Why We Need Business School Reform

The reckoning will eventually come.

The Wolf of Wall Street

It’s the first day of class and the students are sitting in a wide U shape around me. Some are chatting with their newfound friends, others are pretending to be occupied by their phones, and a few brave souls have mustered up the courage to just sit quietly at their desks with the occasional nervous look in my direction. They are assessing me, the professor, just as I am assessing them. I wonder who the troublemakers will be and who will be the quiet stars I’ll try to draw out through the semester. Then the second hand of the clock moves to half past and I call out the start of the class.

I teach several classes in a business program as an adjunct professor. The students are generally smart, motivated, and good at test-taking. Most have been the privileged recipients throughout their lives of the best private or public education available. They have stories to tell about the microfinance non-profit they founded in Kenya or the high school family vacation they took to New Zealand. The acceptance rate for the program has been consistently sinking over the years and is now among the lowest in the country. I almost always leave class impressed that the students are so aware and connected with the world.

But there are also times that I leave thinking, holy crap, if some of these whippersnappers really are the “future business leaders of America” (this being the idea all business schools inculcate their students with the moment they arrive), then the future of business in America could use a serious makeover.

Cheating, and the pressure to participate, is rampant. Ethics is a throwaway class. The idea that success can be measured by values other than the bottom line is approached with apologetic caution. The reason for this culture lies not entirely, or even mostly, with students. What we need is a wholesale overhaul of business education as we know it.

The idea that success can be measured by values other than the bottom line is approached with apologetic caution.

Majoring in business has become more popular than ever. According to the National Center for Education Statistics, 361,000 students earned undergraduate business degrees in 2012–2013. (That’s just under 20 percent of all degrees earned that year.) MBA programs have skyrocketed in popularity and are now widely viewed as the most flexible and lucrative of all graduate degrees. This is a tremendous change from the purpose envisioned by the founders of business education in the late nineteenth century, who saw these programs as providing vocational training for local businesses, not as prestigious cash cows for their attached universities.

In fact, for decades, business struggled to be seen as a legitimate course of study, tinged with the plebian tone of practicality. It was not a subject of inquiry for serious scholars. But starting after World War II, the subject focus narrowed to quantitative-driven research, with an emphasis on abstract financial study designed to emulate traditional mathematic and scientific disciplines. As Rana Foroohar so aptly puts it in her excellent book, Makers and Takers, “the language of the time makes it clear that the elites were a bit embarrassed about any ties that business education might have to actual factory floors.”

Attend a business school today and the core curriculum is not so much about how to create things so much as how to adequately measure them. Schools emphasize statistics, business analytics, accounting, operations management, and finance. The required core is so large that students often only have room for one class per semester that isn’t related to business. Trying to study abroad can require months of advance planning to ensure compatibility with the course schedule. Though business programs are beginning to offer an impressive panoply of majors and concentrations, ranging from luxury fashion to social impact, the largest draw for most students remains the high paychecks found in investment banking, consulting and private equity.

Attend a business school today and the core curriculum is not so much about how to create things so much as how to adequately measure them.

The competition amongst the student body is intense and overwhelming right from the start. In order to secure a coveted junior year summer internship that usually leads to a full-time offer, it helps to gain experience through a sophomore year internship in the industry, which means it doesn’t hurt to have a freshman internship to get that sophomore year internship. The most alpha freshmen have found internships by mid-spring. At the MBA level, students treat recruiting as a full-time job starting the first semester, followed by intense networking, while their studies trail a distant third. This tense atmosphere tends to push already high-achieving individuals to the brink, breeding exclusivity and resentment.

I completely understand the irresistible siren call of these jobs. But after spending multiple years with students, I can see how their impulsive need race towards measurable accomplishment insidiously infiltrates their decision-making as soon as they step foot in the door. They think they are being strategic and shrewd. But they are also conforming to the least common denominator of the definition of success.

Consciously stepping away from the herd takes an act of courage, one for which students are not rewarded. Large investment banks, management consulting companies and private equity firms have deep ties to the career advising offices of all the top business schools, which feed them some of the most talented candidates year after year. They are given preferential recruiting times on the calendar to woo, interview, and lock up the best students before other companies or non-profits even arrive on campus. Undergraduates who fail to declare a finance major can be shut out of certain job applications altogether. It would not be an exaggeration to describe students who are not gunning for these jobs as second-class citizens. The strong perception, which schools do little to counteract, is that those who end up in other fields simply “couldn’t hack it in finance.”

Sadly, the focus on quantitative finance has encouraged generations of CEOs who prioritize stock prices and clever accounting manipulations over creating products or services that provide real, tangible value to consumers and create benefit for society. We need to rethink the business school curriculum to emphasize critical thinking as well as quantitative skills. Business school students should be encouraged to become questioning, thoughtful leaders, not mere spreadsheet whizzes.

Consciously stepping away from the herd takes an act of courage, one for which students are not rewarded.

There are encouraging signs that schools are starting to move in this direction. Particularly in the undergraduate programs, new mandatory classes have been instituted to ask deeper questions about the role of business in society rather than blindly maximizing shareholder profits. Finance classes teach students about investing for social impact and with the environment and human rights in mind. Supply chain courses instruct on labor rights and factory safety. And incorporating design thinking into business education encourages students to develop empathy for the end user: rather than thinking about how to cut costs, start by thinking from a consumer’s perspective, so that we can develop better, safer experiences for them. That’s something that educators should be doing when rethinking the business school curriculum, as well.

In my class, I like to make the students do a little exercise at the end of their first semester with me. We go around the room and I ask them what career they aspire to have after business school. Student after student in a row will intone, “Investment Banker. Venture Capitalist. Consultant at McKinsey.” Then I say, okay, imagine that there is no pressure. Not from your parents, your peers, and least of all yourself. What would you be in this hypothetical vacuum of expectations that would make you truly happy?

As unlikely as it seems, this may be the first time that they have ever seriously considered this question. We’ll go around the room again and some of them are at a loss for words. But there are always some gems that emerge. A woman who I was sure would become a neoconservative Captain of Industry said, “I would go to Scandinavia and work on an organic farm.” Another shared, “I would follow my true passion of being a singer, like my mother,” or “I would like to be a chef, because I have always loved food.” Several students who said they would pursue private equity admitted they would rather be sports agents. An undergraduate once gaped and said, “Well, I have wanted to work at McKinsey since I was a kid, but now I don’t know why, and I think I may have been brainwashed.” I have heard that this is one of the rare times that students feel that they are able to let down their guard and be more open; to admit the difficult and shameful truth to each other, that they did not come into this world wanting to be an investment banker (or similar), and they are often amazed to hear that others feel the same.

They did not come into this world wanting to be an investment banker.

When how you spend your time is so misaligned with who you want to be, the reckoning will eventually come, and it will turn you inside out. How did the current system come to deviate so far from its original intent, which was founded to educate students in manner that encouraged them to think about the entire business ecosystem? Top business schools have become a place of transaction where students exchange their six-figure tuition for a six-figure salary. This system ensures that neither is fulfilling its true potential. Reform may be a long time coming. Institutional inertia and tenure are formidable blockades to overcome. But allowing students some space to dream may just be a good first step.

Mei last wrote about buying an apartment for The Billfold.

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