Gulf business schools need to reshape Western corporate model

19 January 2010

The world’s top providers of management education are coming to the Gulf. They need to learn as much as they teach

At Insead’s annual leadership summit, held this year in Abu Dhabi, the institute’s global leadership centre director Manfred Kets de Vries stimulated aspiring Gulf corporate moguls with a lecture named the “Achilles’ Heel of the leader”.

The reasons why senior managers fail were listed. Some cannot make tough decisions. Others are bullies. Narcissism is a more subtle trend. Too many business leaders are self-obsessed. Over time, they lose the ability to accept criticism and tolerate open discussion about plans and strategy.

De Vries closed his talk by putting a question to the audience: “Do you want to be the richest billionaire in the graveyard?,” he asked. “The most important measure of success is your ability to cultivate a successor.”

It was a telling observation. Top-down management styles can be found everywhere. But they are often the default arrangement in the Middle East.

Financial meltdown

Insead has been educating chief executive officers, and people who want to be one, since 1959. Practically every European company employs its graduates in senior positions. Almost 2,000 Insead alumni work in the Middle East. There could be more than 10,000 people in the region with MBAs. The business schools of North America and Europe are respected and admired. Why, then, did De Vries turn his fire on the very people they have trained and inspired?

The simple answer is that the credit crunch, which President Obama says was largely due to the errors of senior bank executives, has raised doubts about the purpose and consequences of management education. Practically everyone in leadership positions in Lehman Brothers and other failed financial institutions had an MBA. Business schools have begun to accept that they may have contributed to the meltdown by failing to restrain the relentless individualism of those they train.

But history is full of stories of weak leaders and megalomaniac rulers. Narcissism is not new and cannot be abolished. Leadership in human affairs is a deviation from the norm. If it was not, we would not need it.

Despite the recent loss of confidence, business schools will continue to play an important role in management training. The larger issue is whether an MBA as it is taught in Insead and other business schools can maintain its relevance in an era when the centre of gravity of the world economy is shifting decisively towards China, India and rapidly-growing emerging economies.

The Middle East will present a new test. Leading business schools have opened faculties in the region. Cass Business School and the London Business School are in Dubai and Strathclyde University has run its part-time MBA course in Abu Dhabi for 15 years. The launch this month of Insead’s Executive MBA at the institute’s Abu Dhabi campus is further evidence that top-notch executive management education is building a permanent place in the Gulf. Insead’s dean J Frank Brown told the Abu Dhabi meeting that this is an opportunity for the transfer of knowledge to be more than one way.

Hire on merit

One of the biggest issues facing the future of the Gulf private sector is the role of family businesses, still the dominant corporate form in the region. For many management scientists, these are outmoded institutions. They should be replaced by the modern business corporation run by professional managers hired purely on merit, not family members.

But there is more than one way to structure corporations. Delivering results in today’s world demands organisations where consensus matters and every employee understands the company’s values and objectives, almost instinctively.

Many Middle East family businesses fail on both counts. But at their best, they present a robust alternative route to lasting success. The goods ones have dealt decisively with the global recession and despite the shocks, continue to grow.

The world is wondering what has gone wrong with the Western corporate model. Business schools such as Insead say they are ready to listen and to learn. Gulf businesses should seize the opportunity to teach a lesson or two of its own.

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