2/8/14 Business schools are better at analysing disruptive innovation than at dealing with it
IN EVERY profession there are people who fail to practise what they preach: dentists with mouths full of rotten teeth, doctors who smoke 40 a day, accountants who forget to file their tax returns. But it is a rare profession where failure to obey its own rules is practically a condition of entry. Business schools exist to teach the value of management. They impart some basic principles—like setting clear goals and managing risk. They also teach how dangerous the business world has become. The most fashionable phrase today is “disruptive innovation”: professors solemnly warn people that entire industries face powerful new forces and that comfortable incumbents are at the mercy of swift-footed challengers. But when it comes to their own affairs, business schools flout their own rules and ignore their own warnings.
Opportunities abound. Demand for good management is spreading to the emerging world and to the public and voluntary sectors. The number of business schools worldwide has increased from a handful a century ago to 12,000 institutions that now deliver some form of business education—and first-class establishments are today found in Hyderabad and Shanghai as well as London and Boston. But at the same time they face huge risks. They lack barriers to entry to protect them from changes that are sweeping through the education industry. Good management could ensure that they thrive. But it is in scarce supply for two reasons.
In this section
A shrunken giant
Big companies’ revenue and profit
News you can lose
Those who can’t, teach
The first is that business schools have been captured by the academic guild. In 1959 two inquiries sponsored by the Carnegie and Ford Foundations argued that business schools were little better than trade schools and urged them to be more academic. Now they are little more than flags of convenience for academics. The surest way to get a tenured post is to write a PhD (on a subject only loosely related to business) and publish a string of articles in respected journals. Tenured academics are untouchable and can block any change in a school. So far the best schools have been able to thrive despite the power of the academic guild. Academic star-power helps them to attract high-paying MBA students.
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