Glenn Hubbard: B-schools must unravel lessons from crisis at the VA

Recently confirmed U.S. Secretary of Veterans Affairs Robert McDonald has a big challenge on his hands, possibly the greatest he has faced in his distinguished business career.

The mounting problems at the U.S. Department of Veterans Affairs are a good example of a management challenge—the need to set goals, develop processes for action, and assess metrics for success. Such a challenge is more than a technical one of providing a specific type of medical care. The case study is instructive.

The department lost sight of its core mission—delivering the best possible care to our veterans— and instead became mired in poor decisions that masked systemic problems at all levels of the organization. Previous leaders focused on adhering to reporting rules and standards rather than the underlying problems of physician shortages, mounting claims, an influx of returning soldiers, and uneven care. The tragic stories of veterans failing to receive their benefits for weeks and months represent a stark human cost that can result from leaders’ inability to understand the impact their decisions have on the whole organization and its goals.

The challenges faced by the Veterans Administration are a microcosm of a bigger point: Most major business and social problems require disciplined and integrated management thinking—thinking that goes well beyond a list of disciplines covering functional areas of businesses and organizations. Indeed, employers of top MBA graduates say they increasingly prize candidates who think quickly and across disciplines when confronted with new challenges. Business leaders who will thrive in today’s global marketplace must learn how to “connect the dots” among patterns, problems, and ideas to address complex challenges in industry and finance—and in society and government. And developing integrated problem-solving skills for organization leaders cannot be taken for granted.

The best business schools have been a hotbed of innovation in integration—long the essence of entrepreneurial imagination and strategic thinking. At Columbia Business School, for example, we foster integration of skills in the core curriculum by using an experiential case study—currently on General Motors (GM).

As we saw at GM during the 2008 financial crisis, difficulties plaguing the automaker before its bankruptcy developed over decades; executives failed to connect the dots when serious problem arose across production, pricing and finance. That’s why in charting the best course, it’s critical for managers to examine a company’s overall business decisions from a broad view that includes various business functions and how each interplays with one another.

Integration is also the watchword at other top business schools, such as Stanford Business School’s emphasis on critical thinking and Harvard Business School’s Field Immersion Experiences for Leadership Development curriculum. Both provide students hands-on experience acting as leaders in addition to thinking as leaders.

While top business schools analyze and comment on the need for entrepreneurial and integrated thinking in organizations ranging from the Veterans Administration to General Motors, all business schools also need to reexamine their approach. Pulling this off will push business schools to a natural integration between faculty and business with leaders teaching ways to tackle complex business problems (say, how to negotiate deals or develop top management processes) and between business school faculty and university leaders to hone critical thinking skills in context areas (say, how demography or trends in personal medicine shape the search for business opportunity).

As with the Veterans Administration, this reorientation requires a refocus on goals and objectives, team engagement, and the use of technology to enable success. McDonald will no doubt find strategy and better management practices a key to turning the VA back to its social mission. While management education isn’t the VA’s burning platform, it, too, will need to adapt. With the resources and broad-gauged intellectual capital required for success, only a handful of top business schools will succeed in the quest to provide the business education that today’s leaders need to be successful.

Glenn Hubbard is Dean of Columbia Business School. Previously, he was Chairman of the Council of Economic Advisers under President George W. Bush.