Will Harvard Business School raze the right issues?
Harvard Business School has long preached innovation. Now the new dean at HBS is trying to innovate—at HBS. Nitin Nohria is an articulate Indian-American who has already demonstrated he’s capable of raising the right issues related to innovation. But innovation also requires razing the right issues. Can Nohria and HBS achieve this?
On July 1st, Nitin Nohria took charge at Harvard Business School. He comes in having said business faces a “crisis of legitimacy” and business education is at a crossroads. Nohria believes HBS is on the cusp of “a period of extraordinary innovation” and can point MBA students in a better direction. That’ll only happen if Nohria can raise—and then raze—the right issues. Razing is essentially wrecking. It’s necessary because things happen in a system and cannot really be changed without flattening the system itself. Mobile phones are one example. They’re an innovation that destroyed wall phones.
Nohria is coming in to innovate after a decade of HBS’s reputation taking a beating. Global business is stuffed with HBS graduates, and more than their fair share played a part in the recent financial meltdown. Nohria says his first task is to restore faith in business in general and in business schools in particular. To restore is to renew. Renew is from the Latin, innovatus, or innovate. Innovation is renewal. It’s not about being creative, clever, or cool. It is about harnessing the “gales of creative destruction” wrote economist Joseph Schumpeter. Healthy capitalism “incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one.”1 Innovation is not adding more—it is subtracting from within. Renewal at HBS requires razing parts of the present system. Nohria has three innovations in mind.
First, Nohria wants students to take part in live case studies. This will challenge the status quo. Since the 1920s, HBS students have pored over case studies. In fact, HBS claims to be the source of four-fifths of the case-study materials used in the world’s leading business schools. But a great many of these have extolled the virtues of institutions and individuals now marked by vices. “Enron was stuffed with HBS old boys, from the chief executive, Jeff Skilling, downward,” writes The Economist. “The school wrote a sheaf of laudatory case studies about the company. Many of the bankers who recently mugged the world’s taxpayers were HBS men.”2
The present case study system is criticized as being too abstract. To renew HBS’s teaching methods, Nohria will have to raze it. He wants students “to take part in live case studies—to take themselves to the Midwest or Mumbai and spend time working for real companies,” The Economist writes. He wants students to get their hands dirty. That’s good, as even scripture describes experience as the starting point for learning. This is why internships in companies already embroiled in ethical controversy would be the place to start. MBA students should face tough ethic issues before graduating just as a medical intern faces a stopped heart, a code, before graduating and knows what to do. Otherwise, the present case study system carries on, where an astounding 56 percent of MBA students in the United States admit to cheating—the highest rate of dishonesty among graduate student groups.3
Nohria’s second innovation is a bit tougher. He wants HBS to renew its commitment to shaping its students’ “competence” and “character” as well as their intellects. That sounds fine but it’s deeply flawed. In the Judeo-Christian definition of reality, conscience is a lens for perceiving reality. Thus, conscience is the means of renewal by helping us see reality rightly. Character on the other hand is the result of conscience. We develop conscience; character is derived from it. The Apostle Paul urged believers to keep a clear conscience (I Pet. 3:16). He targeted conscience in his work of renewal (II Cor. 4:2). Conscience is the organ of innovation; character is the outcome. How likely is it that HBS will raze character and replace it with conscience?
You can see why innovation is difficult. “Character development” is nothing more than platitudes. In The Death of Character, James Davison Hunter writes: “we want what we cannot possibly have on the terms that we want it.”4 Nohria wants character—that’s good—but he can’t get there from here. Our present-day “character education” is a process that has not proven to hold up under the pressure and realism of corporate leadership. As long as the system biases short term profits for shareholders, the system will produce what the system has produced, regardless of “character.” Nohria needs more than a new oath and such minor tinkering. He needs to tip over the system.
