Feb 7th 2012, 18:49 by B.R.

IT IS a problem familiar to many businesses: how to handle the succession of a larger-than-life boss whose name has become synonymous with the brand. But for the Kellogg School of Management the problem was doubled. When Sally Blount took over as dean 18 months ago, she not only had to follow Dipak Jain, a hugely popular figure who twice led the school to the top of The Economist’s MBA ranking during his eight years at the helm, but also Donald Jacobs, whom Ms Blount describes as “the greatest business school dean of the late 20th century”. 

Mr Jacobs’s presence still pervades the school. He was dean for an impressive 26 years, between 1975 and 2001, and retains the title of dean emeritus. He is a tough act to follow: “What do you do for the 21st century when you’ve had this magnificent history?” wonders Ms Blount.

The answer to her rhetorical question, it seems, is to try to redefine the school. She has embarked on a five-year plan, which will see Kellogg pull back from the traditional American model of a two-year MBA, taught by faculty who are steeped in their narrow academic disciplines. She also aims to distance it from its traditional tag of the world’s most prominent marketing school. 

Change is essential, she argues, because the world is entering a new epoch. “It feels like only now that we are in the 21st century,” she says. “In many ways, as I look back, 2000-2010 was some kind of worm hole that got us from the 20th to the 21st century. If you had told me in 2000 that in a decade the World Trade Centre would fall from a terrorist attack, we’d go into a number of wars, we would elect a black president and Bear Stearns and Lehman Brothers would vaporise, I would have been stunned."

"You can almost see the simplicity of the 20th century in retrospect," she goes on. "Business is still the dominant social institution of our time, as it was in the late 20th century, but it is very different now. The depth of understanding that you cannot separate private enterprise from public policy is far more profound than anyone saw. And that has huge implications on what you do as a business educator.” 

Two is too many

One implication has been that domestic demand for the traditional, two-year MBA in America is falling alarmingly. Currently, the shortfall is being made up by foreign students, particularly Asians (see chart). But it has been difficult for the powerhouse business schools to come to terms with the idea that the model on which they have relied for decades might be creaking. Many have been in a state of denial, merrily admitting more and more students while increasing tuition fees well above the rate of inflation. 

Kellogg has been the first to blink. It is beginning by reducing the size of its two-year, full-time programme from an intake of 650 to around 530. At the same time it will beef up its one-year programmes, both the truncated MBA for those who have already studied business at undergraduate level, and its professional Master’s degrees. 

The market, the dean hopes, will not see this as a sign that the school has over-reached. Although the two-year programme will shrink to the size it was 15 years ago, Ms Blount insists that it should be viewed as a way of making the school less US-centred. Increasingly, she says, students from India and China will shun the idea leaving the workforce for two years’ study. “If you think your job is to give out two-year MBAs in the US, you are missing the boat,” she says. “You have to be realistic about what the needs of the marketplace are when people are paying for their degrees. There is this wonderful irony that people are living so much longer, but kids in their 20s perceive that they have less time for going and getting education. It is a fascinating phenomenon.”

There will be also be an overhaul of the curriculum, with less focus on individual academic departments, such as accounting, finance and marketing. Instead teaching will be based around four overarching concepts, which the dean says will cut across all subjects: innovation and entrepreneurship; how business interacts with government; markets, customers and growth; and what it calls “architectures of collaboration”—essentially the new ways that companies are organised, including with suppliers and customers.  

The curriculum will be rolled out over the next two years. The reason for the change is a belief that business problems are no longer simple enough to be solved by those rooted in a particular discipline. CEOs, says the dean, now think about the world in terms of these four concepts, not in terms of traditional silos. 

Non-marketing campaign

It is quite a risk for a school famed as the world’s powerhouse in one of those disciplines, marketing. This is, after all, where gurus such as Philip Kotler and Louis Stern built their reputations. Furthermore, one might think that being known as a marketing school would be a useful distinction at a time when the finance-led models of most of its competitors, including the neighbouring University of Chicago, have come under scrutiny following the credit crunch. 

Yet, Ms Blount feels that its dominance in marketing can be distracting. “Within ten years, the idea of having a finance or marketing school will be immaterial,” she says. Indeed marketing, she goes on, is a good example of how the traditional business disciplines have become unshackled. Value creation is now all about understanding your customer, she explains, and marketing, led by the phenomenon of “big data”, has become much more analytical and sophisticated. 

Even the theory of supply and demand has become outdated. “Price is not the defining characteristic that you set out to work on in a value-creation business,” she says. “If all you are focused on is price you are in a commodity business. If you are not a commodities business you are so focused on slicing and dicing everything you know about your customer that price is the last thing you are thinking of.” 

Prospective students will be pleased to know that the dean is not going to use this insight as an excuse to raise fees further on her MBA programme; given that the cost of two years’ tuition is already nudging $110,000, that is just as well. Nonetheless, Ms Blount is convinced that her new approach will offer value for money. With banking in the doghouse, she reckons, and the age of the finance-led business school on the wane, a more balanced approach to management is called for. She might be right. But changing a successful organisation is always a bold move. Those with perfect timing are lauded, but the business graveyards are full of people who were right too soon. Time will tell whether Ms Blount will make it a hat-trick of successful deans. If she does, pity the poor person who has to follow her.

Poll: Should American business schools shorten their MBA programmes?