Why Business Schools Teach Yesterday’s Expertise

by Steve Denning

Practical men who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist.

― John Maynard Keynes, The General Theory of Employment, p. 243.

As the world undergoes a fundamental transformation of the way we live, work, and relate to one another unlike anything that humankind has previously, experienced, different definitions of the management that is needed to prosper in this new world continue to proliferate, as noted in Part 1 of this series of articles: “Why ‘Management Desperately Needs A Fresh Definition.”

Given the intellectual firepower at the disposal of business schools, one might have expected that they would be in the forefront of showing the way out of the current Tower of Babel. Paradoxically, it’s the opposite. Today’s business schools are mostly teaching 20th century management principles and, in effect, leading the parade back to yesterday.

What’s not widely understood is that this blinkered thinking is driven by the standard textbooks in widespread use in business schools.

Business School Textbooks On Management

Let’s look at two standard business school textbooks on management:

  • Foundations of Business, (6th edition, $81.99) by William Pride, Texas A&M, Robert. Hughes, University of North Texas, and Jack Kapoor, College of DuPage, and

Both books begin with a lengthy discussion of trendy topics, such as the role of business in society, the importance of ethics, diversity and the key role of employees. In each case, it is only after more than 150 pages that we finally arrive in chapter 6 to the heart of the matter, namely, what exactly are we talking about? What is management?

The answers given are strikingly similar, as shown below in Figures 1 and 2.

To summarize their similar answers.

· Management is a process.

· Mindsets, assumptions, attitudes, perspectives, values, inspiration are not central to management. Management is a set of tools, processes, practices and structures.

· The processes are top-down. Management is command-and-control, with managers telling staff what to do and evaluating what they have done.

· The processes are things done by managers to the staff.

· People are considered as “resources” to be used by the managers.to achieve the goals of the organization.

· The focus and goals of the organization are internal, with barely any hint of any external purpose to create value for others, such as customers or other stakeholders.

· The view that “some firms live by the philosophy that employees are their most important assets” is treated as an optional anomaly.

· Interaction with staff is either absent (Ferrell/Hirt) or limited to the controlling phase (Pride/Hughes/Kapoor)

· The feedback loop mentioned by Pride/Hughes/Kapoor only occurs in the controlling function: the other steps from planning to organizing, from organizing to leading, and from leading to controlling in a linear fashion, without any apparent step to “review and modify.”

· One of the books book, (Pride/Hughes/Kapoor) does admit the possibility of “self-managing teams,” but merely means that the top-down management processes of planning, organizing, controlling are taken over by the team itself.

· Innovation is noticeable for its absence. In Ferrell/Hirt, it is noted as something that happens in small startups,

Ahistorical Thinking

Despite their great length, the find no place of the history of management. Peter Drucker is not mentioned, nor his foundational statement that the only valid purpose of a firm is to create customers.

There is no mention of the fact that the most financially successful firms in the world today, such as Amazon, Apple, Microsoft, Meta, Nvidia, and Tesla, are primarily focused on creating value for their customers.

In fact, the processes described are strikingly similar to the basic processes of administration identified by the French scholar, Henri Fayol, in 1903: planning, organizing, directing and controlling. (The intellectual debt to Fayol is not acknowledged.)

The Diminutive Role of Innovation and Entrepreneurship

These books are illuminating in the worst way. Despite their great length, vorh books devote only a few paragraphs to the topic of innovation, which is described in Ferrell/Hirt as "taking place within small startups" and is not mentioned as part of management of organizations.

"Entrepreneurship" fares somewhat better in each case getting several pages out of more than 600 pages. But in each case, it is seen as a business function that is quite separate from management, and certainly not a central focus of management.

When this kind of anachronistic thinking is what a significant proportion of of the 250,000 MBA students are still being taught each year, (let alone the millions of MBA graduates, who were taught this in the past, and are now influential managers of corporations), is it any wonder that firms are run in a top-down fashion and that employees are disengaged or that innovation and entrepreneurship struggle?

The Result?

We can see this thinking in action in this first-hand account published in The New Republic by John Benjamin, an MBA student and Dean’s Fellow at the M.I.T. Sloan School of Management.

· “MBA programs are not the open forums advertised in admissions brochures… Business school instruction is routinely blinkered… An MBA class will consider a business issue… in isolation. Its challenges are delineated; its society-level implications are waved away. The principals’ overriding goal—profit maximization—is assumed. With mechanical efficiency, students then answer the question of how to move forward. Individual choices are abstracted into numbers or modeled as graphs…”

When MBA students go out in the world and eventually become corporate leaders, is it any surprise that they emulate this thinking or that we have the kind of corporations that we have?

The Way Forward

What is required is a radical rethink of the business school system and its role in society. The challenge is to build business schools that are as innovative as they are efficient, as forward-looking as they are pragmatic, as passion-filled as they are intellectually rigorous and as valuable as their enrollment fee. This is not merely about adding a new course to the curriculum, Instead, business schools need to rethink their existence from top to bottom.

An important foundation for this rethink will be different textbooks with a fresh definition of ‘management’—a challenge that I will tackle in Part 3 of this series of articles, coming here shortly.


Part 1: Why ‘Management’ Desperately Needs A Fresh Definition

And also: Why Today's Business Schools Teach Yesterday's AAlExpertise

Why Business Schools Teach Yesterday’s Expertise
Steve Denning August 18, 2023
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Why ‘Management’ Desperately Needs A Fresh Definition
by Steve Denning