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 / Spring 2008 / Issue 50(originally published by Booz & Company)


Lessons for Business Schools

Strategy guru Gary Hamel comes at the question of leadership and business success from a different angle. In his 2007 book, The Future of Management, he argues that if 21st-century leaders are to adapt to the torrid pace of change in today’s market, their challenge is to reinvent the practice of management itself. (The book is reviewed in “Books in Brief,” by David K. Hurst, s+b, Spring 2008.) Industry must change as dramatically in the coming decades as it did 100 years ago, he says, and managers must develop systematic ways to examine — and confront — “legacy beliefs.” In particular, they have to free themselves from a paradigm that “places the pursuit of efficiency ahead of every other goal,” he writes.

Hamel says companies are capable of such change, and he cites the way that DuPont revolutionized capital allocation and Toyota harnessed employee know-how to drive continuous improvement. Such companies as Gore-Tex and Google are evolving new management forms and ideas to “build organizations that are capable of continual, trauma-free renewal.” But, he says, it is equally telling that many other companies have had a hard time emulating these examples. One reason, Hamel suggests, is that the innovators challenge shibboleths about hierarchy and efficiency that their would-be imitators are reluctant to abandon.

Few of the managerial breakthroughs cited by Hamel grew out of business school research. And Hamel writes almost nothing about business education. But his book does suggest some of the changes that business schools will have to make in order to regain their relevance. For example, amplifying creativity throughout the organization is a prime goal of today’s most innovative companies. To reach it, they tend to organize work around small, peer-driven work units, often with no identifiable supervisor, and en­gage in constant experimentation and feedback. Leaders tend to emerge naturally from these groups. In contrast to traditional companies with their constant pursuit of efficiency, today’s innovators attempt to build slack into their systems because, as Hamel notes, “if you wring all the slack out of a company, you’ll wring out all of the innovation as well.” Thus, for example, Google, which aims to launch 10 to 12 new service offerings or enhancements each quarter, attributes fully one-half of its new product launches to its employees’ “dabble time.”

Traditional companies and business schools treat leadership, creativity, and entrepreneurialism as rare attributes possessed by a tal­ented few. Now a number of companies believe they must nurture such traits across a wide range of employees. The challenge for business schools is to understand the new structures and philosophies of these “lattice” organizations, and to train students to thrive in them. Equally important, during an era characterized by rapid change and increasing global interdependence, business schools are uniquely positioned to help companies redefine what constitutes both a “societal good” and “good business.” Doing so, many critics would agree, would be an important step in the rehabilitation of the American business school.

Reprint No. 08111

Author Profile:

Andrea Gabor ([email protected]) is the author of several books, including The Capitalist Philosophers: The Geniuses of Modern Business — Their Lives, Times, and Ideas (Three Rivers Press, 2002). She is a professor of business journalism at Baruch College at the City University of New York.
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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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