May 2009 Update
A New Vision for the College
- Our mission is to educate a generation of leaders who create great economic and social value ... everywhere;
- To do so, we want to be the preeminent institution for entrepreneurial thought and action—and known for it;
- We want to embrace people, planet and profit issues simultaneously, not sequentially;
- We want to extend our global reach to have an impact on the world;
- We want to create a diverse, multi-cultural and inclusive community of highly talented students, faculty and staff; and
- We want to be prosperous and sustainable, with ample resources for our work.
Why is this vision right and compelling for Babson today? The world we teach in and educate students for has changed in significant ways. The current global financial and economic crisis has made it clear that many of the traditional ways of conducting business run the risk of no longer being relevant. The operating models taught at business schools were predicated on three key assumptions that are now in a state of flux—easy access to credit, cheap availability of energy, and an abundant supply of skilled labor at low cost.
For most business schools, the challenges of realigning curricula with the realities of today’s marketplace have never been greater. Students need to learn how to think and act differently in an environment where the underlying logics have changed dramatically and will continue to change rapidly. This is the role of entrepreneurial learning—to learn in real time, and adapt as conditions change and results emerge. Moreover, it is increasingly clear that economic value has become an inadequate outcome measure of performance. Business schools like Babson have an obligation beyond assisting our students to build better businesses. We must educate them to build a better world.
This need for entrepreneurial thinking and action and for realigning the curricula to go beyond business plays to Babson’s strategic advantage. The world wants entrepreneurial solutions and leaders who can create them. With our long established leadership in entrepreneurship and with an embedded liberal arts faculty, who is better prepared to provide these solutions and educate these leaders than our College? This is our moment—and we have to seize it.
A New Mission for the College
- Educate a generation of leaders who create great economic and social value ... everywhere.
A central tenet of our new mission is that entrepreneurial thinking extends beyond the boundaries of traditional business organizations. We educate future leaders—some of these leaders may choose to start new businesses, others may participate in family businesses, some may create new products and processes within existing organizations, and still others may engage in a new social venture, service, or movement.
Babson Strategy—A Historical Journey
Babson’s current strategy is rooted in a journey that began more than thirty years ago. In the late 1970s, Babson leadership adopted entrepreneurship as a point of differentiation from other business schools. Fifteen years later, Babson came to be recognized as one of the leaders in the discipline of entrepreneur-ship. At this point, Babson also began to focus on curriculum innovation. The result was the creation of integrated cross-disciplinary graduate and undergraduate programs marked by a focus on experiential learning. At the end of the 1990s, Babson started to reach out globally, and a number of partnership agreements were signed with schools across the world.
Figure 1: Babson Strategy (Pre-2009) Global Entrepreneurship Integration
As Figure 1 indicates, the pre-2009 strategy had three elements: leader in the entrepreneurship discipline, innovation across the curriculum through integration, and greater global outreach. The strategy was a success on all three dimensions. Babson has retained its number-one ranking in entrepreneurship for more than fifteen years. It became a leader in curricular innovation with continuous improvements in existing programs and the launch of the Fast Track MBA. Further evidence is provided by external recognition: awards by the United States Association for Small Business and Entrepreneurship (USASBE) for our undergraduate and graduate curricula; the December 2008 Business Week recruiter rankings which placed Babson as the 4th most innovative MBA curriculum—after Stanford, Chicago and Northwestern. In a recent Business Week undergraduate survey, five of Babson’s seven business discipline faculty groups were rated among the top ten schools in the U.S. for the quality of their teaching. Finally, Babson acquired a number of global partners who collaborate with Babson on research projects, student exchanges, overseas study trips, student internships, faculty exchanges, entrepreneurship education, and joint certificate and degree programs.
Babson’s Current Environment and Challenges
While our current strategy has largely been successful, it was conceived and executed in a very different environment. There are three significant changes in the environment for business schools since the adoption of our current strategy in 2003.
