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Home» Notes on Noble Business » Leaders » Time to Change What BUSINESS SCHOOLS Teach? Rethinking the Role of Business and Leadership

Time to Change What BUSINESS SCHOOLS Teach? Rethinking the Role of Business and Leadership

March 17, 2009 - Leaders, Leadership, Societal Evolution
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With financial companies in shambles and the rest of the economy reeling, the business education community is asking themselves where they may have gone wrong in training the MBAs who headed for Wall Street, rose through the ranks, and were at the helm of many of the companies that lost their way.

A New York Times article in last Sunday’s (3/15/09) Business section (pp 1-2) by Kelley Holland titled “Is it Time to Retrain B-Schools?” reports on this re-examination of business schools.

The article’s general theme is: “(W)ith the economy in disarray and so many financial firms in free fall, analysts, and even educators themselves, are wondering if the way business students are taught may have contributed to the most serious economic crisis in decades.”

Here are some excerpts:

  • “Critics of business education have many complaints” some contending that “schools give students a limited and distorted view of their role–that they graduate with a focus on maximizing shareholder value and only a limited understanding of ethical and social considerations essential to business leadership.”
  • Warren Bennis of USC claims that schools suffer from “an overemphasis on rigor and an underemphasis on relevance.” He states that “Business Schools have forgotten that they are a professional school.”
  • Henry Mintzberg of McGill University argues that “because students spend so much time developing quick responses to packaged versions of business problems, they do not learn about real-world experiences.”
  • Judith Samuelson, executive director of the Business and Society Program at the Aspen Institute says, “There are a lot of extraordinary things talking place in business education,…but what’s the central theorem of business education? It’s wanting.”

The article also comments on a 1950’s study of business schools commissioned by the Ford and Carnegie foundations that encouraged business schools to become more analytical and rigorous in their approach – which they did. But it also recommended that business leadership become a true profession, with a code of conduct and an ideology about its role in society. That hasn’t had much impact.

Stop and think about that for a moment. If business schools only teach techniques, say to maximize shareholder value, then they are just teaching a trade, a skill. But what we need now is leadership that is deeper than that which recognizes that business exists to serve a wide variety of constituents, that leadership is more than about doing financial formulas and financial deals, that HOW we do business is important. Call it ethics. Call it culture. Call it inspired leadership. It’s about leading people to become the best they can be, to contribute to something meaningful and important for society. It’s about treating people inside and outside the business with respect.

If business schools set the intention of teaching the Noble Profession of business leadership, I will be the first to cheer.

In my own small way, I am doing what I can right now about that. I’m teaching about the Noble Enterprise approach for revitalizing and leading companies – at Olin Business School at Washington University in St Louis and at Fordham Business School in NY. And I’m speaking at business and professional associations about just this theme.

For me, it gets down to the issue of what is the role both of the business corporation and its leaders. Rakesh Khurana of Harvard Business School observed in the article, in the 1970’s, the idea that the company’s stock price was the primary barometer of success, changed the schools’ concept of proper management techniques. “The new logic of shareholder primacy absolved management of any responsibility for anything other than financial results.”

Obviously, this is now all out on the table, after the financial mess of recent months (really years). I’m pleased that the Noble Enterprise “business model” is now out there as one possible alternative model of business that will serve society better than merely a short-term profit-maximizing “machine”- as well as be a guide for how to create and lead it.

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