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Learning and Change – Roger Martin

“When you’re building Business School 2.0, you don’t start from scratch.”

It is Tuesday, September 14, during the first week of school at the Joseph L. Rotman School of Management at the University of Toronto. Roger Martin stands at a white board leading a group of 125 first-year students through their very first exercise as aspiring MBAs. They’re playing a business-simulation game, and Martin is trying to cajole the members of each team into explaining how they arrived at their results. What information did they use to make their decisions? What were they thinking at the time?

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If you were to happen upon this scene in the soaring atrium of the school’s new building, it might not seem extraordinary — more like business as usual in the life of a business school. But Roger Martin is not interested in business as usual — or in business school as usual. Just two years ago, Martin was living in Wellesley, Massachusetts, enjoying the perks and benefits that befit a cofounder and partner at Monitor Co., a premier strategy-consulting firm. He was pulling down a seven-figure salary, including bonuses, and spending his days in the company of some of the most powerful CEOs in the corporate world. Last year, at the age of 42, he took a 90% pay cut to move to Toronto with his wife and three children. There, he became the dean of Rotman — which wasn’t considered the best business school in Canada, and was never mentioned among the top 25 business schools in the world. It was not a move that suggested enhanced prestige, position, or power. So what is Roger Martin doing teaching a business-simulation exercise?

The answer: reinventing business education. It turns out that Martin has arrived at Rotman at a crucial moment in the history of management education. For as long as schools have given out MBAs, they have generally used the big multinational corporation as their unit of analysis. Managers’ actions are studied in the context of how they affect “the firm.” Economics and finance are also situated in the context of big-firm decision making. What you plan to do in your career is largely immaterial, says the classic business- school script. MBAs are in training to become “general managers,” and the skills of a general manager are, by definition, transferable.

But the way Martin sees it, that old business-school mantra is beginning to look a little anachronistic. After all, some of the most successful people in business today never attended college, let alone business school. And they’re the kind of people who assiduously avoid letting old-style MBAs come anywhere near their companies. While the world’s top business schools are in no immediate danger of becoming obsolete, they do face the prospect of becoming increasingly irrelevant. So it stands to reason: In an age when most businesses are fundamentally being reinvented, why isn’t anyone bothering to reinvent the business school?

That’s exactly the question that Roger Martin asked himself when he decided to take the dean’s job in 1998, and he answered it in a couple of ways. First, he declared that Rotman and all other business schools had been using the wrong unit of analysis. The firm was not at the center of things anymore. He declared his intention to rebuild the school around something he calls “the value of one,” which acknowledges the rapidly increasing economic power of free-agent knowledge workers. Second, he wanted the school to produce what he calls “integrative thinkers.” All business schools claim to do this, assuming that if they stuff enough finance, marketing, operations, and strategy into students’ heads, then when those students graduate, they will be able to put it all together on their own. But, says Martin, business schools are not doing their jobs if they don’t explicitly promote interdisciplinary thinking while students are still within the walls of the classroom.

On the surface, that’s a relatively simple mind flip. But this is a business school after all, and academic institutions, with their tenured professors and hoary traditions, are notoriously slow to change. Martin’s goal is to propel Rotman onto the list of the world’s top 10 business schools within seven years. Currently, the Financial Times ranks the school at 36 — which Martin concedes is about right.

What’s so interesting about his prescription for change is that while the challenge of change for a business school is every bit as compelling as that for any business, the metrics are much less clear: Success for Martin can’t be defined by an exploding stock price or by a doubling of revenue. And failure can’t be measured by the school’s being acquired or going out of business. If Martin fails slowly and slinks quietly back into consulting in a few years, it will simply be because Rotman has stayed the same. If in seven years Rotman still looks too much like every other second-tier business school, Roger Martin will know that he simply hasn’t done enough.

