Wake up and sharpen your competitive edge

October 12, 2001

It's high time Europe pulled its socks up when it comes to management training, insists John Quelch.

The MBA has become the educational standard for United States business. This has not yet happened in Europe and its overall business performance has probably suffered as a result.

Part of the problem - in the United Kingdom at any rate - has been the objection of major universities to the pursuit of business studies. The implication in certain quarters until recently has been that they would be selling themselves short by offering studies leading to trade-oriented degrees.

The Said Business School at Oxford University was established in 1999 and the Judge Institute at Cambridge University a few years earlier. The Yale School of Management opened its doors in 1974 and Harvard Business School is almost 100 years old.

You can see the results by comparing the number of chief executives with an MBA in FTSE-listed companies with those who hold the degree in Fortune 100 corporations.

British business is too finance and accounting oriented. In the US, many more top managers come up through the strategy and marketing ranks (something that is reflected in the more general coverage of the MBA), leading to greater risk orientation, a more entrepreneurial style and a willingness to see the glass as half full rather than half empty.

The MBA has been making inroads into continental Europe - besides Insead and the London Business School in the first tier, there are good, second-tier business schools emerging in Spain, Italy and France - but the lack of a high-quality general management education tradition has limited European competitiveness, notably in Germany.

Germany's engineering schools have given companies a range of quality products, differentiated from the global competition - but the country's corporations have blind spots. Another issue is the German higher education system. It is a sort of failed welfare programme that keeps millions of young people gainfully unemployed in universities for a number of years. We often find that the or 28-year-old Germans who apply for the London Business School's top MBA programme are at a disadvantage to other nationals because they have had less work experience.

Some Europeans - certainly a section of the British business community - still see academia as remote and irrelevant. North American businesses and academic institutions are much more tightly integrated - partly a function, I believe, of the way many universities are privately funded and have to reach out to corporations or to their typically business-oriented alumni. If business schools are perceived by European industrialists to be underperforming, the fault lies in part with the business community for not getting more involved in setting the agenda.

Then there is an attachment in Europe to what I call a "Chariots of Fire" view of the world. This contends that success in business is genetically transmitted rather than having much to do with hard graft and learning. The situation is not helped by the proliferation of MBA courses in the UK - 120 at the last count, of which just 35 are accredited by the Association of MBAs.

US business schools are not perfect - there is a myopia in the US about the rest of the world, and at Harvard one of my jobs will be to stimulate the faculty to do more overseas research. European schools with a clear international mission, such as LBS, offer a powerful point of differentiation in the global economy.

The important question for a business student to gauge their level of satisfaction is: "Will this MBA programme help me land my dream job?" An MBA represents a large investment of money and time, plus the opportunity cost. The return on that investment is very important. We are always interested in the differential between what students earn when they finish the MBA and what they were earning when they started. I think we in business schools ought to do more to monitor how much we help people transform their futures.

I have seen no serious studies that attempt to link an investment in management education to a company's share price. Tracking the link to corporate performance would repay additional academic endeavour, possibly by bringing in experts in cognitive learning psychology. There are not many academics in business schools who have the appropriate training to set up such studies. If the link impact of alternative intervention between corporate performance and training is not validated, management education expenditures will be cut as quickly as the advertising budget whenever recessionary clouds appear on the horizon.

John Quelch is senior associate dean of Harvard Business School. He was formerly dean of the London Business School. This article is an edited version of his contribution to a feature on executive education to be published in the autumn 2001 issue of European Business Forum ( www.ebfonline.com ).

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