How has management education evolved, and where is it going? This question is of crucial importance for society, says HBS professor Rakesh Khurana. Business leaders are admired yet often distrusted, and the idea of management as a profession is similarly on shaky ground—as it has been for more than 100 years. The situation may be due in large part to the role of university-based business education from the founding of the Wharton School in 1881 and continuing right up to the present.
According to Khurana, the schools first emphasized that managers should carry out their work in ways beneficial for society. This theme was later replaced by preference for disciplinary knowledge, and finally by a market logic that regards business education as a marketable commodity rather than a professional education.
It has been an invisible transformation, but society and business schools themselves must grapple with it. Khurana lays out his institutional analysis and its repercussions in his new book, From Higher Aims to Hired Hands: The Social Transformation of American Business Schools and the Unfulfilled Promise of Management as a Profession.
Khurana has witnessed the transformation from both sides of the aisle. As a doctoral student at Harvard he completed all his MBA coursework and went on to earn a master's in sociology and a PhD in organizational behavior. Now he teaches in the MBA and doctoral programs and knows the issues that students today face as they contemplate future career paths.
He met with HBS Working Knowledge to discuss professionalization and how business schools shape—and have been shaped by—societal forces and values.
Martha Lagace: What led you into this analysis?
Rakesh Khurana: Since I was a graduate student I have been interested in how people at the top get their positions. How are they socialized into their positions, and what are the consequences for organizations and society? I was also interested in theoretical questions about how new institutions emerge and diffuse in society.
My first foray into this topic was published in a book, Searching for a Corporate Savior: The Irrational Quest for Charismatic CEOs. I focused on understanding the processes by which CEOs were selected—in particular the phenomenon of outsider CEO succession. In the conclusion I wrote a bit about the role of business schools in perpetuating the image of the charismatic CEO.
The founders saw a profession in terms of using one's knowledge for the advancement of societal interest.
What I found even more interesting was the legitimation and justification of CEO compensation packages and the logic that was used to justify them. Rightly or wrongly, the argument was that CEOs deserve and should be given a percentage of the value they created. The notion struck me as odd when compared to the logic of other professions. Doctors save lives; lives are infinitely valuable; so do doctors deserve to be paid an infinite amount of money? Judges administer justice; justice is essential to having a good social order. Should judges deserve an infinite amount, too?
The notion that somehow the logic of a purely monetary conception of value could be transferred to business struck me as odd, especially in a university-based business school. It seemed very unlikely that business education could have been legitimated that way. So I started exploring in greater detail the origins of business education. That investigation led me to the archives of Harvard Business School, other business schools, and philanthropic foundations that supported business school reform, thereby allowing me to better understand the process by which business education emerged and how it has evolved over the last hundred years.
Q: In a podcast for Princeton University Press, you said business leaders are among the least trusted members of society. More than 100 years ago, when university-based business schools first emerged, what did the founders envision? Were they naive?
A: The original intention is very clear: to create management as a profession. A profession did not mean a distinction between an expert and a novice. They saw a profession in terms of using one's knowledge for the advancement of societal interest. That was the basis around which the "professionalization project" (creating management as a profession) of the business schools began. They linked the notion of a business school to 3 already-legitimated institutions that were seen as key for the 20th century:
Science. They wanted to establish management as a science, not just an art.
Professions. Professions took knowledge and used it to advance societal interests. Professionals acted in the best interests of the persons they were representing rather than their own self-interest.
The university. Universities were seen as the fulcrum for knowledge toward truth and the advancement of understanding.
Were they over-optimistic? It depends on your point of view. Like all entrepreneurs, they were trying to change the world and not content with the status quo. From an analytical perspective, though, they followed a path that was very different from the one that the traditional high professions of medicine, law, and science had pursued. In those cases, the impetus for professionalization came largely from a subgroup of practitioners who sought to distinguish themselves from hacks, quacks, and snake oil salesmen.
Business schools need to look at what differentiates a professional school from a vocational school.
For management, the impetus came much more from a small cadre of academics, a group of people who were concerned about what was going on in society, and a small group of managers who were seeking to raise their status. They all believed that "if we build the business school, the profession will come."
The challenge, though, was that they created business schools without addressing fundamental questions. What was a business school about? For whom was business ultimately responsible, what did the implications mean for the research that would take place, for the kind of faculty who would be hired, and for inculcating students into the profession? What did profession specifically mean?
Because the founders of university-based business schools never dealt with these fundamental questions of purpose, they tried to create management as a profession, but never resolved the issues in any kind of meaningful way nor did they articulate a coherent purpose with a single voice. These questions remained unanswered.
Q: One turning point in business education was the introduction of the GI Bill after World War II, which created a huge pool of potential new students. What were other crucial turning points?
A: The Great Depression of the 1930s reinvigorated the discourse and questions about what a profession is and what end business schools should be serving. These questions were partly motivated by the fact that many scholars in business schools had offered no real policy prescriptions for how the United States could get out of the Depression. Moreover, so many businesspeople had been seen as not necessarily following the highest standards that were expected of them, and business schools took some responsibility. The conversation was cut short upon the entry of the United States into World War II. After World War II, business schools experienced one of their fastest growth rates as a consequence of the GI Bill.
The problem for business education was that, because so many universities and colleges were seeking to take advantage of federal funding, there was almost no quality control. That created an opening for the Ford Foundation in the 1950s and 1960s to lay down a significant critique about the quality of business education in most business schools, the quality of the faculty, and the quality of the students. Leaders of the Ford Foundation, working in particular with Lee Bach from Carnegie Mellon, sought to put business schools on a higher academic footing by focusing on the quality of the faculty. These leaders argued that the best business school faculty should be strongly immersed in quantitative training and have a disciplinary orientation. The social science disciplines in particular were economics, sociology, and psychology. Quantitative reasoning eventually took precedence.
