Business Schools in Emerging Markets Can be World Leaders

Wilfried R. Vanhonacker is the Coca Cola chair in marketing and the former dean at the Suliman S. Olayan School of Business at the American University of Beirut.

Can indigenous business schools in emerging markets achieve international acclaim and recognition? If past performance can predict the future, I believe it is possible for bold academic institutions to do so, consistently. Based on my personal experience, this commentary spells out what it would take to bring a home-grown business school into the major leagues of higher education ranking and reputation.

In the mid eighties, I got involved with a development aid project in China that was financed by the European Union. It was a small MBA-type program, two-years long, and it admitted students every other year. In terms of management needs in China, it was a nano-sized drop in the ocean. Recognizing the tremendous need for trained management talent that would come with China’s ascension as a new economic power, it did not take long for me to start thinking about how to turn this small base into a real business school.

Unfortunately, many dreams just remain that: dreams. But this one was not: by 1993, and against all odds, we had secured government approval for an independent business school, the China Europe International Business School, in Shanghai. Fifteen years later, that school’s core MBA program was ranked in the top 20 in the world: One of the first non-European, non-North American schools to emerge and compete on a global scale. With a vision, unwavering conviction, hard work and some luck, anything is possible. Anywhere.

Building on my achievements in China, a team of private entrepreneurs invited me to replicate the project in Russia, but with the added request that it but with the added request that it be a school that would take management education into the 21st century. I spent five years building the foundations of what came to be regarded as Russia’s leading business school, a school like no other. With the BRICs (Brazil, Russia, India and China) and other emerging economies coming to the forefront in the world, we set out to create a school that would develop entrepreneurial leaders for the challenging environments these economies have. Being in Russia gave us legitimacy to know what those environments were like. We felt that the traditional business schools continued to focus more on developing risk-averse corporate management talent and not the talent needed to lead in uncertain and unstructured environments with scarce human resources.

We innovated in two key areas: pedagogy and faculty management. On pedagogy, we made a major commitment to experiential learning. Not easy to implement as the core of learning, but with its potential to hone market-relevant competencies and its attractiveness to students (as an alternative to passive, traditional classroom teaching), we had an incentive to master experiential learning. We created a very novel MBA program where the students only spend four months of the program in class in Moscow and the other fourteen months doing five projects on three continents.

Apart from the pedagogical philosophy, we also changed the social learning environment. The admissions for a typical MBA are based on the individual, but we set out to maximize variance in the class, engineering a richer learning environment through heterogeneity of background. The logic was that you do not really learn that much from people who are like you. The variance challenged faculty members. However, we found novel ways to integrate the students in the learning process by making them responsible to educate students less capable than themselves. The program became a learning partnership and turned out to be a way to hone the students’ mentoring skills, which are necessary for leaders in emerging economies with scarce human talent. As often is the case, a challenge became an opportunity.

As we considered how to manage the faculty, we tackled the perennial problem of teaching versus research. In traditional business schools, academic faculty members are expected to do both. But they are essentially different tasks using different competencies. Requiring all faculty members to do both is like asking an R&D manager to sell and a salesman to do R&D. Just as no leading company can be built with jacks-of-all-trade-and -expert-at-none, no leading business school can be built with all faculty doing all things. We devised a real dual-track system where research faculty only did research (in self-financed knowledge centers) and teaching faculty only taught; both were managed differently. An environment was created where both tracks were respected and appreciated.

Fast forward to 2012 and the Arab world, a world severely under-serviced in education with businesses operating in uncertain and evolving environments. Although the region has one of the largest young populations in the world, a handful of decent business schools do not provide enough of an educational platform to fuel the aspirations of Arab youth. Like their cohorts in other parts of the world, they are entitled to dream big. They are also entitled to receive an education that gives them the basis to realize their dreams. The region is chronically short of visionary leaders and because of it remains a perpetual hostage of its own history. So the region’s future is very much in the hands of this next young and vibrant generation.

After China and Russia, the MENA region loomed very large on my radar screen for introducing innovative business-school models. It was a culture and a world totally new to me but also another opportunity to learn. How can one instill values of learning in others without an open mind and a genuine propensity for continuous and life-long learning?

And after having built a couple of high-profile independent business schools from scratch, I was curious about what it would be like to work within the academic confines of a traditional university. That is how I found my way to the Olayan School of Business at the American University of Beirut, with a mandate to get the full potential out of this school.

But a specific and captivating strategy would be needed with an ambition that would take OSB into the orbit of leading business schools, a position it can and rightly deserves. How to get there?

One intuitive insight we get very early in life, but seem to forget as we grow up, is that the best way to win a game is not necessarily to be very good at it but to set the rules. When you observe kids playing their own games, you will see that they make up the rules as they go. There is some unrecognized wisdom in this: to get a school to the top, one has to change the rules. Even at the American University of Beirut, one of the leading liberal arts universities in the region, one is not going to beat Harvard or INSEAD at what they are good at. We had to take a different route, but not too different. Unless your strategy connects with some critical points in the traditional academic game, nobody will take you seriously. You want to be seen as a maverick, not a cowboy.

