What do you think is the biggest concern now facing business schools?
A particular problem is that too many business professors want to study and teach what’s convenient—it’s as simple as that. It’s convenient for finance professors to study and teach finance without considering anything other than financial issues or worrying about how finance interacts with areas such as marketing or operations. They don’t ask, “What are the problems that real business executives worry about? How could we make a positive impact on those problems if we studied them in an academically rigorous way?” They don’t address these big questions, even though doing so would be enormously helpful to real business people making real business decisions.
They’ve been able to get away with this because business education was growing—but it’s not growing anymore. We have people like entrepreneur Peter Thiel offering students $100,000 to drop out of college to start businesses. He’s saying, “I went to college, and I can promise you it wasn’t necessary for my success.” When influential people say things like that, everyone starts rethinking whether an MBA is worth it. Business schools need to start thinking more about how they can make the lives of businesspeople better. They need to show that they have insights on business’ most pressing problems, including the ones that aren’t easy to study. Otherwise, we’ll see our industry decline.
What factors do you think have most contributed to the current state of business education?
Part of the problem is how we reward faculty. Last year, I published three Harvard Business Review articles and a book, and my research rating for that work was “below average.” That rating doesn’t bother me, but other professors are punished for publishing in practitioner-oriented journals like the Harvard
. The No. 1 imperative for business faculty is to publish in refereed journals that speak exclusively to other academics. Directing work to non-academics is considered to be worse than doing nothing at all.
Another part of the problem is how we fund research. In the sciences, research is funded by government agencies and big foundations, but in business, research is paid for primarily by tuition. That means business students are paying to support research that is not designed to benefit their learning in any way. At the same time, some business professors are paid roughly twice as much as professors in other disciplines, like psychology, because business schools have been rich and they’ve bid up professors’ salaries. People didn’t notice this when business schools only had to open their doors and the students would come. But that ended sometime around 2009 when applications to American business schools started dropping, and schools started ramping up their foreign student admissions dramatically to make up for it. Business schools have not yet adjusted to the fact that their core market is turning its back on them.
The MBA has a super-high cost structure, and at least half of that cost goes to research that has value to society but not to students sitting in class. That’s why we have the Peter Thiels of the world saying they don’t actually need this degree; they can succeed on their own or in a different way. For business schools, that is an existential threat. We all need to recognize that the world has changed.
If you were to design an MBA program for the future, what would it look like?
In business education, we often think that if we teach students some finance, some marketing, some strategy, they’ll be able to solve business problems. That’s just not true. As Peter Drucker said, there are no finance problems, there are no operations problems, there are no tax problems—there are only business problems. Do we teach students how to solve business problems? No, we do not.
So, if I could design an MBA program from scratch, honestly, I would call it the “not-the-MBA.” I’d tell students to go get their MBAs as cheaply and quickly as possible and then come to my program to “activate” their MBAs. In the first semester, I would teach only philosophy, which is the underlying theory of how people work, and physics, which is the underlying theory of how things work. Business is the integration of people and things—if students don’t understand how people and things work, they won’t be successful in business. Next, I would teach them design, leadership, and an integrative theory of management, so they learn how to think, how to put together all the pieces of the puzzle.
Finally, I would hire only non-tenured faculty, who would be free from the requirement to speak exclusively to other academics. I would hire brilliant non-academics who each have a theory about what’s necessary to be a successful leader, creator, and innovator in the world of business.
Roger Martin is Premier’s Research Chair in Productivity and Competitiveness, academic director of the Martin Prosperity Institute, and former dean at the Rotman School of Management.