Q: What choices does business education face today?
A: A university-based business school, in my view, faces the challenge of deciding whether it's going to be a professional school or not. If it decides not to become a professional school, it risks devolving into a vocational school. And that raises a fundamental question: Why should universities have vocational schools? There is an active for-profit market for vocational schools.
Second, business schools need to look at what differentiates a professional school from a vocational school. There are at least 4 criteria that scholars use to describe a profession, criteria that business schools would need to have a conversation about.
A professional school consists of some agreed-upon body of knowledge that it believes the practitioners of the profession need to know in order to be effective. Current trends suggest that an institutional fragmentation is taking place with respect to whether business schools even agree about what their students need to know. At other leading business schools, there is a movement away from a required curriculum. It is as if a medical school said, "Some students don't want to take pathology and organic chemistry so they shouldn't have to take pathology and organic chemistry." I would ask, "What do the students need to know?"
The second challenge is about faculty. How do schools ensure that faculty continue to exert cultural authority in the classroom and are seen by their students as legitimate sources for information, knowledge, and directions to practice? If that is not addressed, business schools risk being seen as largely places where students come to develop elite social networks and acquire a credential that helps them access particular types of jobs. To make sure that faculty does not lose their legitimacy and authority in the classroom, it is important to ensure that they can speak to the students in a meaningful way about the work and practice of management, and that faculty see business as a positive force in society.
The third challenge is the hallmark of any profession: some kind of governance or guidance that the practitioners take to say that they will use their knowledge and the practice of their work to benefit others rather than engage in self-dealing or self-interest. A minimal step would be to have students take a Hippocratic Oath equivalent that would ensure on some level that they understand the enormous amounts of responsibility they are being given when they are charged with controlling and managing society's most precious resources.
Fourth, it is critical to restore a goal of professionalization in business schools and create some kind of evergreen MBA. The reality is that almost all the high professions require continuing education in order to ensure that their practitioners are up to date with the newest knowledge and techniques. Given the rapidity by which our business context is changing, the graduates of business schools should be able to access continuing education. If we really do believe that knowledge is important for effective practice, then it would seem that having some mechanism for connecting graduates to what is relevant would be very important.
Q: Many business schools have adopted a leadership mission. Is leadership a path for the future?
A: Potentially it could be, but it would require a couple of different developments. First of all, leadership right now in the major research-based universities is fragmented, and in many leading schools not considered a legitimate subject of study. Despite its frequent appearance in the mission statements of schools, it's not a subject that is seen as having deep analytical traction. To the extent there are faculty who study leadership, they are scattered throughout a variety of different schools at a university and throughout different departments. And so I think there would need to be an assessment of what we know about this subject, and doing so presumes leadership is legitimate to study.
Second, leadership could not be taught without addressing the question of "leadership to what end?" It's hard to mention leadership without invoking a question about values and the equivalence between a totalitarian leader and a leader from a democratic society. In our contemporary world, this issue about values and to what end leadership should be applied is, I think, a very difficult one. A professional school must address it. Think of the difference between a marine and a mercenary. They have the same technical skills except one person uses skills for advancing ends that are particularly valued by society, and the other uses skills to address narrow personal interests.
Leadership would require a serious conversation.
That said, I'm very optimistic that at some point these issues will be addressed. We are already seeing some schools reconsidering their point of arrival and experimenting with new approaches to MBA education. I think the challenge we face is that the world has changed very quickly for business schools. The imprint that gave rise to us, and the imprint around which we have become institutionalized, is no longer as aligned as it is once was to contemporary challenges.
We need to have a good assessment and understanding of these new challenges and changes, but ultimately align our internal structures—how we train and socialize faculty, how we select students, what it is that we teach them—with this environment, and at the same time overlay it with the notion that in this world there is a cry for effective leadership. Every day, in all of our institutions—political, economic, social—people are asking, "Where are the effective leaders?"
I think at a university we have a sacred responsibility to ensure that this cry is answered and met with the best students that we can produce, who are trained by faculty who know how to produce leaders.
Q: What do students want?
A: From a purely academic standpoint, it is positive that the kinds of students we now see in business schools have more academic horsepower than they've ever had in the 125-year history of university-based business education.
I believe that most of our students want their work to have meaning, and they want to find meaning in their work. The fact that too many of them believe that the way you go about your career is to learn, earn, and only later give back, is misguided. The heart of a profession is that it is in the course of doing one's work that one is actually doing good and fulfilling the duty that is demanded of professionals.
My worry—and this is not limited to business schools—is that we have created a context in which people want the status of a profession without any of the constraints of a profession. A profession is not only about the benefits that you claim. It's also about what you renounce.
I think one of the roles of a professional school in higher education is to make clear to the students not only the privileges they get but also the responsibilities that they have, and then to create the necessary governance systems to ensure that those responsibilities are fulfilled to the best of everyone's ability.
Q: In recent decades, business schools have accepted and indeed sought out more women and minorities. How has diversity affected business education?
A: The student body today, from a gender and ethnic perspective, is much more diverse. Moreover, business schools have taken more of a global character in their education than any other professional school.
If you want to be a lawyer you usually have to go to law school in the nation-state that you're educated in. If you want to be a doctor, while there's movement internationally, this profession tends to be seen as a national asset.
It's very interesting: The MBA has really become one of the first global degrees. The number of schools that give MBAs has proliferated dramatically all over the world. China and India are the fastest growing MBA markets. So it is a good time to be asking these questions.