Wednesday, September 30, 2009

Reforming b-schools

The debate continues. The Schumpeter column of the Economist has some suggestions:
So what should business schools do to improve their performance? More history classes would help. Would-be business titans need to learn that economic history is punctuated with crises and disasters, that booms inevitably give way to busts, and that the business cycle, having survived many predictions of extinction, continues to prey on the modern economy.....

History courses aside, business schools need to change their tone more than their syllabuses. In particular, they should foster the twin virtues of scepticism and cynicism....

The original sin of business schools is boosterism. Professors are always inclined to puff the businesses that provide them, at the very least, with their raw materials and, if they are lucky, with lucrative consultancy work.....Business schools need to make more room for people who are willing to bite the hands that feed them: to prick business bubbles, expose management fads and generally rough up the most feted managers. Kings once employed jesters to bring them down to earth. It’s time for business schools to do likewise
What to make of these suggestions?

History lessons? You mean to say the people who ran Bear Stearns and Lehman had not heard of booms and busts? Scepticism and cynicism? You could argue that the latter has a tendency to triumph over the former. Why be sceptical about financial engineering products when you can make money at somebody else's expense? B-schools do not need to foster cynicism. Their faculty and students have this quality in abundance.

I agree with the third point, about boosterism at b-schools. Faculty writing great stories about organisations that provide them the material, consultancy, and, in some cases, chair professorships. This is a serious governance issue for the boards of b-schools, it is not a matter that concerns only faculty.

3 comments:

Partha Pratim said...

Sir,

What do you think is a feasible solution to the third problem?

Anonymous said...

Prof Raghuram - Railways case study euologizing Lalu Prasad and Sudhir Kumar (Officer on Special Duty to Railway Ministry then). A clear case of 'boosterism' at IIMA.

T T Ram Mohan said...

Partha Pratim,

As I have indicated, this is a governance issue. The Boards and faculty will have to evolve suitable norms to deal with these, including situations that are perceived to pose conflicts of interest- of the sort that Anonymous refers to.

-TTR