Historically, some of the most profound innovations in science and business have taken place during times of stress. During World War II, we saw more scientific development than we’ve seen in any other era. During the 1980s, when companies laid off massive numbers of staff, we realized we had to devise new ways to accomplish the work that needed to be done.
Today’s institutions of higher learning also are facing stressful times. In this volatile economic climate, state funding is down, endowments are falling with the stock market, and students can’t afford higher tuition. At the same time, traditionally profitable enrollments in executive education noncredit courses are shrinking because fewer people can afford to pay for such programs. These are certainly causes for alarm—but they might also be opportunities in disguise, chances to try new ideas and implement new initiatives that otherwise might never be accepted.
Earlier this year, in conjunction with its annual Dean’s Conference, AACSB International held a bonus workshop titled “Responding to the Global Economic Impact on Business Schools.” At the workshop, more than 100 people from 20 countries—a third of them from outside the U.S.—discussed ways to address the challenges facing today’s business schools. I led the workshop with Gail Naughton, dean of the College of Business Administration at San Diego State University in California.
Workshop participants were divided into 16 discussion groups, where they tackled ten topics of concern for today’s business schools. Half of the groups reported on problems associated with their topics, and the other half reported on solutions. Each discussion inspired an energetic exchange of ideas as participants offered not only their own schools’ solutions, but also completely new approaches to the challenges today’s higher education institutions face.
The workshop’s exchange of ideas was valuable, but its main benefit was that people realized they were not alone. They also realized that we must look for alternatives to “business as usual.” The central theme of the workshop and conference was that we all must prepare for the future, since the economy isn’t going to turn around in a year. We have to understand our options, and we have to act.
The following pages outline the problems that workshop groups discussed and highlight the solutions they suggested. Together, their proposed solutions might provide a toolkit of new ideas for business educators and ways to see the opportunities in today’s tough times.
Discussion No. 1:
Coping with Change
Ever since Alvin Toffler published Future Shock in 1970, change has occurred at an unprecedented rate. Most academics don’t understand or appreciate change theory, considering it part of “social sciences.” As a result, many of them have been paralyzed by the rapidly changing environment. But business school deans have no choice but to learn to cope with change. They can’t merely reminisce about the past; they must look to the future.
• Welcome change as an opportunity to accomplish new goals.
• Anticipate change and keep informed about options.
• Understand the new technologies and resources that accompany change.
• Learn from Kurt Lewin’s theory of social change, which advocates unfreezing, moving, and refreezing to overcome inertia and move into a new mindset.
Discussion No. 2:
The current global climate is overwhelming and uncertain. With business schools’ success and survival at stake, many deans and faculty risk cleaving too tightly to outdated training, experiences, competencies, or technologies. Business schools must ensure they stay relevant. They also must strive against becoming more uniform at the very time when differentiation is essential.
• Carve out “quiet time” for strategizing.
• Build a strong strategic planning staff.
• Define a unique mission.
• Focus on what the school does best.
• Conserve resources by deciding what not to do.
• Strengthen the business school’s autonomy.
• Cross disciplines.
• Identify growing industries, like energy, sustainability, healthcare, and government.
• Train and recruit faculty in these fields.
• Learn from mistakes.
Discussion No. 3:
As overall unemployment rapidly increases, it’s harder for students to land jobs—which is the reason they’re attending business school in the first place.
• Partner with prospective employers to create programs that suit the needs of future business.
• Expand experiential learning opportunities.
• Create employer-student mentoring programs.
• Support on-campus business speaker programs.
• Invite more prospective employers to campus.
• Help students develop stronger networking and job-search skills.
Discussion No. 4:
Because of the recession, schools might see government funding drop by as much as 30 percent, while some endowment values are down by as much as 40 percent. Even if schools increase enrollment, tuition caps limit what they can charge. A loss of funding can hurt program offerings; it can make students anxious about losing financial support; and it can lead to a drop in morale among faculty.
• Seek more collaborative grants and contracts.
• Expand development and fundraising activities.
• Expand credit and noncredit programs that generate surplus revenue.
• Increase out-of-state student enrollment at higher tuition.
• Revamp student fees:
▸ Require students to pay more for extra services.
▸ Charge tuition on a per-course-hour basis.
▸ Charge more for programs in high demand.
• Revisit agreements with the university:
▸ Require nonbusiness university programs to pay for business courses.
▸ Renegotiate revenue-sharing programs.
▸ Urge the university to eliminate caps on student tuition.
▸ Borrow from the university to bridge budget deficits.
• Help the university seek additional government funding or participate in economic stimulus programs.
• Eliminate inefficient policies and practices.
• Cut back on operating budgets.
• Restrict student enrollment.
• Reduce course offerings for nonbusiness programs.
• Eliminate academic administrative units and programs.
• Deliver more courses or programs electronically.
• Increase class sizes.
• Increase faculty teaching loads.
• Renegotiate faculty time for teaching and research.
• Utilize more shared PhD seminars and courses.
• Hire new faculty only to fill critical needs.
• Don’t fill other empty positions.
• Provide early retirement incentives.
• Consider drastic solutions:
▸ Eliminate faculty positions.
▸ Put faculty and staff on furloughs.
▸ Reduce salaries.
▸ Abrogate tenure for core faculty positions.
Discussion No. 5:
Both businesses and individuals are suffering from the recession and have less money to give. Many existing pledges are being retracted or delayed, and some longtime supporters are shifting their gifts to charitable organizations. As a result, some business schools have seen annual giving drop by at least 25 percent, while new major gifts have gone down by a similar number. Staff reductions in the development office have exacerbated the problem, and so have situations in which business schools find their needs in conflict with policies in the central development office. (For more on fundraising, see “Giving in Tough Times” on page 36.)