Third, Nohria wants business students to regard themselves as members of a profession. He supports a movement by students to adopt a business equivalent of the Hippocratic oath. Again, Nohria is raising the right issue, but as The Economist gloomily notes, “the movement for a Hippocratic oath for business is already running out of steam.” That’s because modern business has never been defined as a profession. In raising this issue, Nohria will have to raze the current definition of business. Not easy.
Business, as practiced today, is a far cry from 200 years ago. Before the English Industrial Revolution, the most widely institutionalized form of business was slavery. “At the end of the eighteenth century, well over three quarters of all people alive were in bondage of one kind or another, not the captivity of striped prison uniforms, but of various systems of slavery or serfdom,” writes Adam Hochschild.5 Most of the rest of the world’s workers were independent tradesmen or part of professions or guilds. These guilds instilled and enforced moral and professional behavior. They yielded legitimate businesses that were largely conducted out of the home. It’s why business was once considered a cottage industry and called the domestic system.
After the Industrial Revolution, business moved from the family and cottage to the firm and corporation. This is why Howard Gardner, the John H. and Elisabeth A. Hobbs Professor of Cognition and Education at the Harvard Graduate School of Education, writes, “strictly speaking business is not—nor has it ever been—a profession. Professions develop over a long period of time and gradually establish a set of control mechanisms and sanctions for those who violate the code.”6 Gardner is referring to our modern definition of business. Business today “lacks this model; you don’t need a license to practice. The only requirements are to make money and not run afoul of the law.”
For Nohria to get business students to regard themselves as members of a profession, HBS will need to regard work as a calling, or vocation, with guilds instilling and enforcing moral behavior. The Economist doubts this will happen, characterizing Nohria’s approach as applying new rules and questioning whether he will raze old assumptions. “The moral values that business people should adhere to are universal ones, not a professional code. Business progresses through creative destruction, not through the application of rules.”
It’s worth noting that The Economist agrees with scripture on this count. For business to be a profession there must be adherence to universal truths. In the past, these were derived from religion. The Economist also says renewal happens through creative destruction. We raze to renew. We destroy to innovate. In scripture, this is known as take and eat. In the original Garden, renewing bodies required taking plant life—killing it—in order to eat. In redemption, renewal requires taking and eating the body and blood of Christ. This is why the most important innovation has yet to be raised—whether HBS will include the Judeo-Christian tradition as a resource for renewing business. But at least Nitin Nohria is off to a good start. Let’s hope he keeps razing the right issues.
_______________
1 Joseph Schumpeter, Capitalism, Socialism and Democracy (New York, NY: Harper, 1975) [orig. pub. 1942], pp. 82-85.
2 “A post-crisis case study,” Economist, July 31, 2010, p. 55.
3 This is according to a Duke University study cited by Howard Gardner in “The Ethical Mind,” Harvard Business Review, March 2007.
4 James Davison Hunter, The Death of Character: On the Moral Education of America’s Children (Grand Rapids, MI: Basic Books, 2001), prologue.
5 Adam Hochschild, Bury The Chains: Prophets and Rebels in the Fight to Free an Empire’s Slaves (New York, NY: Houghton Mifflin, 2005), p. 2.
6 “The Ethical Mind: An interview with Psychologist Howard Gardner,” Harvard Business Review, March 2007, p. 54.
Very thoughtful again, Mike. Nohria has written one of my favorite business books: What Really Works. Superb research and simple, easy-to-apply lessons. My kind of business book. Glad to hear he’s taking over HBS.
I’m not sure I like the idea of business as a profession. Seems like professions–doctors, engineers, etc–erect pretty high barriers to entry like licenses and exams. Some of our best business people would never tolerate that kind of conformity, and I’m pretty sure that we don’t want them to.
Seems like enforcing that conformity would develop a mindset the opposite of what an entrepreneur needs–that creative destruction. Most professions I know are locked into protecting the way it’s always been done. I shiver at thinking what the communications industry would look like today with a “professionals” running it. Would we still be reading paper newspapers and dialing rotary dial phones?
