Whether bearish or bullish about the economy, there is no denying that business and management education are in a state of turmoil. The “new normal” will likely be something we’ve never seen before. A recent story on National Public Radio (NPR) captures this sentiment:
American Business Schools trained many of the people who had their hands on the tiller when the nation’s economic ship ran aground. Now, those in leadership positions at top business schools are asking themselves what degree of responsibility they share.
The schools had critics before the economic crisis cost millions their jobs and their retirement saving. Now, the critics are louder, and the questions they raise are being taken more seriously.1
Anger germinates, even abounds in this current environment, but not all agree about what should be done. In the same NPR story, Jay Light, Dean of the Harvard Business School (HBS), and Stephen Kaplan, Professor at the University of Chicago’s Booth School of Business, paint contrasting pictures of the current state of affairs in business education.
Kaplan takes a more optimistic view of the status quo, arguing that the reasons for the current crisis are multifaceted and cannot be attributed to MBA education alone. He states, “You look at the business world and the global economy since 1980, and it’s stunning. Productivity growth around the world has been terrific. You know, where did all this come from? There’s a huge success story of the tools of markets and economics that are taught at business schools.”
Light, alternatively, argues that the present crisis should serve as an opportunity for deep introspection and change. In fact, he has commissioned a Harvard faculty team to lead such an effort to ensure that the current moment is appropriately seized.
Wherever you fall in this debate, it’s clear we’ve approached a fork in the road, and the direction we choose will have important implications for the future. Business, with its far-reaching and increasingly interconnected stakeholders, will have difficulty absorbing the highs and lows of un-reigned market forces. Consider the chaos of just the last ten years: the dot.com run-up and bust; Enron and a myriad of other corporate scandals; the housing bubble and sub-prime collapse; and the ensuing credit market meltdowns, just to name just a few.
In my role at Seattle Pacific University (SPU) as Director of the Center for Integrity in Business, I work alongside those in the academic and business communities to re-imagine the role of business education in light of this unprecedented crossroad. This work takes on many different complexions, but one area of focus for us has been to reframe—maybe more accurately, elevate—the purpose for business as taught and modeled to students. In doing so, we’ve created a break from famed economist, Milton Friedman, and his prevailing view that the ultimate purpose of business is to increase shareholder wealth. Although we don’t deny the necessity of profit and the benefits that can attend profit -seeking, we believe the highest purpose of business is to serve—first, by providing goods and services that enable communities to flourish, and second, by providing opportunities for persons to express aspects of their identity in meaningful and creative work. As businesses serve communities well, long-term financial health and profits have ample opportunity to follow.
Jeff Van Duzer, Dean of the School of Business and Economics at Seattle Pacific University, challenges those at the intersection of Christian faith and business to redefine “the bottom line.” In our program, we “think of profit generation and return on investment as fundamental, as critical, as necessary, but not as the end of the operation. It’s what you need to do in order to attract the capital from shareholders that will enable the business to do what it should be doing, which is to serve…”2
We don’t have this worked out perfectly and readily admit that these ideas need empirical testing. But given the current environment, we feel less alonethese days than we did just a few short years ago. One interesting development in reforming business education has been a grass-roots campaign to install a Hippocratic-like oath—an integral component of medical education—to the field of management. An oath for aspiring business leaders (see www.mbaoath.org) has gained momentum across the United States. This past year, 400 graduating students took the oath at Harvard Business School. And other programs, like Thunderbird, a highly-ranked global school of management in Arizona, have taken similar measures.
The campaign for an MBA oath dates back to 2004, when Ángel Cabrera, president of Thunderbird… suggested that his students write one. It soon became an official part of the school’s MBA program. The oath, Mr. Cabrera says, has been “a phenomenal change-management tool.” Students constantly use it to question things they are taught, he says, citing those who took a faculty member to task for breezily asserting that paying bribes is a normal part of doing business in India.”3
These initiatives are important and should be applauded. Business students must recognize, like doctors and lawyers, that they are part of a profession with shared values and aspirations. And their actions in the marketplace should be held to such ideals. But these efforts are just the beginning. We need to rethink the entire business school experience, finding ways to define the moral imperative of business education.
One place to start is to find ways to counterbalance a long-term trend in management education that largely defines successful business training as scientifically rigorous. The shift, which many believe took place in the 1950s in response to a negative report from the Ford and Carnegie Foundations, was intended to strengthen lackluster faculty performance and narrowly-focused, vocational-oriented education.4 But, as often is the case, the pendulum may have swung too far in this direction. Aspiring business leaders are often trained as compartmentalized clinicians rather than whole persons who assess both the analytical and social implications of business decisions. In the pursuit of rigor, a corresponding and unintended depersonalization process has occurred. A student’s ability to hedge currency risk may have greater value than engaging in honest conversation about doing the right thing.
One approach that might contribute to reversing this trend and that has had some success at MBA programs around the country is the use of literature to teach business ethics. Harvard Business School has taken a leadership role in this process. As Sandra Sucher, a senior lecturer at HBS explains, “through the novels, plays, short stories, and historical accounts, students are brought much closer to life as it is really lived, certainly closer than in lecture learning and even closer than in case discussion.”5 Through literature, students are forced to live less as clinicians and more as whole persons, seeing in characters of fiction and figures of history all the strengths, weaknesses, and fatal flaws that make us vulnerable in a world of moral complexity.
Another interesting approach has been launched by the Aspen Institute’s Center for Business Education. Giving Voice to Values, an ethics and leadership curriculum developed by the Aspen Institute Business & Society Program, with the support of the Yale School of Management, “focuses on ethical implementation and asks the question: What would I say or do if I were going to act on my values?” Self-assessment, effective ways to raise values-based issues, scripting and practicing values-based conversations, as well as coaching and peer reviews are important distinctive of this innovative approach.
This is just the beginning of a wave of change that is taking place in business education. Business deans and faculties are searching for ways to enrich the moral education that is offered in MBA programs. Creating a Manager’s oath is a promising start, as are efforts to broaden the ways we train business leaders. The “new normal” of business has not yet been codified, but one thing seems to be certain— the purpose of business as defined by Friedman appears to be changing. Maximization of shareholder wealth alone doesn’t feel compelling in this day and age, and it certainly doesn’t capture the imagination of market participants. With all due respect to fiduciary responsibility to company shareholders, we need something grander, more compelling, and more sustainable. It is time for practitioners and academics, alike, to work together to create and live out such a framework.
John Terrill is the Director for the Center for Integrity in Business at Seattle Pacific University
1 Brooks, Anthony (2009, May 17). Business Schools Mull over Blame in Financial Crisis. National Public Radio. Retrieved from http://www.npr.org/templates/story/story.php?storyId=103719186
2 Scott, Alwyn (2009, May 29). Questions for Jeff Van Duzer. Puget Sound Business Journal Online. Retrieved from http://seattle.bizjournals.com/seattle/stories/2009/06/01/story10.html
3 (2009, June 4). A Hippocratic Oath for Managers: Forswearing Greed. Economist.com. Retrieved from http://www.economist.com/businessfinance/displaystory.cfm?story_id=13788418
4 Holland, Kelly (2009, March 15). Is It Time to Retrain Business Schools? New York Time Online. Retrieved from http://www.nytimes.com/2009/03/15/business/15school.html
5 Gilbert, Sarah Jane (2007, November 19). Teaching the Moral Leader. Working Knowledge. Retrieved from http://hbswk.hbs.edu/item/5801.html