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First Change Yourself

Roger Martin always had a hunch that he might end up in academia one day. But he figured that this was something that he would pursue later in life — probably as an exit strategy from consulting. So he wasn’t quite prepared when a member of the board of a Canadian company that worked with Monitor approached him two years ago about the vacant dean’s position at Rotman. Martin thought it over and wrestled with two related issues, both of which he knew he had to resolve in his mind if he were going to succeed in improving Rotman.

The first question was whether a business-school dean could ever be in the best position to have a large effect on people. After all, the most obvious move for Martin to make after leaving consulting would be to take the CEO’s job at a large, troubled company, turn that company around, make it a better place to work, and make the stockholders rich. To Martin, however, that seemed like a boring path for an experienced consultant already rooted in the world of change. “I had worked with CEOs for 17 years,” he says. “As a CEO, if you do your job well, you can have some influence on one group of people in one organization. But I wanted to do something that would affect a larger number of folks.”

The second question was more personal — and partly patriotic. Given Martin’s reputation, he probably could have landed the dean’s job at one of the top-ranked business schools in the United States if he had set his mind to it and was patient for a few years. But he also happens to be Canadian, born and bred in a small town 70 miles west of Toronto. So part of the pull of the Rotman job had to do with Martin’s passionate feelings about Canadian competitiveness. “Overall, I have an underlying confidence in Canada and Canadians,” he says. “But Canada’s history of restrictive trade policies has left its people not quite entrenched enough in the mind-set of the global market. For decades, people here benchmarked themselves against other Canadian companies. But there is no value at all today in asking whether you’re the best company in Canada. There’s certainly no value in asking whether you’re the best business school in Canada. All that matters is how you’re doing globally. I felt that by coming back, I could draw more attention to that fact and pump out Canadian MBAs who would understand it.”

Then Change the Product

What made Martin so supremely confident that the skills he had mastered as a consultant equipped him to run a business school? Martin’s own experiences with business schools in several different settings directly influenced his diagnosis of management education’s ills.

For one thing, he is a 1981 graduate of Harvard Business School — even though, according to Martin’s own account, he attended HBS under “suspicious” circumstances. What he really wanted to do after finishing his undergraduate degree at Harvard in 1979, he says, was to stick around for a few years, hanging out with his girlfriend (who was starting graduate school there) and coaching the men’s volleyball team. His parents didn’t consider coaching volleyball to be a worthy pursuit, so he enrolled in the business school largely in order to give himself a legitimate reason for staying in Cambridge.

Having entered HBS under spurious, if not false, pretenses, Martin didn’t have the best attitude when he started its MBA program. But the school didn’t even live up to his low expectations. “I loved Harvard — the institution — because I thought that it stood for the right things academically,” he says. “So I was surprised by how anti-intellectual its business school was. Whenever people tried to ask a question in a new way, or to think about a problem in an unorthodox manner, other students would literally hiss at them, as if they were trying to be showy. That’s not the way students should be treating peers who are trying to peel the onion one level deeper.”

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Later, as a recruiter for Monitor, Martin became a consumer of MBAs. Within what was then a 900-person consulting firm (it has grown to employ more than 1,000 employees), he became the head of Monitor University, the firm’s training program. What he saw in the new recruits confirmed his growing belief that there was something fundamentally wrong with MBA education.

“By 1991, we had determined that the people we hired from high-end business schools were no better at integrative thinking than the undergraduates we hired from top-notch liberal-arts programs,” he says. In fact, the newly minted BAs were more fun to work with. “The BAs and the MBAs are equally driven and equally smart,” he says. “But unlike the BAs, the MBAs show up on their first day of work with their heads all crammed full of stuff that they believe is important — but that really isn’t. By the time people were done with business school, they were generally less open to using their minds the way we needed them to.”

The problem, according to Martin, is this: Business schools teach eight or nine subjects, ranging from finance to strategy to marketing to organizational behavior. Each discipline exists in its own silo, even though students take some of the courses simultaneously. But as an approach to learning the skills needed in business, this method isn’t very useful — a realization that most business-school students recognize soon after they begin their graduate studies.

