What do students and employers expect out of an MBA? The curriculum needs to do much more than just give them the building blocks, says Stan Garstka, deputy dean of Yale School of Management.
By John O’Hanlon
With many hundreds of higher education institutions round the world trying to fill the demand for business qualifications — especially MBAs — the latter have become something of a commodity.
The difference between the best and the rest is not just a matter of teaching quality. Leadership in business or the not-for-profit sector demands extraordinary personal qualities. But no matter how able the individual, they have to know what tools there are and how to use them. That’s why management schools teach economics, statistics, legal and accounting procedures, marketing and the like.
Students, hopefully, know they need to learn these things. But what they often don’t know is how business operates in relation to politics, to society and to the entire intellectual panorama of a university – history, language, literature, the sciences. Oftentimes they don’t know they need to know that.
One thing is known: many employers are getting skeptical about the value of an MBA, and questioning whether they can better impart functional skills on an in-service basis.
“Some are hiring fewer MBAs and going instead for scientists with relevant specialized knowledge, for example, or ‘green’ first graduates, who they then develop within the organization,” says Prof. Garstka. “That is one of the things that prompted us to change our approach.”
In recent years MBA education has become something of a commodity and there are some organizations that query whether it is worth the cost. Many schools — and until recently Yale shared some of this criticism, Garstka admits — have concentrated too much on imparting business skills. They responded to the students’ expectations that an advanced understanding of finance, economics, marketing, the supply chain or corporate structure would equip them for leadership.
“That was fine 20 years ago,” Garstka says, “when your chosen specialism could take you to the top: when many successful managers developed their entire career within a particular silo. But 20 years ago functional management skill had already reached a high level of maturity. The only really new things we have developed are computer programs that recognize these skills.”
A program for our time
Universities are wasting the time they spend teaching these programs in isolation, Garstka believes. Today, managerial careers cross the boundaries of function, organization, and industry, as well as cultural and political borders. Even managers in large organizations must be entrepreneurial in the sense that their success depends on their ability to synthesize.
This is why the Yale School of Management (SOM) radically revised its curriculum this year, shifting the emphasis from how to why, Garstka says.
Students were initially alarmed, Garstka acknowledges, fearing that they would be inadequately grounded. But those fears are groundless, he says.
“They will still be taught the full range of functional skills needed to succeed in the business world. They will still learn how to build a DCF model, how to market a company, how to run a regression, how to account for stock options, how to strategically manage a business, how to forecast demand under various constraints, and the like.”
But the context has changed.
A sound knowledge base is as important as ever but an MBA should be judged on how it reacts to the real world of business today and in the future, Garstka believes. And he says the key word here is integration. “At every level of the organization, from the top floor to the shop floor, you need to understand how what you are doing relates to everything else.”
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The world today is integrated. Right off the block we are trying to impart a holistic mindset in our students. A mindset that says management is about creating order out of mess, and needs to span functions and disciplines,” Garstka says.
This is quite a change from a half century ago, Garstka suggests, where value was primarily being added in the economy by creating, what he calls, behemoth organizations that took advantage of economies of scale. This was especially true in developing economies.
“That was when we really need a lot of expertise on functional areas to work out how to make it better, how to make it bigger,” Garstka says. “But the world has changed, and most of the value in the economy is not added by these agents in the functional silos. It is added by having a mindset that is much more entrepreneurial. ‘You are the principal,’ we should be telling our students. ‘You are trying to put order round a mess, and that is the way you add value!’”
Holistic from the start
This is not a new concept, Garstka acknowledges. Still, “We have not been very good at imparting that in business schools. It isn’t enough to teach in the old way then try to draw it together at the end with case studies and the like. That’s why we have taken a holistic approach right through our new curriculum,” he says.
The heart of the new first-year curriculum is a series of eight multidisciplinary courses, called Organizational Perspectives, that are structured around the organizational roles a manager must engage, motivate, and lead in order to solve problems — or make progress.
These roles are both internal to the organization — the Innovator, the Operations Engine, the Employee, and Sourcing and Managing Funds (or CFO) — and external to the organization — the Investor, the Customer, the Competitor, and State and Society. This focus on organizational role, instead of disciplinary topic, creates a richer, more relevant context for students to learn the concepts they need to succeed as managers, the school believes.
Garstka says the new curriculum recognizes that today’s managers must be equipped to work across boundaries of function, organization, and industry. The concept of integrated management therefore takes the emphasis away from single-discipline courses, such as finance or marketing.
Perhaps colleges and universities really can’t teach entrepreneurship, but the top American and international business schools have the luxury of being able to select applicants with the entrepreneurial gene. Only one applicant in six gets a place at Yale SOM, and all of these are interviewed face-to-face wherever in the world they live.
Contact destroys boundaries
The Yale SOM aims to have an international student makeup of between 20 and 30 percent. As a relatively small school, Yale has an intimacy that not all the top 20 ‘A list’ management schools can achieve, Garstka says.
“We hold an international month, and at one point we had students from 40 different countries putting on presentations about their national culture and economy. There is a level of interaction between faculty and students that doesn’t exist in some larger schools,” Garstka says. “Furthermore, as part of the first year curriculum every student has to go for ten days or so on an international trip linked to the curriculum. Globalization is such an integral part of management today.”
So the school has set aside the vertical barriers of function, discipline and geography. The advantage of being part of a world class university such as Yale is that students have access to programs in other schools. The benefits of access to law, economics, modern languages and — of course — science faculties are obvious, and in their second year Garstka says he encourages them to avail themselves of what he calls the ‘seamless’ learning environment at Yale.
Just as important is the involvement of the school in public and private sector practice. Some of this is done within courses, with guests and alumni coming in to co-teach specific programs. Some of it is elective, such as the large annual private equity fair held on the campus, where students get a chance to network with upward of 200 private equity practitioners. It’s a dynamic way of linking up with job opportunities, Garstka says, and it creates valuable links for the school too.
Professor Garstka acknowledges that management education has to adapt to survive.
He says that the oldest business schools, such as the Wharton Business School (at the University of Pennsylvania), the Harvard Business School, Yale, or the Stanford Graduate School of Business, are not necessarily the best, though by changing its curriculum, he believes Yale has aligned itself with the latest out-of the-box thinking.
It remains to be seen what result that will have on the school’s 2008 international ranking (the FT Global MBA Ranking), which has hovered around tenth for the last three years. The top American schools are under pressure not only from within but also from overseas schools such as the London Business School, INSEAD and even CEIBS, the leading China-based international business school that has jumped ten places to come right behind Yale this year.
Its management schools can help lead United States toward global thinking: As Garstka, in epigram mode, puts it: “We are no longer in the silo that we call the US.”
– John O’Hanlon
johnoh@whitedm.com