A business dean’s rant: Ignorance of the facts or pure “Chutzpah”?

“What makes a country prosperous is not investment in science and technology. It is businesses producing high paying jobs by having unique products and processes that a customer needs”.
This is from Roger Martin, a former management consultant, who is now Dean of the Rotman School of Management at the University of Toronto.

Under the Globe & Mail headline, “Canada will shrivel under business-school neglect”, Roger Martin was sounding the alarm. Canada’s business schools are starving for funds and need their share of government support. What does he really want? That government invests in “business education” as opposed to “research in science and technology”.

There is a “fundamental crisis in funding business education on a national scale”. We hear people say, ‘Well, what we need are scientists and engineers running these companies because these are tech companies.’ But if we in Canada would like to have companies like Hewlett-Packard, IBM, Microsoft, Apple, Cisco and Intel, find out how many of their CEOs have science and tech degrees. The answer is there are a lot more MBAs than science and technology degrees”.

It is ironic that all the companies cited by the dean had founders with a science and technology background and none had a business degree. Jim Colliander has an excellent post on this. Who does he think creates those products and processes?  Business majors?” Jim does a great job listing the people who founded the companies cited by the dean, and their qualifications. We cannot repeat it enough:

Bill Hewlett and David Packard were electrical engineers. Bill Gates was a math major/computer scientist at Harvard before founding Microsoft. Paul Allen also studied computer science. Steve Ballmer majored in mathematics and economics. Apple’s Steve Wozniak is a computer scientist and an electrical engineer. Cisco’s Len Bosack started as a computer scientist, and Sandra Lerner has a Bachelor’s degree in political science, a master’s degree in econometrics and a master’s degree in statistics and computer science. Intel’s Gordon Moore has a PhD in Chemistry and minor in Physics. Robert Noyce has a Ph.D. in physics. Same story for Google’s Sergey Brin (a computer scientist/mathematician), and Larry Page (computer scientist). Same for Facebook, without forgetting the engineer in Mike Lazaridis and  Research in Motion.

One can surely argue that high tech companies are often started by scientists and engineers, but they don’t grow beyond a certain size and profitability without professional management. Google’s Brin and Page needed Eric Schmidt, Apple’s Wozniak needed Steve Jobs, and Lazaridis couldn’t have done it without Jim Balsillie.

But they can also “blow it”. Remember how and who sank Nortel, when it was sitting on the world’s largest pool of high tech. patents? And what about the role of Harvard Business School grads in using the processes (financial instruments) developed by mathematicians to sink Merrill Lynch, Bear Stearns, Lehman Bros, and the rest of us?

There is another troubling aspect of the dean’s rant.

  • “The Canadian government is starving management education. They have reinvested in education in the only way they can directly, which is through chairs in research and the like. They totally bypassed business education”.
  • “We have an innovation crisis in this country and these people say that we still haven’t invested enough in science”.
  • “… the arts are getting an incredibly rich allocation of the money at all levels. It is only business that is not.”

In other words, the “free market” proselytizers are now asking for more government help. Business schools want to be exempt from government’s regulation of tuition fees, proceed to charge exorbitant fees, while preaching against government’s interference with the free market system. But when these major proponents of the free market system need help, who do they turn to?

But the pitch of the UT dean is more targeted. He is saying that Business Schools are not getting their fair share from the Tri-council and the CFI. He is totally oblivious of the fact that these programs are for funding research and not education per se.

“Of all the money given out by the Canada Foundation for Innovation, a big federal grants program, nine times more has gone to arts and literature than to business. I am not even talking social and human sciences – that is 41 times.” It will be interesting to see if the Presidents of NSERC, SSHRC, and CFI will respond with some data of their own.

I have been dealing recently with a “two-body”-style hiring at UBC, one of which being in “social psychology”, and I got to learn that the Sauder School of Business have mathematicians, economists, sociologists, and psychologists, as do the UBC Faculties of Arts and Science. The only difference is that the social psychologists in the department of psychology are paid a fraction of what their counterparts in the business school earn. Are we now to ask the Tri-council to adopt some artificial eligibility criteria (based on academic unit affiliations) in order to separate researchers, who are otherwise working on similar research themes?

Is the dean saying that Canada’s business schools want very high “market salaries” and unregulated “market tuition”, but don’t want to compete for granting council research funding? Is he angling towards a separate “pot” within SSHRC,  or maybe even a new “federal boutique”,  solely dedicated to business education (not even research).

This said, we should not forget that, as recently as 2009, business schools got a preferential treatment from the federal government. Indeed,  after having cut the Tri-council by 5%, the 2009 stimulus federal budget proceeded to earmark the $17.5-million assigned to SSHRC for graduate scholarships towards students in business and finance.

Is it possible that the dean is coming back for an “encore”? Well aware that the AUCC ask from the upcoming federal budget singles out support for SSHRC, can he be aiming for a good chunk of any potential budget increase to go for business schools?

We shall know on Tuesday, whether all this is simply for Flaherty’s ears.

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7 Responses to A business dean’s rant: Ignorance of the facts or pure “Chutzpah”?