Healthy Systems Don’t Need to Be Changed

Plenty of other business-school deans are aware of this problem, and several of the best ones have added programs that attempt to solve it. Martin, however, seems to be shouting about it the loudest, because he and his institution have the most at stake. He is also the first to admit that business school changed his life, and for that he is grateful. Through a classmate, he met the woman who later became his wife. The small group of friends who later formed Monitor first met in a class they had together. “I should probably be more positive about the experience,” Martin admits. “I could not have met such a great group of people in any one place anywhere else.”

For most of the best students at the best business schools, this is still true. They gladly put up the $100,000 or more in tuition and living expenses and forego even more in salary for the opportunity to meet other people just like them and to build their human network of high achievers. And that’s why many of the best business schools will never go out of business — because no one has invented a better way to network. “I honestly don’t think people care a whit about what they’re actually learning in business school,” Martin says. “Not one bit. They’re there to get a job and to make contacts.”

Martin insists that recruiters also care just as little about the learning that is going on. “Harvard Business School creates value through its ability to find great people, extract them from their companies, turn them into free agents, assemble them in one place in Boston, and then spit them out on an extremely predictable schedule in a manner that is user-friendly to people who want to hire them,” he says. “It’s not the faculty members who are doing the most useful work at these institutions. It’s the admissions staff and the placement office that create the real value.” He only wishes that he could have recruited from HBS’s list of admitted students when he was still hiring consultants for Monitor. “Those students’ egos would have been a lot smaller,” he says. “Plus, it would have been a lot cheaper to hire students.”

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Business School 2.0

Martin plans to change none of this at Rotman, and he speaks with excitement about the fact that such top-notch consulting firms as Bain & Co. and the Boston Consulting Group intend to recruit more of his students this year. But he does think that it’s pathetic that the best thing about most business schools is their ability to put résumé books together.

The challenge for Rotman, Martin says, is to stand for something. Today, he is advancing several ideas to build the Rotman brand. First, there’s his notion of integrative thinking. Theoretically, the case-study method that Harvard popularized and that many other business schools employ should help students use interdisciplinary thinking. “The case-study method has inherent promise,” Martin says. “But the cases tend to be written by academics who teach in only one discipline, so the cases tend to focus around that discipline.”

What could business schools use to replace that method? No one is quite sure — there’s no proven theory of how to teach integration. Martin readily admits that he doesn’t have another method waiting in the wings. The temptation, then, is for schools to throw up their hands and to insist that it’s enough that they manage to teach several complicated disciplines in just two years. To Martin, that’s lazy. “Most students will tell you that the second year is filled with a random assortment of special-interest courses,” he says, “forgettable stuff that could be replaced with something important.”

Like what? This spring, Martin is introducing two new interdisciplinary courses into the curriculum: one that will examine how companies divide responsibilities among employees and reward employees, and another that will look into “learning how to learn,” or developing skills that will enable students to learn faster and more efficiently. He also dreams of building a class for which he would create a library of taped interviews with great integrative business thinkers. He would walk students through the tapes, analyzing each subject’s decision making, and then allow students to grill each subject live in the classroom.

“It will be a slow migration,” Martin concedes. “When you’re building Business School 2.0, you don’t start from scratch. You build on version 1.0. So step one is to overlay some integrative elements onto what is now a nonintegrative curriculum. Building a holistic integrative program will take a good five years.”

Second, Martin wants everyone at Rotman to understand that it’s the individual who sits at the epicenter of the new economy, rather than the corporation. “It’s an elemental force, it’s inexorable, and anyone who thinks otherwise just doesn’t get it,” he says. “No recession will change the fact that our economy has moved from one in which physical assets mattered most to one in which human assets predominate.”

