Business schools should produce what companies need

Charles Handy, the management thinker, argues that in management we have forgotten what a business is for. Look around and you will see a business community untrusted, under scrutiny and seemingly without vision.

But let’s be honest, business leaders are simply applying what they learnt in management school 15 years ago. People such as the writers and academics Henry Mintzberg and Rakesh Khurana have been arguing for years that we have a problem in business schools and that the problem is not only a matter of curriculum; the whole system is a vicious cycle. Success is determined by revenues; the media ranks MBA programmes on their capacity to increase earnings and business schools design programmes to provide students with the tools to maximise returns. The result is that top-ranked business schools are those capable of placing the most graduates in high-paying jobs, particularly investment banking.

Ask any chief executive and they will tell you that most companies are not currently managed based on their most important competitiveness factors. Companies list their top factors as employee talent, long-term vision, corporate culture, stakeholder management and quality or capacity to innovate, yet they tend to manage the company based on factors such as productivity, sales, growth, cost savings, stock price or market share. Perhaps the reason is that most top factors are difficult to measure, and therefore to manage. Ironically, their intangible nature also makes them very difficult to teach. The result is a system where businesses manage themselves admittedly not based on their most strategic assets, and where management schools train students to continue using the same system.

The Chilean economist Manfred Max-Neef argues that the world would change if we made it mandatory for all economists to spend six months in a poverty-stricken area. Adopting that simple measure, he says, would mean international policy from the World Bank, the IMF and the UN would be radically different. The same reasoning can be applied to those who advocate making corporate social responsibility a central part of MBA programmes. The logic is that if MBA students are taught to remember what a company is for, or even what it should be for, organisations will be transformed and the vicious cycle broken. Thus, for some years now, there have been a number of business schools around the world that have been placing CSR at the centre of their MBA programmes, including core mandatory courses, offering electives and even special tracks. The question is whether or not teaching CSR to MBA students has any effect.

MBA graduates from schools that focus on CSR tend to be described by recruiters and companies as more collaborative, having more soft skills and a broader perspective, seeing the world as a complex system with no easy solutions. Obviously, there is another side to possessing these qualities, such as being less competitive, lagging behind in some hard skills and not being as quick to reach decisions.

In CSR-centric MBA programmes, students are taught that companies are communities and should be managed as such, that to maximise long-term value we need to focus on generating value for all stakeholders, that complexity can be managed but not solved, that intrinsic motivation is based on values and emotions, and that a corporate culture is not defined by words but by actions.

The debate for or against having CSR content embedded in an MBA programme should be based on trying to answer what an MBA is for. Most students embark on an MBA not only to learn a technical skill, not solely to improve their salary, but mainly to change their life. Yet most MBA programmes are designed to produce the type of graduates who will fit into today’s business environment, not the leaders who will challenge it and take it forward.

Business schools need to stop acting as factories producing the products their clients [the companies] want and start producing what they need. If MBA programmes, as most management schools claim, are designed to teach the leaders of tomorrow, they should take this job seriously. We need professionals who understand that companies are a part of society. CSR should be a mandatory part of any MBA programme and business schools need to review the way they teach their students. Maybe in this way we will be able to break the vicious cycle.

The writer is a researcher at Esade’s Institute for Social Innovation.