Taipei Times: How has the state of the global economy affected top-tier MBA programs?
Judy Olian: There are a number of ways in which the global economic crisis has had an impact on MBA programs. It has brought students into MBA programs who have lost their jobs, especially early on, so immediately there was a spike in the number of applications.
PHOTO: SHELLY HUANG, TAIPEI TIMES
The global economic crisis has impacted new angles to what we teach, around global economic risk, the interdependencies of markets, ethics and integrity and crisis management, which has become a managerial imperative. When you think about what’s been going on at British Petroleum in dealing with the Gulf of Mexico oil spill, in addition to the pragmatics of operations, a lot of what they have been doing is crisis management, which is a challenge.
There have also been challenging conditions in terms of employment. Not only was there an employment downturn, it also meant that people had a much broader perspective in the jobs they were looking at, both functionally and geographically. Many students who might have previously only looked for jobs in the US have looked globally, and I think that’s a very good development, because we are in a global economy.
TT: Did you see a spike in the number of MBA applicants who lost their jobs during the financial crisis?
Olian: Initially, yes, but then it leveled off again. The other thing that we’re a part of is the narrow financial issues associated with getting financial aid and loans.
TT: Some people have pointed to business schools and MBA graduates as being at least in part responsible for the global financial crisis. Would you concur?
Olian: I think that singling out one set of people is way too simplistic an analysis of what happened in the market. Nobody in MBA programs for the last 30 years taught people to take unbridled or uncalculated risks. Nobody taught them to be unethical. To simplistically say that it’s one set of people or one type of behavior is really misunderstanding the huge complexity of what happened in the marketplace. There were some triggers around sub-prime mortgages and uninformed lending that then blew up into huge financial risk that then spread like a tsunami or avian flu throughout global markets. There were some of the wrong incentives associated with the way people were rewarded, and in a few instances there was unethical behavior.
That said, nobody in MBA programs has ever said, take uninformed risks. On the contrary, we try to teach people what the underlying risks are and how to behave in an ethical manner. What sometimes happens is, they leave and spend 10 or 15 years in organizations and their behavior is molded around the incentives offered. Having said that, we’d be living like an ostrich with our head in the sand unless we accepted that we have to do things differently.
TT: Some critics argue that ethics cannot be taught in the classroom. Do you agree or disagree?
Olian: Especially when you’re talking about the MBA, students come in at the age of 27 or 28. Something has happened during those 28 years. They’ve been molded by their families and experiences. But we can refine that. We can teach people ethics through case studies. Not that people who have emerged from MBA programs have questionable ethics, but what happens when incentives mold behavior? When you see somebody earning ridiculous amounts and doing things that raise some questions in your mind, do you raise those questions or do you do what he or she is doing?
TT: Many applicants to business schools decided to pursue higher education because they have been laid off during the financial crisis or find their careers stagnating. How do business schools view such candidates?
Olian: A crisis is your friend because losing your job is not a massive failure in this economy. What we always look for, regardless of an individual’s job situation, is a sense of purpose. What do you want to do with your life? Why will an MBA help you achieve it? We talk about leading organizations and communities, we don’t talk about leading only business organizations or business communities.
Leadership in general can have a huge impact and be highly significant. We’re looking for people who have a sense of purpose in terms of how the MBA will help them. We also look for people who, because of their work experience, enrich the learning experience for their peers. So we’re asking, what have you done with your life, and what will you bring to the classroom. Whether you have a job today or not is not as relevant as what you have done or how you have contributed to society.
TT: Do you view the current state of economy as an opportunity or a threat in terms of recruiting students?
Olian: You have to look at the MBA as a long term investment. That’s what we mean by the present value of an MBA. There’s no question that getting an MBA will accelerate your career, because it opens all kinds of doors.
TT: In your opinion, has the value of an MBA degree increased?
Olian: I believe the value has always been there, but I also believe it has increased because it prepares people for leadership roles across a number of different sectors and functions. Today, if you’re leading a hospital, you can’t just be a doctor or understand medicine, you have to understand the nature of business, such as how to read a balance sheet or how to market and differentiate your hospital. If you’re managing an art museum or a theater, you must know the business side of things. So when you think about the value of an MBA, you have to think broadly about the skills required in various leadership roles.
TT: Why should Taiwanese students consider studying in a Western business school when the economy is expanding rapidly in emerging markets such as China and India, but slowly in the US and many European countries?
Olian: There has been a real shift in the directionality of where people are going. It used to be in from Europe and Asia to the US. Nowadays, people are moving in all sorts of different directions. People are going to Europe or China or Hong Kong. There is a more mixed direction in terms of study for Asian students. I think that’s a very good development because business is global. Emerging opportunities and threats are coming from all kinds of places. We would be shirking our responsibility to educate people for the next frontiers of business if we didn’t provide them with global brains, which means exposure to emerging markets.
Any business school has to provide global exposure. I think it’s incumbent on students domestically to go somewhere they can be exposed to an environment that challenges them — something totally new to be prepared for the world of global business and multi-culturalism in organizations, and to learn from a community of students who are very diverse. That’s why whenever you choose a school, you should look for an experience that is as broad, challenging and uncomfortable as possible, so that you broaden your horizons. You want to be challenged and to learn something vastly different to what you already know, not just in terms of the content of the program, but also the global exposure.
TT: Speaking of global exposure, would you say that there is an ideal level of international representation in business schools? For example, is 20 percent too little, or 50 percent too much?
Olian: We don’t have a quota or threshold. We tend to think that around a third is a good number. Diversity on many dimensions is critical in comprising a class.
TT: As one of the few female deans of a top business school, do you think the business environment is likely to become friendlier or more hostile for female business leaders in the near future?
Olian: As a woman, I wish we were further along. What I want for women is for them to be given the opportunity to choose. Some women choose to pursue an MBA, others to focus on their families. For some, it’s not an easy a choice because they don’t have many options, or they’re in companies that are not as welcoming of the sort of family choices women in general want. That’s why women have not done as well in business careers as they have in the legal or medical profession.
I think that maintaining a balance as a woman with a serious career is a very tough goal. That said, I think we are seeing some progress in California. Two business women [former eBay chief executive officer Meg Whitman and former chairman and chief executive officer of Hewlett-Packard Carly Fiorina] are running for the highest offices in the state — governor and senator. There are more women in every walk of life who are progressing slowly with hope. But women still have to confront structural issues that are more extreme than for men.
TT: UCLA and UC Berkeley are the only two public schools that have consistently ranked among the top MBAs in the world. As a public school, what does UCLA’s Anderson offer that private schools cannot bring to the table?
Olian: The financial model is, unfortunately, more private than public. We increasingly have to be more self-sufficient in terms of funding. So student tuition is pretty high. We also have a variety of programs that help us with funding. In terms of competition for the best students and faculty, there’s no difference in what we look for. UCLA Anderson is now only 18 percent publicly-funded. We are increasingly funding ourselves through our own revenue streams and private giving.
TT: Would you say that it has become more challenging to secure funding?
Olian: Necessity is the mother of invention. We are currently exploring different funding models for our own enterprise within the public university system. Donations or private giving during the financial crisis declined because people felt a lot less confident about their own financial wealth. However, I think people are really coming back because they believe in the goal of higher education because it transforms lives, and ultimately, economies as well. We are all moving towards a knowledge economy. Education is the single most important factor in lifting people out of poverty.
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