When the former bosses of HBOS and Royal Bank of Scotland were called before the British House of Commons Treasury select committee a month ago to explain exactly how their institutions got into the current mess, one question concerned formal banking qualifications. Just one of the four possessed anything remotely relevant: the Harvard MBA earned by Andy Hornby, the deposed HBOS chief executive.
Harvard MBAs are usually worn as a badge of pride, especially when, as with Hornby, you graduate as the top student in your year. But as the debris settles from the worldwide collapse in credit and banking confidence and the reckoning begins on who exactly led the financial system into chaos, an increasing number of fingers are being pointed at leading business schools.
Similar arguments have been made before, most recently when US energy giant Enron imploded amid a mountain of concealed debt, a scandal stewarded by another Harvard alumnus, Jeffrey Skilling. Too many MBA programs, the simplified version goes, draw in young, greedy types with little business experience and indoctrinate them with half-baked management and finance theories, along with an unshakeable belief in their own talents, before sending them out to earn ill-deserved fortunes in investment banking and consulting.
This is, of course, a gross caricature. But the turmoil has shaken business schools, many of which are devising courses to examine what went wrong. Professors are pondering whether the theories they taught played a role.
Mauro Guillen, a management professor at the University of Pennsylvania’s Wharton school, organized a hastily arranged program of lectures examining the economic woes, which started in January. More than 250 students swiftly signed up.
“I think we are trying to come to terms with this reality that almost nobody predicted,” he said.
While Guillen believes corporate leadership failures were principally to blame, he concedes regret: “We didn’t ring the bell. It’s very easy for me to say in hindsight, ‘I wish I’d emphasized the idea that leadership and compensation systems can produce these perverse and negative effects.’ But I don’t think this has been an ethical issue. The problem was people were on auto-pilot, taking on enormous risks to meet certain targets.”
Others argue for nothing short of a complete re-evaluation of how business schools teach and the values they impart. Last October Ken Starkey, a professor at Nottingham University’s business school, wrote a letter to the Financial Times calling for courses to take a broader view and end their current “fixation on markets and individualism (i.e., greed and selfishness).”
Simon Learmount, deputy head of the MBA at Cambridge University’s Judge school, has just returned from a gathering of school leaders and MBA program directors in San Francisco. Many discussions, he said, centred on how schools can focus on social accountability and collaboration.
“It’s probably too early to say schools are having a fundamental rethink, but it’s absolutely in the air,” he said. “I won’t mention them by name, but certain other business schools have very strongly fostered that kind of individualistic ethos, the heroic business person going out and slashing costs, increasing value for shareholders. It’s a possibly unfair caricature, but it’s out there.”
Chris McKenna, director of the MBA program at Oxford University’s Said business school, says it is hard to blame students for taking lucrative finance jobs, not least when they face debts from courses costing as much as £45,000 (US$62,400).
“There were so many jobs and they were so lucrative that when people took an MBA it felt sort of ridiculous not to take a banking job. Why do anything else when there was so much money on the table? I think we’re now seeing a shift to people asking what it is they really want to do. They’re going back to their dreams — at least I hope they are,” he said.
One professor with a particular insight into the internal musings of MBA students is Srikumar Rao, who has taught an MBA elective at London Business School, as well as schools in the US, with the grand title of Creativity and Personal Mastery. It requires students to plow through a reading list ranging from PG Wodehouse to books on Zen and quantum physics before addressing whether they even want to spend their lives working 15-hour days in the pursuit of riches.
Rao says he is now encountering people “more ready to speak their minds. They are much more reflective. In fact, many have turned down offers at high-prestige firms in favor of asking, ‘What can I do that really brings meaning to my life?’”
Unusually for a business school professor, Rao expresses serious misgivings about the fundamental ethos of such institutions.
“Our top business schools are really not education institutions; they are indoctrination institutions. There are certain things which are so much dogma that you don’t even want to encourage any challenge to them — the primacy and efficiency of markets, maximizing shareholder value. These things are not in question,” he said.
He believes that notions developed in business schools such as agency theory, which argues that the managers’ interests and those of their shareholders need to be aligned through devices such as stock options, have created a world of short-term profits in which executives gorge on bonuses.
Someone else with a broad perspective is Derek Walker, new head of recruitment at the Said school, who formerly sat on the other side of the fence employing business school graduates for Barclays Capital and others. He believes that sweeping condemnations are unhelpful.
“There’s no doubt the current environment will make everybody sit up and think carefully about how they go about doing what they do in the future,” he said. “But it would be naive if not inaccurate to say, ‘Well, it’s all the fault of the business schools because they’re the people who teach business theories.’”
Where it all started
The first business school in the modern sense was Wharton, founded in 1881, with the first MBAs awarded around 30 years later at Harvard. The US still dominates the field , though a handful of overseas institutions are chasing hard. This year’s edition of the Financial Times MBA league table, generally seen as the most authoritative, placed London Business School (LBS) joint top with Wharton, a first for a non-US school. Perhaps more significantly, a Chinese school, the Shanghai-based Ceibs, made it into the top 10.
Many MBA programs are broadly similar, the uniform flavor increased by the global intake; at LBS, 90 percent of the MBA intake can typically come from outside the UK. While many British MBA courses contain a smattering of people from public administration or government, in the US these tend to study separately at places like Harvard’s Kennedy center for government.
George Santayana wrote: “Those who cannot remember the past are condemned to repeat it.” This article will help readers avoid repeating mistakes by examining four examples from the civil war between the Chinese Communist Party (CCP) forces and the Republic of China (ROC) forces that involved two city sieges and two island invasions. The city sieges compared are Changchun (May to October 1948) and Beiping (November 1948 to January 1949, renamed Beijing after its capture), and attempts to invade Kinmen (October 1949) and Hainan (April 1950). Comparing and contrasting these examples, we can learn how Taiwan may prevent a war with
A recent trio of opinion articles in this newspaper reflects the growing anxiety surrounding Washington’s reported request for Taiwan to shift up to 50 percent of its semiconductor production abroad — a process likely to take 10 years, even under the most serious and coordinated effort. Simon H. Tang (湯先鈍) issued a sharp warning (“US trade threatens silicon shield,” Oct. 4, page 8), calling the move a threat to Taiwan’s “silicon shield,” which he argues deters aggression by making Taiwan indispensable. On the same day, Hsiao Hsi-huei (蕭錫惠) (“Responding to US semiconductor policy shift,” Oct. 4, page 8) focused on
Taiwan is rapidly accelerating toward becoming a “super-aged society” — moving at one of the fastest rates globally — with the proportion of elderly people in the population sharply rising. While the demographic shift of “fewer births than deaths” is no longer an anomaly, the nation’s legal framework and social customs appear stuck in the last century. Without adjustments, incidents like last month’s viral kicking incident on the Taipei MRT involving a 73-year-old woman would continue to proliferate, sowing seeds of generational distrust and conflict. The Senior Citizens Welfare Act (老人福利法), originally enacted in 1980 and revised multiple times, positions older
Nvidia Corp’s plan to build its new headquarters at the Beitou Shilin Science Park’s T17 and T18 plots has stalled over a land rights dispute, prompting the Taipei City Government to propose the T12 plot as an alternative. The city government has also increased pressure on Shin Kong Life Insurance Co, which holds the development rights for the T17 and T18 plots. The proposal is the latest by the city government over the past few months — and part of an ongoing negotiation strategy between the two sides. Whether Shin Kong Life Insurance backs down might be the key factor
RSS