MIT Sloan professor argues for a new values-driven MBA rooted less in traditional capitalist principles
Being in tune with human nature, profit-driven capitalism works, up to a point. Turbo-charged since 1981 by Deng Xiaoping’s economic reforms in China, it has been responsible for dramatic increases in living standards worldwide, albeit with associated increases in income inequality. Recently many have argued that capitalism needs to be remodeled if it is to fulfil its potential as the system best placed to offer solutions to major challenges such as: climate change, species extinction, poverty, and economic disparity.
If shareholder capitalism is to re-find Adam Smith’s ‘noble purpose’, and put poverty reduction, social good, nature and the environment alongside money and profit as its motivation, it will need leaders up to the task. Leaders imbued with a new set of values. Where better to start than in business schools—where leadership is taught and its core tenets are developed.
In his new book, Business School and the Noble Purpose of the Market, MIT Sloan professor Andrew J. Hoffman, suggests that business schools are too wedded to an outdated paradigm that elevates the primacy of shareholder profits above the interests of employees, the environment and society, downplays the role of governments, and promotes unlimited economic growth despite negative environmental and social consequences.
From Adam Smith and William Blake to Donald Trump and Mark Zuckerberg, Hoffman covers many intriguing angles as he explains the evolution of the capitalist economic system, highlights its many moral and practical shortcomings, describes how business schools have related to it, and recommends how they should now move forward.
His central argument is that, in preparing students to operate in the capitalist system, business schools, fixated with exploring best business case scenarios in the traditional profit-driven way, are failing to focus on the radical transformation businesses need to undertake if they are to really address the existential issues that they have the latent possibility to resolve.
In our experience at IEDP the Executive Education divisions of the leading business schools are very aware of the broader role businesses are now being called to take on. They have made significant moves over the past 20 years to commission research and develop programs that align social, environmental, and financial sustainability as their purpose—many offering hands-on opportunities to students to apply their analytical skills to real-world social challenges. Furthermore, over these years, human-centred leadership has replaced strategy as the top priority in business school executive development.
Hoffman’s focus, however, is not on Executive Education programs but on the MBA—the traditional bedrock of business school teaching. His contention is that the values at the heart of the MBA are yesterday’s: That continuous economic growth is possible; that governments have a limited role; that the planet offers an unlimited source of materials and a sink for waste; that efficiency is always good; that work is an inconvenient part of the supply chain; and that the whole system is energized by human avarice.
The spirit of our times—not to mention the young people entering the workforce—demands a deeper more ethical set of values. Hoffman’s ideal MBA of the future will not shy away from teaching values based on moral purpose and doing social and environmental good. He quotes the founder of Patagonia, Yvon Chouinard: “The capitalist ideal is to grow a company and focus on making it as profitable as possible. Then you cash out and become a philanthropist. We believe that a company has the responsibility to do that all along—for the sake of its employees for the sake of the planet.”
While much of Hoffman’s analysis makes sense, and it is important that would-be business leaders learn socially responsible values and purpose, it is also important that they learn to understand the real competitive business world as it is—and, with AI encroaching on the workspace, how it will be in future. Profit alone may smack of human greed, yet without profit there is no progress at all.
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For Thomas Misslin, transformation rather than training is the aim of executive education at emlyon business school
