Are Business Schools to Blame? See the Great Debate

As I wrote earlier in the week, there is quite a debate going over at the Harvard Business Review website about whether business schools are to blame for the meltdown.  There are 50 comments, nearly all thoughtful.  After reading them and thinking about it more, I guess where I am at is that, yes, the question of whether business schools are to blame is kind of silly -- they are just one part of a bigger system that needs overall repair.  But I tilted further toward believing they are part of the problem after first reading a long and rather pompous defense of business schools (which seems to accept no responsibility at all) from "Professor Sir Andrew Likierman,"  Dean of the London Business School and then a response from from Robin Humphreys, who described himself as a non-MBA with 40 years of experience. Sir Andrew rambles on, but here is the key part for understanding Humphreys' response:

As to where our graduates go – it is true that a high proportion of them in recent years have gone into investment banking. There is a very simple explanation for this: investment banks were paying the most to attract the best talent. That, too was part of the normal operation of the market cycle – and it is now correcting itself. Business schools will continue to attract talent and continue to train people to be better managers. They will continue to be places where a wide variety of ideas are generated. They should not be convenient scapegoats for today’s financial problems.

Here is Humphreys' reaction:

Andrew Likierman makes the point that the investment banks were paying the most to attract the best talent. The 'talent' churned out by business schools is rather like the 'talent' responsible for the British economy over the past 12 years. It has an extremely narrow focus on "the numbers" to the exclusion of all other metrics of organisational performance and a similar belief that the numbers are all that matters. Talk to the vast majority of MBA graduates of any business school about the relevance of managing and leading people to achieve outcomes and a blank look descends over their faces. They don't do people, as they cannot be measured in black & white terms; it's all grey.

As for the ethical perspective, why are we surprised about the levels of greed that have been seen in the pursuit of "the numbers"? People at work do what they believe they are measured on and what they believe they are rewarded for. It's like night following day - no surprise at all.

If you read Sir Andrew's comment, on the surface, it all seems completely reasonable in some ways, but the thing disturbs me is a complete refusal to accept any responsibility  at all-- it is an argument for inaction (or perhaps impotence, another way to read it is that it is an argument that business schools are powerless pawns in the marketplace).  Regardless, it is an absolute refusal to accept even a tiny bit of responsibility for the problem,-- and thus, by implication to accept even a tiny bit of responsibility for changing things.   I am reminded of the F.M. Cornford's 1908 classic book (which I have blogged about before and you can get free online) Microcosmographia Academica.  Cornford has a lovely line about academic politics: "There is only one argument for doing something; the rest are arguments for doing nothing."   In the great tradition of academic politics, Sir Andrew offers us an argument for doing nothing.  In this vein, Cornford offers many arguments for doing nothing, but perhaps the one that applies best to Sir Andrew is "The Principle of the Wedge," which Cornford explains is "you should not act justly now for fear of raising expectations that you may act still more justly in the future -- expectations which you are afraid you will not have the courage to satisfy."  

Also, Sir Andrew makes seems to present business schools as places where many ideas float around and none really rule roost.  As I will be writing later in the HBR discussion,although business schools do have many different disciplines,  the top dog is usually economics and the often not very implicit assumption that economics in its rawest form -- unbridled selfish self-interest -- is how human beings will and can behave.  And even if we could stop them from their selfish pursuits, it would be a bad idea. There are other voices in all business schools, but this is usually the one that is the loudest and most powerful.

Check out the rest of the debate, it is fascinating.

Comments

[Kevin Rutkowski]

I think that more than anything, greed is to blame for the economic crisis. My hunch is that greed would be a powerful force regardless of what business schools teach.

The idea of "every person for themselves" seems to have permeated our society for a long time. Some of the economic theories taught in business schools may have contributed to this, but business schools certainly can't take all the blame.

