Canadian M.B.A. schools climb the global ranks

Many of Sarah Kaplan’s former students at the University of Pennsylvania’s Wharton School asked her the same question when they found out she took a job at the University of Toronto’s Rotman School of Management last year: “Why Canada?”

It’s an understandable question. Wharton, after all, is one of the top business schools in the United States, if not the world. And while Rotman has made significant strides in climbing up the global rankings over the past decade, it is still a long way from being considered in the same breath as Wharton, Harvard and Stanford—the sorts of places where a mere mention of the institution’s name will instantly open doors.

In fact, only two Canadian M.B.A. programs made it into the top 50 on the respected Financial Times list for this year. They are Rotman (45) and the University of Western Ontario’s Richard Ivey School of Business (49). York University’s Schulich School of Business’s M.B.A. program was ranked 54th.

But rankings don’t paint a complete picture. “Rotman has one of the top strategy departments,” Kaplan says. “If I look at the quality of research and quality of faculty, I’ve joined one of the top schools in North America.” For students, though, a lack of name recognition at Canadian schools presents a conundrum. While the education may be of high quality and more affordable than in the U.S., it can be more difficult to get on the radar of big U.S. companies and the recruiters that scour the globe for top talent.

The good news is that things are beginning to change. The meltdown that started on Wall Street and reverberated around the globe in a flurry of bank failures and government bailouts largely skipped over Canada, where a more conservative approach was credited for keeping the banking sector out of trouble. Federal Finance Minister Jim Flaherty has since suggested that Canada be used as a model for other countries, an argument bolstered by global surveys and even U.S. President Barack Obama, who said, “Canada has shown itself to be a pretty good manager of the financial system and economy in ways that we haven’t always been.” And there’s reason to believe Canadian business schools are poised to benefit by association. “The fact that the Canadian economy gets a lot of attention can only be good for Canadian business schools,” Kaplan says.

The challenge will be successfully capitalizing on the spotlight to show the world that there’s more to the Canadian approach than being conservative about money—a trait that appeared admirable during a once-in-a-lifetime financial crisis, but may also be holding back the country when it comes to producing global champions.

The financial crisis, spawned by the risky mortgage-backed securities created by Wall Street, inevitably resulted in soul-searching about the roles of business schools in promoting a profit-at-all-costs breed of capitalism. By contrast, many Canadian schools emerged from the recession with comparatively little baggage, and even enjoyed a perception of being part of the solution.

It added up to a unique opportunity for those charged with attracting top talent north of the border. “When the American schools scaled back on their hiring, many of the Canadian schools took advantage of it,” says Rick Powers, Rotman’s associate dean, noting that Rotman has made several key hires as part of a drive that will see faculty grow from 115 to 150 over the next four years. In addition to Kaplan, new faculty includes: Kent Womack, a visiting professor of finance who has taught M.B.A. and executive programs at the Tuck School of Business at Dartmouth College for over 10 years, and Partha Mohanram, an associate professor of accounting who came from Columbia University. Powers says, “Now Canada has become a very viable destination, not only for students, but faculty.”

It also helped that several Canadian business schools had, pre-crisis, adopted non-traditional approaches in a bid to differentiate themselves from their better known American counterparts.

At Rotman, dean Roger Martin has emphasized the importance of critical thinking in business as opposed to a strict, vocational style. “If we are going to cope with the increasingly dynamic and creative marketplace, we’re going to need more creative solutions than if you just took a strategy class, marketing class, and finance class,” says Kaplan. “Rotman school is not just trying to prepare students for their first job, but for next jobs around their career.”

She offers as an example a class she had been dying to teach. It’s called “Corporation 360” and it’s an intense examination of a single company (the most recent semester looked at Wal-Mart) and the multi-faceted issues it faces. That includes everything from looking at traditional subjects like marketing and finance to less tangible areas such as the impact on, say, Chinese labourers of corporate decisions to pursue a low-cost strategy by sourcing manufactured goods from developing countries. “It’s about getting the students to think comprehensively about these problems,” Kaplan says. “I had wanted to teach this course in other places and this was the first school that really had an appetite for it.”

