Richard M. Cyert; William R. Dill
In the past ten years, progress has been stimulated by the appearance of new concepts for business education at a few universities and by serious attempts at most schools to evaluate the approaches they have been using. With financial support from the Ford Foundation and other sources, improvements have been made in both undergraduate and graduate programs. There has been a significant increase in the numbers and in the intellectual caliber of new Ph.D. candidates preparing for business-school teaching and in the numbers of able [persons] from other disciplines willing to join business-school faculties. Business schools are paying more attention to significant research that is being done by others in fields related to management; and many business schools themselves are centers of significant research in the management, behavioral, economics, computer, and quantitative sciences. In many more universities today than ten years ago, the business school has become the intellectual leader—a spur and a stimulus for other departments and professional schools.
These accomplishments are only a beginning, however. Changes in technology, in methods for decision-making and research, in international relations, and in the role of business in modern society leave no time to rest satisfied with past achievements. It is important to look at the elements which account for the improvements that we have made and to assess the effectiveness of the same methods for the changes which lie ahead.
Business schools have three basic missions in society. First, at the undergraduate, graduate, and "executive program" levels, their job is to help students acquire knowledge and skills that they need to function effectively and responsibly as manager and as support personnel to management in business and industry. Second, primarily in doctoral programs, schools are responsible for training faculty members to teach, conduct research, and to provide administrative leadership in tomorrow's business schools. Third, to an extent that has not yet been fully acknowledged, there is a responsibility to do basic and applied research. Research provides the thrust for improving business practice and for improving the management of interrelationships between economic institutions and the rest of society.
Fortunately for the job of prediction, management practice frequently lags behind the advanced research developments with which schools are familiar. This means that we can speculate from current studies about what managers can do, and we can make some judgments about what they are likely to do in the years to come.
The first set of predictions relates to the computer. Until recently, business management has viewed computers strictly for their powers as calculators. Occasionally, computers have been used for decision-making but most of the applications have been routine, and the concept of the computer as a decision-maker is still not widely recognized or understood. Yet a growing collection of evidence from business itself shows that computers can make many managerial decisions as well as people can. Computer programs exist, for example, to develop and evaluate equipment designs, to locate warehouses, to select advertising media, to estimate the reception for new products from consumer survey data, to schedule production and inventories, to select stocks and bonds for trust portfolios, to determine bids and prices, and to monitor and control the operation of complex and continuous production systems. Within five or ten years, it is reasonable to expect computers to be making a variety of decisions that middle and top executives now spend time making. Educationally this means that schools must prepare students to understanding the computer and to understand the steps by which decision processes are analyzed and flow-charted. They will need these skills to be able to make the computer into an aid for their own decisions and to check and control the decision programs which others have written.
The greatest strides in management education and practice over the last decade have been in the introduction of concepts and methods for improving the administration of "the going concern." Relatively little attention has been given to the strategic planning process—the set of activities by which management creates and maintains a viable firm. As long as companies were small, as long as their products and markets were stable and profitable, and as long as new capital investments could be made on the assumption of a comfortably long pay-back period, planning for the future was not as important an activity for most managers as working to increase the efficiency and effectiveness of current operations. Now, however, the strategic planning problem can no longer be ignored. Companies are getting larger, more diversified, and harder to hold together as viable economic units. The profitability for many old products and old markets is declining; and because of changes both in technology and in economic development overseas, entirely new markets are developing. Capital investments for an automated factory or an electronic data-processing system are bigger and more short-lived than the investments which many companies have been accustomed to making. The arts of goal setting and planning are taking precedence over the arts of administration and control.
Students going into management must be trained to play a creative role in setting goals for the firm or for the sub-unit of the firm in which they are working. They need to be able to assess the external environment. What opportunities and constraints does the environment provide, both with respect to existing products and markets and with respect to new kinds of product-market ventures? Students must learn to weigh potentialities of the environment against the distinctive resources and competences of the firm and to translate these evaluations into more specific concepts of the company's mission and goals. They need, finally, to be able to elaborate their assessments of the environment and their decisions about basic strategies into plans for the development of research, marketing, financial, production, and administrative operations.
The new emphasis on strategic planning and decision making has been most conspicuous so far in the reorientation of courses in business policy. Strategic questions need also be treated in marketing, finance, production, controls, and organization courses to counterbalance the weight which is already given in these courses to the problems of operating once basic strategies have been chosen. As we develop more substantive knowledge about strategic issues, there may also be a need for new courses in such areas as the planning process or the management of research and development.
To the extent that it is concerned with objectives, strategic planning also overlaps with the revived interest in some schools in such things as business ethics and the place of the corporation in society. We fully endorse the notion that in setting goals, managers must be aware of social, political, and legal factors as well as economic ones, but we are disturbed by two divergent tendencies. The first is to make the business policy course more a course in the social responsibilities of the executive than a course in strategic—and predominantly economic—planning and decision-making. The second is to reserve consideration of the non-economic issues for a separate course, which has nothing directly to do with courses in business policy and the functional fields of management. Neither tendency really is consistent with an integrated view of businesses as economic institutions which, as a matter of course, accepts substantial social, political, and legal constraints on their economic freedom of action. The only way to teach this view, it seems to us, is to focus on the interaction between economic and non-economic considerations in all courses and to subject the latter kinds of considerations to the same systematic questioning and evaluation as we do the former.
"A school which includes both [business and public service] students may help prepare a generation of managers who are more flexible and more committed to maintaining the joint responsibilities and freedoms of different kinds of institutions in a pluralistic society."
- Richard Cyert & William Dill