THE WORKPLACE OF THE FUTURE will be dominated by technology. All along the business supply chain, many of today’s human jobs will be eliminated, replaced by adept machines and networked systems that handle manual tasks and repetitive labor. Those who want to continue doing high-value work will need to develop skills that machines can’t replace. They will need to know how to innovate, as machines cannot yet do, and must aspire to become members of the Creative Core. The Creative Core is the part of the organization entrusted with the task of building the next product, service, or solution. Its team members typically include both scientific experts familiar with the product under development, and business specialists familiar with the industry, competition, and customer base. But workers in the Creative Core must move beyond knowledge of the familiar; they must drive the innovation that spurs continued growth for their companies. The important question for today’s business school administrators is: How can we prepare students to become innovators at the heart of the Creative Core?
PATHWAYS TO THE FUTURE
Today’s workers may enter the Creative Core by taking one of three routes: They can have a deep understanding of the field where they work (the business/industry route); they can be experts at the technical parts of their business (the scientific/technical route); or they can be visionaries who create new industries from scratch (the Henry Ford/Bill Gates/Mark Zuckerberg route).
Most people in business enter the Creative Core by following the business/industry route. Typically, they start out as operational experts and over time evolve into Creative Core innovators. Operational experts are masters of the latest thinking in their functional domains, frequently having acquired that knowledge through business education. But from their first days on the job, they should search for ways to improve the operational status quo. They might not be creating new products, services, or solutions, but through their early operational improvements they will show an ability to innovate. In addition, while finding ways to improve existing customer service or supply chain processes, they will gain deeper knowledge about their industries, companies, customers, and products. They must have this fundamental knowledge if they are going to develop ideas for products, services, or solutions that have not existed before.
Employees who follow the business/industry route are the ones who will benefit most from business education. B-schools can prepare them for their journeys to the Creative Core by equipping them with two kinds of knowledge: the hard skills they need for operational excellence in their functional domains; and the soft skills, such as teamwork and communication, that will enable them to work on high performing teams.
Even so, the journey from operational innovator to Creative Core member will not be swift for most business graduates. Anecdotal evidence from executives suggests it takes five to ten years to gain deep knowledge about a company and its industry. Graduates must be prepared to invest this time—and if they change industries they will need to invest even more time to learn a new field.
A business school background is not directly applicable to those joining the Creative Core via the second path: the scientific/technical route. These individuals gain their initial formal academic training in a technical field, such as biomedical engineering or environmental chemistry. Just as their business colleagues rely on training in their functional domains, these individuals rely on their scientific and technical expertise to contribute to their companies.
The Ford/Gates/Zuckerberg route is the third path to the Creative Core, and those who follow this route seem to have little need for tertiary education. Ford, Gates, and Zuckerberg all started industries from scratch and had little codified knowledge to study; not one of them had a university degree. Ford was a master tinkerer/engineer who spent years building the first horseless carriage and ultimately the first mass-produced motor vehicle; he was barely literate and did not value education. Gates and Zuckerberg were among the smartest high school graduates of their generation, but both dropped out of Harvard to build their companies.
The fact that formal education has little to offer those following the Ford/Gates/Zuckerberg route should sound a note of caution to schools offering entrepreneurship courses. Teaching aspiring entrepreneurs to write business plans or connecting them with venture capitalists will do no damage, but a question remains: Will budding entrepreneurs really think it’s worth spending time completing many years of formal education to acquire those skills or to gain access to financing?
There’s a second equally important question: To what degree will entrepreneurship training turn students into successful entrepreneurs? Most new ventures fail, and very few individuals are as capable of envisioning new products, services, or solutions as Ford, Gates, and Zuckerberg. Schools should neither overestimate the ability of their young adult students nor allow them to underestimate the difficulties entrepreneurship presents. At the very least, b-schools should track their entrepreneurship students to verify how many succeed after graduation. Schools also can mitigate the risk by ensuring these students complete other functional majors so that if their ventures fail they have other skills to fall back on for employment.
However, universities can follow other avenues to encourage entrepreneurship among their students. Combining different disciplines into academic Creative Cores is one way to promote cross-campus entrepreneurship. For instance, if business and engineering students work together on innovative ideas, the engineering students will present the scientific/technical ideas, while business students will provide the business/industry knowledge necessary to implement the ideas.
When students work outside their domains, they gain experience in the multidisciplinary and cross-functional nature of Creative Core work. When students follow the business/industry and scientific/technical routes, they work in established organizations to gain the experience that eventually propels them to the Creative Core. Far fewer will join the Creative Core by following the Ford/Gates/Zuckerberg route—that is, by forming their own Creative Cores from the beginning. However, many take this route in combination with one of the other two paths. But they only form their own companies after they have spent time accumulating knowledge at a university and honing their skills in an existing organization. The pity is that the established companies fail to retain the employees they train.
GLOBAL GROWTH & INNOVATION
While Creative Cores will drive innovation in the leading-edge workplaces of the future, it will take time before this is completely true across the world. That’s because both the nature and the rate of economic growth depend upon the level of economic maturity countries have reached.
In the mature and industrialized U.S., for instance, the infrastructure is in place and electricity is available to all; most families have houses, at least two cars, multiple TVs, closets full of clothing, refrigerators full of food, and access to the services they need. New demand is limited, as it mostly is created by population increases and replacement or maintenance expenditures. Furthermore, many critics believe Americans are already guilty of overconsumption and ought to buy less, rather than more. Under such conditions, companies only can capture market share through offering innovative products, services, and solutions. This means the rate of economic growth will be slower than it will be in countries undergoing economic modernization. In a nutshell, these are the conditions that describe Creative Core-inspired innovation-led growth.