  1. Thanks for recalling the 2009 redirection of funds away from graduate support for economics, history, psychology etc. toward professional degrees like MBAs.

  2. Melonie F. says:

    Great post. One thing I’d point out though (for clarification) is that the SSHRC allocation you mention was widely misinterpreted at the time; the extra money SSHRC dished out was technically a temporary fund for “business or business-related” work. Not only that but it was just a special earmarked fund as you mention, and not SSHRC’s full allocated funding for graduate student scholarships for that year (which was how many students first interpreted it). I think the upset was that SSHRC saw no increase to funding other than this amount which had been designated for “business or business-related” research, at a time when it had suffered funding cuts (http://dalenglishgradprogram.blogspot.com/2009/03/clarification-on-sshrc-graduate-funding.html, http://www.sshrc-crsh.gc.ca/funding-financement/programs-programmes/fellowships/cgs_masters_business-besc_maitrise_affaires-eng.aspx).

    Not that I would defend Martin’s arguments. I fully support good business and management education and research, but to me it seems inappropriate to put business as a category of scholarship on the level with “science” and “social and human science” and “the humanities”, for a number of reasons (e.g. the latter categories are much broader and so they each “hold” more different disciplines; one simply cannot lump all of “the sciences” together and compare them to business).

    I actually think Martin is off-base in advocating for sequestered government funding for business not only because business schools already enjoy a financial advantage from privately-raised funds, but because creating a silo for business will only undercut the government’s agenda to mobilise “innovation” and “entrepreneurialism” in every academic/research area. If the government wants a broader movement to this kind of approach then it could attempt to fold some funding for business-related education into other academic areas, such as it was and is attempting to do with SSHRC.

    I also notice that Martin compares Canada’s business schools with a) the international competition (including *private* US Ivy League schools I assume) and b) the amount of funding received from the government by other academic areas, picking on SSHRC in particular. This kind of argument would serve to continue the segregation of business from other areas of the university (which I would argue is unproductive). I would also ask, is it really the case that other countries, such as the United States, have created the desired entrepreneurial ethos (and resultant economic productivity) by asking governments to fund business education? Does Martin have any evidence to support that idea, or is he just targeting the Tri-Council with a self-serving argument?

    • Ghoussoub says:

      Thanks Melonie for the clarification on the postdoctoral allocation to SSHRC. The need of not insulating business schools from other academic units that can be partners in the innovation agenda is extremely important. You must know that the problem is even more acute than that when many deans of B-S (including ivy league’s) develop a superiority complex/behavior vis-a-vis the presidents of their own universities and act accordingly, with some believing that their schools are too good for the universities they belong to.
      I did however contemplate a comparison to US and especially European schools (HEC, ESSEC) but the post was getting to be too long.
      Let me add how much I appreciate your tweets and input on other posts.Hard to believe you are a grad student. You are on your way to be a thought leader (My personal opinion though I am not an expert being a lowly mathematician).

  3. JoVE says:

    Another example of that special pleading that seems to be going around these days.

    Given that the government did allocate extra funds to SSHRC specifically to boost research in business — graduate studentships AND faculty research — it seems a bit crazy to cry poor now. And yes, SSHRC doesn’t allocate funds based on your department but on the area of research.

    In addition to the points you make about people other than business majors creating those products and processes, I think your point about the hiring you’ve been involved in is also instructive. Business schools themselves do not hire people with a business education. Many of their faculty were trained in other disciplines. As such a business school is an interdisciplinary unit that offers degrees at undergraduate and masters level (and sometimes doctoral? I’m not sure here but it would be interesting to know) and does research.

    One difference in the research culture of business schools is that they have traditionally been much more open to applied research and to what it now called knowledge mobilization. They have also been much more active and successful at securing research funds from industry (broadly conceived), largely because they value the production of outputs useful to those funders.

    Perhaps Martin protests too loudly. Is the problem really that the business skills needed to run successful companies can be learned on the job. That we don’t need business degrees to run businesses though we may need business education in another form. After all business schools are a relative latecomer to higher education, especially if you start to look outside of North America. Undergraduate business education in the UK is often listed alongside other newish fields like “media studies” as evidence of the decline in the rigour of education, for example.

  4. Nilima says:

    We should thank the Dean for providing much-needed laughs during the week when Jon Stewart was on break. What courage! What eloquence! What foresight!

    http://www.economist.com/whichmba/think-twice

    and that priceless article by Pfeffer, from the Stanford school of business:

    http://www.jeffreypfeffer.com/pdf/articles/AMLE-Sep2002.pdf

    President Obama’s Presidential Council of Advisors on Science and Technology recently issued an interesting report, projecting kinds of skills were needed in the workforce. I recommend a quick look at figures 8.2.1 through 8.2.3:

    http://www.cs.washington.edu/homes/lazowska/nitrd/8.2.pdf

    And then there’s the PCAST report on
    ‘University-Private Sector Research Partnerships in the Innovation Ecosystem”

    http://www.whitehouse.gov/administration/eop/ostp/pcast/docsreports/archives

    The phrase ‘business administration’ appears not once in this report. Not once. Comfortingly, cliches like ‘innovation ecosystem’ are still present.

    Nilima

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