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Sir
Geoffrey Chandler Reflections on the way forward: I will try to address three interconnected questions - why teach? what teach? how teach? And then, having failed to answer them to anyone’s satisfaction, will struggle incompetently to an inconclusive ending. Why and what teach? The most striking omission in the whole debate has been the lack of context and perspective. Marianne Knuth touched briefly on the paradox of a world of growing wealth and increasing unemployment, but the situation and the contrasts are much starker. In the UK, the relative economic decline of more than 100 years continued inexorably after the 1960s, when the business schools were inaugurated in this country. We remain at the bottom of the major industrial league by all relevant measures. There is today greater inequality between rich and poor and greater child poverty here than at any time since the war. Business is an integral part of the country’s social and economic failures. In public perceptions of social utility, business ranks at the bottom, together with journalists and politicians. Internationally the contrasts are sharper. We have a world of growing inequality between rich and poor; of conflict and human rights violations in many countries. But companies are prospering and increasing their influence in the globalised post-Communist economy, at worst oblivious to, at best inadequately aware of, the context with which they are inextricably linked and to which they contribute. This is an unsustainable scenario for the world and for business. It contains the seeds of its own destruction. MBA courses, as currently shaped, seem designed to speed up the germination of those seeds if they do not recognise this context and the challenges it presents. In the 1930s, the ‘crisis’ of capitalism derived from its apparent failure. Today the crisis derives from its apparent success. This should be the point of departure for teaching today. It is self-evident that the content of teaching and training should be consistent with the ends sought. So we are back to our old friend – the purpose of the company. You cannot teach an activity if you do not understand its purpose. You cannot have leadership without a purpose. Most business schools posit their teaching on the vitiating fallacy that the purpose of a company is to maximise value to shareholders; in other words, to a rapidly shifting constituency, whose preferences are unknowable, whose time horizons are unknown, who have no reciprocal obligation; and money becomes the sole measure of performance. As a purpose it is a nonsense, both in practice and in principle. The corporate graveyard is full of maximisers. A competitive return to shareholders is of course a condition of success and survival. If purpose is defined as the profitable supply of a product or service that people need or want, this makes sense to the practising manager or entrepreneur, who recognises in this the real world in which he or she operates; and it radically changes the perception of business’ social utility. There are siren voices which claim there is no difference in practice between the two concepts, but I will not delay to argue against something that is demonstrably untrue. You cannot teach within the context of an agreed purpose without a concept of values or principles underlying its execution. I am a doctor’s son, brought up with the Hippocratic Oath, at whose core are the principles of doing no harm and caring for the patient. Such precepts seem in principle relevant to business. To create financial wealth while destroying other forms of wealth is unacceptable. To do no harm therefore brings in the idea of stakeholders – those who contribute to the successful operation of the company or are affected by it. It allows the integration of personal values with work values. If business is an activity whose values and principles conflict with a personal sense of right and wrong, it will not survive, nor will it deserve to survive. Charles Handy suggested that it is the private and personal values of the individuals who run companies which dictate the values of the company. I wish it were true. The values of most CEOs are derived values, derived from a false assumption of purpose, which is why when two or three CEOs are gathered together, their conversation is so narrowly bounded. But corporate values can today look for guidance beyond personal values. For the first time in modern history there are internationally accepted values – in the UN Universal Declaration of Human Rights and the Convention on the Rights of the Child – which provide a framework for individuals and institutions. Ah, say politicians and CEOs, these are not truly universal, they are relative to culture and not for us. To this I would quote Michael Ignatieff: "Relativism is the invariable ally of tyranny", to which I would add that it is also the invariable ally of corporate myopia and pusillanimity. Purpose and values must be the point of departure for teaching. What then should be taught? I have to accept, since it is from one who knows, Charles Handy’s description of the MBA as a "trumped up graduate course of a rather trivial nature". Administration is about things, technology, money. These are wholly subsidiary to people, which management is about, or to the social and physical environment. But I wouldn’t abolish it, because