First, Babson’s leadership position in entrepreneurship as a discipline and curriculum innovation is being publicly challenged by other more prosperous schools such as MIT, Indiana, Stanford, and USC. These schools have been investing and growing their entrepreneurship departments. In curriculum innovation, Yale has frequently been cited as a leader in integrated curriculum development and execution (partly because of Babson’s modest efforts to document, refresh, and disseminate its curriculum). The strategic challenge this poses is: How do we respond to the challenges by other leading business schools to our leadership in entrepreneurship and curriculum innovation?
Second, the economic environment has shifted drastically, as evidenced by the dual shocks to the global economy from the dramatic rise and fall in oil prices and the meltdown of the credit and financial markets in 2008. These events have undermined the major, unstated assumptions on which business education has been built in the last sixty years—a cheap supply of fossil fuels, an infinite supply of raw materials, availability of capital at low interest rates, and low unemployment. There is a growing recognition that reliance on fossil fuels has to be replaced with alternative energy and production practices which emphasize sustainability. These “shocks to the system” also have revealed the danger of relying excessively on a market model which focuses on shareholder wealth creation and profits, and ignores how those profits have been created.
The global financial meltdown has brought close scrutiny of business school curricula in recent months. Critics point to the absence of ethics and the blatant disregard for societal good that seems to have been the hallmark of many business school graduates working in the major financial institutions. There are increasing calls for business schools to teach their graduates more than how to make profits and maximize shareholder wealth. And there is an increased emphasis on the role of business in fostering the common good and following ethical practices. The second challenge facing Babson can be summarized as: How do we build a curriculum that emphasizes sustainable practices and the common good alongside profit maximization and shareholder wealth creation?
Finally, a side effect of the economic crisis has been the significant decline in college endowments, alongside a diminishing student pipeline for private colleges and increasing student populations at public institutions which are experiencing diminishing government support. The crisis has focused attention on the financial management of private colleges—particularly those that rely heavily on endowment income. The cost of education has risen to the point where it is increasingly difficult to gain incremental net income from price increases due to countervailing pressures for financial aid. The last strategic challenge is: How do we build a sustainable financial model for the College that ensures long-term prosperity?
As Figure 2 shows, the Babson strategy for 2009 and beyond redefines the three historical pillars of entrepreneurship, curriculum integration, and global outreach. The 2009 strategy is a call to:
- Extend our leadership in entrepreneurship by moving from entrepreneurship-the-discipline to the more pervasive entrepreneurial thought and action.
- Cement our lead in curriculum innovation by designing the “next generation” curriculum that integrates profit and the common good. Revisions to the curriculum should allow students to be conscious of business stewardship obligations toward the environment and to society and should reflect the faculty’s voted support of the UN Principles for Responsible Management Education (PRME).
- Expand our global reach from limited partnerships to deeper strategic relationships. These would form a “global entrepreneurship education network” (GEEN) that disseminates Babson pedagogy, research, and practice across the globe through alliances, strategic partnerships and, in some cases, a physical presence. These partnerships provide the prospect of significant incremental revenue growth.
Figure 2: Babson Strategy 2009
Each of the three cornerstones of the 2009 strategy is described below.
Entrepreneurial Thought and Action
To extend our leadership in entrepreneurship, we propose that we shift our overarching institutional focus from entrepreneurship-the-discipline to entrepreneurial thought and action. Rather than a single discipline, this broader conception shifts the focus to a more encompassing notion of teaching students a different way of thinking and acting. This proposed shift gives rise to two important issues. First, is the concept of entrepreneurial thought and action sufficiently rigorous to withstand academic and practical scrutiny? Second, can we design a curriculum based on this concept that differentiates Babson from other business schools and provides our students with a marketplace advantage regardless of their career choice? We strongly believe that the answer to both of these questions is in the affirmative.
With respect to academic rigor, the concept of entrepreneurial thought and action is rooted solidly in research disciplines as diverse as philosophy, behavioral economics, decision theory under uncertainty, organizational control, management organizational behavior, and sociology.