At the other end of the spectrum are countries like Afghanistan, where most still live in extreme scarcity, physical infrastructure is yet to be built, and only a small segment of the population enjoys any material abundance. Afghanis are followers awaiting economic modernization to reach levels others have already attained.
During the 20th century, a small group of countries—including Singapore, Taiwan, and South Korea—attained rapid progress through economic modernization, or input-led growth. In other words, they marshaled capital and labor, or inputs, to build productive capacity quickly. Known as “early fast followers,” these countries invested their high savings into infrastructure and the physical capital needed to build roads, factories, and offices. At the same time, they poured resources into educating laborers to work alongside the fast economic progress was mobilization, not innovation.
A country experiencing input-led growth may go through several phases. For instance, at first it might build footholds in export-led industries such as textile manufacturing, where it can rely on its manually dexterous labor force to produce goods inexpensively. As the society modernizes, it might advance into other areas, depending on global competition and local capabilities. Later still, it might pour resources into domestic markets.
During these phases, innovation will be at the margins. For instance, domestic companies might adapt materials and products to suit local conditions, but they won’t be creating anything fundamentally new. But once a nation is fully industrialized and economically mature—i.e., once all roads and houses are built, and everyone has clothes, cars, and TVs—then the only way to continue economic expansion is through innovation-led growth. And that’s harder to accomplish.
Let’s take the example of China, which still faces decades of input-led growth before reaching the living standards now enjoyed in developed countries. Until recently, most of the country’s economic growth was based on building capacity for exporting goods—that is, the products that were made in China were destined for the rest of the world. However, for the foreseeable future, it’s likely that China will foster most of its economic growth by focusing on domestic products and services offered by Chinese workers for Chinese consumers.
Moreover, as this inward-oriented transition unfolds, Chinese domestic consumers probably will be more like the American middle-class consumers of the 1950s and ’60s as they moved to the suburbs of growing cities. They won’t have the purchasing power of today’s wealthy Americans, but they’ll be able to afford reliable cars and homes of around 1,000 square feet—the average size of an American house 60 years ago. But once China reaches the maturity and saturation now seen in America, it too must master innovation-led growth or see its economy sputter.
THE ROLE OF BUSINESS SCHOOLS
Business school educators must make sure their graduates understand how economic conditions differ across the world—a notion strongly emphasized at the Darla Moore School of Business. For instance, we offer a class on comparative politics and sociology that helps students see that every country’s business environment is shaped by its own societal institutions, governance structure, and technology level. A class on ethnography helps students understand that different business models are required to operate in different parts of the world. (For more details on these, read “Commerce & Culture” in BizEd’s July/August 2015 issue.)
In emerging economies, educators must teach students to mobilize capital and labor to help their nations catch up. If they’re following the economic models of Singapore, South Korea, Taiwan—or, most recently, China—they will show students that their countries must first develop export-led production capacity before turning toward more domestic-led economic growth.
By contrast, in the developed world, educators must equip students with capabilities to innovate at rates faster than others can replicate. But in the countries facing innovation-led growth, educators also must deal with the consequences of wealth and abundance. In the U.S., for example, students may have to learn that deferred gratification, resilience, and failure are all parts of innovation. In the cornucopia of their pre-university years, these students may not have developed the discipline and work ethic to master the functional skills needed to perform the complex work their fields require. Business schools in the developed world, especially the U.S., may have to ask more of their students.
It is essential that business students be educated to move into the Creative Core—whichever route they take—because we all face a future that will be dominated by machines. We all will have to focus on doing what machines cannot do, regardless of where we live. In fact, one of the biggest threats facing developing countries is that the next generation of factories will not require manual labor, so there will be little work available for those who cannot read and write. As new technology makes production more automated and complex, it is hard to see how nations that are so far behind will catch up quickly.
Technology also is changing classrooms around the world, as many foundational aspects of functional disciplines now can be taught online. Such an educational structure offers great benefits, particularly in developing economies, by allowing excluded populations easy access to education in ways that were impossible only a decade ago.
But this ability to deliver routine instruction online also is reshaping education in developed nations, because it allows teachers to use class time to provide education that machines cannot. Business professors can use prerecorded videos and other digital methods to deliver foundational education. Then they can spend class time having students apply complex analytics to intractable business problems; these exercises will prepare students for the work they will do once they’re employed. In this manner, business educators will be applying what they teach to education itself.
My hope is that the economic and technological divergence between developed and developing nations will decline over the 21st century, so that by 2100, all input-led growth will be in the past. At this time, living standards will be similar across the world, and a nation’s share of global output will depend on its percent of global population. Tradable economic activity mostly will be located according to global competitive advantage.
If we reach this high-road scenario, all will focus on what they are best endowed to do, and we’ll worry less about whether humans are still innovating to stay ahead of machines. Machines at this time may even be responsible for most production, effectively eliminating scarcity and freeing humans up for activities unimaginable today.
To reach this state, Creative Core workers in the medium term might spend as much time innovating around the means of production—machines themselves—as they do today innovating around new products and services. In fact, they might be building machines to do the work, rather than working alongside machines as they did in the 20th century. In either case, humans will require appropriate education, in business and other fields, to reach this advanced state of convergence as seamlessly and uneventfully as possible.
Peter Brews is dean of the Darla Moore School of Business at the University of South Carolina in Columbia.