This will be the first installment of a multi-part series.  José, in a recent blog, brought up some excellent points regarding policy, power, and capital.  So, who are these villainous characters populating the halls of places like AIG, Lehman, and Merrill-Lynch?  A bunch of capitalist MBAs, who may never have read a word of Ayn Rand prose, but act out all sorts of wild, objectivist fantasies, right?

Well, there’s been a recent battle brewing on the Harvard Business blogs on the topic of the recent financial crisis and How to Fix Business Schools.   The editor-in-chief of the Harvard Business Review wanted to start a dialogue on the very topic::

“Are our business schools up to the job? Many critics have charged that the values imparted in MBA programs contributed significantly to the ethical and strategic lapses that led to the current economic crisis. Is that fair? And if so, what needs to change? How can business schools regain popular trust?”–Adi Ignatius

Joel Podolny, a Sociologist, notes in his blog post that “Business schools provide students with many technical skills, but they appear to do little, or nothing, to foster responsibility and accountability.”  Bob Sutton, an organizational sociologist, also brings up some interesting points on the Harvard blog, as well as his own::

• “One of the root problems with business schools is that too many are infected with assumptions that reinforce and bring out the worst in human-beings. In particular, the logic and discipline of economics usually rules the roost at business schools.”
• “I have had Stanford students tell me for decades that Merrill is (or was) fundamentally dog eat dog world to live in and there is no incentive for helping coworkers and you get ahead by ignoring them, doing your work, and occasionally sticking a knife in their back.”

Sutton points a finger squarely at economics, which is a dominant mode of thinking in business schools (more on this later).  On the other side of the fence, Steve Kaplan, an economist, offers up “The Economists Have It Right,” where he notes the positives of economic thinking and how not following good economics leads to bad results::

“The tools economists give to students better equip them to understand the business world they will experience. In fact, one of the ways CEOs of financial services firms (e.g., Lehman’s Dick Fuld, Merrill Lynch’s Stan O’Neal and Citigroup’s Charles Prince) failed was in not understanding the agency theory and economics taught in business school. In particular, it is a simple economic point that it is a bad idea to pay up front fees and bonuses for investments or loans that have long-term payoffs.”

He goes on to state that efficiency advances due to economics has increased world GDP and well-being through businesses and capitalism.

First off, I have three degrees from AACSB business schools, but I’ve always been interdisciplinary and my training was steeped in the social sciences, as well as having exposure to the humanities at the graduate level.  My take is that many business schools have created a received-view, dare I say the hackneyed term paradigm, of solving problems.  I’ve seen and heard arguments about adding rigor through quantitative logics or a emphasis on ethics in the curriculum as solutions.  Given this, I have often wondered what type of students are we creating.  Critical problem solvers or disciples of a rational economics worldview (tempered with business ethics)?  It’s not just about how many economics courses are taken, but rather which paradigms are being used to build knowledge.  Which normative logics are being taught?

I think students pick up from business schools and the workplace HOW work gets done and how to get ahead.  There needs to be no smoking gun memo issued by a manager or a PowerPoint slide by a professor stating this.  How is this so?  It’s all about habitus (i.e., our actions are guided by our learned dispositions within a context) and doxa (i.e., what is taken-for-granted in a given context), borrowing from Pierre Bourdieu.  Business schools teach “the game.”  Pop culture depicts the habitus and doxa of the business game with overkill, but the examples are nevertheless instructive.

Oliver Stone’s Wall Street (1987) {left} has Gordon Gekko state a declaration of principles, seeming to echo the very spirit of Adam Smith himself.  “Greed is good” is declared with almost religious fervor, a manifestation of the final trajectory of Max Weber’s take on Martin Luther’s “quiet revolution.”  Boiler Room (2000) {right} has Jim Young indoctrinate the noobs* to the culture.  Now, imagine these images of hyperbole toned down and couched in lectures, cases, and war stories.  This is not to say that it’s all bad and that all that is being taught is that opportunism and guile are justly rewarded.  I will say that there are patterns based upon dominant ways of thinking about business and organizations, often based upon assumptions of rationality and certain logics (but not others).  One might just say it’s simple pragmatics.  It doesn’t have to be this way.  Sutton, in a comment response to Kaplan, notes what is being done at Stanford::

“…The bulk of the class is getting the students out and spreading ideas — they have spread (or tried to spread — failure happens!): Firefox (by building real browsers); practices for making Wal-Mart employees more aware of the environmental impact of the products they sell; hip-hop music; financial responsibility among younger people; and Facebook. In all cases, they have done these things by working among real customers and employees, and their work was judged by real executives from this companies. In other classes, we have done stuff like redesign and change an all-hands meeting in a real company.

So although the image of practical education most business schools present is the telling of war stories, our approach (which is expensive and inefficient) is to start with and weave in some general principles (including design thinking), some stories about how it works, and then to require the students to actually implement some change. This is a different model of management education than most business school professors imagine.”

Exactly.  I know that this type of approach is likely only at top-tier schools and niche programs.

I’d like to see business schools move towards giving students concepts and tools to re-think processes and practices that go beyond how things are currently done.  I’d like to see programs as incubators of ideas.  Places where students can try things and fail, learning from their mistakes.  I’d like to see business schools get students to think in terms of social systems and to incorporate practical solutions to dealing with the interface of different forms of capital (i.e., financial, social, political, cultural, natural, etc.).  In other words, stop trying to boil everything down to financial capital or over-rely upon particular disciplinary thinking.

I think there is creative work ahead for business schools, particularly given the current scrutiny, as well as the fact that the market for programs is increasingly global.  I’ll leave this installment with a Goethe quote::

“To refashion the fashioned, lest it harden into iron, is work of an endless vital activity/Und umzuschaffen das Geschaffne,  Damit sichs nicht zum Starren waffne,  Wirkt ewiges lebendiges Tun.”–Eins und Alles