Are we teaching MBAs what they need to know?
27 May 2015
Despite some recent criticisms, the MBA is still seen as a highly influential management qualification. In the US alone, over 100,000 new MBA students graduate every year. Graduates from the top schools do go on to be prominent in industry as executives, consultants and financiers. We believe, however, that despite several initiatives to update and change the MBA programme – particularly since the financial crisis – the topic of sustainability, by which we mean managing the social and environmental and economic impacts of an organisation – is still at the margin of many schools' work, despite its increasing centrality to business.
But just why do we need more focus on sustainability at MBA level? The answer’s in the long game.
While there is increasing diversity – and particularly growth in the international participation, the profile of a typical MBA at a top school taking the 'classic' full-time programme is quite clear. They are mostly men (around 66 per cent), 28 years old with about five years' experience . This means that they do have long careers ahead of them.
Today’s 28-year-olds were born in 1987, meaning we can expect our average graduate to work until about 2052, and to live for a further 15 years or so. By the time a typical member of this MBA cohort retires, they will be living on a planet which will be very different indeed.
There is likely to be a population of around 9.6 billion, mostly living in major cities, with much of the growth coming from this cohort's improved life-expectancy. The demands of this very large population, and growing middle class, will place significant pressure on resources. Water, food, and energy will all be seen through a different lens – and managing these precious inputs will be important. While other commodities, such as metals, will be treated very in a different way, with successful companies retaining ownership of these scarce inputs through circular economic models.
There will also be substantial rebalancing in the global economy as the 'centre of gravity' shifts South and East. There’s a real expectation that a typical MBA career will take members of this cohort to other parts of the world, and they will certainly be expected to have a truly global perspective. The policy decisions made in 2015 about climate change and other goals – for example the UN Sustainable Development Goals – will be playing out during this cohort's careers. They will be making decisions under a set of external conditions which are entirely unfamiliar to today's managers.
Technologies will also change dramatically – replacing numerous knowledge jobs as computing power becomes more impressive; creating more resource-efficient materials and shaping innovations which can help mitigate and adapt to the effects of climate change and resource scarcity.
As the challenges this cohort faces have no precedent, the retrospective, 'case study' approach to learning on an MBA will not necessarily help solve new problems. MBA students will have to learn fundamental principles, and new analytical methods to make complex decisions which have not been faced before.
So the case for change is clear. And in fact, some of the 'no regrets' moves are clear. There are established concepts, such as ESG reporting, responsible investing or natural capital valuation which fit quite easily into the finance and accounting curriculum on an MBA programme.
We also see increasing demands by accreditation bodies to introduce these concepts to teaching. EQUIS (the European Quality Improvement System), AMBA (the Association of MBAs) and AACSB (the Association to advance Collegiate Schools of Business) have now built a requirement that business schools include sustainability into their syllabus.
What’s less clear is the plan of action. There are inevitable barriers to institutional change, ranging from the lack of availability of relevant research or teaching materials to a lack of confidence by faculty members.
Today, we are working with colleagues from Accounting for Sustainability to convene a group of senior business school leaders, including Deans, Professors of Finance and Accounting, editors of major journals, and accreditation bodies to start to identify the steps business schools could take to make sure that we are better serving the leaders of the future. We believe that business schools have a vital role in providing both the research and the teaching in order for this generation to become the managers the world will need in the future.
 We looked at the 'class of 2016' for ten of the top American and European schools.