Innovation is a topic of many conversations at business schools today, and for good reason. Business schools long have had reputations for producing only suit-and-tie Wall Street-ready graduates. But we are now in the midst of an “innovation revolution,” in which business schools are expected to produce graduates who can flourish in an innovation economy. While innovation can be defined as the ability to move ideas forward in ways that add value to the community, there is a second definition that is equally important to business schools—the ability of organizations to continuously reinvent themselves, so they can grow and thrive. In a sense, all organizations need to behave like startups!
It also is critically important that business schools (and universities) constantly reinvent themselves. Every year, they might look a little different than they did the year before, as they reassess whom they serve, what they do, and how they do it. They must continuously consider what innovation looks like for their stakeholders and adapt their programs to meet the needs of their communities.
That is what we do at the Rady School of Management at the University of California, San Diego. Founded in 2003 as a startup business school, the Rady School was launched at a time when no state support was available. The school was created to serve the innovation economy of Southern California, a hub of science and technology. Here, more than 600 life science firms and over 100 telecommunications and software startup companies operate within five miles of our campus. This unusual environment has shaped our identity and inspired several strategies that I believe could help other business schools better define their own paths to innovation:
1. Establish a clear identity.
As we built the Rady School, we knew we had to be as specific as possible about who we were and what community we would serve. If we based our identity on general business education, we risked blending in with other schools. On the other hand, if we aligned our programs and mission with the community we served—in our case, one heavily steeped in life science and technology—we would establish our value from the start.
That strategy not only has given us a clear direction, but also has served us well in other ways. During the last financial crisis, several individuals donated enough money to help the Rady School make up for a budget shortfall and support our mission. While other schools in the UC system were instituting furloughs, our faculty never had to take pay cuts. The members of our community know that our school exists because of them and for them. For that reason, they assume an extraordinary responsibility for our success.
2. Work across disciplines.
Many Rady faculty collaborate with professors in disciplines such as engineering and health science. Some have co-authored papers that have appeared in journals such as Science and Nature, while others have secured grants from the National Institutes of Health and the U.S. Department of Energy. One group is working with the Scripps Institution of Oceanography to study issues related to the oceans, the atmosphere, and environmental sustainability.
3. Reimagine faculty rewards.
For a business school to be innovative, it must align the way it rewards and recognizes faculty with that goal—something that does not always happen through traditional paths to teaching and publication. At the Rady School, for instance, we consider Science to be an A-level journal. If we continue to use old metrics, we will do only what we have done before. However, we know that our future must look quite different from our past.
4. Reach across campus. A great way for business schools to inspire innovation is to push beyond their boundaries—literally. At every university, disciplines such as engineering, health science, and the liberal arts are recognizing that business needs to be part of their curricula.
Should business schools sit back and observe while these departments develop their own programs in innovation and entrepreneurship? Or should business schools design basic courses for students in other disciplines and help other departments achieve their goals? The growing interest in business is an opportunity for business schools to take on roles at our universities that we have never taken on before. Entrepreneurship and innovation leadership have never been more relevant across campuses.
5. Incentivize risk. A school that is not taking risks is not moving forward, and a school that is not moving forward is in jeopardy of becoming a nonentity in today’s market. Create incentives that encourage faculty to experiment and that discourage fear of failure. Such freedom might lead faculty to design new curricula, submit grant proposals, and support interdisciplinary initiatives.
6. Act like a startup. Innovative business schools sometimes have to make something out of nothing. They need to “bootstrap” just like a startup. Today, at the Rady School, we continue to follow a self-supporting financial model, even at a public university.
Business schools can act like startups in other ways as well. For instance, in 2003, Rady started Lab2Market, a series of courses in our MBA program in which entrepreneurs learn how to turn fledgling ideas into market opportunities. We had no state funding for the program, and we had only one faculty member on staff to teach the courses. We started small with a weekend program. We flew in faculty from institutions where I had previously served. We asked entrepreneurs and venture capitalists to volunteer as mentors. The school engaged the community to support its launch.
As we grew Lab2Market, it became our “innovation maypole,” around which our other programs revolved, from our Rady Venture Fund to our StartR Accelerator, just launched in 2013. During the 2013–2014 academic year alone, startups from this program raised nearly US$2 billion through venture funding, partnerships, and the first Rady alum IPO. Seventy-five alumni-founded businesses are viable and operating today, hiring employees and raising capital. Forty percent of those businesses evolved from Lab2Market.
In 2009, entrepreneur Pierre Sleiman further developed Go Green Agriculture, a hydroponic organic farm, for his Lab2Market project. Sleiman now has five acres of greenhouses producing approximately 500,000 head of lettuce, kale, and other greens every month. In August, he was recognized at the White House as one of the Obama Administration’s “Champions of Change” for his agricultural practices. That is the kind of innovation business schools can inspire.
DEFINING THE FUTURE
Business schools must practice innovation and be transformative in purpose as well as in behavior. Schools that are unable or unwilling to continuously reinvent themselves will be at risk, but the business schools that thrive will be those that help define the future.