Philosophers have long argued about the nature of reality—whether we can understand reality and then alter it through action or whether action itself creates reality. A more recent incarnation of this line of thought goes back to Kurt Lewin’s work in action research in the 1940s. Lewin’s work is rooted in the concept that action creates reality and there is no better theory than one that is rooted in practice. In the 1960s, Herbert Simon argued that, faced with high degrees of uncertainty, heuristics rather analytics is the better way to proceed. Simon and his colleagues at Carnegie were instrumental in introducing the concepts of “satisficing” and “bounded rationality” to capture the idea that decisions under uncertainty do not conform to causal logic of optimization found in classical economic theories built on the assumption of human rationality. This line of research recognizes the tension that exists between formal logic and a more action-oriented logic in which reality is an act of co-creation between an actor and her environment.
Simon moved decision theory from the relative certainty of known to the uncertainty of the unknown world. More recently, Saras Sarasvathy has moved this line of reasoning forward to consider the unknowable world in which many entrepreneurs make decisions. Sarasvathy provides empirical evidence that entrepreneurs often think and act quite differently from managers. For example, while most managers rely on causal logic and build plans to deal with uncertainty, many entrepreneurs often control uncertainty by acting directly upon it. Within a loosely-defined general direction, and within the confines of their values, they focus on what to do next and worry less about what they ought to do in some ultimate sense. They use quick action to test what works and make modifications as they go. Ironically, this approach limits risk. Most managers focus on means they must acquire in order to achieve the ends they desire; many entrepreneurs often start with their means at hand and work to the ends that they can create within those means. Managers generally think about what they ought to do; entrepreneurs often focus on what they can do. While causal logics, such as game theory, emphasize choosing to manage for the possible outcomes that maximize payoffs, entrepreneurs often use an alternative criterion of affordable loss in making choices.
Not only do the entrepreneurs Sarasvarthy studied think differently from managers, they also act differently. Rather than find opportunities, the entrepreneurs often make opportunities. Unlike managers who act on the basis of well-formulated plans, entrepreneurs act more opportunistically. In a sense, the normative manager operates on the principle “If you build it, they will come;” entrepreneurs in her sample often operate on the idea that “They are here, let’s build something and get going.” In the early stages of organizational innovation, such entrepreneurial thinking is clearly needed; at later stages of organization development, managerial thinking becomes increasingly valuable (until renewal is called for). Her work represents one of many interesting lines of inquiry available to our faculty as they undertake the task of curriculum renewal.
The existence of a Babson curriculum that already effectively blends theory with a grounded practice orientation and the evolution of a number of streams of research alongside the Simon/Sarasvarthy work we are describing lead us to maintain that we can build, refine, and brand a curriculum that capitalizes on the concept of entrepreneurial thought and action. We can do so by building on the differences between managerial and entrepreneurial modes of thought, and teaching how and when to use each. For example, the content of most business programs is built on the logic of what every manager needs to know. This framework leads to a causally-oriented curriculum that emphasizes the following questions:
- What is the problem?
- What analysis needs to be performed?
- What results do I expect?
- What actions do I need to take based on the analysis?
As each of these questions are precursors to managerial action, most business school curricula place great emphasis on honing the skills of students to recognize problems, find the right analytical tools for analysis, perform the analyses correctly, and draw the appropriate conclusions. There is little opportunity for careful reflection on implementation—just advice on the importance of excellent execution.
Sarasvathy discovered that entrepreneurial thought and action uses “effectual” logic that is based on asking the following four questions:
- Who am I (my identity as shaped by culture and context, skills, and abilities)?
- What do I know (my knowledge and training)?
- Whom do I know (my professional and social network)?
- How do I bring together these three elements into a network of participants who can co-create an opportunity?
These questions can become the organizing principle for a curriculum that is based on entrepreneurial thought and action. To the extent that our curriculum already emphasizes elements of this logic, it provides us with a way to validate and brand our educational model. To the extent we do not yet fully train students in this logic, it allows us to make our curriculum substantially more explicit and differentiated.
