Deans from four of the country’s top business schools gathered together on a single stage earlier this week for a panel discussion on the future of graduate management education. Though the panelists—Geoffrey Garrett of the Wharton School of the University of Pennsylvania, Nitin Nohria of Harvard Business School (HBS), Garth Saloner of Stanford Graduate School of Business (GSB) and R. Glenn Hubbard of Columbia Business School (CBS)—have certainly grappled with questions about the value of the MBA degree and how best to train tomorrow’s leaders with each other in the past, Monday marked the first time they had ever come together in public as a group to do so. The event took place on May 2nd at Columbia University as part of that business school’s ongoing centennial celebration.
Moderator Jan Hopkins, former CNN anchor and correspondent, put the deans on the defensive from her very first question and didn’t let up, but the deans held their own and argued persuasively in support of the MBA.
“Business is hardwired into the prosperity we take for granted,” CBS’s Hubbard said. “And the biggest problems in the world are business problems and management challenges.” So even in the current climate, where “business has been vilified and bankers are hated,” as Hopkins put it, CBS draws the same proportion of its students from finance and sends the same proportion back out into finance. “The flows haven’t changed,” he said. “What has changed is the number of students wanting to bring about positive change in the world,” he said, adding that more and more students think of social enterprise as the route to do that, not government.
Nohria, for his part, noted that business is still an entirely voluntary enterprise. “You don’t have to buy something or invest in something unless you like it, and when the business enterprise ceases to create value, it disappears.” But even amid this natural process of creative disruption, the prosperity of society still depends on the business industry and business leaders, he continued. “When people think about business leaders today they think about them as people determined not to do well just for themselves, but for others.” His fellow panelists concurred that the role of leading business schools is to train these leaders.
Is the MBA Worth It?
Noting the staggering cost of business school, which will likely only increase over time, Hopkins questioned whether the model is sustainable. “Any transaction is about value,” replied Hubbard. “If you are going to any of the very top business schools, the answer to that question is yes,” he continued. But the burden falls upon those institutions to continue delivering an experience that is broad in scope, not focused on narrow disciplines taught one at a time. “There will be a handful of schools that survive and prosper and add value.”
Wharton’s Garrett added that even the top schools must evolve to remain relevant and valuable—including by placing growing emphasis on experiential learning. “We’ve long been good at ‘learning by studying,’ but now we are all getting into the ‘learning by doing’ business,” he said. “We all want and have a responsibility to ensure there is no rigor/relevance trade off, and I think that is a sweet spot for leading business schools.”
Why Wouldn’t Would-Be Entrepreneurs Skip the MBA?
Alluding to current Silicon Valley successes who skipped business school, Hopkins next challenged the value of the degree to would-be entrepreneurs. Garrett countered, noting that some big names in Silicon Valley right now happen to be Wharton alumni, including Google CEO Sundar Pichai (MBA ’02). The MBA is particularly valuable, he continued, when it comes to scaling businesses. “The skills our graduates develop at Wharton are what help turn a great idea into a great business,” he said.
“Entrepreneurship can be done by all kinds of people, and history is replete with entrepreneurs who didn’t get a great business education,” HBS’s Nohria acknowledged. That said, 50 percent of HBS graduates will have founded their own company 20 years out of school, drawing on the skills they gained while there, he noted.
Stanford’s Saloner shared that 16 to 18 percent of that school’s MBA graduates start their own businesses straight out of school, three times what it has been. “They benefit from business school because an entrepreneur is a general manager—you need to hone those general management skills.” He also added that even businesses that are founded by non-MBAs have MBAs in the executive suite. “The MBA may not be the founder, but most of those companies find you need not only the technologist but also someone who brings the business fundamentals,” he said. A third of all unicorns—startups valued at more than $1 billion—have an MBA as part of the founding team, he added.
Hubbard echoed Garrett, underscoring that there is a big difference between an idea and a business. He also noted that at CBS he’s seen an increase in the number of students interested in startups who are not themselves entrepreneurs. “They see themselves as providing that complementary skill to a technology or medical entrepreneur.”
A Shift Toward More Diffuse Hiring
The deans of these leading business schools also report seeing a major shift in hiring trends. “Out of the 800 students who take jobs, they are going to 400 distinct companies today,” Saloner said. “The days when a small number of companies would show up and drive off with busloads of graduates, that’s just not happening.”
Hubbard immediately concurred. “In the past, a company like McKinsey might come in and hire an entire cluster,” he said. No longer. So the role of alumni coaches and mentors has become much more important as part of the school’s career management process. “There are so many more employers today, and we can’t rely on big institutional recruiting like we have in the past.”
At HBS, the same phenomenon is happening. Sixty percent of HBS graduates last year went to smaller companies. “We need to find a way to help both our students and the companies discover a way to find the perfect fit,” Nohria said. “Maybe we can do some affirmative action for smaller company recruitment,” Garrett added.
Business Schools Must Allow Students to Experiment
“We are all in the business of educating—and that can take the form of entrepreneurs or financiers,” said HBS’s Nohria. “We are lucky that we can be selective and choose people with amazing potential. Our job then is to give them every opportunity in the two years they are with us so that when they leave they feel better prepared to do whatever they set out to do.”
At Stanford, one main focus is providing examples of possible career paths. “We put entrepreneurs and practitioners in front of them day after day after day,” Saloner said. “Many students will say about the first three, ‘I could never be that person,’ but by class four, five or six they say, ‘I could do that!’”
“Yes—we give them the opportunity to experiment,” Nohria said. “The other great value of business school is that it is a moment to imagine yourself within the different possibilities of a leader.”
Send Students Out into the World, Bring the World to Students
Does delivering business education today require having campuses all over the world? Different schools have different models—and therefore different answers to that question—but all panelists agreed on the need to infuse globalization into their offerings.