Other Canadian schools are taking an even more radical approach. Peggy Cunningham left a comfortable job at Queen’s University last year to take over as director of the School of Business Administration at Dalhousie University. She was drawn to the chance to help develop a different kind of M.B.A. program that promoted responsible leadership over a myopic focus on profits. Cunningham has since been named dean of the Faculty of Management. “I was troubled that business schools didn’t take more ownership and responsibility [for the financial crisis],” she says. “They see business as a sector with separate rules that isn’t part of society. Very few schools have been willing to take risks, trying to do something different.”

At Dalhousie, Cunningham says a key focus is seeing business as an activity that requires the co-operation of multiple stakeholders. That includes recognizing government as a potential partner, as well as local communities. She says business leaders also need to recognize that a single-minded pursuit of profit is ultimately unsustainable if companies are causing harm elsewhere. She points to snack-food makers that have moved to reduce the salt content of potato chips or oil companies that work closely with Aboriginal groups in Alberta’s tar sands as examples of such holistic approaches in action. While Cunningham acknowledges it’s sometimes difficult to tell whether such efforts are merely shrewd marketing tactics or a bid to appease regulators, she argues that many companies are finally being convinced that doing the right thing, even if not immediately profitable, can pay bigger dividends down the road. “There’s certainly a long-term business case,” she says, cautioning that the shift in thinking isn’t likely to happen overnight. “One of the problems of education is there hasn’t been enough asking of the big questions,” she adds. “I think it’s changing. I think that business people don’t want to just park their morals with their cars.”

The challenge remains educating potential students and employers, particularly in the U.S., about top Canadian business schools and their innovative programs. Adwoa Jones is a 32-year-old M.B.A. graduate from Ivey. She lives in the Washington area and is in the process of launching her own career-consulting business called Crystal Clear Interviews. She’s frequently surprised at how little U.S. companies know about Canadian business schools and recalls an early response she received from a major global consulting firm, who looked at her resumé and casually dismissed her application—apparently because she didn’t graduate from a U.S. business school. “I was told I don’t have American experience,” she says. “The company was Deloitte. I was shocked. They are a big international company.”

Jones, who was born in Ghana and attended high school in Brazil, blames an insular American culture, although she says that’s slowly changing. In the case of Ivey, Jones says several big New York-based investment banks and consulting firms now routinely hire from Ivey because they’ve had good experiences with the school. That awareness is likely only going to increase as Canadian schools continue to attract leading experts and put out ground-breaking research.

She also believes, based on conversations with colleagues working in foreign countries, that Canadian business schools have a growing reputation overseas, where they are perceived to offer a more “international” perspective on business than in the U.S.

At the same time, Canadian business schools need to avoid complacency. There’s no doubt the country’s unique business culture was a key asset in creating a stable financial sector, but it’s not immediately clear whether the approach can—or should—be applied to all areas of business.

There is much hand-wringing about the need for more innovation in Canada, and economists frequently lament the country’s dismal productivity scores (essentially a measure of how much money and manpower it takes to produce goods and services). Most of the country’s biggest companies are focused almost exclusively on the Canadian market. Indeed, there are relatively few firms like BlackBerry maker Research In Motion or athletic-wear maker Lululemon that have attempted to export their brand—a situation that doesn’t seem to be related to a lack of Canadian expertise, but of a dearth of global ambition and willingness to take risks.

Kaplan, for one, says there’s a marked difference between her students at Rotman and her former ones at Wharton in that regard. Where her American students were inclined to blow up existing business models and shelve successful products in pursuit of an innovative, market-leading approach, she says Canadians tend to avoid radical business strategies that threaten to cause conflict with employees or suppliers.

“The challenge for Canada is not better implementing its conservative model, it’s figuring out how innovation is going to happen,” she says. Which is why it’s a good thing that schools like Rotman, Dalhousie and others have spurned a traditional approach in favour of one that challenges people to think about business differently—because there are risks in not taking any risks too.