Why we need business leadership more than ever

Print More

Ever since I started my position as the dean at the School of Business and Leadership at Nazareth College, outsiders often have asked me whether we offer an MBA program. My polite response is that we do not, and we do not intend to. More often than not, by looking at their reactions to my reply, I can guess they are surprised. 

Kenneth Rhee

Now to set the record straight, MBA programs have their merits and purposes, and well-designed MBA programs are extremely helpful for people who want to move from a non-business to business profession. I was a beneficiary of an MBA program, transitioning from chemistry to business. Before I started the MBA program, I had zero business knowledge, and the program was instrumental in making my transition from the non-business to business world. However, does this mean MBA programs are for everyone, or are appropriate for what current and future managers need?

I would posit that if you have already been working in the business world or a business-related field, getting an MBA does not make sense in the current business environment. I will explain why. The current marketplace seems to agree with my assessment as well. In the U.S., many MBA programs are in decline. Graduate Management Admission Council data shows that applications dropped around 7 percent in 2017 and 70 percent of full-time MBA programs are showing declines. I have personally observed or played a role in phasing out traditional MBA programs in many regional universities in the past several years. The GMAC data showed that international MBA programs (programs that are outside the U.S., especially in Asia) have been growing, but I would have to wonder if that is a logical progression of those students requiring graduate degrees to be competitive in the growing Asian economy, and future enrollment will soon follow the U.S. trend. In addition, a lack of available options outside MBAs, as in the U.S., might be disguising the current overseas trend. 

One of the reasons why MBA programs might not make sense in today’s environment is that most MBA programs are designed or built on the rational and scientific management theories of the 20th century. Mind you, I am not saying these theories are without merit. They served us well in the 20th century business environment where you focused your business efforts on maximizing manufacturing efficiency and productivity. However, something happened when we entered the 21st century, and disruptions became the norm rather than exceptions. What was valued in the past—control, planning, and stability—got replaced by chaos, agility, and turbulence (see “Everyday Chaos” by David Weinberger). MBA programs aren’t designed to handle such a shift in the business environment. The business landscape has changed—perhaps forever—and change is something we need to be mindful of and attentive to constantly. Being agile is no longer a luxury but a necessity. In the 21st century, where competitive advantage does not lie with maximizing efficiency but with maximizing human potential in organizations, something different needs to take place in both business education and the corporate environment.   

If the above reason is not sufficient to convince you, here are some more reasons:

  1. According to Gallup’s latest study, “70 percent of the variance in team engagement is determined solely by the manager.” In other words, what managers do makes a huge impact on people’s level of engagement, and ultimately on the organization’s productivity and performance. The very competencies that make managers much more effective and lead to more engaged employees are not management skills, but leadership skills that are focused on human relationships. 
  2. With the advancement of artificial intelligence, human skills will become much more important. The conventional wisdom is that machines will soon replace human beings, and human relationship skills will become obsolete (no need for touchy feely). Such thoughts are very shortsighted. First, human beings will not be replaced entirely by machines in the foreseeable future, and furthermore, once the machines take over the repetitive and routine works, human interactions and collaboration will become even more important as humans tackle more complex and non-routine tasks. As far as machines taking over completely, that is a farfetched future, and we are not even sure that is what would happen or be desirable. In the meantime, the ability to leverage or fortify human potential in an organization will be extremely important and provides a competitive advantage over other organizations, A recent book on innovation discusses what differentiates successful innovators from less-successful innovators (see “Innovation Capital” by Jeff Dyer and others). The authors make it clear that it is not the innovators’ creativity or ideas, but their ability to exercise their human skills (influence, relationships, etc.) that makes a significant difference.
  3. Traditional MBA programs emphasize analytical skills, and they have been producing outstanding students with these skills. However, as criticism of these MBA programs dating back to late 1980s reflects, the programs have been accomplishing this at the expense of building other skills. For graduates, if you are planning to or if you want to advance in the organization to have a bigger impact or make a difference, it would be more helpful to focus and develop leadership skills. Many studies, including Gallup studies, have shown that we can typically count on only one out of 10 managers to be effective leaders. My colleagues’ and my studies have shown that only 10 percent to 15 percent of managers are truly outstanding leaders. So, if companies/organizations want to make the biggest impact on their bottom lines, they should be spending all their time and effort in identifying and cultivating leadership in their own organizations. 

So, what is the alternative? Is there a better solution? The short answer is yes, and it lies with leadership. Many experts have noted the difference between management and leadership. The main difference boils down to leadership dealing with change whereas management deals with control and predictability. So, as organizations try to focus on developing their human talent and realizing their human potential to address the rapidly changing and disruptive environment, it would be imperative for them to focus on developing effective leadership. Business schools can definitely aid in that process, but simply having a course or two on leadership or human relationships does not constitute effective development in leadership. In addition, creating a leadership program that is an MBA or traditional management master’s degree in disguise is not an effective solution. Recently, master’s programs that focus on innovation and technology have sprung up, especially the emergence of artificial intelligence or data science, but most of these programs are repeating the same mistake and focus too much on analytical skills and cognitive/conceptual knowledge and not enough human relationship skills.

