Mastering Business

As governance becomes a bigger aspect of management education, Domini Stuart discovers that an MBA could help directors better understand strategy, governance and ethics.

The most effective boardrooms are populated by directors with a range of complementary skills. But decisions are made collaboratively and directors can only engage in meaningful discussion with their colleagues if they also have a broad understanding of the business and its environment. This is in the best interests of the organisation and also the directors themselves. If the company should find itself in trouble, the whole board would be held liable – and ignorance of any aspect of its operations or financial standing would not constitute a defence.

Many aspiring directors are choosing to develop their expertise by studying for a Master of Business Administration (MBA). “An MBA teaches students enough about all areas of business so they can ask the right questions of fellow board members, senior executives and outside specialists such as the auditor,” says Dr Pete Manasantivongs, director, global engagement, Melbourne Business School (MBS).

Appointed directors – some with a great deal of experience – are also returning to the classroom. “Advances in technology are transforming the business environment,” Manasantivongs continues. “Many of the jobs that people will be doing in 10 years’ time don’t yet exist. And, 10 years ago, few people gave much thought to things like apps on phones or the sharing economy, which are now shaping businesses.

“Growing numbers of C-Suite executives and board members are recognising that their knowledge is out of date or that they are missing certain tools that would help them progress their career or perform more effectively in their current role. An MBA can strengthen their core business skills and their ability to deal with uncertainty and ambiguity, to react quickly and to respond appropriately as the industry, the economy and the world around them continue on a trajectory of rapid change. Our senior executive MBA program is specifically designed for people with around 25 years’ experience,” he adds.

The changing face of the MBA

MBA programs must also keep pace with rapid change. Around the world, they are being reviewed and updated to ensure both the content and the modes of delivery are relevant and responsive to students’ needs.

One of the changes is less time out of the workforce. Full-time MBA courses provide the benefits of an immersive experience but many business leaders are reluctant to take the traditional two years out of the workforce.“This can represent a very significant opportunity cost, particularly for those in sectors such as disruptive technologies, where things move so quickly,” says Manasantivongs. As a result, there is a global trend towards the one-year MBA.

“When we transitioned to a one-year program we managed to maintain roughly the same number of classroom contact hours – 720 – by reducing the inter-term breaks and making more efficient use of students’ time,” Manasantivongs continues.

Part-time programs enable students to continue working full-time, go to class in the evenings and build their study around their other obligations. And, it is now technically possible to complete an entire MBA online.

“Students can find quality information at lightning speed – ‘Professor Google’ has won the information-dissemination game hands down,” says Bob O’Connor FAICD, executive director of the Queensland University of Technology (QUT) Graduate School of Business. “But an MBA is about learning how to apply that information in the workplace. Face-to-face networking and collaboration allows students to explore how different organisations and industries have implemented solutions.”

A blend of online and face-to-face learning can provide an effective compromise. “Recorded lectures, podcasts and other forms of online information give students the freedom to learn the basics whenever it suits them,” says Gavin Nicholson FAICD, an associate professor at QUT Business School. “It also frees up time for more discussion when they do meet face-to-face.”

Dr Laurel Jackson, director of postgraduate education at the Western Sydney University’s School of Business, finds that time-poor business leaders welcome this model of flexible learning.

“They like the fact that they still have opportunities to engage with colleagues, build networks, work in groups, and work through problems together,” she says. “When we are developing flexible learning options, we are very mindful of how important it is for students to experience community and collegiality and to establish lasting networks.”

O’Connor believes that as Generations Y and Digital progress in their careers, they will be attracted to the flexibility of online MBAs, especially if further advances in technology support real-time “face-to-face like” interactions. But is there a danger that a growing emphasis on online learning could create a two-tier MBA where an immersive, full-time model is perceived to be of greater value?

“Many MBA schools have embraced advances in technology, innovative practices and blended teaching and learning activities to ensure there has been no compromise in the quality of teaching,” says Dr Vipul Pare, MBA program director at Flinders Business School. “In many cases, MBA learning has become more topical, rigorous and practical.”

Many MBAs now offer experiences beyond the classroom. “Students are looking for opportunities to put the theories into practice,” says Pare. “They want to take part in real-world projects where they can solve live business problems and learn first hand about the risks associated with, for example, new ventures and start-ups. There is also a trend towards experiential learning on an international level, which could include exchange programs, study tours and cross-cultural consulting projects.”

