What’s Wrong With Business Schools Today

• Business schools should incentivize faculty to produce research that is less narrow and has broader practical applications.
• One way for business schools to set themselves apart is to present unique offerings outside of a commoditized core curriculum.
• Another way business schools can stand out in the market is to identify the competitive advantage they have over alternative education providers.

 
Today’s business schools need to rethink the value proposition they’re offering society—in the research they produce, the teaching they provide, and the role they play as business institutions. That was the assertion made by Sydney Finkelstein of the Tuck School of Business at Dartmouth College in Hanover, New Hampshire, when he delivered the first keynote speech at AACSB’s Deans Conference.

Finkelstein, the Steven Roth Professor of Management at the Tuck School, has been listed on the Thinkers50 roster of top management gurus. He has published 25 books, including Why Smart Executives Fail and Superbosses; he also hosts The Sydcast, a podcast where he shares the stories of figures in sports, entertainment, politics, academia, and everyday life. His presentation at the Deans Conference, held virtually in early February, was called “The Big Scam? What’s Wrong With Business Schools, Business School Faculty, and the Study of Management.”

‘We’re Not Advancing Ideas With Impact’

Finkelstein first addressed the topic of business research, which exists in a state of crisis, he said. Because faculty are incentivized to publish as much as they can, they create narrowly focused studies that don’t challenge the status quo or have practical value. “I call this a factory model of research,” he said. In many cases, he noted, published articles aren’t being read by other academics, let alone the managers and governmental leaders who might actually benefit from the scholarship.

“The net result is that we’re not really advancing ideas in ways that will make an impact. If we’re not publishing work that managers care about, what are we doing? If we’re not publishing work that’s addressing the big issues in society, then who are we talking to?”

Finkelstein next considered the topic of teaching, noting that many schools accord it little importance, and some faculty see it as a burden. This is illogical, he said, because professors are in the business of creating and disseminating original knowledge and because we live in a world where “fake news” has become a critical issue. “As scholars, as universities, as business schools, we have a responsibility to effectively communicate our ideas,” he said. “We can do that at a basic level inside the classroom.”

Another problem with teaching, he said, is that the core curriculum has become a commodity that is almost identical from school to school. He said, “In most industries, when your product is a commodity, competition is on the basis of price. Why are we teaching that way?”

A better solution might be to make core courses available online, with material delivered by “master communicators” such as actors or news anchors. This would free high-priced tenured faculty to teach courses based on their own original research, which ultimately would benefit their research. “I’ve gotten some of my best ideas from being in a classroom and debating ideas,” he said. “It’s so fulfilling to teach—but teaching can also help our research dramatically.”

Turning to the subject of the business school as an enterprise, Finkelstein began with what he called the “oligopolistic fallacy.” While most business school administrators would say they’re competing against other regional or global institutions, Finkelstein pointed out that content providers such as Google, LinkedIn, and TED Talks are also competitors that offer business knowledge to potential students.

“We’ve taken for granted our position and our power. As a result, we’re underperforming.”

For business schools, he said, the question becomes: What is our competitive advantage? It’s not research, because not enough people are reading the articles and the research itself isn’t having enough of an impact on society. It’s not teaching, because too many other players might be doing a better job at providing content than the schools themselves.

“Our most formidable advantage might very well be our accreditation capability,” Finkelstein said. While entities such as Google and Coursera do offer certificates, those credentials don’t carry the same weight as degrees—yet. But the advantage is a problematic one.

“Our unique capability is that we have a piece of paper with a nice stamp and a brand name on it?” he asked. “Is that what we’re basing our competitive position on? Are we betting that that capability will continue to be a sustainable competitive advantage into the future?”

He pointed out that business schools try to help other organizations get out of their comfort zones and adapt to change, and yet schools themselves keep relying on old methods and dated models. “We’ve taken for granted our position and our power. As a result, we’re underperforming. It’s really all about innovation. It’s what we teach to students and what we need to apply to ourselves.”

‘Change Is Already Here’

Business schools need to adapt to change, Finkelstein said, because it’s already occurring. For instance, research might be losing some of its luster. Schools are hiring more clinical and adjunct faculty and fewer tenure-track professors oriented toward research. Some of the media rankings also are putting less emphasis on research—as an example, the Financial Times is beginning to look less at the number of articles published and more at the societal impact these articles have.

Another concern is that society as a whole might be assigning less value to a business education, he noted. Fewer people are taking the Graduate Management Admission Test, and students care less about learning and more about getting jobs. As the pandemic has led to the Great Resignation, companies are scrambling to find workers, he said, and some of them have started hiring people without university degrees.

“Change is already here,” he said. “We shouldn’t think that it’s just somewhere in the distant future.”

If that’s the case, how can business schools respond? When it comes to research, Finkelstein said, “we need to start demanding that people raise their game.” Schools could start by incentivizing faculty to tackle research projects that are relevant to business or political stakeholders or that take on critical issues such as climate change or vaccine hesitancy. He mentioned the work of the Responsible Research in Business and Management group, which encourages faculty to conduct research that has a societal impact.

“What we’re really doing is creating a social club for our students where they develop networks and lifelong relationships.”

The problems with research are exacerbated by the tenure system, he said, which rewards faculty for publishing quantity over quality. He advocated for revising the research model so that professors who are up for tenure show what impact their published scholarship has had. “If we did that, the whole game would change.”

When it comes to teaching, he said, schools need to put more emphasis on the classes that differentiate them from competitors. He hypothesized that, in the future, there might be inexpensive MOOCs that feature Nobel laureates from prestigious universities teaching core classes such as finance—and most other business schools could not compete with those offerings. Instead, schools should encourage their faculty to teach classes that feature their unique research, so that students are exposed to knowledge they cannot get anywhere else. This approach, he said, would improve both the quality of research and the quality of teaching.

When it comes to considering business education as an enterprise, Finkelstein admitted that he has come to an “unattractive conclusion” about what business schools do best.

“What we’re really doing is creating a social club for our students where they develop networks and lifelong relationships,” he said. “And we have created a sorting mechanism that enables employers to find talent.” Everything else business schools do—including teaching and research—“is symbolic.”

‘The Things We Do Are Really Important’

Business schools will begin conducting relevant research and putting more emphasis on teaching only if enough resource providers—including governments, donors, and recruiters—begin demanding change, said Finkelstein. “If they don’t see a problem, we’ll keep going on this way. But I believe they do see a problem.”

One way to ensure that faculty are focused on practical business problems is to enable them to spend more time working in government or corporate settings. Senior faculty sometimes take appointments in outside organizations, Finkelstein noted, but junior faculty rarely do, because the timeline for achieving tenure is so short. If the tenure clock were extended by a year, he suggested, more junior faculty could acquire valuable real-world experience.

He added, “I find it completely incredible that we have faculty members that have never worked in a company, in an organization, in an NGO, or in government. They know less about organizations, economics, and supply chains than their students coming in. How is that a sustainable model?”

Despite the challenges facing the industry, Finkelstein asserted his belief in the value of business education. He said, “It’s so hard to have an impact on society unless you have some of the skills that business schools impart—leadership, building teams, understanding supply and demand. The things we do in business school are really important. So, we owe it to ourselves to push ourselves out of that comfort zone.”