Business Management and Holistic, Critical Thinking

In early January I read an excellent article in the New York Times - Multicultural Business Theory.  At B-School?.  The article was about the efforts of Roger Martin, the dean of the Rotman School of Management at the University of Toronto, to transform business education.

About a decade ago, Professor Martin began advocating “what was then a radical idea in business education: that students needed to learn how to think critically and creatively every bit as much as they needed to learn finance or accounting.  More specifically, they needed to learn how to approach problems from many perspectives and to combine various approaches to find innovative solutions.”

“Learning how to think critically - how to imaginatively frame questions and consider multiple perspectives - has historically been associated with a liberal arts education, not a business school curriculum, so this change represents something of a tectonic shift for business school leaders.  Mr. Martin even describes his goal as a kind of liberal arts M.B.A.  ‘The liberal arts desire,’ he says, is to produce ‘holistic thinkers who think broadly and make these important moral decisions.  I have the same goal.’”

Martin’s ideas may have been radical ten years ago.  “But even before the financial upheaval last year, business executives operating in a fast-changing, global market were beginning to realize the value of managers who could think more nimbly across multiple frameworks, cultures and disciplines.  The financial crisis underscored those concerns - at business schools and in the business world itself.”

As a result, business schools are moving into territory “more traditionally associated with the liberal arts: multidisciplinary approaches, an understanding of global and historical context and perspectives, a greater focus on leadership and social responsibility and, yes, learning how to think critically.”

I could not agree more, based on my personal experiences in business, - as an executive at IBM for many years, and more recently as a consultant at IBM and Citigroup.  In the graduate courses and seminars I have been teaching at MIT and Imperial College for the last few years, my overriding objective has been to give the students a better appreciation for the kinds of complex technical, business and organizational problems that they will encounter throughout their careers.  How well they handle such challenges will, in my opinion, be a critical factor in their success as executives and professionals.  Let me elaborate.

In the industrial economy that dominated the 20th century, companies and other institutions generally had a hierarchic management structure.  Most people in the organization were involved in making products or delivering services.  Authority and information flowed down from small groups of senior executives in headquarters.  These small group had broad, overall responsibility for the general management of the business.  They made most of the decisions.  Middle and lower managers were responsible for specific functional areas, where they carried out the decisions of top management, and supervised the operations and the people in their departments.

This organizational model worked well when technologies and markets changed slowly.  But as these changes accelerated, and as globalization and other competitive forces have intensified, companies have had to become more flexible and adaptable.  The industrial age hierarchic organization, where information and decision making was concentrated with relatively few individuals at the top, has proved to be too slow and rigid.  It no longer works. 
 
To better compete and survive in our fast moving, competitive environment, companies have to embrace a more distributed, collaborative management style, as well as a more entrepreneurial culture.  Managers and other individuals throughout the organization have to feel empowered to address and solve problems as they arise.  They have to be able to respond to fast changing conditions and make decisions without having to constantly check with upper management.  General management and leadership responsibilities have to be distributed throughout the organization.

What competencies should we be teaching to potential managers so they become better overall problem solvers and decisions makers?  How do we best prepare such managers to have successful careers in their companies and in business in general?

A 2007 study on the alignment of MBA curricula and managerial competencies addressed this question.  The study analyzed data from surveys conducted by the US Department of Labor with more than 8,600 managers.  It identified six main areas of management competencies which it broke down into two categories:  some are hard or quantitative in nature - administration and control, logistics and technology, and task environment; and some are soft or people-oriented in nature - human capital, decision making and strategy and innovation.

The study concluded that there was a significant gap between the skills that companies are looking for, and the skills being taught in business schools.  The schools continue to produce graduates that are primarily strong in some hard, quantitative, functional area, like finance or accounting.  But, what companies generally want from the top students in MBA programs, - as well as from top students in engineering and other disciplines, - are graduates who are strong in innovation, strategy, communications and leadership and have good people skills, so they can work well in teams with clients, colleagues and partners.

These top graduates will also excel at a functional, analytical or technical area.  That is taken for granted.  But in general, students with such narrow skills are easier to find and may not necessarily require a graduate degree.  Harder to find and in greater demand are T-shaped professionals, who combine a strong functional skill in some specific discipline with the broad, multi-disciplinary, social skills needed in general management as well as in strategy and innovation.