[Wally Bock]

It is true that the B-schools (taken as a whole, with exceptions of all kinds) are market-driven entities. When the investment banks and brokerages were hiring analysts at the highest salaries, they created courses to teach people to analyze companies and markets. They created executive programs that involved travel to exotic locations and which cost huge sums. But all the while they throw up their hands and say, "You can't blame us. We're not responsible." All the while they avoid any measure of actual effectiveness for their programs. Now, since the market has shifted we will see lots of ethics courses in the MBA curriculum and lots of ethics retreats that involve travel to exotic locations. But no one in the institutions seems to give a tinker's damn about even pretending to figure out if the courses and retreats actually make any difference. It is the definition of brazen.

[Murthy]

Hi Professor Sutton,

First, thank you so much for mentioning the HBR discussion on your blog. It is a remarkably fascinating debate, its given me an opportunity to share some of my thoughts on the HBR site, and I'm eager to read the discussion next week that you will be an active part of.

After reading this post, I wondered if perhaps I found myself in the "impotence party" - the group of folks who believe b-schools are not to blame for the crisis. I want to share a few more thoughts on this position, because hopefully its useful to consider the motivation of this position as the debate continues next week.

It's possible that there is a minority of folks who have closed their eyes and covered their ears with their hands murmuring "la la la la la la" in hopes of simply not listening or accepting any opportunity for change or improvement. I don't believe that this describes all those who take the position that Business Education is not to blame.

I don't believe this group is advocating doing nothing or is suggesting that Business Education is perfect. I believe the position is that Business Education is in the business of educating theory - that's it. No other school at a Stanford or Harvard or Northwestern or Columbia perceives itself as having a mission beyond conferring great theory, skills, and knowledge to its students. How the students choose to practice that theory is a matter of the student's individual choices and the choices of the organizations that choose to recruit them.

There is absolutely great opportunity to think about how Business Education curricula can be improved - how can the theory be innovated to be as relevant and useful as possible. There is also opportunity to consider how Business Education is marketed - maybe the emphasis on rankings and salary payback are the wrong variables to compete on.

There is also great opportunity for practicing industry organizations to rethink recruiting, cultures, incentives, etc so that they are producing results that are not only accretive to shareholders, but to the community at large.

To connect these two entirely separate domains is where I am concerned and where I believe the concern of many who take an opposing stance lies. If AIG Financial Products hired a bunch of incompetent risk takers, it wasn't HBS's or Stanford Business School's fault - it was AIG's fault and the fault of individuals who participated in those products. If Enron cooked their books, it was the fault of their management and their board, not the educational institutions that these people attended 20 years before taking these positions.

So I hope the opposing view in the debate does not seem like one of suggesting "let's do nothing, everything's fine." There is lots to do, both in academia and industry, to improve the theory and practice of Business. But I think there is a Chinese Wall somewhere in there that is really important. This debate assumes, often with very little evidence and mostly just emotional mudslinging, that there is no Chinese Wall and it is the educators who have directly caused bad practitioners.

I believe that this is unfair to Business Educators. And if at all anyone in this debate is shirking responsibility, its the people pointing the finger at academia instead of at the individuals and organizations industry who choose the behaviors and decisions, which have caused the challenges we face today.

[Toby Wollin]

Bob -- as a matter of fact, I am even more harsh than you are; I believe that Wall Street's role in basically putting the US economy into the toilet has included their almost singleminded efforts to 'assholify' their staffs through recruiting, developing, training, rewarding and holding up assholes as heroes for a very long time -- and I said so...right here:
http://oxdown.firedoglake.com/diary/4562

[Rodney Johnson]

I love this quote from Pete Murray. He states, "You stand for what you tolerate. Define your intolerables." Will MBA programs define what they're willing to tolerate? If not, there is little chance for change at the major MBA institutions.

[michael webster]

Thanks for locating an online version of Cornford.

Note to readers, it is not satire despite how much it makes you laugh.

[Youngjin Yoo]

Bob, I don't think you were too harsh. I concur with your characterization. That is the part of the problem is the intellectual hegemony that one particular voice (economics) has in the business school. I wrote further in my own blog linking the GM's problem to its executives' background and some of the key actions they took over the last several years. (http://www.youngjinyoo.com/in_an_ipod_world/2009/04/rick-wagners-resignation-and-the-failure-of-a-management-model.html) We need to reform business schools in a way that appreciate more pluralistic and diverse voices.