Societal responsibilities of the Business School—the role of executive education

What challenges might business schools, in general, and executive education, in particular, clarify or resolve for society?

There are several, but at least four business and management challenges would seem to be important enough to suggest that business schools have a responsibility to respond to the challenges. One effective way for business schools to respond to these challenges would be by designing and delivering executive programs that address the challenges. In fact, business schools have more than simply an opportunity to address these challenges, society should demand that they do. Each of these challenges has underpinnings that transcend business and management issues, but there is no question that business and management relate to the specification and potential resolution of each challenge. Although there is some activity among business schools in responding to these challenges, there is much more that business schools should consider doing. Executive programs tailored to the challenges would be one important way for business schools to deliver value to society.

Challenge 1: health care.

It is curious that as science has advanced and as longevity in the developed world has increased, the management of health care service delivery has struggled to keep pace. Few systems of health care delivery are not maligned, as the cost of health care delivery has skyrocketed.

In the U.S., the trends are particularly worrisome, as the health care sector is estimated to reach 18% of U.S. GDP by the end of the decade. Apart from wondering what this means in terms of an economy that produced more than $12 trillion in goods and services in 2006, there are fundamental questions at the level of the health care services delivery enterprise. The conventional enterprise is a hospital or clinic that was organized in response to societal needs of more than a hundred years ago when average longevity was about 70% of what it is today, and care of acute health issues was deemed more important than care of chronic health issues.

In simple terms, many of the problems that society experiences now with health care delivery stem from a poorly organized set of health care service delivery enterprises. There are at least three categories of concerns that all relate to management and the business of the health care service delivery enterprise:

1. competition. The entrepreneurial initiatives of physicians groups, especially those that establish specialized clinics, commonly compete with the conventional hospital with which many of the very same physicians may affiliate. Competition is neither good nor bad, per se, but most importantly, its emergence as a factor in health care service delivery should signal that the system monopolized by conventional hospitals is not stable and, most likely, not sustainable at a low cost to society. Business schools can assist in the evaluation of competition and in the development of strategies for growth or survival in competitive environments.
2. physician relations. A long-standing challenge for managing conventional hospitals has been to align or accommodate the interests of the clinicians with those who administer the enterprise. Simply put, the hospital enterprise cannot operate in a manner blind to its reason for existence, namely its clinical mission. Yet the hospital enterprise cannot operate blind to its need to support itself either. It is understandable that clinician’s requirements and incentives can collide with those of the administration of the enterprise. Such collisions among constituencies commonly occur in any organization. These are challenges that business schools are accustomed to addressing, and an opportunity for executive education directed to combined audiences of health care executives and clinicians.
3. technology. Perhaps the most troubling issue facing health care delivery enterprises is technology choice. How to frame the choice is often as difficult as making the choice. Whether a hospital should acquire a customer relationship management system, an electronic medical records platform, or a CAT scanner are all technology decisions with different implications for the health care enterprise as it seeks to execute its mission. Business schools have accumulated significant knowledge in the management of technology and innovation, and the opportunity to apply the knowledge to health care enterprises through executive education should be exploited.

Challenge 2: energy and the environment

Al Gore has eloquently articulated the consequences of global warming, and he has raised social awareness of the problem. More trenchantly, Lord Stern asserts that the current condition of the environment juxtaposed with energy choices is strong evidence of market failure. This should trouble faculty in business schools, as the received model for designing business school curricula and supporting research of faculty in almost all disciplines of business is market liberalism. That is, business schools assume that the societal model to be applied in almost all cases is one that rests on democratic institutions and markets that are efficient and transparent.

Framing the energy choices of all players in society will require some appreciation of the collective choice facing society. So, in this case, business schools face a different opportunity, namely, to explore the limits of the fundamental model of the organization of society and the consequences of its application for choice of energy systems and their component parts. Executive education would be an avenue for engaging decision-makers and influencers in extended, structured dialogue of what energy choice and the environmental consequences mean for business as we have known it in the modern age. Technology choice in this context must be viewed in systemic terms.

Challenge 3: the converged space of communications and computing

“Convergence” became a descriptor of the technological collision of computing and communications technologies and industries, especially during the 1980s and 1990s. Policies imposing market liberalization in the U.S. and in Europe re-defined industry boundaries, and new entities emerged as consolidated enterprises (Time Warner/AOL, for example) and newly privatized entities (Deutsche Telekom, for example). Rather than merely re-setting industry and market structures, the continued advanced of digital technologies, relaxed regulation, and globalization have spawned new alignments, new product concepts, and new uses of communication and computing utilities. Time faces a competitor in Yahoo, Google competes with Microsoft, Skype almost single-handedly induces telecommunications incumbents to adopt and deploy internet telephony, and Apple launches iPod ostensibly as a mobile music medium that could as well become a medium for movies and news. The changes have been momentous, and conventional private interests compete with new private interests not only in the marketplace but also in the halls of government to influence the rules of the game.

Business schools would be remiss to stand on the periphery of these significant changes. Confusion reigns in the marketplace, in industry, and in government. This means that there is an opportunity for business schools to provide structure and insight to executives and policy makers alike as they contend with the need to make rational choices in what otherwise appears to be an irrational environment.

Challenge 4: financial stability

We are living through a moment of remarkable re-distribution and generation of wealth. Asia has emerged, and it is likely to continue to expand in influence as the century unfolds. As one indicator of this development, free capital reserves are now concentrated in Asia with China holding more than $1 trillion in U.S. instruments. Perhaps the most pressing issue now is: how can this be managed so as to assure stability of the new financial order? Indeed, this is a great opportunity and a great responsibility for business schools. Learning to take reasoned risks is the challenge. The consequences of not educating those who manage these reserves to take appropriate risks would be meted out as financial instability around the world. Finance theory, risk analysis, and risk management are staples of any business school. To respond to the current need, business schools should rise to the opportunity to deliver executive programs for those who manage these reserves in the Asian region as well as those who must know how these reserves are managed in order to assure financial stability of their enterprises.

Industry demands that its executives be educated. There are occasions when industry will not find it expedient to release executives for extended periods of study because enterprises need them at the helm. The demand is real, the constraints are real. Business schools need to be adaptive to both the demands and the constraints in designing and delivering executive education.

Additionally, business school must distinguish between basic skill-building courses and courses that expand the executive’s thinking in the context of the challenges that businesses now face. Both kinds of programs should feature in the portfolio of the business school’s executive education portfolio. The former conforms to a rather traditional didactic program and the latter conforms more to seminar format enabling both students and instructors to tackle problems by learning from each other.

In either case, the fundamental benefit of executive education for the strategy of any business school is that it secures the relevancy of the business school enterprise. Society will not be a kind judge of business schools if they cannot demonstrate their ability to be relevant. I have suggested four contemporary societal challenges that business schools are particularly well-positioned to address through executive education. Steps business schools might take to respond to these challenges would be steps taken to assure relevance, thus value, to society.