I am honoured to have been invited to address this opening session.
The subject that you are going to discuss during the next two days is not an easy one and the Organisers are to be complimented that they have succeeded in putting a program together that has attracted so many participants from different walks of life and of such diverse experience.
Such a varied group of participants should help to ensure that at the end of the conference we will know what we are really talking about and what managers and educators should be aware of when dealing with complexity issues in their organisations.
EFMD with its membership of 800 business schools and a group of large corporations is increasingly acting globally. Its role is as a catalyst, guide and source of inspiration to make business schools and management education and consultancy drivers of change, transformation, innovation and entrepreneurship. Business schools have a fundamental role to develop the human capacity for leadership in institutions and preparing their graduates for management within and across organizations.
Peter Drucker always pointed out that in a society of organizations and institutions we cannot rely on those few “born” managers and leaders. We need to educate and train many more for organizations that are striving to achieve their mission. The explosive development of business education and in particular the MBA program in the 20th century demonstrates the reality of this endeavour. It has been one of the greatest success stories ever in academic education.
However, questions have been asked since the financial crisis. Were business schools partly to blame for having educated the wrong type of managers, had they focused too much on business hype, is the MBA still a useful preparation for a leadership role in our modern society?
We all know that business schools have made a massive contribution to modern management and that they cannot be blamed for some of their graduates misbehaving in business life. However, they must confront the question of whether they have nurtured sufficiently critical thinking and inspired a broader understanding of management as a key role in society.
In a time of accelerated change business schools are themselves confronted with the need to transform. We must rethink how we help leaders and managers to tackle the challenges of the 21st century. But before we do we had better identify what these challenges are.
The theme of this conference, Managing Complexity, is a perfect example of the new requirement that business schools face. It is a theme at the intersection of social sciences and hard sciences (complexity science). It requires a deep understanding of technological capabilities and of the unrivalled capacity of the human mind in terms of pattern recognition and intuitive judgements based on our own capacity to process “big data”.
There is no doubt that in the present global world, fraught with new challenges, business schools will have to review their research agenda. They have moved too deeply towards the methodology of hard science. This is not necessarily the best approach to understand and diagnose issues within organizations. Increasing criticism has been voiced about the relevance of business school research to address real life issues.
Another example is the devastating effect that short-termism has had on the economic system and long-term prosperity, not only of companies but also society at large.
So we need to ask ourselves the critical questions – have business schools done enough in their research and education to show the catastrophic effects of the agency theory and its ensuing logic? The great Sumantra Goshal was one of the few who did ask. He wrote a fiery article in 2005 shortly before he sadly passed away. It is a shame that this flame was not taken up by many others with a similar combative attitude and high moral aspiration. It was before the crisis hit – and he in a way foresaw the disaster looming.
I believe that Business Schools have a major role to play in addressing the wider context in which businesses operate and to help economists to complement their real world perspective by understanding the economy beyond aggregates and mathematical formulas. It is real people with their knowledge, their values and their motivation who make the difference.
The young people joining organizations today have a strong desire for purpose and meaning. They want to understand what value companies provide to their customers, to society generally and to them personally. CSR and sustainability have all too often been used as fig leaves to hide deficiencies resulting from short-term profit maximization.
We all know that innovation is the key to further prosperity and welfare. But we should constantly be aware of the fact that – whatever the financial resources available – there will be very little innovation if we fail to build organizational structures in which there is ample space and freedom for the individual to use his or her imagination, to create, to experiment and to sometimes fail.
Business schools will have to help to recreate an innovation culture that works for businesses, for societies and the individual. For this we will need highly focused research and new education programs. EFMD has through its membership a wealth of experience, which can be put to work to create such new programmes and to stimulate relevant research. The strongest social responsibility of businesses is innovation – only with innovation can business be made sustainable and the issues of the future be addressed and the same goes for business schools.
This conference can help to get a concrete idea what should be done for educational business institutions to continue to stay relevant now and in the future. .
Complexity is not something that can be tackled in a happy-go-lucky way. We are dealing with the management of all aspects of societal life. This time we had better get it right.
Gerard van Schaik has been Honorary President of EFMD since June 2008. He was the President of EFMD from 1995 till 2008.He joined Heineken N.V. in 1959 after taking his Masters Degree in Economics at the Free University in Amsterdam. In 1968-1969, he followed the Annual Program in Business Administration at IMEDE in Lausanne. In 1974, he was appointed to the Executive Board of Heineken and was responsible for European interests as well as Corporate Marketing of the Group. In 1983, he became Deputy Chairman of the Executive Board and, in 1989, was appointed Chairman. In 1993, he retired from that position.He is also currently Chairman of the Board of Martinair Holland N.V. Previously, he was Chairman of the Board of AEGON N.V. and former member of the non-executive Boards of a.o. DSM N.V., Sara Lee/DE N.V., ABN-AMRO Bank N.V., Whitbread Plc and United Biscuits Holding Plc.