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"The traditional MBA is dead.” With those provocative words, the University of Sydney Business School last month launched a brand new full-time master of business administration degree. It’s a bold call, but one based on two years of interviews with big companies, recruiters, students and alumni, as well as what’s worked in the school’s four-year-old part-time MBA.
“Overwhelmingly, the ability to do the basics, such as read financial reports, is not a differentiator in Australia’s crowded MBA market,” says Guy Ford, MBA director at the University of Sydney Business School. “In an increasingly complex and volatile world, business models are changing rapidly and skills such as creativity, critical analysis, interpersonal relationships and a systems approach to problem solving are vital for dealing with ambiguity and uncertainty.”
Ford is not the only one beating the “adapt or perish” drum. The University of Wollongong’s radically revamped MBA starts next February, following a nine-month review. Last year, the University of Technology, Sydney introduced an MBA in entrepreneurship and has significantly changed its mainstream MBA to emphasise teamwork, creativity, design thinking and business analytics.
In the United States, several business schools completely revised their MBA courses for 2016. Wharton, for example, introduced new courses in big data, law and ethics, business analytics, entrepreneurial management and brain science for business. Similarly, Cornell’s redesigned MBA now includes critical thinking, personal and leadership skills, data analysis, collaboration, innovation and a fintech hackathon.
“Internationally and increasingly in Australia, there’s a growing realisation that the old MBA format is a bit outdated,” says Paul Gollan, MBA director at the University of Wollongong’s Sydney Business School. “We tore our old MBA apart, quite frankly. It’s a total redesign, a fundamental rethink, focusing on things like sustainability, values, industry collaboration and networks, and creating global citizens.”
Difficult conversations
The pressure for change is coming from all sides. With whole industries disrupted or disappearing – and much faster than many expected – organisations want to ensure they are an IBM-type reinvention rather than a Kodak-type bankruptcy. That requires adaptable, agile, creative leaders who don’t just respond to change but act as change agents in a digital world.
Students, meanwhile, want more hands-on, experiential learning and are demanding far more than traditional subjects such as accounting, marketing and organisational change – which they can get elsewhere.
Ford says two issues stood out across all the feedback collated for the University of Sydney Business School’s MBA review. First, personal and interpersonal skills. “Organisations told us MBAs had all this knowledge, but didn’t know how to use it to have difficult conversations, listen effectively, build teams or give feedback.”
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The second standout requirement was the ability to deal with ambiguity and be creative in solving problems. “That means instead of just retreating to tick the box desktop research, you start by asking, ‘Am I really trying to solve the right problem?’ ” Ford explains.
Nice but not essential
That organisations are not getting what they want from MBA graduates is borne out by the way they recruit, according to Simon Bell, director of the Centre for Workplace Leadership at the University of Melbourne.
“Most businesses don’t see an MBA as essential; it may be nice to have but it’s not as essential as it might have been 20 years ago,” he says, adding that one partner at a large consulting firm said he’d hire an arts graduate who’s read politics and philosophy ahead of a business school graduate.
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Similarly, Deloitte’s chief human resources officer, Alec Bashinsky, says an MBA is not a prerequisite for many of the global consulting firm’s hires. One of the key skills Deloitte is looking for is the ability to think in new ways coupled with an understanding of disruption and innovation. “Without doubt many MBA courses have not moved with the times and lack focus on disruption, change, digitisation and innovation in general,” he says.
For students, Ford says the content of MBA programs is of course important, but the key thing is how it is delivered. “Even with the best deliverers, students start to get twitchy after a while in a traditional lecture format,” he says.
“Knowledge is widely available, they can use the internet to get facts – what’s important is what you do with those facts. Students want to learn by doing, as the classroom is a safe place to fail. They don’t want to just talk about baking the cake, they want to bake the cake.”
Pressure to change
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Australia’s business schools are scrambling to adapt, in a challenging market. While demand from international and undergraduate students is growing, demand from domestic postgraduate students is shrinking, especially for full-time MBA programs.
Roy Green, dean of UTS Business School, says the MBA marketplace is roughly divided into three tiers. At the premium end are 10 or so top international business schools, such as INSEAD and Wharton, where big Australian companies often send their C-suite executives. At the bottom are cheap and cheerful online mass production courses. In the middle are Australia’s 40 or so MBA programs, competing with in-house corporate programs, online providers, international schools and specialised master’s programs.
“We’re all trying to work out how we fit and how we respond to this demanding environment,” Green says. “We’ve always had pressure to change and keep up with the marketplace and there’s always been a very big debate about rigour and relevance. But now is in the nature of a tipping point.”
Of course many schools have already added new subjects to their MBA programs. Capstone units, where students complete their MBA with a team project for a real client, are increasingly popular, as are units on leadership, innovation, entrepreneurship and the like. But often the changes are tweaks rather than a rethink of the whole program.
Bell says it’s not just about content and delivery, but programs’ very structure. “My concern with the MBA is that it far too strongly adheres to an old discipline-based model of education, compartmentalising knowledge around functional areas like accounting, finance and marketing,” he says. “This reflects an old corporate model: large, hierarchical, siloed and discipline-based. That’s no longer how many organisations are structured.”
It also reflects how business schools themselves are structured, with professors of various disciplines fighting to have their content included, rather than focusing on what the market actually wants. “Traditional structures for MBAs have a classically supply driven focus,” he says. “In redesigning the courses, we’re blinded by that structure, so we’re sort of missing the point.”
Mediocre leadership
The Centre for Workplace Leadership’s 2016 Study of Australian Leadership – the first major review since 1995’s Karpin report – found a pattern of mediocre leadership in many organisations.
It also found that most of an organisation’s leadership training budget was spent on the top echelons of the management team.
Based on data from almost 8000 people in 2700 organisations, the study concluded that good leadership and management were vital for Australia’s prosperity, especially during an extended period of slow economic growth, but there are significant gaps and weaknesses.
Could a 21st-century MBA be the answer? Bell is not convinced. “There’s no doubt business education and education more generally can lead to a leadership uplift that our survey identified the need for. But the way you go about it needs to be revisited.”
His concern is that by focusing on hot topics – big data, sustainability, entrepreneurship, neuroscience, resilience – programs may fall into the same trap of discipline-based learning around functional areas.
“I’d like to see the starting point being developing individuals as great leaders, corporate citizens and members of broader society and the global community.”
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