Are Business Schools to Blame?

podolny-110.JPGJoel M. Podolny is the dean and vice president of Apple University in Cupertino, California. The former dean of the Yale School of Management, Podolny was a professor for over a decade at Harvard Business School and the Stanford Graduate School of Business.

The economic crisis in the United States has claimed many casualties — some human, some institutional. Among the latter, business schools are among the most battered today. "How could MBAs have been involved in activities that caused so much damage to the economy and society?" people ask.

Business schools provide students with many technical skills, but they appear to do little, or nothing, to foster responsibility and accountability. Society implicitly trusted MBAs to do no harm when it allowed financial markets to operate in a relatively unregulated fashion — but its faith has been betrayed. As a result, there's an active distrust of business schools and their graduates.

How did we get to such a pass? For three major reasons:

The traditional MBA curriculum has divided the challenges of management and leadership in a dysfunctional way. Business schools teach leadership as a soft, big picture-oriented course, distinct from the details on which hard, quantitative courses focus. Leadership, they imply, is about setting the vision and framing an agenda, but it isn't about focusing on details. Because of this distinction, students are convinced that nitty-gritty work can be done without consciously considering factors such as values and ethics.

Business schools communicate the idea that would-be applicants must measure the MBA degree's benefit in terms of the additional salary they can earn. This idea is reinforced by rankings that use graduates' salaries as a measure of how business schools stack up against each other. All this creates the impression that the MBA is, primarily, a ticket to big bucks, and doesn't foster the fact that it is a professional degree that imposes responsibility and accountability on its holders.

There has been little contrition on the part of those involved in MBA education after the crisis. Look at the website of any leading business school — and you will find it basking in the achievements of its graduates. By the same logic, business schools must also accept responsibility for the harm their graduates do; express disapproval; and make curriculum changes that will reduce the likelihood that future graduates repeat those behaviors. However, there appears to be little movement in that direction — yet.

Where do we go from here? I'll offer some suggestions to get things started. In their curricula, business schools need to focus more on integrating the "soft" focus on values-based leadership with the "hard" focus on details. This will require much more coordination among faculty than there is at present. Without integration, students will continue to believe that a position of leadership doesn't entail attention to detail, and doing one's job does not require considerations of ethics. Some business schools have started to move in the right direction, but many more need to follow suit.

To regain their professional focus, business schools must stop fostering the belief that a MBA program's primary goal is to augment students' incomes. In fact, the US Association to Advance Collegiate Schools of Business, which provides business schools with accreditation, should impose restrictions on their advertising to prevent them from touting how much more graduates can earn after doing the course. Critics may say that isn't a good idea, but one of the hallmarks of any profession is that it voluntarily accepts constraints. Lawyers, doctors, and accountants abide by strict rules that stipulate how they can advertise their services.

Finally, business schools must demonstrate a greater affinity with society's interests. Some experts have argued that business schools should develop the managerial equivalent of a Hippocratic Oath as well as a code of conduct.

Perhaps, but oaths and codes of conduct work only when a professional body monitors behavior and withdraws credentials for violations. For instance, bar councils and medical review panels enforce standards that are higher than the legal standard. Before there were national associations of lawyers and doctors that could remove an individual's right to practice, there were local certifying associations, usually with links to nearby universities. In the same way, faculty and alumni at every business school should set up a committee that draws up a code of conduct and monitors MBAs' adherence to it. This committee would have the right to revoke the degrees of graduates who break the code and it must exercise that prerogative as often as it needs to.

Until business schools make such public gestures of disapproval, society will never fully trust the MBA again.

By Susan Jackson  |  April 2, 2009; 8:00 AM ET
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