“I think of globalization as being about inhaling and exhaling,” Hubbard said. “We inhale the world to this place through our students, faculty and cases. But we are also taking faculty and ideas outside.” Though CBS faculty members teach all over the world, the school does not operate campuses elsewhere. “That’s not our model,” he says.
Wharton, for its part, opened a new center in Beijing last year. “When I speak there I always say I hope we have something to offer but we also have a lot to learn,” Garrett says. Looking at his fellow panelists—an American, an Indian and a South African—the Australian noted that they embody just how global American higher education has become. At the same time, he noted the finiteness of what Wharton can do with its campuses. “Demand for high-quality education is through the roof globally, and I think it is only going to increase,” he said. “It would be nice to be able to provide access to some of what we do to many more people.”
HBS, meanwhile, sends its students in their first year in teams around the world. “Our feeling is that anyone who will be a business leader in the next 40 to 50 years has to learn how to operate in a global world,” Nohria said, so HBS is focused on giving students a real understanding of how global business operates. In addition to the required first-year travel, 60 percent of the cases HBS teaches are now global, he said. “I also think we should be invested in building great institutions in many of these markets,” he said. “We should celebrate the fact that the world will be more global and that other people will be sitting on this stage who will have built great business schools in other parts of the world.”
Saloner agrees about bringing the world in—and notes that the current Stanford GSB student body comes from more than 60 countries. But like HBS, Stanford also requires that all students have an international experience in the first year. “We are a smaller school than all of the others on the stage, and we cannot be all over the world,” he said. Instead, the school has selected a few offerings to deliver in various geographies.
On Teaching Leadership
“Is leadership something you can teach?” asked Hopkins. “Absolutely,” replied Hubbard without a second’s hesitation. “There are characteristics of a great leader that are innate, but there are also things that can be taught,” he said, noting that leadership is the first part of the CBS curriculum. “We aim to make people into the best leaders they can be,” he said, but added that leadership is also something that evolves over time. “Most of what we are doing is winding up that process.”
Saloner thinks the way leadership has been taught in the past—by offering up 10 exemplars and suggesting that students model themselves after one—isn’t the best approach. “It should be experiential,” he said. “We put them in small teams with coaches who go over what they are doing well or not so well.”
Stretch experiences—including trips to places like Antarctica and Patagonia—are some of the ways Wharton students hone their leadership skills, said Garrett. But the school also offers a nonprofit leadership program that places students on the boards of local nonprofits. “That’s leadership ‘learning by doing’ that adds value both to the community and our students,” he said.
For its own centennial, which it celebrated in 2008, HBS developed its own definition of leadership. “We came up with this idea that leadership is about knowing, doing and being,” Nohria said. “You have to know what the right opportunity is, then you have to learn how to put that decision into action and then you have to inhabit being a leader,” he explained. “People have to call you a leader because they trust your confidence and your character.”
Which Brings Us to Ethics…
When you’re in the business of teaching people to be leaders—can it be presumed that you’re also teaching them to be ethical? “Our view is that ethics is best taught in real situations,” Hubbard said. “’Here is a slippery slope that I was on, here are the options I saw, here are the choices I made.’”
When it comes to ethics, context matters, stresses Garrett, offering the issue of facilitation payments in developing countries as an example. “Say you get a bribe to do your job, but you’re not being paid a living wage,” he said. “The right thing to do in that sense requires a lot of context—the world is a complex place, so the context really matters.”
On the question of ethics, Nohria quoted Lincoln, who said, “Most people think the way to judge a person’s character is how they do in adversity; the real test of a person’s character is to give them power.” He went on to say that at HBS they have the great privilege of educating people who inevitably will hold a great deal of power. “We are always looking for better ways of helping our students understand that as they gain power—that even for people who know not to lie, cheat and steal—in the middle of that, temptation abounds. We teach them how to avoid that temptation.”
At Stanford, there’s a very popular elective course called “Real Life Ethics,” made up of very short cases that evolve over the period of the class, Saloner said. “Most people do not go into most situations intending to act unethically,” he said. “We have tried to model that by having cases that unfold, where perfectly reasonable looking actions that I took in rounds one and two suddenly have put me in a compromising position.” Employing student-to-student and student-to-instructor role-playing, the cases cover business situations ranging from raising venture capital to developing financial instruments to senior management mutiny.
Please Gaze into Your Crystal Balls
In closing, Hopkins asked each dean to predict what his business school would look like in five or 10 years’ time.
“What we know is that our graduates will insist upon—and we will deliver—an even more integrated experience,” Hubbard said. “It will be less about individual disciplines, and more about solving business problems.” He also expects to see more and more graduates leave business school for jobs in younger companies and prepare for different careers over their lifetime.
Garrett thinks the difference between the four institutions represented on the stage and business education writ large will grow over the next decade. “Online, shorter, non-MBA masters will continue to grow, and we’ll have to decide how much we want to play there.”
Nohria agreed that we are living through a period of extraordinary change in terms of globalization, technology and non two-year MBAs. “As we navigate through this change, it is important to maintain continuity about some core things we value,” he said. “A commitment to leadership, general management, a transformational educational experience people can get in two years—we should be determined to protect and enrich these things.”
Saloner, meanwhile, pointed out that the way we deliver education has remained largely unchanged. “Very often, we have an individual standing in front of the class teaching,” he said. “The biggest revolution we had in higher education was when we moved from the chalk board to the white board,” he quipped, drawing laughter from the crowd. But more dramatic change is near, he says, and he predicts it will be very rapid.
“Schools like ours will use these changes to further explore experiential education,” Saloner said. “The schools up here will continue to attract the highest-level students who will come for a transformative experience through experiential learning. And then we will disseminate that widely.”