Still, I like the idea that a moral compass or conscience needs to be at the heart of a business education. Here the business world could learn from the US Army.
There, commanders deal with moral dilemmas every day. My personal experience in teaching brigade commanders at Ft Leavenworth the past few months has led me to conclude that their professional education in the art of leadership leaves them much, much better prepared with mental models and practical tools in dealing with tough situations.
Perhaps we’ll evolve a blended model of some sort–a profession for those leading large organizations where moral issues have bigger impact and a culture of entrepreneurship that keeps us innovative and strong.
KCBruce:
Yes, thats a terrific way to put. We cannot deny the power of institutions yet have to hold in tension that, by definition, they are boundary defining entities that easily become resistant to innovation. This is why I believe a roundtable is one of the more effective ways of institutionalizing resistance to the status quo. Thank you for your contribution.
…. I meant “that’s a terrific way to put it.” Pays to proofread before hitting the “Submit” button!
I have a hard time thinking of Business as a profession. KCBruce made excellent points and I will only offer one other:
A Profession has special moral mores that are specific to their job are not shared by the general population.
Doctors have special rules on how they must treat their patients based on the special powers they train for. They must do no harm.
God holds Religious leaders to a higher standard…warning more severe judgement if they become “stumbling blocks”
The Military Profession have special rules with regard to warfare. They must not ruthlessly slaughter everyone on and off the battlefield at any time they please. We don’t allow everyone the power to kill.
We require businessmen essentially to be honest… a quality we expect in everyone.
Mike,
Interesting that you raise the issue of a business oath similar to the Hippocratic oath. Isn’t it strange that folks who took the hippocratic oath now practice plastic surgery, inject muscle-kiling cocktails into our wrinkles, and carry out operations such as gastric bypass, destroying the troublesome bodies God gave us to get the bodies we hope for? I think these sorts of procedures violate the hippocratic oath, and I don’t think the consciences of these folks actually bothers them much. Could be how their community defines “harm”. Could be they simply have unhealthy consciences.
Also, interesting that Chris mentions how we “expect” honesty in everyone. Do we need a hippocratic oath of sorts in order to expect honesty of businessman, or will Nohria and the organizations to which these young minds are interned be able to cultivate a conscience in them that will guide them to good character? Let’s hope Nohria’s character and conscience rubs off on these students and the internship coordinators they are entrusted to. In fact, let’s pray for it…
Another problem with the business school curriculum (says this Stanford grad) is that there is virtually no inclusion of practical values. For example, courage and perseverance (two of the values in the course we teach) are the most vital qualities for entrepreneurial success, yet I don’t know of a business school anywhere that teaches these learnable traits. As another example, every company explicitly or implicitly includes integrity in the statement of values it presents to the public (even Enron did), yet in practical terms many corporate cultures undermine integrity by tolerating gossip and rumor-mongering; again, fostering a culture that is intolerant to toxic emotional negativity is a learnable skill. — Joe Tye
Mike,
Thanks for another thought-provoking post.
Does razing need to be a primary intention, or is it sufficient for it to be an acceptable by-product?
Using your analogy of the mobile phone, was the primary goal of creating the mobile phone the destruction of the wall phone? Or was the latter just a by-product that was acceptable?
In raising new ideals does one need to desire the destruction of the old or just be willing to see the old destroyed?
I hope my question is not mere semantics; it seems to be a question of where your primary focus should be – to raze the old OR focused forward on raising the new, with a willingness to see the old razed in the process.
Bill
To arrive at a destination requires leaving port. The answer to your (good) question is “both/and.” Destruction is intrinsic to the process of creation, just as “take” preceded “eat” in the (good) Garden. Taking was killing fruit, for example, in order to eat it. Your question is not mere semantics, it is substantive.
What happens if we do away with corporations – the only-real-on-paper institution that distances us and our behavior from consequences?
Is that a viable option? A means of shalom?
Brody
P.S. I own an LLC. I’m just curious, not hypocritical.