In an upbeat office building by San Francisco’s Marina, a throng of Stanford University graduates is reinventing banking. SoFi, the online lender, was founded by four business school students in 2011. In six years, they have grown the fintech company to have 225,000 customers, 750 employees and $8 billion in loan originations last year, with a $4 billion valuation to boot.
Daniel Macklin, co-founder and VP, believes business school is a good place to launch a business. He says: “SoFi wouldn’t be here if it wasn’t for Stanford. Business school gave us the advantage to be able to develop and incubate an idea in a safe environment, and the confidence that this was a viable idea.”
SoFi’s story runs contrary to the narrative that business schools are out of touch with Silicon Valley. Many entrepreneurs and technology companies are wary of MBA programs because of a perception that the courses are not relevant. They reason that the art of A/B testing, rapid product development and data analysis — talents synonymous with Silicon Valley — are best acquired outside classrooms.
Digital Disruption Of The MBA
But business schools are rapidly trying to keep pace with smarts once seen as vital for tech startups, but which are now essential to every industry. New venture challenges with prizes of over $100,000; data science and deep learning courses; dual-degrees that combine STEM subjects with business — these are all examples of the digital disruption of the MBA.
“Digital technology is driving a fundamental transformation of business education,” says Dan LeClair, chief strategy and innovation officer of AACSB International, an accrediting body for business schools. “It’s changing the teaching models, the way business functions connect with each other, and the way business schools set students up for success.”
Yet one thing business schools cannot escape is criticism that they are not catching on quickly enough. Today’s MBA programs are “outdated” and in desperate need of a digital upgrade, according to PepsiCo CEO Indra Nooyi. Business schools rely too much on the case method and fail to focus enough on technology, she claimed last year.
An “Outdated” Curriculum
“The biggest challenge facing organizations is the fact that digital is the biggest enabler [for growth], but there is little capacity. I applaud that we have universities tackling this, but we need to do this at a faster speed,” says Radhika Chadwick, partner and head of digital advisory at EY, the professional services firm.
Doug Stayman, associate dean at Cornell Tech, New York’s $2 billion, high-tech business school, believes a new type of education is needed to develop leaders of the information economy. “The modern university was built for the Industrial Age,” he says. “As we have moved from a physical to a software world — from atoms to bits — we need a different kind of school to allow students to flourish.”
He describes Cornell Tech’s learning model as a “studio curriculum” in which students from different academic disciplines band together to build digital products. “We think it’s critical that business students learn deeply the perspective of people with other skill-sets,” he says. “There is a role for case studies, but they are not relevant to prototyping and teamwork across disciplines.”
Engineers may be the hottest commodity in the technology industry, but they are not enough on their own. A demand for skills typical to the MBA syllabus — such as sales and change management — is being prompted by technology companies hiring business school students in greater numbers, and a proliferation of graduates founding high-tech start-ups, often in Silicon Valley.
Yossi Feinberg, senior associate dean for academic affairs at Stanford University’s Graduate School of Business, believes that future executives with a combination of technical expertise and leadership skills will become treasured assets. “Graduates who can both envision the potential of an innovation as well as execute on bringing it to market are in great demand by employers and venture capitalists,” he says.
At Stanford GSB, in the heart of Silicon Valley, more than 80% of MBAs elect to take courses at other departments, such as the university’s prestigious Engineering School. Stanford GSB also offers six dual-degree programs, including the MS in Computer Science/MBA.
Just like how technology has dissolved the boundaries between business sectors, the lines between different academic disciplines are now blurred. “When you start breaking down silos between disciplines, that’s where you will find the most fertile ground for innovation,” Yossi says.
Entrepreneurship “Can Be Taught”
Frederic Kerrest is the COO of Okta, a cloud computing startup based in San Francisco. He met his co-founder Todd McKinnon, the former head of engineering at Salesforce.com, while studying for an MBA at MIT Sloan School of Management in 2009. In its eight-year lifetime, Okta has amassed thousands of customers including LinkedIn, Adobe and 20th Century Fox. This year, Okta filed for an IPO.
“MIT Sloan has been an incredible network for me,” Frederic says. “I’ve always had the entrepreneurial bug, but I didn’t want to go at it alone. I wanted a technical co-founder who complimented my business background.”
MIT Sloan has several offerings for entrepreneurs. The “New Enterprises” course lays the groundwork for business plan development. The Entrepreneurship Lab lets students develop solutions to early-stage problems at local companies. Additionally, students can pursue the entrepreneurship and innovation MBA track, which focuses on the clout needed to launch emerging technology companies.
“These skills can be taught. They are not genetically gifted to a few lucky souls,” says Bill Aulet, managing director of the Martin Trust Center for MIT Entrepreneurship.
Whether business schools themselves can innovate as institutions will determine whether they thrive in the Digital Age, or as Berkeley Haas School dean Rich Lyons puts it, literally go out of business.
From: BusinessBecause.com on March 20, 2017 | Written by Seb Murray