/ 3 August 2001

Who’s eating your lunch?

In today’s economy, where you are doesn’t matter, it’s what you do and how well you do it that counts

Deleen Wilson

Business education in the 21st century will have to reflect and engage the major changes taking place in management demands around the world. But what will be the role of the increasingly popular MBA, and how do the prolific number of courses differentiate themselves in this highly competitive arena?

Businesses are the “engines of prosperity” and the creators of jobs, yet the nature of global competition has shifted significantly in the last decade. Having moved from an industrial economy with material and tangible assets, into a knowledge or information economy with many intangible assets, today’s successful companies are those that understand that their competitiveness depends on the performance of their people, not just their product.

And tomorrow’s successful people are those who recognise that because of the accelerated rate of change within our business environment, there are three essential components to getting it right: they must identify what practices and skills will work in this new environment; identify those that don’t work and abandon them with intention, rather than inadvertently let them go; and learn a whole new set of skills necessary to survive. Alvin Toffler put it succinctly when he said, “The illiterate of the 21st century will not be those who cannot read and write, but those who cannot learn, unlearn and relearn.”

This change in approach to business isn’t a choice, it’s a necessity, says Nick Binedell, director of the Gordon Institute for Business Science, “yet it brings with it wonderful opportunities for innovative business leaders and proactive entrepreneurs to flourish both locally and globally. Success, however, requires knowledge, and more and more dynamic middle and senior managers are opting to study an MBA to fast-track into tomorrow’s leadership positions.”

There are so many MBAs now on offer that the term has made it into the English dictionary, has lost its generic status and is now a recognised brand name. Such is the growth that, according to a recent survey, nine South African schools produced 689 MBAs in 1997.

In 1999, 13 schools almost doubled this figure to 1 254 qualified MBAs an 82% increase in just two years. It is important to research how many students complete the course from the school of your choice, however, and in what time frame, as not all those who start finish the MBA.

And yet the controversy around its validity as a practical business tool still rages. The question most often asked is: Is the MBA simply a set of hypothetical theories or does it provide practically useful information and experiences that can be applied to every day business? Answers may vary, but for Tony Sage, currently enrolled for an MBA, there’s no doubt: “I’m growing faster than the Internet.”

But investment on the part of the student is high: the cost of an MBA ranges vastly between R17 500 and for those with deep pockets R70000, averaging at around R35000. The heavy financial investment means that many students are sponsored by their companies.

While the financial cost is substantial, the emotional and physical effort can be far higher. On average, students taking a two-year part-time MBA are required to attend 20 to 25 hours of classes a week and put in an additional 25 to 30 rigorous hours of study. Any time that may be left over is swallowed up by the numerous case studies, which have to be analysed by project teams.

But money talks, and the significant salary increases MBA graduates normally enjoy on completing their degree positively yells. One survey indicates that, before taking an MBA, the majority of graduates earned between R100000 and R200000 a year; after the MBA, the majority earned between R200 000 and R300 000.

This leaves employers in a challenging position. They must now consider their employee proposition as carefully as their customer proposition if they want to attract and more importantly retain high-performance graduates and leading young managers.

A good salary, company car and comprehensive medical aid are no longer adequate packages. Nothing less than up-to-the-minute skills training and a global career are what hot, skilled graduates demand.

It follows that business schools are also under pressure to rise to the challenges of globalisation. Like any organisation whose roots are based in the industrial era, they are finding it necessary to “adapt or die”.

The advent of e-business has ushered in a new mode of conducting business, whose impact we are only just beginning to grasp. Telecommunications, especially the telephone, Internet and e-mail, have rendered companies’ physical location irrelevant. In a globalised economy, where you are doesn’t matter, it’s what you do and how well you do it that counts. If you have to turn around to see who is coming up behind you, you can bet someone will have eaten your lunch by the time you turn back round.

But Binedell is highly optimistic. “Clearly, South African business schools are addressing many of these changes. Professor Michael Porter of the Harvard Business School, and author of 16 books on business competitiveness, recently shared the following data: the World Competitiveness Report on Microeconomic Competitiveness Ranking listed South Africa 25th out of 30 countries; yet the quality of business schools was given as the fourth Relative Competitive Advantage, with a global ranking of 17.”

So, once you have decided to study an MBA, the most important question is: which one do you choose? An MBA is not an MBA is not an MBA, so what makes each one different and what should you be looking for in choosing the right one for you?

One of the first options candidates must consider is distance learning versus interactive classroom learning. While distance learning offers the student flexibility and control over their studying schedule, it offers limited faculty interaction and the student is deprived of the stimulation that a classroom of peers can provide, both of which are absolutely critical for executive students.

“Business is not only based on analytical and rational thinking,” says Binedell. “Decision-making at executive and senior executive level also requires communication and social skills that are hard to absorb when the programme is distance learning. So, while it has a place, distance learning also has its limitations.”

A further criterion to consider is how the MBA is structured. Is it modular, for example? Can you retain your job and accelerate within your company, while you study?

Links with overseas institutions are also important does the institution you’re considering have such links in place? In a globalised economy, students who can benefit from international experience and observe best practice in other industries and companies as part of their study experience will clearly be at an advantage.

Yet the introduction of the information economy poses an interesting question. If the product you are selling is knowledge, who produces it and where do you buy it from? At the core level, universities “produce” the knowledge in the form of graduates: state-of-the-art models equipped with the new set of specialised skills required to function and succeed. In effect, universities have become the factories of the knowledge economy.

The onus lies not only with the government but with local business to fund our future leaders. South African business has made many contributions over the years to a variety of social investments, but in the years ahead the main investments should be in enlightened self-interest, and the critical area of investment is education. It is vital, therefore, that companies make a higher level of investment in education particularly science, technology and business education.