The Upwardly Global MBA
From Strategy+Business, Fall Issue, 2004

Over the last year, as part of an exercise to determine London Business School's role in the education and training of the next generation of business leaders, we conducted more than 100 face-to-face interviews with executives from global companies across a variety of industries and geographies. For those of us involved in educating managers, these men and women, located in more than 20 countries, are our ultimate customers. They are the people who recruit from the 100,000 or so students who earn master of business administration (MBA) or equivalent degrees every year from more than 750 institutions around the world, and who pay for executive education to improve their managers' skills and value.

...Business schools must move beyond their current focus, equipping people with knowledge, and instead furnish them with skills and attributes, the means by which knowledge is acted upon. MBA education must become more action oriented, but also must find ways to nurture integrity, judgment, and intuition - a seemingly contradictory mandate that schools nevertheless must learn to prosecute.

Above all [we found that] graduate business schools must inculcate in their students global business capabilities, which we define as the knowledge, skills, and attributes to succeed in the global economy. MBAs must be trained to think, decide, and act efficiently and innovatively in an unpredictable global business environment.

...In the early 1990s, business schools were once more attracting criticism. This time it wasn't their academic credentials that were under attack. In fact, it was argued, the pendulum had swung too far in that direction; business schools were said to be out of touch with the real world of business. Again, schools responded by overhauling their curricula - this time by adding more practical skills to their MBA programs.

In April 2002, the Management Education Task Force of the Association to Advance Collegiate Schools of Business (AACSB) issued a report questioning the relevance of business school courses. It recommended that American business schools focus more attention on "basic management skills, such as communications...leadership development, and change management...and prepare managers for global adaptability."

What Companies Want
Today, we are at another inflection point in business education. A great strength of business schools is their consistent willingness to listen to and respond to the critics. From our conversations, three clear messages emerge. We believe these constitute a new agenda for business education.

First, our research confirms that executive education must be global in its outlook and content.

Business school customers require executives with global business capabilities - what one executive in our research labeled global savoir faire. For our end-users, global business is more than a political discussion point, marketing mantra, or corporate aspiration; it is a burgeoning day-to-day reality.

One need only scan trade statistics to understand why. In 1984, U.S. exports were worth $291 billion; by 2003 the figure had more than tripled, to $1,018 billion. In 1984, U.S. imports were worth $400 billion; by 2003 the figure had almost quadrupled, to $1,508 billion. Similar trends are apparent in the trade figures for other developed and developing nations.

More than half the S&P 500 now report revenues by geography. For them, international markets account for 33 percent of revenues, and their international business is growing nearly twice as fast as their U.S. business (9.1 percent annually versus 5.4 percent from 1998 through 2003). Not only is trade becoming more global, the leading companies are as well.

Yet business school programs have remained largely national rather than international. Some business schools have tested the waters by expanding the global reach of their activities. However, many MBA programs remain culturally limited on a variety of measures. Consider the mix of students at some leading American business schools. At Harvard Business School, non-Americans make up 33 percent of the MBA intake. At UCLA's Anderson School of Management, the figure is 24 percent. By contrast, non-U.K. citizens account for 79 percent of London Business School's MBA intake.

The second message from our interviews is that the new business education agenda must be multidisciplinary.

In the real world of business, managers are increasingly expected to contribute to multifunctional teams and work on projects that draw on a range of disciplines. Yet the way managers are taught in business schools remains one-dimensional. Schools are organized according to communities of scholarly interest. They are bound by functional disciplines rather than reflecting business reality. Despite the fact that companies must break down their functional silos to succeed, the core MBA subjects and the way they are taught have remained largely unchanged. The basics - and the isolation - of marketing, operations, organizational behavior, IT, finance, economics, accounting, and strategy endure.

In part, this reflects the nature of business schools: They try to straddle the academic and business worlds. Traditionally, universities have identified their main mission as creating and disseminating knowledge. Accordingly, academia has been organized along neat functional lines. But businesses are not. Companies increasingly see knowledge as a commodity - and a highly perishable one at that. Thus, deep functional knowledge is now little more than an entry ticket into management. To enable end-users to move from the cheap seats to the front row of business leadership, business schools must develop a new approach to teaching and learning.

This brings us to the third item on the new agenda: Business education now has to go beyond the passive transfer of theoretical knowledge to the application of practical knowledge. Business schools have traditionally provided a reflective learning space, a place to absorb information and knowledge. But the new agenda must be practical and action oriented.

...Things have unquestionably changed. Markets are multinational. Communication is global, instant, and constant. In this environment of - pardon the clichés, but they are all quite real - 24/7 contact, triband cell phones, the BlackBerry, frequent-flyer families, airport-lounge showers, long-distance teams, and extensively extended enterprises, the successful executive has to be flexible, multidimensional, and global.

Globalization is not simply the transfer of work to emerging economies. Globalization is an art - an art of human relations that, like other arts, is premised on insights gleaned from teaching and from experience, and honed by continual practice, day in and day out, in the executive suites of the world's corporations. Globalization concerns the exercise of management and leadership on a worldwide scale. Global business is not the sole preserve of large companies. For small and medium-sized enterprises, too, it is neither a theory nor a discussion point, but a fact of life.

