Guest post from Prof. Ken Starkey, Nottingham University Business School, and Dr Christophe Lejeune, EFMD
Universities are faced with a situation of ‘creative destruction’ (The Economist
, 2014) or, even worse, a ‘campus tsunami’ (Wall Street Journal
, 2012) which has the potential to change the traditional configurations of university education radically.
Disruptive forces facing the sector include: a cost crisis; changing labour markets; new technology; new competition (for example, in the business school context, for-profit providers such as BPP); changing ‘consumer’ expectations; and global competition for students, for the best faculty,
and for space in academic journals. The balance between the traditional bricks and mortar model and web-mediated education may well be close to a tipping point.
Thomas et al (2013) present three scenarios for the future of business schools. Their best case scenario involves a renewal of the historical purpose of business schools in emulating elite US schools such as Harvard with two key goals: management education that produces effective business leaders and research that has a positive impact on the practice of management. Increased stakeholder value is generated through improvement in education and moving closer to practice. Thomas and colleagues also present a scenario they consider to be the most likely ― ‘muddling through.’ One where there is little change, apart from some niche specialisation, and schools carry on as they are. This seems unlikely to us.
We would argue that without change, as demand falters the conditions become ripe for Thomas et al’s (ibid) third, negative scenario, a ‘race to the bottom’, a period of stagnation and inevitable shakeout. Host institutions continue to demand more of business schools but the market is increasingly fragmented by new entrants, international and private providers, able to do things cheaper. Schools become less competitive and less interesting to better informed students faced with a proliferation of choice and delivery models.
In such an environment, the only schools that will survive and thrive are those that learn to innovate
in a strange business sector which, unlike others, is characterised by entry but not exit (Christensen and Eyring, 2011). Universities have tended to survive because there has been a dearth of disruptive competition and disruptive technology, coupled in the business school case with rising demand fuelled by globalisation. The rules of competition have been set by the elite through ‘the Harvard effect’ and the ‘Carnegie ladder’ with a common goal of heavy emphasis on research, doctoral programmes and particular degrees (the MBA, for example). The strategy of most schools has been imitation, not innovation, supported by accreditations, league tables, journal lists, etc.
This situation is unlikely to last. Top schools in more elite universities will be able to rely, in the medium-term, on students who are willing to pay for a campus experience but there is now a significant and growing group who will want education tailored to their needs (e.g. work combined with study, blended learning, online learning …) and at cheaper cost in this age of austerity. State support for and regulation of the sector are declining, allowing new entrants to make inroads with strong political support. We are witnessing significant falls in demand, even for what were once premium products such as the MBA, which we would suggest has now become a ‘burning platform.’
In the words of Michael Barber, one of the most significant architects of UK public sector reform, particularly in schools when he headed Tony Blair’s Prime Minister’s Delivery Unit, An Avalanche is Coming and higher education faces a ‘revolution’: ‘Our belief is that deep, radical and urgent transformation is required in higher education as much as it is in school systems. Our fear is that, perhaps as a result of complacency, caution or anxiety, or a combination of all three, the pace of change is too slow and the nature of change too incremental’ (Rizvi et al, 2013: 3). The drivers here are technology and new entrants. Look at what Christensen himself is offering through Harvard’s new on-line service, HBX. According to Rich Lyons, Dean of Haas School, UC-Berkeley, half of US business schools could be out of business by 2020. And according to Christensen himself, half of US universities could face bankruptcy within 15 years.
Top schools will survive, although we would not want to hazard a guess at how many will be able to continue to operate with current ‘profit’ margins. We know what top schools do and what aspiring top schools need to do. Top schools are research intensive and teaching intensive with a strong research-led teaching culture and a shared faculty commitment to optimising the student experience (Anteby, 2013). Leadership in these schools is about strengthening this culture and innovating when it becomes necessary, as Harvard is doing with HBX. In top business schools good deans do what any good leader does ― promote a shared sense of purpose and direction, clear identity and a strong brand, and challenge complacency, caution, and anxiety. In second tier schools, however, where business school and university agendas often differ, it is an unusual dean who can convince university management to take his/her business school seriously beyond the lure of the cash cow role too many business schools have been forced to adopt.
We propose a fourth scenario ― ‘back down to earth.’ This will almost certainly require, as described by the Higher Education Funding Council (HEFCE), doing more with less and changing work cultures. We note that funding bodies and our political masters are adamant that complacency is not appropriate! Our scenario will involve deans courageous enough to challenge the almost ubiquitous imperative of churning revenue (based on large student numbers of undergraduate and unsustainable numbers of international postgraduate students) and to justify the role of the business school more effectively, committed to developing an academic learning community (of staff and students) rather than just running a business. In this scenario, we consider it possible to ‘thrive and prosper’ without necessarily emulating Harvard or any other elite US schools. There could well be a symbolic price to pay in pursuing it, which would involve challenging the shallow rhetoric of ‘grandiosity’ (Alvesson, 2013) now widespread in academic contexts which requires setting our sights lower and more realistically. It is striking, and bizarre, how many business schools nowadays claim to be pursuing ‘excellence’, achieving ‘world-class’ and aim to be in the ‘top X’ of a media-inspired global élite while only a very few national champions can actually hope to achieve the holy grail of ‘world-class excellence.’ Those schools claiming to play this game without actually the capacity or any realistic hope of sufficient investment to achieve it (and thus over-selling themselves) are most likely to lose in the race to the bottom.
However, those business schools that re-calibrate and pursue the ‘back down to earth’ scenario will have opportunities to thrive in a different way, namely by recognizing, valuing, and working with their local communities of internal and external stakeholders and engaging with them on a sustainable basis. Indeed, the local benefits of many business schools are too often forgotten, if not disregarded for the sake of the ‘grandiosity’ rhetoric. In the ‘back down to earth’ scenario, business schools will be proud of and value their impacts closer to home and be more critical of globalisation as the only game in town. Business schools engaged with a local community will strive to: (1) support local entrepreneurs and businesses, big or small; (2) develop research activities for the sake of local, regional and national economic development; and (3) interact and share knowledge with local business and civic leaders. It remains to be seen how this scenario might work out or how business schools might address the challenges it creates. With this in mind, EFMD has recently launched a tool called ‘Business School Impact Survey’ (BSIS)
to help business schools assess and promote their impact on the local environment.
To the extent that they are ready to pay the entry price of the ‘back down to earth’ scenario, business schools will need leaders who have the credibility, aspiration, and courage to challenge the narrative of hyper-growth and hyper-success that afflicts many in the sector. It is time to rethink our capabilities, our ambitions, and our metrics for discussing success.
You can download the full leadership series as a PDF publication here
Alvesson, M. (2013) The Triumph of Emptiness. Consumption, Higher Education, and Work Organization. Oxford: Oxford University Press.
Anteby, M. (2013) Manufacturing Morals. Chicago: University of Chicago Press.
Christensen, C.M. and Eyring, H.J. (2011) The Innovative University. Changing the DNA of Higher Education Inside Out. San Francisco, CA: Jossey-Bass.
Rizvi, S., Donnelly, K. and Barber, M. (2013) An Avalanche is Coming: Higher Education and the Revolution Ahead. London: IPPR.
The Economist (2014) Creative Destruction. 28 June.
Thomas, H., Lee, M. and Wilson, A.D. (2014) ‘Future scenarios for management education’, Journal of Management Development, 33(5): 503–519.
Wall Street Journal (2012) Changing the Economics of Education. 4 June.