Pentacle's Eddie Obeng: Creating Business Education That Keeps Pace with the Modern World

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Is the business school model outdated? British educator and entrepreneur Eddie Obeng thinks so, and dedicated himself to developing Pentacle, which touts itself as the "Virtual Business School." Speaking to Arabic Knowledge@Wharton at the recent TEDGlobal 2012 conference in Scotland, Obeng describes the non-traditional ways he researches and analyzes business problems, and dismisses case studies as anachronistic.

Obeng so strongly believed in his ideas that he left a fast-tracked career in traditional business education to launch Pentacle. When he struck out on his own, Obeng had become the youngest executive director at a European business school, that being UK-based Ashridge Business School.

Obeng champions a concept he calls 'New World Management,' favors applied practice rather over conceptual thinking, and treats his students as customers. Acknowledging the modern pace of life in business studies, and factoring that into how one can gain immediately applicable skills, he says, provides "what you need to teach in a MBA curriculum for a new, complex world."

An edited transcript of the conversation follows.

Arabic Knowledge@Wharton: You've taught about dealing with a fast-paced environment. You state the pace of learning is slower than the pace that the world changes. What do you teach students about how to do it?

Eddie Obeng: The analogy I like to make is about a little experiment they show you sometimes where you fill a glass up with water from a tap. At first there's nothing to see until you inject a needle with green dye in it. It makes a nice thin line down the middle, very gently and calmly. As we increase the tap water, it stays the same. And then all of a sudden, the green line disperses because it becomes turbulent.

A lot of things you build into how you live and work no longer make any sense. So that's what turbulence really is. We don't know for sure because no one has injected any green ink. It's shifted from a stable environment to a turbulent environment. At the same time, we haven't sped up our rate of learning. So the pace has outstripped our ability to learn. So the world we've learned about how to live is completely different. And it's random.

We have companies that make forecasts for 10 to 15 years but they can't predict. Why can't they predict? In turbulence, it's really hard to predict anything. So learning faster isn't the answer, because all we're doing is chasing after the little bits. You have to look at the big pattern, which is why I went for causality-based research.

Arabic Knowledge@Wharton: Can you explain your work at Pentacle?

Obeng: What I have been doing for the past 16 years is a very simple experiment. I used to be at a normal business school, but I left when I realized the world was getting more complex. The pace was accelerating. I examined what we were doing in the business school, such as teaching case studies. In a stable world, you've got two years to research a case study, one year to write it, and then you can teach it for 20 years. If the world is changing, these case studies are going out of date.

Looking at the kinds of things that clients wanted, they wanted people coming out of business courses to do something different afterwards. What we did was concentrate on making the class work be useful. But the people attending were a mix. Some wanted to learn how to do things differently, and others wanted to network. If the world is complex, that's not right. We've got to think about what is it we're researching so we can teach them, how we're teaching them so they can apply it, and how are we helping them to apply it.

At the same time was I had a couple of projects that made no sense to me. One was about a banking project called SWIFT. The project was massively overrun, and they couldn't understand why. I couldn't understand why either; it was just a big project. You just define it, plan it, resource it, and implement it, so why didn't it work? I started digging and I realized nobody really understood what the outcome would look like, because the outcome was so different than from what they were doing. I realized it didn't have the normal formula for a project.

I was also working at the time with a company called Mercury. They approached me and asked, "We want people to work across the business to work together. Can you come up with something that will align everyone?" That was interesting because most companies were interested in keeping divisions apart, not together. So we came up with a system called flexible teams.

What I presented at TED was this: If the pace of change is accelerating, we function because we can understand the world around us. But if the pace keeps going up, are we learning as fast as the pace is going? If we're not, then we'll get to a point where the pace will overtake us. And therefore we'll be in a world that we can't understand.

So that's why I quit [UK-based Ashridge Business School], to find out what you do when the pace of the world goes faster than you can manage. Not so much about how to catch up, because catching up is really hard. If you suddenly find you don't have all the clues, now what do you do? Catching up from there is almost impossible. You don't know what to catch up on. So how do you cope?

I had in mind setting up a business school to do what I was describing. To apply everything I've researched into the school. And that was Pentacle. It's a simple idea. The first idea is don't have a faculty. You have people who can contribute but you run it on a project-by-project basis. As long as you have a faculty, you have research programs. Once you have a research program, then they're interested in what they're interested in, and not what the customer is interested in.

Arabic Knowledge@Wharton: You mean the customers are the students?

Obeng: Exactly. Teachers are interested in their own stuff. Let's say I'm interested in Chinese growth in tourism, does anyone care? No. But I'll go into the classroom and teach what I researched. So don't have a faculty. Do it all by projects. So you have a virtual faculty, and depending on what the clients need, you bring people in as appropriate.

The second point is to organize work so you can use the new technologies that were coming along at the timeā€¦ The third element is the actual infrastructure. If you don't have a faculty, you don't need much infrastructure. All you need is a way to connect to the customer, so that all the people coming for courses are fed and watered. You don't need to feed and water them yourself. The only crucial ones you need is doing the researching, teach them well and then following them back to work.

So the infrastructure is really light. Even our reception is outsourced. If you ever come to our office in Beaconsfield, there is no reception. If you phone after hours, it goes to a call center. In those days, that was really unusual. It meant all I really needed was a small amount of workshop space. Even our photocopier is outsourced to a photocopy shop down the road. You just put the file in, they print it and deliver it. Why would you need a photocopier? So even at that level, everything is virtualized and outsourced. That was a key element.

[Lastly] what should you teach people? I realized that if the world is changing faster than we can learn, we've got a problem. How do people do research? They collect large amounts of data, which takes time. And they analyze it and that takes time. So if the world is changing that fast and you're using a conventional research method, that means everything that you publish is already out of date. So I scratched my head and I looked at what people actually do.

If you look at research, you'll discover that most research is incidence based. What they'll do is interview 4,000 people and say that 60 % of people believe having a high level of innovation drives their business success. That type of research is easy to do but you should really be suspicious of it. Just because a lot of people do it doesn't mean it's true. It's like saying everybody on the planet should eat rotten meat because there are more flies than human beings and they all eat rotten meat. It's the same sort of mindset. That's how a lot of research works. I thought, 'I won't do that.'

The second type of research is correlation research. If you look at research which people say is scientifically incorrect, it's about correlation. This is the bit to remember. Every time birds sing, the daffodils come out. So birds singing and daffodils coming out are correlated. If you drew a graph with birds singing and daffodils coming out, you know why? Because the sun has come out and it's spring. When there's a common cause, it always correlates. Just because two things correlate doesn't mean they have anything to do with each other. So I realized the standard method wouldn't work. [Correlation research] is used a lot but is actually gibberish.

So I combined lots of systems, and I added some other bits. I came up with a system which meant I could do research really fast and really cheap. I call them bubble diagrams. I say, "This innovation is working. Why is that?" Then I work out the causality and scientific method on top of that. I look for elements I would expect in that situation. Also, I look for 'dead man's statistics'

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