World Class MBA in Japan: is there one?

World Class MBA in Japan: is there one?

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Toshio Umehara

Japan’s post-war economy (“The Japanese Miracle”) has been exhaustively reviewed and, for the most part, heavily praised. Say what you will about Japan, the size of its economy, its growth, and Japan’s contributions to manufacturing technology and quality control, are indisputable. So-called “Japanese-style” management has been given much of the credit and has been more or less universally respected as something to emulate, not criticize.

Until now. As 2008 draws to a close, newspapers are filled with headlines announcing devastating financial losses, unprecedented layoffs, and discredited business models throughout Japan’s economy. Not even Japan’s largest and most prestigious firms have been spared. Even before the bad news about specific firms began to unfold, the lead story in the October 10, 2008 U.S. edition of Newsweek delivered a devastating summary of all that is wrong with Japan – socially, politically, and economically – in a few short pages devoted to one simple question: Why can’t Japan produce a company like Apple Computer? In a withering assault on Japan’s insistence on preserving models that arguably peaked half a century ago, the Newsweek analysis might have asked as well: Why, in a country where even manicurists are certified, is there virtually no academically rigorous managerial training?

Put another way, why does Japan have no business schools, developing hundreds of bright, talented, critical thinkers each year?  The Yomiuri Shimbun noted earlier in 2008 that some 20-30 institutions in Japan claim to offer some form of post-graduate business education. However, Japan has no formal B-school categorization, and there are only two schools in Japan recognized by the international Association to Advance Collegiate Schools of Business (AACSB, the international standard in B-school accreditation). New Zealand, with one thirtieth of Japan’s population, has three schools accredited.

In Japan the Nagoya University of College and Business (NUCB) is essentially part-time; it has classes only on evenings and on weekends. This prevents students from developing the indispensible interpersonal relationships – with a broad cross-section of professional managers – that lie at the heart of a classic B-school MBA. This leaves the Keio Business School (KBS) as the only fully accredited, full-time, two-year Masters of Business Administration (MBA) degree in Japan. Yet KBS, while an excellent program, lacks another vital ingredient: true membership in the global community. Most Keio MBAs do not graduate with the global communication skills or international personal networks that the 21st century demands of professional managers. It is an outstanding Japanese-language program for Japanese managers working in Japan – or for the tiny handful of foreigners (perhaps a dozen Americans or Europeans in its 40-year history) with Japanese good enough to be admitted.

As for the “B-schools” in Japan without AACSB accreditation, they may meet the needs of niche markets and they may provide some great business training, but do they turn out true MBAs? Some offer no degree at all. The majority appear to be English-language programs, yet English is not standard for business in Japan as it is in Hong Kong or the Middle East. For Japanese seeking an MBA in English, a high-quality brand MBA from Berkeley or London is an incomparably better investment. Finally, the value for a foreigner coming to Japan for an MBA is to understand how Japanese business works – something obtainable only by conversing with Japanese who are comfortably speaking primarily in their native language.
Some of these “business schools” appear to lack leadership, marketing ability, or anything remotely resembling a strategy. Many of their websites are of embarrassingly poor quality – some don’t have one at all. Anecdotal evidence suggests that many programs lack sufficient students or faculty, or both, to survive (KBS, on the other hand, is growing and in 2008 relocated to a new and larger campus). For the schools that don’t survive, there is something truly pathetic about an institution claiming to provide business education that has failed at marketing, strategy, finance, and vision – in short, the fundamentals of business itself.

The key reason for Japan’s situation is not hard to identify, and it reveals a huge irony. Simply put, Japan ignores the value of the MBA because Japan has no great B-schools, and it has no great B-schools because it ignores the value of the MBA. It is a classic chicken-and-egg conundrum, excused by worn-out cliché’s, well contradicted by the evidence.

The planet-sized irony lies in the oft-overlooked fact that, whatever the problems and weaknesses of Japan’s educational system, post-graduate work in this country can be world-class (three professors with roots in Nagoya just received Nobel Prizes). Japanese university undergraduates may spend four years cutting classes and partying, but those who choose to go on to graduate school are often performing first-rate research. There is simply no reason why Japan should not be home to one of the world’s top ten B-schools. Instead, it is rare or impossible to find KBS, NUCB, or any other institution on any international B-school list at all.

