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Robert Dolan on Business Schools and The Financial Crisis

Question: Do business schools bear responsibility for the financial crisis?

Robert Dolan: Well, we’re always trying to look at the world and do better and improve. So certainly, for my point of view, I look at the economic crisis, which is unfolding, and then say, okay, well what’s the lesson for us in this. I honestly don’t subscribe to the view that the crisis is something which should be laid on the doorstep of MBA programs because we’ve trained a lot of the people who were leaders us of these companies. 

But I do think there are a couple of things that I take away from it. One is around our educational programs. But importantly, the second thing is around our research programs and, you know, I think, if you look at what’s happened, we, in the academic world, have done a great job of, now, reconstructing, well, what was it that got us to this point. Obviously, that is of some value but a far greater value is if you’re kind of get out ahead of the curve. So if you try to think about, you know, what academia, what is academia’s responsibility or job in this, I think it’s quite significant. Because if you just arbitrarily say, look at the top 25 business schools in the country and on average, they’re going to have about 20 finance faculty members.  And so, right there, you have 500 academic finance folks whose job is to observe and think.  You know, that’s the, you know, as a research institution, our faculty spends more of their time doing research than they do teaching. 

So in some sense, I think academia really has the responsibility. We are, in some sense, the largest think tank going. We’re not biased to any particular point of view. And so, for me, the question is how can we sort of adapt and get ourselves more into the world of business and having our research impact day-to-day business activity. And also, I think, one lesson I take from the recent event is that we probably need a tighter coordination between schools of business and schools of public policy. That would be another good thing for us to be doing. So, I think, for us in academia to try to move a little bit more in the direction of the world of practice. And also finding ways to adapt our communication style so it’s much more timely than is typical in our world of referee journal articles to think about, gee, we really want to have impact on the world of practice and this is the way we should be doing it. 

You know, the second part of it, the second lesson I take from the current economic crisis is if there is one dimension in which I think the business model or the educational model of most MBA programs in particular could use some variation, it’s really in terms of the contact that we have with our students. And in some sense, a typical MBA program now, the average age is going to be about 26 years old. So we have you come as a 26 year old. And I think of it this way that if we said to you, as a student, look, here is the intellectual buffet of the Ross School of Business, you can eat from this buffet for 20 months anytime in the rest of your life. And you choose how much you want to consume when. If the student said to you, well, I think I’ll consume for the next nine months and then I’ll go do a summer internship for three months and then I’ll go, I’ll consume for another nine months and that will be the end of our formal relationship for the rest of my life, rest of my professional life.  We’d probably say, well, gee, that student wasn’t as smart as we thought they were.  And yet, that is sort of what we impose on people. 

So as much as we stay connected through reunion activities, I think what we really have to do is say, we educate, if you look at people we educated in 1980, so we educated them in 1980 when they’re in their mid-20s and that would, now, put them at the point when they are the CEOs of the major corporations and in positions of leadership. If you look back to 1980, what do you see? 

Well, the three largest employers in the United States were AT&T, General Motors, and Ford.  The three largest employers today are Wal-Mart, UPS, and McDonald’s.  So it’s a different world from when you had your educational experience with us to what it is today. 

And secondly, I think, you just look what’s happened with information and communication technology, we were not talking much about the influence of the Internet on business activity in 1980. So I think this idea of us, really forming a lifelong relationship with our students, where we’re not just educating you when you’re 26, 27 years old and then saying, well, you know, I hope you read the Economist or tune in Big Think every once in a while to see what’s going on, but to really think that we’re going to have a lifelong relationship with you. I think that goes back to my earlier point about really looking at stimulation for research. 

If we, everyday, had to be saying to ourselves, okay, our alumni are expecting us to provide insight into what’s going on today, I think we really stimulate a great set of research activities. So I think those would be my main take away points that the research model that we have, we got to speed it up a little bit, you know, if we’re going to have influence on the front end rather than just be explaining on the back end. And secondly, we really should be taking this notion of lifelong learning as a key part of our responsibilities to our students as an academic institution. 

Recorded on: April 13, 2009

Having educated today’s Wall Street, business schools have a lesson to learn.

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