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.