Our ongoing financial crisis is arguably a strong illustration of what happens when universities focus primarily on teaching relatively narrow skills.  These are the kinds of deep analytical skills that quants on Wall Street are famous for.  Many of them lack the skills, or the proper education on professional responsibilities, that would have helped put their work in a broader context. 

The results, as we know painfully well, have proved disastrous for society, as well as for many financial companies.  There is plenty of blame to go around beyond whatever misdeeds were committed by quants, but they, and the schools which in retrospect did not provide them with a properly balanced education, bear at least some of the responsibility.

The efforts of Roger Martin and others to transform business education are most definitely a step in the right direction.   

“Will any of these changes have a big role in preventing future economic crises?  Opinions here are more mixed . . .  Mr. Martin agrees that the problems that led to the crisis are bigger than business schools alone can address.  But he’s still optimistic. ‘The vast majority of our students want to be a positive influence on the world,’ he says. ‘And if you give them ways of thinking that help them with these complicated dilemmas, they’ll make choices that are in some sense more worthy and have a higher moral quality.’”

Comments

[Dave]

You have this backwards: it was the hierarchical management structure that was responsible for slow rates of change in technologies and markets.

Its nice that you've discovered these more effective organizational structures and identified the fact that effective leaders must actually be deep and credible in *at least* one technical discipline, but companies have been built by such leaders using these structures since the 1980s.

What will you discover next? The critical importance of creating and managing the right organizational culture?

[business innovation and skills]

This method first helps the decision-makers identify all the important people and resources relating to the issue at hand, especially those that are very often forgotten.The next step is to bring these elements together into a new "whole",represented by a short "statement of purpose".With this broad holistic goal in place, the group has a benchmark by which they can measure their future decisions.A subsequent testing phase reaches back to often ignored considerations to make sure that none are being forgotten.

[dblwyo]

Irving a worthy endeavor and vitally necessary in a new normal where turbulence, disruption and tsunami's will the likely course of events. I'd argue that much of our problem is not business skuls per se but their reflection of our tendency to stovepipe ourselves into functional specialties and get further lost in political arbitration between competing interests. When you see holistic what you really are saying is what can the function do for the enterprise? And conversely what expectations and objectives should the enterprise lay on the function within available and balanced resource constraints? Finally that should be coupled at both levels by repeating the question for the short- and long-term horizons. My general experience is that it doesn't happen because most functional execs are focused on what their group needs to do in the short-run but also because there is no integrated enterprise framework that sets directions, allocates resources and measures progress. Let me construct that argument, if you would, in pictures a bit. Conceptually it might look like this: Specialists vs. Generalists: Combining Frameworks with Expertise
For the general business enterprise case you might end up taking a look at how to move from functional isolation to enterprise integration: Renewing the Enterprise 2: Governance, Measurement & Performance , and least you think that it doesn't work for some enterprises in the real world you might consider Cisco [Mobility, the 4As, and Cisco: an Anti-sclerotic Exemplar? ] or Wal-Mart [WMT as Exemplar II: Diving Into the Details of the Retail Enterprise ]

[Marc Resnick]

Really, we need students to be taught critical thinking skills in high school when we have them all together. Not only how to think critically, but also the importance of taking a critical thinking stance regarding whatever they are faced with later in life. This needs to be repeated until it is second nature. Then, when we are teaching them marketing or finance in B-School, they will automatically question the status quo. And again, they will do so when working at Lehman Brothers as the new derivatives whiz kid.

[AmiV2]

I am not sure if to be sarcastic, angry or just sad. To read from and IBMer that in B-School you can learn to think NOW, AND that this is a revolutionary move (did you call it "tectonic"?) IS amazing. Well, it's good that we are amazed on a daily basis. Did one of the Watsons carve in stone "THINK" somewhere on some steps of IBM??? OK, with less sarcasm. There is nothing new about teaching business students to think (analyze, synthesize, research, pose scenarios and discuss.) As far as other business schools (I am familiar with Harvard and Berkeley) the idea of making a business manager a good thinker, flexible, intuitive and maybe daring has been tried for a long time. This is true in academic programs and in business consulting. The big problem is the brain. It is much easier to teach analytic financial techniques than to teach "thinking". It is even hard to define "thinking" in many domains. What is the difference between a "thinking" accountant and a really good "operational" accountant. What does a thinking financial analyst bring to the table that a really hard working one does not? If you are a domain expert in these areas you can easily answer these questions, the sad part is that university professors think this is new and revolutionary... nice blog otherwise.