The QUT Executive MBA includes four sessions with an executive coach. “We have a very strong focus on personal development and expanding people’s horizons in terms of what’s possible,” says O’Connor. “For example, a unit called the Leadership Practicum pairs students with a director or C-Suite executive for 10 months. They meet once a month in the latter part of the program to talk about leadership and decision-making and this provides a wonderful opportunity to explore these from both theoretical and practical perspectives. Students greatly benefit from these face-to-face interactions; it is certainly hard to teach leadership at the end of a wire.”

This approach also encourages self-reflection.“We want students to consider what the knowledge they’re acquiring really means to them,” says Nicholson. “We like to challenge their core values and encourage them to think deeply about what kind of leader they want to be. Many of our students have told us that this has been life-changing on both a professional and a personal level.”

Along with a broad overview of business, an MBA can sharpen skills in a particular field. “We have seen a marked increase in the demand for specialisation,” says Jackson. “As a result, we now offer 10 specialised subject areas as part of our early-career MBA program. One is innovation and entrepreneurship, and we’re finding that interest in this area is growing particularly quickly. The whole university has made a significant commitment to helping incubate and launch new business directions and the specialisation was designed in collaboration with a range of stakeholders including industry and professional associations. Our aim is to equip graduates with the skills and knowledge they need to succeed in contemporary business environments.”

At MBS, ethics and corporate social responsibility (CSR) are two of the first subjects to be taught. “Ethical dilemmas are rarely black and white, and we consider learning to navigate situations with no clear-cut answers to be one of the most important elements of an MBA education,” says Manasantivongs. “Students need to know how to influence, persuade, negotiate and communicate effectively in order to make a convincing case for what they believe to be right.”

Western Sydney has a large group of researchers and teachers working in the field of social and environmental improvement. “The concept of CSR has become well recognised and, more recently, sustainability has emerged as an important support to business performance and social legitimacy,” says Jackson.

Strategy and governance

Boards are expected to engage with management in developing the organisation’s strategy and to monitor its implementation. For a director, strategic thinking should be a core component of any MBA.“The good programs have at least two or three strategy-related subjects that provide a combination of traditional theories with the latest updates to ensure the program is relevant and practical,” says Pare.

“The underlying philosophies of these subjects will help business leaders align their decision-making and planning with the overall strategy of their organisation and ensure they are matching their approach to the current business environment.”

Corporate governance used to be pigeonholed as the study of legal duties, solvency and finance. “Of course, it’s important to understand these areas and to know what can go wrong, but the heart of governance is balancing performance and compliance,” says Nicholson. “This reflects a much more positive aspect – governance as the foundation for building the company by understanding and taking appropriate risks. Governance is also about much broader issues, such as ensuring that the company is being marketed effectively and that human resources practices are being used to stimulate desirable behaviour. It brings the various components of management together into the ultimate decision.”

Western Sydney offers a specific short course on corporate governance designed to help students gain a deep understanding of the role of the board and to develop a director-specific skill set. “We look at the fundamental concepts of corporate governance in the context of current Australian issues and practices, as well as the latest thinking on the internal function of corporate boards,” says Jackson.

It might be some years before an MBA graduate joins a board and, by then, much will have changed. “This is why it would be a mistake to spend too much time studying the detail,” says Nicholson. “It’s much more important for students to develop a conceptual understanding of good governance, group dynamics and ways of thinking that will stand them in good stead in any boardroom.”

The latest trends in MBAs

1. Providing MBAs is a business in itself. In order to remain competitive, business schools around the world must continuously adapt their offerings to meet the needs and expectations of would-be students. Here are 10 of the latest trends.
2. More options for the time poor, such as one-year, full-time programs; part-time programs designed to fit around normal business hours; and blended learning – a combination of independent study and face-to-face discussions, simulations and case studies.
3. More opportunities to learn by experience by working on real-life projects, both locally and overseas.
4. A growing emphasis on personal development and reflective thinking.
5. More opportunities to sharpen skills in specialised subject areas.
6. More opportunities to acquire entrepreneurial skills.
7. A focus on ethics, corporate social responsibility and sustainability.
8. An emphasis on communication, negotiation and persuasion.
9. A broader approach to strategic and systemic or holistic thinking.
10. A focus on corporate governance as a synthesis of all other disciplines, which enables effective decision-making.
11. Practising directors are recognising the benefit of returning to the classroom to update and expand their skills.