What Are Business Schools Built For?

A very long time ago, I welcomed students to my MBA course with a Peter Senge story. The influential author of The Fifth Discipline, I told the students, would ask participants in his workshops to, “imagine your organization is an ocean liner and that you are the leader.” Then he would ask, “what is your role?”

As Senge explained in the MIT Sloan Management Review, the most common answer was of course “the captain.” But some people would point to the helmsman, who controls the direction; the engineer, who provides the energy; the social director, who is responsible for making sure everyone is engaged; and others.

Rarely, according to Senge, did anyone mention the role of the ship’s designer. Drawing attention to the oversight, he would suggest “what good does it do for the captain to say, ‘turn starboard 30 degrees,’ when the designer has built a rudder that will only turn to port, or which takes six hours to turn to starboard?”

I used the story to introduce my course on managerial economics, which addressed the architecture of organizations as well as structure of markets. Instead of treating the firm as a black box—an efficient profit-maximizing machine—we tried to get inside the organization and understand the systems and processes from an economics point of view. We talked about incentive compensation and decentralizing decision rights, of course, but we also spent time with job design, recruitment, ethics, and leadership. We applied game theory models and insights from behavioral economics, which were already finding their way into other disciplines.

Of course, organizations are not exactly designed by architects and engineers like buildings and ships. Organizations are social structures and shaped over time through the policies and actions of managers. Managers are designers of their future organizations, as in the scary expression, “we are building the airplane while flying it.” Senge’s point (at least one of his points) was that leaders should be more conscious and purposeful about this role.

Corporate leaders have come to appreciate the importance of organizational architecture, especially of aligning it with strategy. One reason is that the shelf life of a strategic plan has diminished considerably as the environment has become more dynamic and volatile. Many experts now say that the role of the strategic leader boils down to identifying and building the organization’s most important capabilities.

Now, what if we were to ask business school leaders the Senge question. What would they say? My hope is that more will offer “the ship’s designer” as a result of reading this blog.

More than ever, we need to be purposeful about building the architecture of business schools. During my time at AACSB, I was the staff point person for the Blue Ribbon Committee (BRC) on Accreditation Quality charged with developing the 2013 Standards. For the first time in AACSB’s long history, the standards were released with a tagline. It consisted of three words: engagement, innovation, and impact. These three words later became the foundation for AACSB’s current mission, which is “to foster engagement, accelerate innovation, and amplify impact in business education.”

Yes, it was duly noted—the word “quality” wasn’t part of the tagline. For an accrediting body, that was a big step. The best business schools were built on well-established conceptions of quality and now aspire to go beyond. How do they transform for engagement, innovation, and impact? Here are a few basic questions to get started.

What jobs does my business school need? Going beyond requires new leadership roles. I have been excited to find more GBSN schools with Chief Innovation Officers and Associate Deans for Research Impact. The Gies College of Business has an Associate Dean for Innovation, who also is the Chief Disruption Officer. Sasin School of Management in Thailand has a Chief Impact Officer who is also Head of Accreditation. Directors of external relations are becoming chief engagement officers and instructional designers are becoming experience makers.

Does my business school have the right systems? Are faculty, for example, evaluated and rewarded for impact? What about for the type of engagement that leads to innovation? How important is fit for culture in faculty recruitment processes? In GBSN’s Impact Communities, I have been impressed by the number of scholars who are more interested in the difference they can make than the article they can publish. Their schools are leading the way in building powerful cultures of impact.

Is my business school measuring the things that matter? The financial models of business schools, especially university-based ones, have never been all that clear and sometimes create outcomes inconsistent with the school’s mission. For example, some schools might over-emphasize foreign students because they generate more income than local ones, even if the mission is largely focused on local jobs and communities. In higher education, we also tend to conflate “quality” with “selectivity” and “salaries.” How does that play out for schools that are Going Beyond.

Of course, this list of questions is not comprehensive or new to many of us in business education. I suggest, however, that we need to be bolder and faster in addressing them. Doing so won’t be easy. It is not difficult to feel powerless to change a system when it has been built over centuries or if it puts my school at a disadvantage relative to others. Change in higher education can also feel extremely complicated. After all, few other organizations have the breadth of stakeholders (students, alumni, donors, faculty, community leaders, recruiters, etc.) with conflicting perspectives. Regardless, it is time to elevate our role as designers in leading business schools, and the business education industry, for the future.

• GBSN CEO