The last course I taught at the school was one of my own design titled "Management and the Future." The course engaged students in addressing a basic question: How would we manage business firms differently if we took seriously the idea that for the market to allocate efficiently, all costs must be internalized by the firm, economic power must be equitably distributed, and overall human consumption must be in balance with earth's ecosystem?
That's trade school mentality. Whether they own up to it or not, business schools have not distinguished themselves as anything but, and their marketing has definitely played up the value of the diploma itself. Try searching the term 'MBA': how many links talk up developing innovative strategic skills to solve the problems of tomorrow? I think you'll find, as I just did, that the proposition is instead financial enrichment. Educational disciplines (like, ahem, liberal arts) that cannot rely on ROI for their students to generate interest actually do a better job of developing the student beyond the acquisition of short-term marketable skills. An Elizabethan Studies professor, for instance, cannot expect that students are on a career track to teach Shakespeare and Marlowe - how many of these does a society need? Rather, the professor should expect that students have a need to use critical thinking skills, increase their language skills, be inquisitive about cultures not their own, and be willing to challenge their written and verbal communication abilities. Can a student profit from these skills? Surely; many do, in private industry and public service. And their skills pay off increasingly over a life's work, if the individual has internalized the lesson that learning is life-long, not circumscribed by the duration of a degree plan.
Let's say you have a choice between hiring someone with well-developed innovative leadership skills, and someone with well-institutionalized knowledge of finance and business strategy: which is the better candidate to create your business as it will be 15 years from now? Now, how likely is it that the candidate graduated from a business school institution? A company that relies on b-school graduates to fill its top management positions probably expects that its leaders in 2024 will own recently minted MBAs. With the expected churn in management, who hires the talent today who will create the 2024 company?
Yet, how does a company stay in business for more than a (human) generation if it only acts on its interests within a 3 - 5 year horizon? Until the recent financial collapse, companies were not facing this head-on; the short-term paradigm seemed sustainable and even profitable. Although we are now seeing some dialogue on the issue, I continue to witness an entrenched reluctance to let go of old paradigms. This is understandable: if the people strategizing in the board room are unlikely to be working in a generation, their self-interest doesn't necessarily intersect with the interests of the corporation. When corporations start to use time horizons of a human generation, not a technology generation, to scope their long term planning, we will know we've made the necessary break with the past and that leaders have learned that their most significant contribution is to create value that lives beyond their tenure.
(A note on the title: I picked this up from Seventh Generation, whose website states:
The company derives its name from the Great Law of the Iroquois that states, "In our every deliberation, we must consider the impact of our decisions on the next seven generations."
I'm not so ambitious. Just one will do.)
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I like that quote. Would but more of us turn it over in our minds now and then. It's true that we've - and this is especially an American slant - built a culture of short term business thinking. It's not an accident. Prior to the evolution and ascendancy of the the Chicago School of economic theory, many if not most businesses just naturally took a longer view. I say 'naturally' because the assumptions and premises underlying the enterprise were broadly based on a set of ideals that incorporated long-term outlooks as basic operating principles. It was considered a good thing in-and-of-itself for people to want their companies to last a long time. In the second half of the last century, such notions were tagged as quaint, outdated, and 'inefficient'. This notwithstanding the fact that businesses of all sizes are woven into the fabric of modern human society, so much so that to try to separate the business world from social issues is at the outset tautological...it simply can't be done with any degree of intellectual honesty. I grew up in a 'company town.' As I have traveled and the world has gotten smaller and faster, I see that the entire planet is now a sort of company town. The weave of economic and other interests is inextricable. And so closely woven, I think, that the adoption of the largely and purposely amoral (meaning without morals rather than necessarily possessed of bad morals) Chicago School of thought has leaked out into the society at large, and largely through the business schools and, unfortunately, the law schools. The Chicago School posits that short term shareholder gain should be the ultimate, pretty much only, operating principle of a business. All else follows from the pursuit thereof. The market punishes bad behaviors and if a company town - company planet? - goes back to the weeds after a hundred years or more of people building their lives there, it's because it was 'inefficient' and thus it's better for everyone to let it rot. This line of thinking provides a tempting simplicity of thought, clear, bright-line answers to complex problems...except that it's based on fallacies and ignores important empirical evidence to the contrary - AGI, anyone? In reality, efficiency in markets, as with anything else, is a matter of purpose. A Boeing 747 is a much more efficient machine, (pound for pound over distance flown over time) than most little two-seat puddle jumpers. But if I want to go, say, from Akron NY to the Finger lakes region on a day trip, taking a 747 would require that first I build two airports, one to take off from and one to land at. Not very efficient for the task. In the same way, what's efficient in business depends upon what you want out of the thing. The Chicago School, which is the de facto underpinning of the vast majority of what is taught in business schools these days, assumes that short-term, next-dollar gain is the only justifiable operating value for business and for economies at large. But again, and at last, this assumption ignores the fact that economic activity is essentially a social activity operating in concert with and sometimes in competition with, other social goods and norms. Seventh Generation? Rather, one seventh of a generation is too long a time horizon for some.
Regards,
Anon
This is good and important stuff. I especially like your historical contrast. How we think about business now is so deeply embedded in our (my) thinking that I completely missed the point that it was not always this way -- and not so long ago, either.
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