When you enter my business school, a Jesuit business school, the first thing you see is a trading room. It gives visitors the impression that finance is at the heart of business education and that trading is the most important business skill. Unsurprisingly, the standard business program the school offers is very much focused on finance, accounting, and economics. My business school is not unique in this regard; in fact, its leadership is trying to emulate the elite schools. What business students learn matters, because a business degree is the most popular undergraduate degree in the United States and in many other parts of the world. And despite the financial crisis, the global demand for a MBA degree is still increasing. So what are these many business students learning and carrying into the world? The journalist Rana Foroohar suggests that it is a very economistic worldview: With very few exceptions, MBA education today is basically an education in finance, not business – a major distinction. So it’s no wonder that business leaders make many of the finance-friendly decisions. MBA programs don’t churn out innovators well prepared to cope with a fast-changing world, or leaders who can stand up to the Street and put the long-term health of their company (not to mention their customers) first; they churn out followers who learn how to run firms by the numbers. Despite the financial crisis’s lessons, MBA programs — and especially their finance and accounting classes — have not changed much. Foroohar explains: … most top MBA programs in the United States still teach standard “markets know best” efficiency theory and preach that share price is the best representation of a firm’s underlying value, glossing over the fact that the markets tend to brutalize firms for long-term investment and reward them for short-term paybacks to investors. A number of business school deans are acutely aware of this failure and advocate change. Many of them suggest teaching future business leaders about long-term success and good leadership. Despite such insights, most business schools in America aren’t doing this. The traditional curriculum suggests that business is an exact science devoid of messy human concerns. Foroohar remarks: Even after the financial crisis, a survey of the world’s one hundred top business schools (most of them in the United States) found that only half of all MBA programs make ethics a required course, and only 6 percent deal with issues of sustainability in their core curriculum, despite the fact that a large body of research shows that firms that focus on these issues actually have higher longer-term performance. Instead, students are taught that what matters most is maximizing profits and bolstering a company’s share price. It’s something they carry straight with them to corporate America. The business world is increasingly questioning the value of this kind of education. It creates “takers” and not “makers,” and supports a psychopathic mindset. In his book Car Guys vs. Bean Counters (2011), Bob Lutz, a former vice chairman of GM, argues that MBA education has contributed to the decline of American manufacturing and the American automobile industry. Business leaders in Silicon Valley hesitate to hire MBAs and prefer engineers, because they add “real value.” In addition, the typical MBA leadership style, which is top-down, hierarchical, and number-driven, does not work well in start-ups. People there often want to work for a higher purpose than shareholder value maximization. Again, Rana Foroohar expresses the problem of the economistic mindset: Why has business education failed business? Why has it fallen so much in love with finance and the ideas it espouses? It’s a problem with deep roots, which have been spreading for decades. It encompasses issues like the rise of neoliberal economic views as a challenge to the postwar threat of socialism. It’s about an academic inferiority complex that propelled business educators to try to emulate hard sciences like physics rather than take lessons from biology or the humanities. It dovetails with the growth of computing power that enabled complex financial modeling. The bottom line, though, is that far from empowering business, MBA education has fostered the sort of short-term, balance-sheet-oriented thinking that is threatening the economic competitiveness of the country as a whole. If you wonder why most businesses still think of shareholders as their main priority or treat skilled labor as a cost rather than an asset – or why 80 percent of CEOs surveyed in one study said they’d pass up making an investment that would fuel a decade’s worth of innovation if it meant they’d miss a quarter of earnings results – it’s because that’s exactly what they are being educated to do. To transition from this economistic mindset, business education needs to reconnect business education with the humanities, with the sciences, and with practice. More than anything, business education needs to become more human and humane. Ideas on how this can be achieved will be outlined in the following pages, employing the same pathways suggested in previous chapters (see Figure 9.1) In the first section, pedagogical approaches are showcased that have restored dignity to management education (Pathway 1). In the second part, pedagogical approaches are considered that embrace the pursuit of well-being (Pathway 2)