the techniques are relevant and valuable, even if not education. But I would abolish the teaching of business ethics as a separate subject. I would abolish professorial posts in this field, corporate citizenship units and suchlike, and fuse these into core teaching. No management decision is simple. All have context – human and moral, as well as financial. Money is not the only fruit. Stuart Hart’s triangles well illustrate the point. We have ghetto-ised business ethics. We have allowed it to be seen as an add-on. At INSEAD, the gallant Henri-Claude Bettignies holds an ‘ethics day’ for MBA students. Most come. Their response shows that it clearly relates to their problems and understanding. But then, after this one day, it is back to bloody shareholder value for the remaining 364 days of the year. We need a new paradigm of thought from outside the current ‘box’ of conventional thinking – a paradigm based on a better definition of purpose and a concept of stakeholding. I am dismayed by Andersen Consulting’s survey of leadership. It fairly describes what it has found in the box, but simply pops it back in again. There is nothing about context in the leadership challenges they put forward. We need to recognise that breadth of vision tends to go in inverse ratio to hierarchical status and that the MBA as currently taught simply speeds the progress to tunnel vision. Therefore looking to the demand side to stimulate change in business schools is to expect the blind to lead the blind. We need new language, new concepts, radical change. The best as it exists today is not good enough, as Shell and BP, two of the world’s great companies, learnt to their cost in Nigeria and Colombia respectively. Voluntarism doesn’t work. We therefore need to broaden the elements that effect change and on which the market - the most potent influence of all - can work. We need mandatory reporting of the triple bottom line. We need to examine how government can help, for example through reform of the UK’s out-dated company law. There is no such thing as the ‘free’ market. Government has, over time, set the parameters reflecting society’s values within which the market works. Let us help it continue to do so. Corporate activity which is both sustainably profitable and acceptable to the world requires to be underpinned by triple bottom line reporting, on which the market can operate on a longer-term basis than on money alone, and over-arched by international agreement safeguarding not just investment, but also its social and environmental impact. This would provide a level playing field which would be wholly in the interest of good companies. If the business of business is simply business, it is foredoomed. If it recognises it has to stand the test of social utility, it will transform itself and its attitudes. Today it can be seen as a privileged island, making a better world for some, but a worse world for many. Its economic competence we know. It will be judged on its moral and social impact. There is an urgency in this. We have not got ten years. Inequality, conflict, human rights violations, critical consumers, NGOs are pressing on the heels of business, with the internet leaving no hiding place. How then do we use teaching to get where we need to be? Who are we at this meeting? How many are key actors working within the corporate system we recognise as needing change? Possibly one. There is a danger of discussion being a closed loop: we cite gurus, books and articles; we find new language for old concepts. We are in danger of being an incestuous group. Are we the embusqués – those who retreat from the heat of front-line battle into the rear staff echelons? If I am right that the demand side will not bring change, then it is we who must stimulate that demand from the supply side (which is chiefly represented here today), by giving courage to the consultants and scaring the pants off the investors, so that companies will indeed demand what we know they need. We need metaphorical bombs, not research. We cannot go on as we are. We need to make understood what is out there in the world – a violent, unjust, unequal world, much of which thinks that business stinks because business is contributing to the state of that world and profiting from it. We need to bring understanding of that world into the education and training of managers and into the boardroom. Capitalism, measured by economic and financial criteria, is the most successful mechanism the world has so far known for the production and delivery of goods and services. But it is not necessarily the climax economic system if it cannot be more even-handed in its impact. We require change; and today the burden of proof lies on those who oppose change, not on those who promote it. What we have is not a sustainable world or sustainable business. The best as it is is not good enough. Can those of us who meet today use our collective influence in some co-ordinated fashion to change a business educational system which falls short of need? We need to be Trojan Horses, catalysts of change, with the courage to bite the corporate hand that feeds us. If next Monday morning you are prepared to do something towards this end, then my last words would be – in place of advocating the abolition of all existing business educators, which I had contemplated before I came – Go forth and multiply.
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