Richard G. Milter
and
John E. Stinson
Ohio University
I woke up this morning to find that the world had changed. Almost without my realizing it, we had moved from the industrial age into the information age. The dominant technology had changed from the machine to the computer; the primary output from goods to information; the strategic resource from capital to knowledge; the primary energy source from fossil fuel to the mind.
As I looked around at the organizations we work in, and the way we manage those organizations, I also see changes. Global perspective is no longer a buzz word; it is a reality. No longer are we limited by the need to travel physically; we travel electronically. We routinely communicate and collaborate with individuals around the globe on a real-time basis.
Fewer of our organizations emphasize the traditional hierarchies and controls typical of the industrial age. Increasingly, organizations are typified as fluid networks. We find ourselves as members of a temporary work team, drawn together to accomplish a specific purpose and, as that problem/opportunity is handled, reforming with another set of collaborators to manage the next opportunity. Concurrent engineering has become not just a way to introduce products, it has become a way to organize and manage organizations.
Our leaders also have changed roles. Rather than supervisors, directors, and controllers, they are enablers and energizers. They communicate incessantly, energizing the organization with a clear vision of the future -- a vision developed not independently but collaboratively, drawing upon the best of minds from the broadest of perspectives. They don't try to motivate. Rather they redefine organizations to remove suppressive constraints to enable members to release their inherent motivation.
As a long-time educator, my attention is drawn to our business schools. How are they educating these leaders? They seem to combine elements of the old and the new.
Changes in the physical setting are most striking. No longer do we see rows of desks, lined up to listen to the authority in the front. Rather, we see flexible spaces cluttered with electronic technology, where students and faculty meet to exchange ideas, to collaborate, to learn from each other.
The collaboration is not restricted to business disciplines. Students, and business oriented faculty, discuss the potential impact of the bio-technological revolution with the bio-chemist. They attempt to make sense of the changing political face of Eastern Europe with the political scientist. From the anthropologist, they gain insights into the impact of culture on individual behavior. Their education is strongly multi-disciplinary, integrating understanding from a breadth of disciplinary perspectives. While there is acquisition of knowledge, the emphasis is on critical thinking and reasoning skills.
The old concept of apprenticeship has reemerged. Students learn by doing - doing under a set of tutors that constantly help them understand the "whys" as well as the "hows" and generalize their learning to other contexts -- somewhat reflective of the educational system that earned Oxford and Cambridge such high regard. But, students are no longer limited to interaction with local faculty. They listen to the most inspirational lecturers at a time most useful to their learning by accessing the HyperMedia available on their electronic learning system. In their video-conferences they pick the brains of the world's leading thinkers. They consult with the global authorities as they work through their projects.
As students work on the learning projects they continually form and reform collaborative learning teams, and frequently the teams include members from around the globe. They "travel" constantly, interacting with and developing an understanding of cultures throughout the world, and they do so instantaneously and with little cost. Their learning community is truly a global community, not restricted by geography, accessed through electronic technology.
Have I really been asleep like some modern-day Rip Van Winkle? Or is the world we will face in the 21st Century already upon us?
INTRODUCTION
In 1969 Peter Drucker wrote that the world was entering into an "Age of Discontinuity." Replacing the normal incremental and evolutionary change, he saw a period of significant discontinuity -- a period in which the future is not a simple extrapolation of the present, but a place with different players. Drucker saw:
As always, Drucker was remarkably perceptive of the future. If he erred, it was only in timing. There is little doubt that we are now living during Drucker's "Age of Discontinuity."
What impact does all of this have on today's business? An example. The neighborhood pharmacy can no longer worry only about the pharmacy on the opposite corner. There's Wal-Mart, with discount prices. Kroger, with convenience and low prices. Deep discounter's like Drug Emporium provide even more price pressure. And mail order cost-containment firms like Medco pressure pharmaceutical companies into the lowest possible prices and pass those savings along to their regular member-customers. Last, and most important, the neighborhood pharmacy's customers know the alternatives available to them!
Like the neighborhood pharmacy, all modern companies are faced with a new intensity of competition - competition that is global in its reach, not simply local, national, or international. This competition has been facilitated by developments in transportation technology and information technology. Taken together, these enable instantaneous communication and rapid delivery of goods and services on a world-wide basis.