Most business schools are steeped heavily in tradition—they are not accustomed to reinvention. However, in an innovation revolution, we must embrace it. That is the only way we can deliver the value that our communities need. So I share the mantra for our Rady School community—never stop starting up!
By Loick Roche and Mark Thomas
When Steve Jobs decided to make the iPhone, he knew it would ultimately destroy the iPod, which was generating 70 percent of Apple’s revenues at that time. So why did he go ahead with manufacturing plans? He believed the principles laid out in The Innovator’s Dilemma, written by Harvard professor Clayton Christensen, who noted that companies sometimes have to cannibalize their own products to stay ahead of the competition. Christensen never predicted the iPhone’s wild success, but his research helped lead to its creation.
Christensen’s research is only one example of the many ways in which universities can influence innovation today. In the 2012 book What Are Universities For?, Stefan Collini declared that one of the prime objectives of higher education is to be a center for innovation and creative thinking. While some dispute that, we believe innovation is at the heart of the strategy for most business schools today. When schools offer programs that emphasize innovation, they can have a direct short-term impact on the business world—and a long-term effect on tomorrow’s executives.
Regulating bodies that oversee education are coming to the same conclusion. AACSB International has made innovation one of the three pillars of its new accreditation standards, along with engagement and impact. Similarly, under the U.K.’s new Research Excellence Framework, funding bodies there will consider the impact of research when allocating funds to universities.
If business schools want to teach our students how to drive innovation in the workplace, we must teach them to work together, see across cultural boundaries, and think critically. To do that, we first must embrace innovation ourselves. We believe the following steps are good places to start:
1. Collaborate with business to stimulate innovation. The University of Cambridge has set up a strategic partnership under the Cambridge Cluster, which includes 1,500 technology- based firms working with different research centers at the various faculties. In the past 20 years, this university/business partnership has led to the creation of more than 300 high-tech ventures, and 14 can boast revenues of more than US$1 billion.
In another approach, Grenoble Ecole de Management has integrated “serious games” into the curriculum. Students use gaming strategies to discover innovative ways to approach markets and develop products for participating French companies, including Michelin. Obviously, the companies are hoping to benefit by implementing new R&D ideas generated by the students, but the school has a longer term goal: to help students master critical problem-solving skills that they can take with them into the workforce.
2. Launch programs designed to get new ideas to market efficiently.
Two examples are Stanford’s Innovation and Entrepreneurship certificate program and Wharton’s Strategy and Business Innovation program. Another is MIT’s $100K Entrepreneurial Competition, in which student teams create new business models. Maura Herson, director of the MBA at MIT’s Sloan School of Management, points out that the most important part of the competition for students is learning entrepreneurial skills, not winning prizes.
3. Use live case studies in the classroom so students can work on real-world problems.
Such projects are increasingly popular with companies that appreciate the candid feedback given by young students who are not bound by the conventions and politics of the office environment. They give their opinions about the problems companies present to them, rather than the answers they think the boss wants to hear. Such open debate is vital for innovation in the business world.
4. Teach students to look at industry from different perspectives.
in Global Health Care program presents new models in the increasingly challenging healthcare industry. INSEAD’s Social Innovation Centre asks participants to look at business from sustainability and ethical perspectives. Fudan University’s Innovation Science Fair encourages students from different research disciplines to cooperate as they develop their projects in applied research.
Another way to give students a new perspective is to bring in an outsider who challenges the students’ ideas. At Grenoble EM, we’ve experimented by inviting in a philosopher to question students at the end of a lesson. This not only forces them to look at situations in an entirely different way, but it also allows them to defend their ideas to someone who is not part of the mainstream business world. This is a key skill that they will need later on.
5. Encourage cross-disciplinary—and cross-cultural—perspectives.
Students who pursue joint degrees sharpen their critical thinking skills, which is one reason for the popularity of degree programs that pair business with math, design, history, philosophy, law, and psychology. But students develop even broader perspectives when they engage in crossborder studies by taking some classes at other universities. When schools from different countries and continents develop joint degree programs, students get a chance to explore many different ways of thinking.
They also see how innovation can be a global phenomenon. As Amar Bhidé writes in The Venturesome Economy: “A Briton invented the protocols of the World Wide Web—in a lab in Switzerland. A Swede and a Dane in Tallinn, Estonia, started Skype, the leading provider of peer-to-peer Internet telephony.” Students learn how innovation can be sparked and strengthened by global connections.
6. Stop worrying about MOOCs.
In fact, embrace them. MOOCs encourage innovation not only because they offer educational opportunities to people who have little other university access, but also because of their potential to expose groups of students to new ideas from people they might otherwise never have met. In fact, Vivek Goel, chief academic strategist at Coursera, notes that some students in Asian countries have taken MOOC classes and then been accepted into mainstream universities.
No matter what path they take, business schools must build innovation into their curricula because today’s businesses require graduates who are creative, adaptive thinkers. Tony Wagner, expert in residence at Harvard University’s new Innovation Lab, made that point when he spoke at AACSB’s Annual Conference in 2013. He said, “Work is no longer defined by your specialty. It is defined by the task or problem you and your team are trying to solve or the end goal you want to accomplish.”
