Some 50 years since the Ford Foundation’s influential report on the state of management education in the US, all is not well in the world according to “MBA.” To be sure, the economic and cultural capital of B-Schools, and their MBAs, has never traded higher. B-schools around the world are well endowed, well attended, and the American business school model has been eagerly embraced by universities and economies around the world. But how, exactly, do you measure the value of a top brand MBA, which can cost $50,000 and one to two years out of work? More specifically, is what is being taught still fully relevant to the work that managers and employees do in firms? The success of Henry Mintzberg’s book, “Managers not MBAs,”as well as the damning HBR article by Warren Bennis and James O’Toole, “How Business Schools Lost Their Way,” suggests that even from within “the academy” there is a growing recognition of irrelevance and arrogance.
The problems, and lack of relevance, run even deeper. The world of business itself has changed. Globalization is changing the distribution of work across the world, making corporate strategies based purely on scale, efficiency, and cost control less and less tenable. Of course, these things are still necessary. They simply are no longer enough. Anything that can be made can be made anywhere, and more cheaply than in the West. Thus the China and India factors. Competitive advantage is now derived from sustained differentiation and innovation — in services and products — in what Business Week’s Bruce Nussbaum (and others) now refer to as the “empathy economy.” Not only can manufacturers in Asia rush the commoditization of even the most high-end technologies in ever shorter order, American consumers and employees expect, indeed demand, new and deeper levels of authenticity, creativity, and sustainability from companies. Think Starbucks, Whole Foods, Anthropologie, Google… These companies thrive because they systematically innovate for expanding consumer/user experiences.
Meanwhile, Dell sputters. Why? Dell is a prototypical 1.0 company, despite being in the technology sector. It mastered the process efficiency of customizing PCs down to a science, and that was it! Now, many companies, including Lenovo, do the same thing, and offer more variety and much better customer service. Dell’s share price continues to sag, and the sages of Round Rock scratch their heads in wonder. What they need are new sources of differentiation and innovation. But where to find it?
Fundamental changes are occurring in the culture at large. In a post-cluetrain cultural and business environment, traditional “business as usual” management and management learning is so 1.0! There are exceptions, however. According to Roger Martin, Dean of the Rotman School of Management at the University of Toronto, management education and practice will have to accept and embrace these changes or risk being left in the dust. His argument is compelling… He suggests that prior to the emergence of the experience economy near the end of the 20th century, management was (and still largely is) a relentless pursuit to codify solutions to business problems into formulas, or as he calls them, “algorithms.” Once the algorithm is “discovered,” it is then scaled to competition as a matter of execution. He develops these ideas by suggesting that any set of problems present something that is unknown and can thus be understood as a “mystery.” To solve the mysteries (of business problems) 20th century managers have developed “heuristics,” or rules of thumb, which can solve most if not all managerial mysteries. This is the stuff of traditional MBAs. This is what Martin refers to as the “drive to algorithms,” that is, simple formulas that can be applied generically to a variety of problem areas. Furthermore, with the advent and maturation of enterprise software (BPR, ERP, SCM, CRM), these algorithms have been developed even further into what Martin calls “binary code,” or virtually immutable formulas that require little if any judgement, but rather hinge on mere execution. Indeed, over the past few years, the notion of execution, from the pages of Strategy+Business magazine to the best selling book, “Execution,” by Larry Bossidy and Ram Charan, has become the popular management buzzword that celebrates this simplicity. To quote directly from Martin: “Many 20th century organizations succeeded by instituting fairly linear improvements, such as re-engineering, supply chain management, enhanced customer responsiveness, and cost controls. These ideas were consistent with the traditional Taylorist view of the company as a centrally-driven entity that creates wealth by getting better and better at doing the same thing.” To adapt to an economic and cultural environment that is defined by “new economy” cultural expectations at home and increasingly strong economic competition from abroad, Martin suggest that companies need to become more and more like Design Shops and less and less like the Taylorist Firm of yesterday.
This unfolds in several areas. First, in terms of the flow of work life, innovative companies are moving from a work flow based on ongoing tasks and permanent assignments to work based on projects and defined terms. Second, the source of status in firms is moving from managing big budgets and large staffs to the ability to solve “wicked problems.” Third, the style of work is shifting from “getting things perfect” the first time to more interactive and collaborative work. Fourth, the basic mode of thinking is no longer only deductive and inductive, but, like design firms, includes abductive thinking, that is, it includes a deep consideration of what is yet known, “what might be.” This is the difference between managing the known to building the unknown. And finally, the dominant attitudes in innovative firms moves from the idea that “we can only do what we have a budget to do” (i.e constraints are the enemy), to the idea that nothing can’t be done, and that constraints only increase the challenge and excitement of work. Think Google, here, as they proposed, to laughs at first, that they would work to digitize the library holdings of the world’s great universities. If they manage this, against all of the naysayers, scholars 500 years from now will be thankful.
Unfortunately, other than the Rotman School in Toronto, the Institute of Design at the Illinois Institute of Technology, and a few others, there are few programs that explicitly reach out to those groups of people — creative engineers, industrial designers, artists — who hold the trump card of differentiation going forward. They are in a much better position to build the unknown than are their MBA counterparts. As Patrick Whitley of IIT says of the MBA, “why pay the big bucks to ‘administrators’ anyway?” What the business world needs are creators. It doesn’t need successive herds who simply get “better and better at doing the same thing.”
Industrial designers, engineers, creative architects, artists and art educators potentially sit, as Daniel Pink recently argues, in the driver’s seat of strategic differentiation and innovation. But they also need to learn to think strategically in terms of building and growing businesses… As a resource, community, and learning platform, NotAnMBA is setting out to try and help drive the journey from “binary code” back to “mysteries.”
NotAnMBA Syllabus coming soon!
The Butcher
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