It is imperative that business schools and corporations embrace this need for the paradigm shift. More and more, the entire health of an organization is tied to the effectiveness of its leadership. Since the competitiveness of organizations is closely tied to human talents within the organization, those that can help their people learn and grow will have distinctive advantage over others.

At Nazareth, the rebranding of the school from the School of Management (more aligned with the 20th century model of business education) to the School of Business and Leadership (focusing on 21st business education of cultivating transformational leadership) is taking place in a substantial way. We have created a new graduate program in leadership and organization change that aims to address the issues I’ve outlined. We also are creating a new undergraduate major in business leadership that integrates business knowledge and skills with a forward-looking and practice-focused leadership development component.

Our goal is to help develop transformational leaders for the future. These new types of leaders will be able to adapt and change, and help guide their organizations to do the same in the disruptive business environment. We are integrating theory and practice so that our students can truly apply what they are learning in the classroom at their workplaces. 

Kenneth Rhee is the dean of the School of Business and Leadership at Nazareth College. To learn more, visit http://naz.edu/sbl or contact him directly at [email protected]

3 thoughts on “Why we need business leadership more than ever

  1. Really interesting and insightful way to look at this topic in 2019. Transitioning from a focus on “management” to a focus on “leadership” (which implies ongoing adaptation) is smart and logical. I hope this philosophy can trickle down to the high school level as well, with increasing emphasis on life skills in an ever more rapidly-changing world.

  2. Analytical skills are increasingly handed off to software these days, but people skills are very difficult to reproduce with machines. Practical, experience-based skills are what forward-thinking employers are looking for. This is evidenced by both Apple and Google no longer requiring even an undergraduate degree for consideration for a job. Google went from a disastrous policy of hiring PhDs to finding that graduates of 2+2 degree programs made much more useful employees. One famous west coast VC said they add $250k in value for each engineering hire in a startup and subtract $250k for each MBA!

  3. Every company I’ve seen fail has done so because of *human* issues, not technical ones. Basically no team gets anywhere if it can’t function as a team, and a dysfunctional team will kill a company a lot faster than merely a bad technology, which usually has surprisingly little effect on commercial outcome (Facebook being an example).

    What I find unintelligible is how enormously we fail to recognize this problem of team cohesion and address it. Yes, “leadership” is taught in infinite ways, but none of those ways squarely contemplates that a leader is more than a mere *manager.* A true leader descends into the emotional and the consequences of those emotions to create a real team. That is, deals in the raw emotions that people display as the “meat” that we are. “Meatspace” may be ugly, but it’s where humans interact. And technology isn’t making those interactions smoother; cell phones already inhibit conversations, and just imagine how much worse it’ll be when AI becomes ubiquitous. So the problems are already here, and they’re only getting worse.

    ***

    You’d think this would be straightforward, but consider for example how much even a bleeding-edge theory for modern business like lean startups emphasizes agility in product-market fit, while *completely* failing to contemplate (much less deal with) agility in person-person fit within a team.

    Consider airline safety — there are 45,000 air flights per day, and each spends about 3-5 minutes going over plane safety. That’s a huge expenditure for the nation per year for an event that’s a) not likely, b) if it occurs is almost always fatal and c) if not fatal, basically instructions like “head for the light” are about as useful. Now consider “startup safety,” where on day 5 (if it takes that long) the CEO runs off with the husband of the CFO *and* take all the money with them. Oh and the investors are arriving this pm. And the data stinks and the Patent Office just issued a final rejection on the IP. All of that’s *completely* predictable, all of it could be buffered against by some basic “startup safety training” emphasizing how to deal with these predictable human-interaction emergencies. Which is something that lean startups completely misses in its single-minded (blinkered) quest to optimize the fit of the product to the market.

    ***

    I’m glad that Naz is addressing these issues, especially at the student level, since Rochester will benefit enormously if we start teaching our abundance of students how to form cross-entity teams, which is certainly an immediate outcome of leadership training. Twice a year the University of Rochester hosts a summit between c. 10 Upstate academic entities on best practices in fostering Upstate entrepreneurship (https://www.rochester.edu/aincenter/summits/), at the most recent summit the topic came up, and I’m pleased to say that a number of us (myself included) are looking at some bottom-up grassroots initiatives to promote the most important kind of entrepreneurship — “internalized entrepreneurship,” which is what turns a manager into a leader, since it emphasizes exactly what Dr. Rhee highlights, the need to address humans as such and cohere them, not just focus on product.

Leave a Reply

Your email address will not be published. Required fields are marked *