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Even if Martin is wrong about the power of individual students, he’s fully aware that faculty members want to be compensated and evaluated according to their unique contributions to the school. And that’s something that he can change right away. “The way it used to work is that the school graded all of its professors in exactly the same way: 40% on research, 40% on teaching, and 20% on service to the institution through sitting on committees, speaking, and other similar work,” Martin explains. “I intend to blow that up. I’m going to sit down with faculty members, find out how to make their lives better, figure out what kinds of goals they would like to accomplish for themselves, give them some thoughts of my own, and then simply judge them at the end of the year on the goals that we set together.”

Some Fear, Some Cheer

Martin knows enough about organizational change to recognize the different interest groups at Rotman that he needs to consider as he goes about his task of reinventing business school. Fortunately for him, many of the interested parties at the school have everything to gain and nothing to lose. Students have every interest in seeing the school clarify its brand and push up its ranking. Recruiters will get much better candidates from Rotman if Martin accomplishes his goals. Rotman degrees will be worth more, so alums should be happy. And university administrators, who knew exactly what they were getting when they brought Martin in, should also be pleased.

That leaves the faculty. An old line about universities says that the politics in universities are so petty because the stakes are so small. But at the moment, the stakes for Rotman faculty members are anything but small. “What they say — and they’re absolutely correct — is that their entire academic career was built upon being narrow,” Martin says. “That was the way the system worked. You specialized in a particular topic in a particular field and published the results of your research in narrow journals. Then you were rewarded with a job in a narrow department at a broad university. These people made considerable financial sacrifices to devote themselves to scholarship and to teaching, and then along comes this punk of a consultant who doesn’t have an ounce of academic experience, and who appears to be pulling the rug out from under them. They have a stake in the status quo. This is their school. So I guess they have a right to feel queasy.”

Martin hasn’t fired anyone yet. He can’t fire tenured professors, of course, and other than reassigning a few administrators, he has only hired new staff so far. This past summer, Martin hired 15 new faculty members out of a total of 73 staffers. And he claims that he hasn’t lost anyone in a bidding war so far. “Some people are scared, some are cheering, and some are both,” Martin says. “I just have to work through these concerns and make people sufficiently comfortable to head down this path with me. One of my problems is that many of my ideas are still somewhat abstract. This may be one of those experiences that you have to consume to understand. But I think that I’d be disappointed — I’d think that my ideas were not radical enough — if everyone jumped on board tomorrow and did everything that I wanted to do.”

Ron Lieber (rlieber@fastcompany.com) is a senior writer at Fast Company. Contact Roger Martin by email (martin@mgmt.utoronto.ca), or visit the Joseph L. Rotman School of Management on the Web (www.mgmt.utoronto.ca).

Sidebar: What’s Fast

To make big changes, you often have to spend big money. Roger Martin believes that he needs to raise $100 million in Canadian dollars to make Rotman one of the world’s top business schools, and he’s thought hard about how to sell the school to alumni in new and different ways. Here are three of his strategies.

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Hire salespeople who have a fresh perspective.

Sometimes, development-office lifers aren’t the best people to launch a big capital campaign. Martin decided to start fresh. He hired Nancy Holmes to be Rotman’s executive director of alumni and external relations. She was familiar with the Rotman product, having been through the school’s Executive MBA program. Most recently, she had worked in sales and marketing for Imax Corp., a company that makes oversize movie screens. “We liked the fact that she was from a nontraditional background,” Martin says.

Don’t beg for money.

“When I was a consultant trying to attract new business, I tried to avoid cold calls and aggressive selling tactics,” Martin says. “Those tactics didn’t work in consulting, and I don’t think they work for business schools.” So how are people supposed to know to give if no one is asking them to open their purse strings? “If you spend enough time doing nice things for people, eventually they’ll ask you if they can give you money.”

Every service should come with a lifetime warranty.

Martin wants Rotman to become a center for lifelong learning. “Our job is to keep alumni up-to-date about what’s happening in the world of business academics,” he says. “So we ought to invite them back every so often to fill them in. This year, 160 people came to our alumni informational gathering. If we can do other things like this to show alumni that we care about them, and that we consider them to be part of a club, then they’ll come through with donations in due time.”

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