This requires clever innovation in content and in process. Both are necessary to get noticed, captivate the industry, and change the criteria by which the quality of schools is assessed. Changing the criteria is the fastest way to the top. And that is also where the fallacy of accreditation as an objective lies. Many schools think that by achieving accreditation, they join the elite; of course you do but at the bottom. This does not exactly reflect a sense of ambition.

The starting point is to come up with an inspiring and aspiring vision. This gives a sense of direction and hope; it also gives a preview on alignment challenges in the organization. Change management requires decisive leadership; it is not a beauty contest. Before implementing changes, one has to have a sense of where the troops are. As soon as a vision is put forward, one typically sees three segments emerging. A first group consists of those who are excited and energized by the vision and are ready to run, often faster than you want them to. A second group are those who say “great and I support it but leave me alone to do my own thing.” Because of the nature and reward structure of academics, this is often a sizable group. And the third group are those who are against the vision because they are personally threatened by any change in the status quo as they typically have something to lose. For any change-management leader, you have to quickly figure out where your people stand and either get them on board, neutralize or marginalize them, or get rid of them. And this has to be done rather quickly as you cannot fall into the trap of organizing the opposition.

You also have to split the management structure in the school. On one hand, programs keep running and it is business as usual. Some changes can be made gradually to get the existing programs on track and slowly align them with the vision. On the other hand, some resources have to be withdrawn from the day-to-day operations to start working on the process of developing the new strategy. This is where the leadership is needed, so the management of the existing operation can be delegated to trusted aides. All this is pretty routine but as a newcomer in the organization, it is crucial to do all this in a transparent manner. The objective is to focus all energy on developing and putting the strategy in place and getting a positive momentum going that is all inclusive; no one will benefit immediately from the new direction but it is crucial that all feel and see they eventually will.

The vision has to inspire all stakeholders. It took some time to explore opportunities and to solicit input but we at OSB came up with a great vision, our 25/25 vision: be in the top 25 business schools in the world by 2025.

Ambitious? Sure. Doable? Absolutely. But innovations were needed in content and process that would be globally recognized as relevant and clever, and that would put our business school on the global map as a credible player. And we had some clever aces up our sleeves. In terms of pedagogy (and especially the use of technology to redesign pedagogy), faculty management, and business model, we were going to rewrite the rules. In terms of content, we set out to create a distinctive identity around three areas with local relevance but also where we could make a global contribution: family business, entrepreneurship and innovation, and responsible leadership.

What was particularly appealing was that we would do this tapping into resources at the university beyond the business school. In fact, many of the initiatives were conceived to be truly cross-disciplinary and as such would fully utilize the business school’s identity as embedded in another institution.

One cross-disciplinary initiative was around sustainable-heritage management. The idea was to study business models that would treat heritage sites (and the communities around them) as self-sustaining ecosystems and to groom the professional talent needed to develop and manage these sites. This effort needed input from history, archaeology, community development, social entrepreneurship, management, and technology. On the latter, we looked at the latest 3D hologram technology to give visitors a visual experience of how the ruins fit into the reality back in time. Given the region’s richness in historical heritage, we saw this as a way to make a responsible contribution with potentially a global impact. With cash-strapped governments around the world cutting budgets to make ends meet, heritage sites everywhere have seen their support dwindling.

To create a positive momentum for change, it was important to involve faculty members as much as possible. Task forces were created around various programs that were part of the 25/25 vision so that each and every one felt they were contributing to the realization of the vision. The active engagement and discussion also enabled the development of a new culture, the values of which would be the moral compass of the new school we were building. In the end, the cultural identity and cohesiveness are the main ingredients that would make or break any organization when put under competitive or any other stress.

The 25/25 vision was in hindsight like a rock being dropped into a pond of academic tranquility. The ideas and approach captured in the vision were disruptive and the path of change needed to achieve the vision would reverberate across the university. Progress ultimately comes from seeing and understanding the opportunities and from looking the challenges that come with them straight in the eyes. But that is a tall order for any institute of higher learning steeped in tradition that instinctively seeks to preserve the status quo.

Taking an embedded business school on a trajectory like the 25/25 vision requires an institutional setting and culture that is committed, willing, and able to change and to learn from that process. For independent business schools, an entrepreneurial environment that enables and supports a true blue-ocean approach to global academic leadership is needed. While transplant models of globally-reputable institutions play a role in the region, these ultimately benefit the home institution more than the region. Indigenous innovation grounded in, and inspired by, local specificities with global relevance is one possible trajectory to put the Arab world on the map as an educational leader.

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