthy middle class in many developing nations. Detractors contrarily point to the narrow discipline-based business curriculum and research far removed from the multi-disciplinary nature of the real-world problems that often present themselves to managers in their working life. Worse still, the narrow focus hinders business education to have impact and be valuable to society at large. Rigour trumps relevance in research at most business schools, and many would argue that the dichotomy between rigour and relevance is leading to the obsolescence of the business school. Furthermore, a plethora of online providers are disrupting the higher education sector, forcing universities to rethink their current business model and delivery mode.
But what does it all mean for business education in Australia? If higher education and by extension business education is being disrupted, and not keeping abreast with the changing times globally, this would surely mean obsolescence, or worse, complete annihilation. What will business education look like in the future?
While these may seem like simple questions, peering into the future is a risky business. But trying to predict the future when the institution of education is amidst a digital transformation makes it that much harder. The clue, in my opinion, is to look to the history of business education to better understand the various forces that have played an important role in shaping it in its current form. This knowledge will allow us to better understand the changing environment that business schools face today, and what the role these forces might play in shaping the future of business education.
The history of modern-day business education starts in 1880 when a wealthy businessman, Joseph Wharton, made a generous endowment to the University of Pennsylvania to assist the establishment of the first business school: the Wharton Business School. Wharton believed that a professional business school housed within an Ivy League university would provide the discipline the legitimacy it deserved. The focus of the institution was to provide a highly practical and applied education to its students, who were trained to become business leaders. The next 70 years saw a number of business schools established at various universities in North America. The same era also saw the birth of the AACSB network, which in those days was called the Association of Collegiate Schools of Business, an accreditation body specifically established to provide educational accreditation to business schools that met a certain quality standard.
Business education underwent a seismic change in the 1950s brought about by the Ford and Carnegie Foundations who wanted business education to become more in line with the education provided to students in the relevant basic disciplines, primarily economics and social sciences. These foundations played an important part in shifting the focus from professional to academic (rigorous) education by providing funding to facilitate the type and nature of research and teaching being undertaken by academics at these institutions. So much so, institutions like Harvard were dependent on foundations for a quarter of their annual budget. While this focus brought rigour to the discipline, it partly came at the cost of relevance. And perhaps the last nail was hammered into the relevance coffin by the obsession that business schools have had with the yearly Ivy League Rankings that are designed to identify the world’s best business schools. The last two decades of the twentieth century saw business school rankings became equivalent to league tables in sports. Business schools that didn’t make the League Rankings or performed poorly experienced a loss of reputation that subsequently had a downside effect on enrolments, research funding and endowments. As rankings were largely research-based with preference given to publications in high quality, often narrow and esoteric, journals, the focus on rigour over relevance accelerated and became even more exaggerated.
Although North American business schools have a century of rich history, business education in Australia is a much more recent phenomenon. Most business schools were previously variations of Faculties of Commerce and Economics and were created largely to educate accountants and to some degree develop managers and leaders. But there was another reason for their existence, which was to fund research at most universities. As the direct cost of research is not fully funded by the Australian government, business schools have often been viewed as cash cows, playing an important role in subsidising the cost of research. In Australia, most, if not all, business schools are heavily taxed to help fund research. The research funding imperative also forced Australian business schools to look overseas to attract and recruit full-fee paying overseas students, to help fund both teaching and research related activities.
This business model has served business schools and universities very well for the last three decades. But that was yesterday! Today business schools are confronted with a changing environment that will force us to rethink how we teach, do research and engage with the external community. For centuries universities have primarily concerned themselves with the creation and dissemination of knowledge. However, the ineffectiveness of financial and political institutions for example, has forced modern day universities to rethink their purpose. The focus cannot only be on knowledge creation, it has to be on the use of knowledge. Universities cannot be content to create knowledge, they should also be harbingers of the change they wish their ideas to bring about, i.e. universities now have to be their own agents of change by being more involved in their community and actively playing the role of the conscience of both industry and society.
A second challenge that confronts business schools today is that their main business is in danger of being disrupted, particularly in the postgraduate space, unless they are prepared to change both their modes of delivery and business model dramatically to cater to the needs of this market. Internationally, leading business schools are using technology to target new segments and markets, thereby increasing their global footprint. Most popular MOOCS and mini-masters globally are offered by leading business schools like Harvard (HBX), Wharton and Stanford, while both MIT and Yale through their respective open courseware platforms have an ambitious target of educating 1 billion people over the next five years by making their courses available online and free to students globally. Current trends show that the uptake of these courses is highest in Asia, particularly in countries (India and China) that are key markets supplying international students for Australian business schools.
Third, while the government’s current focus is on university engagement with industry, the use of very restricted metrics (essentially non-federal funded research grants) to measure engagement, which will subsequently impact research block grants, will require universities to rethink their engagement strategies. Together, these challenges will force business schools to operate differently in the future.
So what should a future business school look like? For business schools to be more effective, the research and teaching nexus has to be more integrated and the dichotomy of rigour and relevance has to be resolved. While the last decade has seen numerous innovations in content delivery, the same cannot be said about content itself, which to a large extent has stayed the same. The relative importance of the three pillars of teaching, research and engagement will need to change. Business schools will be expected to be much more porous and inclusive in relation to engagement with the external stakeholders than previously. Engagement with external stakeholders and industry partners will be paramount.
Reaching out to external stakeholders will only be one part of the solution; providing immersive learning and teaching experiences for both staff and students would be equally important. Allowing staff to spend extended periods of time in problem-rich environments will enable them to stay close to end-users and go a long way to ensure research relevance. The inherent multi-disciplinarity of real-world problems will force academics from different areas to collaborate, requiring them to step into the intersection of disciplines. Rather than research-led teaching, research will have to be embedded in and integrated into the curriculum. Not only will the new knowledge created through such collaborative research be relevant to industry and society, much more importantly, it will be a source of competitive advantage for universities, as this knowledge will only be available through these sites of higher learning with face-to-face experiential learning environments as an important value add. It will also allow students to be exposed to the best researchers or creators of new knowledge in the business schools, and in turn become knowledge creators of their own.
Business education is at a cross-road. A seismic change of a similar magnitude but of a different type to that of the 1950s is being experienced by them again, requiring a rethink of how they operate moving forward into the future. Engagement will be at its core and Business Schools that ignore engagement will do so at their peril.
Ashish Sinha is a professor in marketing and associate dean (research) at UTS Business School.Do you have an idea for a story?
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