Further, companies can no longer rest on their competitive advantages. Competitors are constantly developing and offering customers new products and new services. Customer wants and needs are constantly changing. There are new technologies that are being adapted to new processes and improvements in product and services. Change is everywhere! And it isn't evolutionary change - it's tumultuous change!
This new age of competition, which has been characterized elsewhere as hypercompetition, and the continuing tumultuous change, which Peter Vaill (1989) has characterized as permanent whitewater, present major challenges to today's business community.
In this paper, we will speculate on the impact of these conditions on the business community and subsequently on the educational community. Specifically, we see a chain of reactions. The new environmental characteristics require business to develop new capabilities. These new capabilities require change in organization structure and functioning, a structure enabled by information technology and requiring people with broader and deeper capabilities. To prepare people to function effectively in these changed organizations, educational institutions, particularly business schools, must change both curriculum and pedagogy. In the following pages, we will describe our perceptions of these changes and propose the requisite response for business schools to adequately meet their mission of preparing students to function effectively in the global business community.
REQUIRED COMPETITIVE CAPABILITIES
Hypercompetition introduces a whole new set of competitive conditions. No longer is it possible for a company to develop a competitive advantage that will allow them to compete comfortably in an industry segment over a period of time. Competitive pressures are too strong and competitive conditions are changing too rapidly. A new set of competitive capabilities is required. While not identical for every organization, most businesses must have the following capabilities to compete effectively.
An intimate understanding of the customer. This is more than Tom Peters' "close to the customer" (Peters & Waterman, 1982). Stalk calls it acuity (Stalk, Evans, & Shulman, 1992). It is understanding customer needs (not just wants), perhaps better than the customer does. It is designing and delivering products and services to meet unique customer needs. It is demonstrating how the product or service adds value to the customer.
Customers are smart. No longer is it possible to produce a product or service and "sell" it to the customer. They have been educated through the wide availability of information. They know quality and know that quality is possible. They know service and expect quick response. They know value and expect better prices. They know who the competitors are. They understand the options open to them. Companies can no longer depend on blind customer loyalty. Customers will make informed buying decisions.
Quality. World-class quality is no longer be a basis for differentiation in competition. World-class quality will be a requisite attribute to enter the competitive environment. Companies who cannot consistently meet or exceed customer expectations will not even be considered. Further, poor quality adds costs and reduces value to the customer, whether the costs result from rework, delay, or inconvenience. Customers simply will not tolerate these added costs (Stalk, Evans, & Shulman, 1992).
Speed. We must not only meet customer needs with world-class products and services, we must do it instantaneously. Stanley Davis (1987) talks of zero wait time. Whether it is because of the exposures we received through television or the pampering we received as children, the expectation of our time is instant gratification. When you decide to buy a new Mercedes, you don't want to wait three months for delivery; you want it now. When the insurance agent puts in an application for a customer, she doesn't want to wait two months for the policy to be issued; she wants it now. Customers expect delivery of products and services just-in-time, exactly when they want them.
Cost. Customers expect all of these - an intimate understanding of needs, speed in responding to those needs, and world-class quality products and services - and they expect all of this at minimum cost. This is not to say that people will not pay for value. They will. But customers are becoming increasingly well educated. They understand competitive conditions and will not overpay for a product or service (Rice, 1992).
Innovation. Innovation is perhaps the core capability. To continually meet customer (changing) needs, to offer the best products and services at the lowest costs most rapidly, companies must continually innovate. Continuous development of new products and services is necessary to meet changing customer demands. Continuous improvement or, at times, reengineering of processes is necessary to improve speed and quality while lowering costs. As Michael Porter has noted, innovation is the way companies obtain a competitive advantage (Porter, 1990). Whether it is innovation that results in a new product design, a new production process, a new marketing approach, or a new way of conducting training -- innovation is key to long-term success.
REQUIRED ORGANIZATIONAL CHARACTERISTICS
As Welch (1990) noted, it is difficult, if not impossible, to meet these competitive requirements with a traditional bureaucratic form of organization. The traditional bureaucratic organization is simply too slow at responding, too internally oriented, and too costly (Handy, 1992). It focuses on control at a time when action is required. It is designed to provide stability, at a time when innovation is necessary. With all the management layers, all the staff positions, all the checkers, and all the reporters, there is simply too much overhead cost to meet the demands of value-oriented competition.
