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Published: February 26, 2008

 
 

Lessons for Business Schools

In a 1950 Fortune article, “The Graduate Business School,” management theorist Peter Drucker wrote that although these schools were more popular than ever, they did not quite know “what their job is or how to accomplish it.” Most schools, he pointed out, embraced Donham’s dictum that business schools have to “provide profes­sional leadership in the modern enterprise and modern industrial so­ciety.” But there was no agreement on what the “function” — job, goals, standards — of someone in business should be, argued Drucker. Nor did many businesspeople, who were likely to see profit making as their key mission, agree with Donham’s call for business to contribute to the greater good of the economy and society. Drucker also saw three practical problems in de­fining the mission of business schools: (1) Business techniques could be taught to almost anyone, but the qualities needed for true leadership were difficult to convey to the typical MBA student, who at that time was a recent college graduate with little or no work experience; (2) courses on administration and policy empha­sized routines — that is, bureau­­cracy — rather than the risk taking necessary for innovation; and (3) business schools fostered a “crown prince” mentality among their graduates, including an aversion to working one’s way up through the ranks of an organization.

Soon after the publication of Drucker’s article, the Carnegie Corporation of New York and the Ford Foundation embraced the cause of business school reform and financed two separate studies of business education. Neither of the books that emerged from those studies — Frank Cook Pierson’s The Education of American Businessmen: A Study of University-College Programs in Business Administration (1959), funded by Carnegie, and Robert A. Gordon and James E. Howell’s Higher Education for Business (1959), funded by Ford — is readily available. But a useful summary of many of their ideas was published in 1994 in The Beginnings of Graduate Management Education in the United States by the Graduate Management Admission Council.

The principles on which the two studies agreed still resonate today. First, they argued that the trend toward specialized, increas­ingly vocational courses would have to give way to a more integrated ap­proach that would take in all business operations and functions from a broad managerial viewpoint and emphasize “analytical rigor and problem-solving ability.” Educators generally accepted the need for such integration, but Gordon and Howell noted that less than one-third of the business schools they surveyed required a course on business policy, which was seen as a key vehicle for achieving an integrated perspective. Because a managerial perspective would require knowledge of the world and the ability to communicate, both studies emphasized the importance of a liberal arts un­der­graduate education. They also called for more course work on the social context of business, including the evolving legal, political, social, economic, and in­tellec­tual environments. Finally, the studies recognized that the scientific and theoretical foundations of business needed shoring up, a goal that would require increasing the percentage of faculty with Ph.D.s, placing a stronger emphasis on research, and expanding the training of fac­ulty and students in both behavioral sciences and quantitative methods. The latter was seen as the key to providing a foundation for more rational decision making.

The Gordon and Howell report, while extolling the role of new quantitative methods, was sympathetic to a general management approach to business school education and the case-study method that had been pioneered by Harvard. The Pierson report, by contrast, clearly saw the science-grounded curriculum exemplified by the Graduate School of Industrial Administration (GSIA) at Carnegie Mellon University as a model of business school education. Pierson’s suggested curriculum gave the greatest weight to quantitative methods, which included accounting, simulation, and statistics in decision making — all GSIA requirements. At GSIA, even the study of organizational behavior focused on analytical tools, rather than traditional descriptive methods. “Fairly elaborate approaches to mathematical programming” would make it possible to develop a more analytical ap­proach to choosing the variables on which managers would base decisions, thus diminishing the role of the “hunch” and even “informed judgment,” predicted the report.

 
 
 
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Business School Resources
Works mentioned in this review.

  1. Chester I. Barnard, The Functions of the Executive (Harvard University Press, 1938), 350 pages.
  2. Warren Bennis and James O’Toole, “How Business Schools Lost Their Way,” Harvard Business Review, April/May 2005.
  3. Peter F. Drucker, “The Graduate Business School,” Fortune, August 1950.
  4. Robert Gleeson and Steven Schlossman, The Beginnings of Graduate Management Education in the United States (Graduate Management Admission Council, 1994).
  5. Robert A. Gordon and James E. Howell, Higher Education for Business (Columbia University Press, 1959), 492 pages.
  6. Gary Hamel (with Bill Breen), The Future of Management (Harvard Business School Press, 2007), 288 pages.
  7. Robert H. Hayes and William J. Abernathy, “Managing Our Way to Economic Decline,” Harvard Business Review, July/August 1980.
  8. Rakesh Khurana, From Higher Aims to Hired Hands: The Social Transformation of American Business Schools and the Unfulfilled Promise of Management as a Profession (Princeton University Press, 2007), 542 pages.
  9. Henry Mintzberg, Managers, Not MBAs: A Hard Look at the Soft Practice of Managing and Management Development (Berrett-Koehler, 2004), 464 pages.
  10. Frank Cook Pierson, The Education of American Businessmen: A Study of University-College Programs in Business Administration (McGraw-Hill, 1959), 740 pages.
  11. Phil Rosenzweig, The Halo Effect…and the Eight Other Business Delusions That Deceive Managers (Free Press, 2007), 256 pages.
  12. Thorstein Veblen, The Higher Learning in America: A Memorandum on the Conduct of Universities by Business Men (B.W. Huebsch, 1918), 294 pages.
 
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