The conservatism that prevents the creation of a globally popular, high-quality B-school in Japan is a reflection of the problem that B-school graduates are trained to address: a lack of critical thinking. Wooden-headedness is certainly not unique to Japan, but the arguments one hears against a Japanese business school would be funny if they were not so sad. Examples:
“Japanese managers can’t possibly take two years off from work.”

Reality: to date nearly 3000 Japanese managers have done precisely that at KBS alone, while thousands of others have taken off two years to attend graduate school overseas. Furthermore, one could argue that Japanese managers do nothing BUT “take two years off from work” due to the deeply-ingrained practice of job rotation, often for assignments that bear little or no resemblance to their education or to what they did before or after the rotation.

“An MBA is too expensive.”
    Reality: Education typically pays for itself, and the success of enterprises such as Mode Gakuen proves that the appetite by Japanese for training, education, diplomas, certifications, and qualifications is, if anything, increasing rather than decreasing. Business training provided by Globis (a for-profit educational services company) has attracted many thousands of students, without the MBA certification. If thousands of people are essentially paying full price for a full MBA education without the diploma, it stands to reason that a full MBA program with the actual degree would be much more attractive.

 “There is no value for the money.”
Reality: It is standing room only at premier B-schools all over the world – and the number of B-schools is growing. Millions (including the tens of thousands of Japanese with MBAs) are clearly happy to pay for an MBA and obviously think there is value here. Decades of research have shown that, on average an MBA pays for itself within 6-8 years (not to mention the emotional rewards and social prestige associated with a postgraduate degree). While Japanese companies usually do not give higher salaries to people with MBAs, with talent competition on the rise globally, the number of firms that will pay a premium for an MBA is certain to rise.

“The MBA is a ‘damaged brand’.”
Reality: The MBA brand, like all brands, has peaks and valleys. Because of the “B” in “MBA,” it is only natural that its ups and downs correlate strongly with the business cycle. Every bear market is accompanied by a chorus of complaints against the evil, greedy, or stupid MBAs who let it happen. Such critics conveniently forget that there were economic downturns and evil, greedy, or stupid managers long before there were MBAs. If the MBA is not yet a strong brand in Japan, most of the blame must be traced to the inability of Japanese universities to put forth a first-rate product. There may also be a bit of cultural snobbery involved (“If Japan can’t make it, it must not be worth making”).

“Japanese don’t need MBAs. We get along just fine without any.”
Reality: Japanese newspapers carry articles every day of horrendous business blunders that an MBA probably would have avoided. Just in Nagoya, for example, any first-year MBA student would have noted that the now-bankrupt Italian Village was doomed from the outset because it had an insufficient diversity of attractions to lure enough repeat visitors given its poor location.

What would a top-tier Japanese B-school look like? It would probably look a lot like KBS, with a few improvements. First, it should have 15-25% foreign student enrollment. All foreign students would be required to have at least Level 2 of the Japanese Language Proficiency Test upon entering and Level 1 to receive the MBA diploma. Also, while being a Japanese-program, about 20% of the courses, using the case method exclusively, would be conducted in English or bilingually. This means it would have to have a highly diverse and largely bilingual faculty. All Japanese students would be required to have high TOEFL scores to graduate. Following the example of a very progressive, internationally-oriented school in Nagoya, it is probably advisable for the school’s senior management to be non-Japanese, at least in the first few critical years.

If Japan needs a better business school, why pick Nagoya? Business trends of the last few decades show clearly the tendency for innovation to begin at the “edge” rather than the “center” of an organization. Tokyo, the center of Japan for nearly all meaningful purposes, is sclerotic and staid, particularly in education. Nagoya, despite a reputation for being conservative, insular (and yes, stingy), is on the other hand the master in “making things.” If an “idea” can be said to be a “thing,” then a noble and worthy aim for Greater Nagoya as a region would be to change its mindset from being a place of “Making Things” to being Japan’s center for “Making Ideas.” There are nearly one hundred two-year and four-year institutions of higher learning in the three Tokai prefectures of Aichi, Gifu, and Mie alone. In the years ahead, it will be interesting to see if one of them has the vision and courage to take up the noble and worthy goal of being home to one of the world’s top ten business schools.

If we have learned anything from the last few years, it is that the 21st century requires 21st century ideas. Too much of Japan is stuck in risk avoidance and in following the strategies of the past. Japan is the only major industrial country in the world without a top-class, global B-school. Creating one won’t solve all of Japan’s problems. But it would be a superb step in the right direction.