Clearly, the liberal arts curriculum has always been concerned centrally with creating awareness and increasing consciousness that helps students to address who am I, what values do I hold, what values I should hold, and who I am not. In some of our other program activities, such as the creativity module, the Managerial Assessment and Development course, and elsewhere, similar discoveries are encouraged. There may be little or no change in what they teach or how they teach it.
On the other hand, disciplines such as managerial accounting and decision sciences, which deal with what I need to know, tend to rely heavily on causal logic and analytical models for decision-making. These disciplines also could introduce students to effectual logic that embraces the idea of focusing on continually re-deciding what to do, rather than just searching for a single globally optimal solution. Finally, organizational behavior and Web 2.0 courses may have to be created to help students identify and build a powerful social network and activate it to co-create opportunities.
A refined curriculum based on entrepreneurial thought and action does not abandon causal logic. To the contrary, causal logic and analytics are extremely important for deciding what to do next, for scaling an opportunity once it has been recognized, and for evaluating the outcomes derived from action. Causal logic and analytics serve both as predictive tools and as reactive measurements.
By teaching both causal and effectual action logics, we can build a generation of ambidextrous practitioners, able to display understanding and behavior associated with each approach at the appropriate time. Using the concept of entrepreneurial thought and action, we can build a curriculum that provides a rationale for what we do, validates much of what we have in place, and differentiates us from other business schools in a powerful fashion. By adding the integrative perspective that follows, we can effectively address issues of purpose and values that complete the perspective for the student.
Next Generation Curriculum—Integrating Profit with the Common Good
We propose to extend our expertise in curriculum innovation to integrate simultaneous consideration of people, planet, and profit. This requires us to develop a curriculum that takes into account that business solutions must not only generate profits, they must be sustainable and meet desired social objectives.
If we look at what most business schools do in this arena, social and sustainability issues are often on the periphery of the curriculum, while most of the focus remains on maximization of profits and shareholder wealth. The current economic crisis has taught us that it is simply inadequate to focus on generating profits without regard to how those profits are being generated. Business school curricula, often unwittingly, have contributed to the notion that success in business comes before an organization can address social causes by establishing a philanthropic foundation. An Urdu saying describes this practice as “the cat going to perform hajj (pilgrimage to Mecca) after swallowing 900 mice.” Businesses should not negatively impact the environment and destroy the social fabric while making amends through charitable contributions.
Additionally, future leaders must develop a competency in cultural sensitivity and understand how one’s culture, history and background informs and shapes one’s perspective and world view. They also need to know how to effectively integrate these diverse perspectives into business solutions that impact people, planet and profit. Our curriculum must create opportunities for students to develop a core skill set and capability in cultural sensitivity and cross-cultural leadership.
Fortunately, we now have a start at a framework with which to design a curriculum that addresses people, planet, and profit issues simultaneously. The UN Principles for Responsible Management Education that 225 institutions of higher education, including Babson (and in the United States, peer institutions such as Boston College, Notre Dame, Cornell, Ohio State and Johns Hopkins), have endorsed provide us with a powerful base to build upon, including a set of principles along with a large network of resources and contacts. Our students have demonstrated a strong interest in this shift to responsible management. A large number of faculty have self identified their interest in this shift as well.
Given a commitment to entrepreneurial thought and action as a method, and the faculty’s recent endorsement of the PRME, there appears to be a significant opportunity to develop our pedagogy in such a way that these issues, which are largely out of the mainstream curricular matters in other business schools, become core in our curriculum. While we certainly do not claim to fully understand what this might look like, we find ourselves in a unique position to accomplish it because we have a strong base of faculty committed to an integrated view of education who are excited about experimentation.
The Lewis Foundation gift of $10.8 million to create a campus focused on responsible management principles provides us with a tangible start to extend our work beyond the traditional conceptual boundaries of business.