What will replace the bureaucratic form of organization? There is not yet complete agreement among organizational scholars. Handy (1992) talks of the Shamrock organization and the New Federalism. Quinn (1992) talks of the spider's web. Bennis (1993) refers to the executive constellation. Welch (1990) calls for the boundaryless organization. Drucker (1988) called it simply the new organization. While the characteristics of the "new" organization have not been well defined, there is an evolving consensus in the literature that certain characteristics will be necessary.
Decisions made close to the point of action. People who work regularly with the customer know customer needs better, and are better equipped to make decisions regarding the customer. Likewise, people who are hands-on with the operational processes best understand those processes and, with appropriate information, can make better quality decisions. Further, passing decisions up-the-line and getting orders back down-the-line simply takes too long; it is not consistent with instantaneous response.
Decisions made collaboratively. While decisions are made close to the point of action, they are seldom made completely independently. Typically the decision maker receives information from and consults with others in the decision-making process, functioning in a network configuration (Devanna & Tichy, 1990). The drawback? This could consume too much time. One challenge facing the organization, therefore, is to enable this collaboration on a real-time basis (see below).
Organizations are flatter. The move toward flatter organizations will be intensified. Going through levels of hierarchy simply takes too long. In addition, all of the levels of "checkers, reporters, and approvers" add cost but seldom add commensurate value (Deming, 1986).
Organized around processes. The customer is the beginning and the end, with all organization processes tied to adding value to the ultimate customer. The traditional functional structure, with its boundaries and barriers, takes significantly longer to function. In addition, because of the numerous boundary-spanning roles and activities, it is a more bureaucratic and more costly structure. Finally, it frequently results in poorer quality because of sub-optimal decisions.
Holistic perspective. This is perhaps the most defining structural characteristic of the organization of the future. Organization members are not functionally oriented, they are organizationally oriented. True, they must perform functions within processes, but they perform those functions in the context of the whole (vision, mission, goals, and strategy). Without this holistic orientation, organization members will not have an adequate basis for making quality decisions and responding to customer (internal as well as external) needs.
ORGANIZATION ENABLERS
Organizations with the characteristics listed above would not have been possible even 10-15 years ago. Rectifying the incongruent requirements of fast quality decisions, collaboration, and reduced layers of management required an information revolution. Further, and this remains a significant problem for many organizations today, it requires people with a different type of preparation. These, the information superstructure and appropriately educated people, we have identified as enablers.
Information superstructure. Organization members need the information necessary to make decisions and perform functions, and they need it instantaneously. Packaged reports provide information too slowly and frequently provide inadequate or wrong information. Organization members need an information system that allows them to inquire and obtain the specific information they need just when it is needed (Davis, 1987).
Further, the information system should support real-time collaboration among organization members and with customers and suppliers. As noted above, it will frequently be necessary to draw the resources and expertise of a diverse group of people together to make a decision. Physical meetings take too much time to arrange and implement, particularly if individuals are separated by distance. Thus it is important to enable this collaboration electronically, saving both time and money.
Education. Organization members need more than just the typical functional expertise to perform effectively. As noted above, they need an understanding of the whole (vision, mission, goals, and strategy) and their place in the organizational processes. They need to be able to accept responsibilities and function independently. They need to be able to function effectively as a member of a collaborative work team. Obtaining this understanding is not just a process of providing information; organization members need to be educated.
It is to this process of education we now turn. What are the required capabilities of people? How can educational institutions most effectively help them develop those capabilities?
PREPARING PEOPLE FOR ORGANIZATIONS OF THE FUTURE
We in educational institutions are educating the people who will function in, and be the leaders of, the organizations of the future. Our educational processes should, therefore, be preparing them to function in that type of organization.
We have recently seen some discussion of the need for change in management and business education and some significant experimentation. Much of this discussion puts management education in a reactionary mode, reacting to criticisms from the business community and the business press. Such reactionary orientation typically leads to limited change and, frequently, more change in form than in substance.
It is likely, however, that the change in our educational system needs to be as radical as the change in organizations away from bureaucratic practices. It is likely that we need to follow Michael Hammer's advice and resist the temptation to "pave over cowpaths" and instead take measures to "re-engineer" business education (Hammer, 1990).
Such a pro-active change starts with a clear focus on the customer. What do our students need to know? What do they need to know how to do? What types of outcomes should students take from the learning processes? Where is traditional education lacking? These are the types of questions we should address and debate broadly as we change education.