• Make all stakeholders aware of funding needs.
• Participate in university development plans.
• Tie special requests to specific outcomes, especially future accomplishments.
• Be sensitive to donors’ situations:
▸ Continue donor stewardship activities.
▸ Allow them to pay commitments over a longer period.
▸ Offer workshops and seminars tailored to their needs.
• Welcome smaller gifts.
• Focus on deferred and future gifts, such as bequests, charitable trusts, and property.
• Approach corporations and high-net-worth individuals who have been less affected by the recession.
• Focus on alumni:
▸ Remind them that their degrees are enhanced by improvements to the school.
▸ Support them in career transitions so they can support the school in the future.
Discussion No. 6:
Maintaining Research Relevance
Faculty generally conduct research within their own disciplines and submit it to journals that also serve a single discipline, but most relevant research in the future will be interdisciplinary. In addition, both business and government are looking for practical research that relates to today’s problems or focuses on emerging topics that will be essential in the future.
• Interact with business and government institutions to identify evolving issues.
• Help faculty develop new research paradigms, particularly in interdisciplinary topics of inquiry.
• Recruit faculty with relevant research interests.
• Restructure doctoral education to focus on relevant research.
• Influence journal editors to place a higher value on applied research.
• View current conditions as an opportunity to look at new kinds of research.
Discussion No. 7:
Attracting and Retaining Faculty
The current business faculty deficit exceeds 1,000 per year. Some schools already are understaffed, and those with budget restrictions will find it difficult to hire and retain faculty if top professors are wooed away by elite institutions with more money. The supply of academically qualified (AQ) faculty may be reduced further as schools cut back on doctoral programs, but more professionally qualified (PQ) faculty may become available as seasoned executives are downsized out of jobs. However, schools need both AQ and PQ faculty to attain AACSB accreditation.
• Create a favorable work environment that is supportive of faculty productivity.
• Use chaired professorships to keep and attract highly qualified faculty.
• Use faculty retention salary adjustments only for top performers.
• Hire graduates from AQ Bridge and PQ Bridge programs.
• Hire visiting faculty.
• Hire or train faculty who can teach interdisciplinary courses.
Discussion No. 8:
More people are considering business schools, because people historically invest more in graduate business education during poor economies. But if the university controls student enrollment, the business school might not see additional revenue from higher enrollments. At the same time, many business programs are becoming generic, and other programs at some universities are replicating the business curriculum, causing the business degree to lose value. Meanwhile, the business school’s resources can be consumed by students who have double majors or minors that include business.
• Develop differentiated graduate and undergraduate programs.
• Determine optimal enrollment levels of all programs.
• Reduce or eliminate nonessential academic programs.
• Reduce or eliminate services offered to anyone outside the business school.
• Reclaim responsibility for management courses that have been taken over by nonbusiness departments.
Discussion No. 9:
Maintaining Teaching Relevance
Because most business schools offer discipline-based courses, few faculty have the cross-disciplinary training to teach what’s happening in the current market. Critics claim that management degree programs are generic, and they ask hard questions. Are business schools still relevant? Are students being taught to think critically? Are students actively participating in the teaching/learning process?
• Encourage faculty to expand their research, particularly into relevant emerging fields.
• Keep doctoral education focused on relevant topics, particularly in emerging fields.
• Expand faculty experience in business and government.
• Supplement textbooks with more just-in-time information sources—from the newspaper to Web news feeds to stock market data—to illustrate financial principles through current events in politics, business, and the economy.
• Develop expanded partnerships with local firms to stay more closely in touch with what businesses need.
• Strengthen interdisciplinary teaching:
▸ Hire and train faculty to teach cross-functional courses.
▸ Expand students’ interdisciplinary learning opportunities.
▸ Devote more centers to interdisciplinary research.
• Prepare students for the real world:
▸ Expose them to topics such as business ethics and social responsibility.
▸ Develop their critical thinking skills.
▸ Give them experiential learning opportunities.
• Change learning objectives to better reflect a changing curriculum.
Discussion No. 10:
While the uncertain economy will cause some existing educational programs to be curtailed, new ones will emerge. Economic development and impact studies will become increasingly important to business and government.
• Determine the market for new or expanded programs—and deliver them.
• Offer more programs related to economic development and impact.
• Enhance entrepreneurship programs to attract newly unemployed individuals.
• Expand credit and noncredit programs that generate surplus revenue.
• Expand programs that build on faculty members’ skill sets.
• Develop appropriate infrastructure to support program delivery.
• Expand grant and contract activities to prepare for the next round of change.
Today’s “Black Swans”
As educators discussed and exchanged these ideas during the conference, I was reminded of the 2007 book The Black Swan by Nassim Nicholas Taleb. His title refers to a widely held belief among 17th-century Europeans that there was no such thing as a black swan, because no one had ever seen one. They would eventually learn, however, that black swans commonly existed off the coast of Australia. Similarly, Taleb notes our tendency to disbelieve that which we cannot predict. But even rare events—the dotcom bubble, 9/11, or today’s financial collapse—aren’t as rare as we’d like to think. Once they happen, the world is never the same.
No one anticipated this financial crisis—the economic equivalent of Taleb’s black swan—and yet it will have extreme impact. Business schools need to accept the notion that things will never be the same. But they also can take advantage of change to try new and sometimes even radical ideas to push forward and prepare themselves for a time when the next black swan inevitably arrives.
Richard E. Sorensen is dean of the Pamplin College of Business at Virginia Polytechnic Institute and State University in Blacksburg, Virginia