...To make sense of these responses, we developed a taxonomy for executive capabilities in the global marketplace. We decided that it was possible to divide the 39 most frequently cited capabilities into three basic categories of global business capabilities: knowledge, skills, and attributes.

These are not simply different in content. They are different in essence. We can teach knowledge, but we need to train people in skills, and we can only develop attributes. This changes not only the what of management education, but also the how and who of the process.

Of course, the three global capabilities are not written in tablets of stone. The mix and importance of knowledge, skills, and attributes shift as an executive's career evolves from individual contributor to team leader to organization leader. Equally, the emphasis on particular skills and especially attributes within an organization will differ according to its industry, its competitive approach, and its culture.

But if global business capabilities are understood and approached in this way, we believe the implications for businesses and executive education providers, although still substantial, can be more easily assimilated. For business schools especially, this taxonomy makes clear that the focus must broaden. And for companies and individual executives, the taxonomy provides an accessible reminder that the development process is multifaceted and must be career-long.

Knowledge. The foundation of global business capabilities is knowledge. Knowledge can be defined as understanding gained through experience or study. Knowledge covers subjects such as strategy, economics, decision sciences, and accounting. Knowledge is the base information required by successful managers to operate at the lowest managerial levels. ...Companies increasingly assume that their recruits will have the necessary basic knowledge. "When we interview MBAs, we do not test how much they know," one interviewee, president of the Asian operation of a major U.S. multinational, confided. He and others assume that knowledge has already been taught by the schools. (Any school that consistently fails that test will find itself banished from the recruiting ranks.)

Perhaps more ominous for the schools' conventional modus operandi, some corporations believe they have the internal resources to impart the basic knowledge required for executive success. One interviewee said he would prefer to recruit a candidate with a Ph.D. in Russian literature than one with an MBA. He thought knowledge of Dostoyevsky denoted someone with curiosity and a "learning attitude"; the company, he said, could teach the more job-specific knowledge required.

"Knowledge of philosophy has been more important than the technical knowledge of business," said Akin Akbaygil, vice chairman of the Turkish bank Türk Ekonomi Bankasi.

Skills. Skills are practiced ability, the learning acquired through the repeated application of knowledge. They are applied in management, and include decision making, managing performance, and cultural sensitivity.

Business has always been action oriented, and skills have always been fundamental to effective management. However, skills are largely peripheral elements of most MBA programs; universities generally assume that the acquisition of skills is the responsibility of companies and individuals, the happy by-product of experience.

This assumption no longer automatically holds. The skills required of executives are global and complex, and they require professional rather than ad hoc training. Although many skills needed by executives are often specific to particular situations, business schools can and must work with their end-users to develop in their students a set of universal skills, such as teamwork skills, project management, performance management, and talent assessment. Schools can also customize skills-training programs to the particular needs of industries, organizations, and even large companies.

For business schools, broadening the mandate to include the development of clearly identified skills provides an opportunity. It expands the range of education they must provide and involves them in the post-MBA phase of an executive's development. Additionally, a focus on skills provides a challenge: Skills are developed through practice as well as understanding of the theory behind them.

For companies the payoff is obvious. Executives armed with both knowledge and skills are operationally effective.

Attributes. We define attributes as individual qualities, characteristics, or behaviors focused on leadership. "You must have a base of management to aspire to build leadership," observed Mike Zafirovski, president and chief operating officer of Motorola. Such attributes are usually acquired at a later stage in an executive's career.

Business leadership demands attributes of personality and character. These include integrity, self-confidence, curiosity, and a passion for excellence. Here, too, is where we place judgment and intuition. "The army follows an order; a good manager follows his beliefs," Nicolas Hayek, chairman of Swatch, told us.

...Global companies are already applying our three metacapabilities, at least implicitly, in the way they identify, develop, and assign executives to tasks and roles. Our interviews confirmed that knowledge has become a basic entry requisite for the budding global executive - a commodity that companies both assume and overlook. Their recruits' skills and attributes clearly are of more import to them. GE Chairman and CEO Jeffrey Immelt, for example, talks of using the company's celebrated Crotonville executive development facility to give executives "an external perspective, global and technical savvy."

The growing emphasis on skills and attributes is supported by the 2004 Corporate Recruiters Survey conducted by the Graduate Management Admission Council (GMAC). It found that the top characteristics employers seek in new MBA hires are strong communication and interpersonal skills, a proven ability to perform, and a cultural fit with the company.

Customer-Driven Education
The shift in companies' recruiting and development emphasis from knowledge to skills and attributes means that each business school must pick the place it intends to compete, creating a differentiated mix of teaching and training opportunities drawn from the three meta-attributes companies require of their recruits.

Given the employers' shift in focus, business schools must change on three fronts:

• They must become more global.
• They must rethink the learning process, moving away from functional silos designed for delivering knowledge and embracing interdisciplinary learning methods to deliver the capabilities required.
• They must become more action oriented.

...While corporations both large and small have globalized, have business schools globalized their methods, content, personnel, scope, and ambitions to the same extent? Mostly not. Global experience must play a much more significant role in business school education. "MBA students should spend time overseas to broaden their knowledge and understanding of different cultures and markets," said Eastman Kodak Company Director Rick Braddock. "Leadership requires understanding of different national decision-making models."