We also have a unique opportunity to link this work to the other part of our strategy—developing entrepreneurial thought and action. There is a growing recognition that the solutions to our economic, social, and environmental problems will come from entrepreneurial ideas and action. Influential New York Times columnist and author Thomas Friedman makes this point explicitly in his latest book Hot, Flat and Crowded. As he puts it, the solution to the problems of energy/climate and the increasing burden on the earth's resources will largely be developed by entrepreneurs generating innovative solutions.
The March 2009 issue of The Economist has an extensive special report devoted to entrepreneurship that makes the same point. Most economies in the world, from advanced to developing, are increasingly embracing entrepreneurship as a solution to the difficult problems we face today. As President Obama said in his first speech to Congress, the answers to our current problems will come from “the imaginations of our entrepreneurs ...”
What does it mean to integrate sustainability and social responsibility into a business curriculum? A possible way to integrate these themes is to assume that nothing we teach in our curriculum is purely technical, and that all technical solutions have environmental and social consequences. To take a concrete instance, in today’s MBA program we integrate across disciplines. We may have a marketing case that has cost analysis and simulation and the three disciplines teach it together. We have process analysis cases that have management accountants and operations management faculty working together. Now imagine a marketing case that integrates how the product or marketing of that product is, or is not, socially responsible, the impact it has on the environment, and its use of renewable resources. Similarly, imagine a process analysis case which focuses on the capacity available at each process step to identify bottlenecks, the cost of each activity as a step in constructing activity-based cost systems, the amount of energy that each process step takes, the amount of pollution each process step generates, and the social and behavioral impact on the workers performing that step.
Does the focus on sustainability and social responsibility require us to abandon what we currently do? We do not believe so. Our liberal arts curriculum is designed to assist students in evolving a set of personal values and ethics within a larger social context with which to address the problems we face. Often, students find a disjunction between discussions in the liberal arts and business curricula generating confusion about the potentially different world views they encounter. Bringing people and planet together with profit holds the potential to close this gap and show our undergraduates what we have been telling them for decades: the value of the arts and sciences to their success cannot be underestimated.
Curricula that combine entrepreneurial thought and action with maximization of profits and the common good provide Babson with an opportunity to redefine these areas in a way that would differentiate us from others and maintain our longstanding leadership position in entrepreneurship and curriculum innovation. The basic ingredients for doing both are already in place—and with some effort we can combine them into an elegant, powerful, and differentiated educational offering.
Global Strategy—Global Entrepreneurship Education Network (GEEN)
The third cornerstone of our strategy focuses on extending Babson's reach globally. Figure 3 below provides a simplified representation of Babson’s global approach as articulated prior to 2009. The strategy focused primarily on creating a number of limited partnerships across the globe that provided specific collaboration around activities such as student and faculty exchanges, educational programs, research partnerships, and joint degree programs. The limited partnerships have provided benefits in certain areas and to faculty who participate in these programs.
These limited partnerships, while helpful, do not provide a truly global educational experience for our students or significant global presence and recognition for Babson. Within these focused relationships, Babson does not control the quality of education provided. Our students often can only afford short trips that lack a deep immersion in the culture of the host country. On the recognition side, limited partner-ships are not committed to the Babson curricular model and we get little or no visibility for our efforts.
Figure 3: Babson’s Pre-2009 Global Strategy
Two recent events bring home the point about the lack of recognition in particular. The March 2009 issue of The Economist contained the previously mentioned special report on entrepreneurship. There was only a passing reference to Babson when the GEM report was cited. Another report by two Harvard professors on the state of MBA programs notes Yale University’s recent effort to integrate its curriculum as an example of contemporary innovation. There was no recognition that Babson had done this almost 20 years ago!
The key drivers of our proposed 2009 global strategy are the need to:
- provide our students with a truly global educational experience; and
- establish a global presence and recognition for Babson as the world’s leader in entrepreneurial thought and action and curriculum innovation. The global strategy, therefore, is a complement to the two other pillars of our strategy—leadership in developing entrepreneurial thought and action and curriculum innovation and integration.
