The world’s top business schools provided the philosophical foundation for the people who made the biggest blunders, and failed to notice the spiralling toxic debts and misplaced incentives in the finance industry.
Reporter Ed Butler spoke mainly to students and faculty at Harvard Business School (HBS), “the world’s biggest name” in business education, which counts George W Bush, Hank Paulson, John Thain, Stan O’Neal and Jamie Dimon and Andy Hornby among its alumni.
Rogue HBS alum Philip Delves Broughton is inevitably the most radical voice in the program. Looking back on his Harvard MBA he says: “There was enormous disregard for other ways of doing things. Europe was boring, Japan was boring.”
Delves Broughton says that the HBS curriculum gives students a “very weak sense of how society works and what role business plays in that.”
For example, he says, his class never had a discussion about what rate of tax it’s appropriate for companies to pay: “When you think about it, it is a great question to ask because for a lot of business people the correct answer is ‘none at all’… If you’re an individual tax payer you know that’s crazy because companies need to put back what they take out… but that discussion was never really had because the assumption was that… companies should pay as little tax as possible”.
Instead, he continues, the accepted vision of the future was that “the giving back came when you were grand and had made your money and wrote checks to museums.”
Citing the involvement of HBS alumni in the insider trading scandals of the 1980s, fraud at Enron, and in running the banks, hedge funds and private equity firms that created the current financial crisis, delves Broughton questions the School’s definition of ethics: “Is it just the number of people who go to prison or is it the elite, as represented by HBS graduates, who basically take out of the economy what’s best for them and leave the scraps for every one else? I think that’s certainly a topic that’s worth discussion but it's not really discussed there."
The program also features Rye Barcott and Max Anderson, two of the students behind the Harvard MBA Oath, plus one of their academic mentors, Rakesh Khurana.
Khurana is Professor of Leadership Development, and is now working with the World Economic Forum to create an MBA Oath that might be used globally.
He cites an Aspen Institute study that found that before starting business school most students believe that the role of companies is to produce goods and services to benefit consumers. By the time they’ve finished, most of them believe that the corporation’s main purpose is to maximize shareholder value.
According to Joseph Baderacco, Professor of Business Ethics at Harvard, the school will look at organizations that have managed risk successfully to draw lessons on management processes and leadership. He describes the teaching of risk to date at Harvard as “state of the art but deficient”. Perhaps he means incomprehensible?
Angel Cabrera, President of the Thunderbird School of Global Management, points out that ethics classes are often electives, but that even when they’re compulsory they’re “disappointing”.