What are the desired outcomes? If we examine the organizational characteristics noted above, they suggest people need certain capabilities. Among these are the following:
We do not propose that this list is definitive. If we accept even a significant portion of the list, however, it does suggest that traditional educational pedagogy will not produce the desired outcomes.
Where is traditional education lacking? Traditional business education is oriented toward providing a strong functional orientation through a functional major. The "integration" of understanding of the functions is typically left to a single "policy" course at the end of the academic program.
Traditional education is oriented more toward the development of knowledge than toward the use of knowledge. While some application is encouraged through the use of case studies and other exercises, it is limited. Further, case studies at the undergraduate level are frequently used simply for illustration purposes rather than to develop critical thinking. They are short incidents included at the end of a chapter in a textbook and require or allow little analysis.
Even more complex cases, such as the typical Harvard case, limit the amount of reasoning development. While useful in developing problem-solving skills, they do little to develop skills in problem finding. The problem is pre-framed and information is limited by the case writer. Students are confronting a semi-structured problem rather than the ill-structured problem typical of business practice. In addition, students are generally discouraged from seeking information beyond that provided in the case. Thus, students do not develop the skill of unrestricted inquiry they will need to function effectively in their business careers (Harris & Stinson, 1992).
Traditional education is teacher-centered rather than student-centered. The faculty member makes the critical decisions of what to study and how it will be approached. This encourages dependence and passivity rather than the type of independence and proactivity needed to function in an organization of the future.
Likewise, there is limited emphasis on behavioral skill and personal characteristics. While communication has received significant attention in recent years, it is most often addressed by adding an independent course in writing or presentations, rather than emphasizing the development of these skills in the context in which they may be used. There are also an increasing number of schools concentrating on behavioral skill development. But, this is also generally isolated into a bounded course rather than being an integral part of the education process.
Finally, few schools have available and utilize the type of information technology that will be characteristic of organizations of the future. To the extent that schools emphasize technology, they tend to use the computer as merely a computational device. This is not related to the information technology where microprocessors and electronic networks provide access to information and collaborative processing instantaneously.
GUIDELINES FOR REINVENTING EDUCATION
If these are the desired learning outcomes, how do we change the educational processes to accomplish the outcomes? There is no simple solution. Certainly, we are going to have to experiment broadly and share the result of that experimentation. We would suggest, however, that the following are desirable characteristics of a radically reformed educational system:
CONSTRAINTS TO CHANGING
While it is interesting and straightforward to discuss changes in management education, implementation is much more complex. There are a number of constraints in the present system which act as restraining forces in any change effort. Among the principle challenges are the following.
Faculty typically are discipline based. The change to a more holistic perspective will require significant reorientation. The marketing professor who takes delight in pushing the boundaries of "pure" research in marketing, whose primary reference group is composed of other researchers who are pushing the boundaries of "pure" research, may have little interest in teaching business. The boundaries between disciplines may be difficult walls to bring down.
Likewise, faculty typically use an objectivist pedagogy. Lecture/discussion has been the dominant teaching approach. Faculty rush to "cover" the content of their discipline and then, if there is time, give the students an example to help them "understand" how it might be applied in business.
It will be a significant change to move toward a more holistic, constructivist approach. These traditional faculty orientations are strongly imbedded in the culture and in the profession. Further, that traditional orientation is reinforced by the existing structures and reward systems. Thus, we can expect considerable resistance from the very individuals who should champion the change. The "tyranny of expertise" will tell us why it can't be done.
Using a constructivist approach will require moving away from the traditional class structure system found in most universities. Most universities are well-established bureaucracies. The change of something as sacred as the established one-hour class structure system will be strongly resisted by the administration and the faculty governance system. The challenge may be to integrate the more fluid structure of a pull system with the remainder of the campus.
Finally, access to information technology will require a reorientation on the part of most universities' "computer" experts. Many universities are still saddled with a "computer center" mentality that is not oriented to distributed systems and instantaneous access. Further, the technology for the information system will require a significant investment.
These and other constraints may act as restraining forces. Change is necessary, however, if we are to educate students to function effectively in the new competitive environment. As educators, it is important that we champion the change, initiate experimentation, and broadly discuss the results of that experimentation. This paper is offered in that spirit.
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