When innovation is the goal, Wagner notes, critical thinking and problem solving are the “first critical skills” young graduates need to develop. A grounding in traditional subjects like accounting and finance is still valuable; even innovation processes are subject to time and budget constraints. But business schools need to supplement those traditional disciplines with programs that teach students to think creatively, not just in one class, but throughout their working lives.
By Alex Triantis
Research shows that creativity rises with ceiling height, so why not raise the roof when asking students to be innovative? This fall at the University of Maryland’s Smith School of Business, we’ll actually remove the roof altogether in the undergraduate class called “Creativity and Innovation for Business Leaders: Outdoor Edition,” taught by Distinguished Tyser Teaching Fellow Oliver Schlake. Students will first form teams and brainstorm products for outdoor enthusiasts; after visiting various retailers to observe customers in action, they’ll return to the classroom to tweak their ideas.
Then it gets interesting. Using scanners and 3-D printers, students will create prototypes that they test in the wild over a full day spent outdoors in the forests around Washington, D.C. In case there’s inclement weather, Schlake will bring a large customized and heatable teepee to provide shelter. Upon returning to the classroom, each team will pitch its product to the others. The four most promising will be chosen, the teams will realign, and students will build and field-test a new generation of prototypes. Meanwhile, students will draft their marketing pitches and shoot video footage to use for crowdfunding campaigns on websites such as Kickstarter and Indiegogo. At the end of class, they’ll make presentations to a live audience of potential investors—and maybe launch a new business or two.
We’re not the only business school offering students a chance to field-test ideas and see business in action. For instance, Harvard Business School now embeds its MBA students in global environments and assigns them to work with realworld partners through a yearlong program called Field Immersion Experiences for Leadership Development (FIELD). Emory’s Goizueta Business School pursues a similar mission with Management Practice, a sequence of courses that lead to field assignments with clients such as GE, Delta Air Lines, and AT&T. Meanwhile, students at Vanderbilt’s Owen Graduate School of Management watch surgeries being performed and visit community clinics as part of a healthcare immersion course.
If business schools are going to stay relevant in today’s fast-changing economy, we must offer rich, meaningful experiences that students can’t have with competitors such as for-profit institutions and online MOOCs. We must transform ourselves from knowledge dispensaries into innovation hubs.
To do that, we must stimulate creative thinking, which is the process of idea generation; and we must encourage critical thinking, which is the process of analyzing data, synthesizing information from multiple sources, and evaluating solutions. At the Smith School, we’re working to bring realitybased learning into every class. How? We follow these six steps:
1. Open two-way channels.
We supplement traditional classroom instruction with real-world experience so that students don’t just learn about companies—companies learn about students. Such exposure often leads to internships, job offers, and other exciting opportunities. As an example, for the past five years, Smith professor David Kass has taken his students to Omaha, Nebraska, for Berkshire Hathaway’s annual shareholder meeting. In 2014, the Fox Business news network invited Smith students to participate in a live on-air conversation with Berkshire Hathaway CEO Warren Buffet and his most famous board member, Bill Gates.
2. Get out of the silo.
We develop relationships across campus by partnering with other thriving programs at the university, because students learn to think more innovatively when they work across disciplines. For instance, QUEST, a reality-based honors program, puts business, engineering, and computer science students together in the same classrooms.
3. Work cross-culturally.
We push business students out of their comfort zones and help them to see past geopolitical and cultural boundaries to view problems from multiple perspectives. When I accompanied Smith students on a 2014 trip to China, they didn’t experience the country in a bubble; they participated in a business plan competition that included multinational teams.
4. Emulate real business.
Smith professors Brent Goldfarb and David Kirsch revamped their entrepreneurship course in 2012 after their research showed that few venture capitalists read business plans. Now, instead of spending a semester creating charts and summaries for potential investors, students launch actual companies in a course called the Real Entrepreneurship Competition. They also learn to create a “business model canvas”—a term coined by Alexander Osterwalder—to answer nine key questions about what kind of business they’re creating, what customers it will serve, and how it will make money.
5. All flexibility.
We realize that a great learning experience for one student might not serve another. To teach ethics, we used to require all students to visit a prison, where they spent half a day meeting former executives prosecuted for white-collar crimes. The program worked well for many students, but not all. Now we allow options for studying ethical business, including opportunities to focus on social entrepreneurship and social value creation.
6. Unleash the faculty.
We know that deans sometimes can drive innovation simply by getting out of the way of faculty. Most academics become professors because they crave meaningful interaction with students. They want to impact their students and how they think. In turn, they’re infected by the enthusiasm of their students, creating a contagious atmosphere of innovation.
By following these six approaches to teaching business, we show students how to bring creative solutions to real-world problems. We turn the school into an incubator for ideas—and we raise the roof on innovation.
Robert S. Sullivan is the dean and Stanley and Pauline Foster Endowed Chair at the Rady School of Management at the University of California, San Diego.
Loick Roche is dean and Mark Thomas is associate dean for international affairs and professor of strategic management at Grenoble Ecole de Management, France.
Alex Triantis is dean of the Robert H. Smith School of Business at the University of Maryland in College Park.