How Should Our Business Schools Respond To The Financial Crisis?
It's impossible to avoid the constant flow of news, criticism and finger-pointing related to the financial crisis; and that's a good thing, I believe. So far this week, we're heard about many tens of thousands of layoffs in the U.S., a distressed bank buying a $50 million jet, the CEO of another distressed bank spending $1.2 million to renovate his office - while dozens of world leaders and world-renowned economists take a stage in the Swiss Alps and blame American companies, American business executives and American regulators for the creation of this global financial mess. While as an American, my initial reactions to all of the global criticism were a bit defensive, I must admit also feeling a certain amount of shame for the actions of some of my fellow countrymen. Who is not a bit upset and embarrassed by it all?
We will have to spend a certain amount of time over the next couple of years reflecting on what happened here, why it happened, and what we can do to make sure that it doesn't happen again. It's pretty clear that there are many, complex causes for this financial mess, shared by many across the globe.
In a discussion on this topic yesterday with a close friend of mine, we were speculating how the country's business schools were coping with this crisis. Certainly, many of them have suffered significant losses in their portfolios. Of course, many of them may also be seeing record numbers of applications as laid-off workers and jobless recent college grads look to business schools for a two-year respite from the crisis. But most importantly, how many business school leaders are looking past these two looming issues and asking themselves the really hard question, which is: Where did they go wrong in training the last generation of business leaders?
Certainly, there are a lot more folks to blame than just business schools for the conduct -- whether bad, indifferent, or just stupid -- on the part of many of our business leaders over the past decade. But many, if not most, of these leaders have something in common: an MBA from a "top" business school.
I know. I know. Correlation does not equal causation. However, there's at least one other commonality across many of the events and activities that helped cause this crisis -- irresponsible management of risk and a disregard for ethical conduct.
It doesn't matter who is to blame for the ailment, but I do think that business schools can have a role in treatment. Risk and ethics need to be elevated in the curriculum of business schools; the ability to understand and truly manage these areas needs to be part and parcel of the development of future business leaders.
When it comes to risk, our business leaders have to understand that they are dealing with people's lives, literally. There seems to have been little understanding or care shown in this area by our financial services sector.
When it comes to ethics, we need much more transparency and more responsibility for one's actions in business. While we will certainly see more government intervention and regulation as one of the responses here, just providing much more transparency to shareholders and the public would make an extraordinary difference.
If business schools don't take on this task and make sure that our future business leaders carry more than a school brand and a network -- that they are ethical in their conduct and responsible in how they manage risk -- who will? What do you think?