It provides the vehicle for disseminating our curricular innovations across the globe, helping us to achieve recognition for our efforts. This need simply cannot be fulfilled by limited partners who are parties to multiple relationships and have little or no commitment to propagating Babson’s thought leadership in all of its forms.
Figure 4: Babson’s New Global Strategy Based on GEEN
As Figure 4 shows, at the heart of our new global strategy is the concept of a Global Entrepreneurship Education Network (GEEN). The concept of GEEN provides a practical vehicle for connecting our global strategy to the other components of our strategy. It envisions a network of institutions that are committed to utilizing and advancing Babson’s thought leadership and pedagogical approaches and will serve as a vehicle to disseminate our curriculum worldwide. Because the curricula will be increasingly aligned across the network, we can provide our students with a chance to study abroad for longer periods of time while maintaining content and quality control. This, in turn, can assist us with our exploration of expanding the size of our undergraduate population. GEEN also can serve in providing us with additional markets for our degree programs—particularly the Fast Track MBA. The partnership can also yield revenues through Intellectual Property (IP) transfer - another cornerstone of our revenue exploration strategy. Finally, the substantive expansion of our global faculty development activities through programs such as the Symposium for Entrepreneurship Educators (SEE) will be enhanced dramatically by the establishment of more strategic relationships.
In the long run, GEEN members will continue to provide much of what our current limited partnerships provide, and hopefully a great deal more. For example, members of GEEN will participate in student, faculty, and research exchanges. They will also provide access to markets for Babson's degree programs, serve as a source of supply of qualified faculty, and disseminate Babson innovations globally. However, unlike limited partners, these strategic partners would be committed to propagating Babson thought leadership and pedagogy by aligning curricula with Babson, hosting an expanded array of SEE programs, sending their faculty to be trained by Babson faculty, and participating alongside Babson in providing faculty to other global partners. For example, a Babson partner institution in one location may become a source of global faculty recruitment supply for teaching in another partner relationship.
It is our hope that, over time, many of our limited relationships will be replaced by these strategic partners. Initially, not all partners will be able to provide all of the benefits envisioned by our strategy. Some may serve primarily as markets for our degree programs, others may be providers of faculty, and still others may serve as attractive locations for student exchanges. However, over time, we hope to create a network of institutions that are truly fungible in the core educational experience and unique in their provision of a multicultural perspective and experience.
From a strategy implementation point of view, our plan is to expand each new relationship opportunity in phases. For example, a first phase might be a joint degree program, study abroad or executive education. Once we have learned a little more about each other, we can expand the relationship to cover other areas. The phasing of any relationship will depend upon the country, the maturity of the proposed partner, and the structure of the alliance (a joint venture or a Babson operation). A Babson run or a Babson-style operation will allow our entire faculty to have a significant role in the global arena.
We believe that the strategy enunciated in this document furthers and cements our leadership in the areas of entrepreneurship and curriculum innovation. It substantially increases our reach both outside the arena of traditional start-up businesses and across the globe. When implemented, the strategy will:
- provide Babson with a unique position in the arena of business education;
- create a niche that is greatly in demand;
- capitalize on our existing brand in entrepreneurship;
- use our strength in innovative pedagogy and curriculum to maintain our leadership in that area;
- provide us with a powerful message based on a few key ideas that will appeal to large-scale philanthropists; and
- generate the resources we need to document, disseminate, and renew our work.
When executed, the strategy should help us build a prosperous financial future by attracting funds from all the sources we are targeting—more students, more partnerships, and more giving.
Whether you are a Babson College student, parent, alumnus(a), faculty, staff, or governance member, the fulfillment of this vision matters enormously. It will strengthen Babson’s academic reputation, increase the value of a Babson degree, enhance membership in the Babson community, and provide a great place to connect with for life.