Words delivered by Jonathan Wareham, Dean of Faculty & Research, to the 2015 MBA Graduating Class of ESADE Business School
I was recently at a seminar with the Dean of Medicine of Warwick University. He controversially claimed that medical universities can produce qualified physicians in just three years. This was obviously provocative on many levels, including the well-known tendency of medical schools to limit access to the profession to keep salaries high. His argument was basically that, in the old days, medical students were expected to command a full body of medical knowledge. Today, this is simply impossible given the explosion of scientific knowledge in recent decades. Medical students must learn some basics, but they must also have the ability to discover and navigate new information, assimilate it, and use it with a great deal of critical reflection. This argument really made me think.
We have a similar challenge in management education; that is, what and how do we teach in business schools? There are some standard answers that we have all heard before: knowledge, skills, capacities, personal ability, leadership, changing world views, people building, entrepreneur building, or manager building. At ESADE, we emphasise concepts/modifiers such as: creative; innovative; entrepreneurial; ethical; social justice; create value for society; build prosperity for others less fortunate.
Of course, we must ask: Do we do this well? How can we do better?
One concern I have is that the simplification of many managerial ideas/fashions leaves our candidates poorly equipped to do what people in positions of responsibility are asked to do; that is, make difficult decisions that have consequences for others (positive, negative, or otherwise) with very limited information, in a short time period, and with plenty of uncertainty and ambiguity. For this you need a strong sense of self and the ability to critically reflect on the often simplified narratives the world provides you. This is similar in some ways to what my colleague in medicine was describing for his students.
Now, as a professor in a school of management, I have some license to satirise our profession. Consider how overly simplistic and value-laden management discourses can be:
- Creativity is good. Control is bad.
- Innovation is good. Administration and bureaucracy are bad.
- Incremental innovation is OK. But disruptive innovation is much better.
- ‘Ethical’ labels make you kind. But if you have no explicit ‘ethical’ label, you are probably greedy.
- Social entrepreneurship is good. All for-profit is bad.
- Design is cool. Manufacturing is mundane and boring.
- Local/micro industries are idyllic. Mass production is dehumanising and environmentally destructive.
- Social innovation is warm, fuzzy and likable. Finance is the source of all evil.
- Sustainability – whatever that means, is clearly good. All petroleum and chemical companies, as well as gene modifiers, are on the dark side.
And so on…I am being sarcastic and perhaps unfair, but I do so to make a point.
Why is this problematic? Let me give you an example to think about.
In our PhD programme, we spend a great deal of time teaching about theory; what a theory is, and what it is not.
Consider what happens when I release the pen I am holding. It falls to the ground. The ancient Greek explanation for this is that it wants to move towards the earth, or more specifically, the small object (the pen) wants to move towards the large object (the Earth). Is this statement right or wrong? It is difficult to evaluate. We can say that is has a high degree of predictive validity – the outcome is always correctly predicted. Of course, we have no evidence to suggest that the objects can ‘want’ or have any form of agency. Hence, the question about whether the ancient explanation is right or wrong is somehow meaningless, perhaps silly, or, more importantly, not particularly useful.
Of course, we all know that Newton invented a language that has the same predicative validity, and tells us much more about the interactions of mass – and so we use that language for many things. But there are many aspects of gravity that Newtonian mechanics do not tell us. It is very useful to predict certain outcomes for a particular range of phenomenon, but not useful for others. To paraphrase the statistician George Box, as a theory, it is neither right nor wrong, just useful for some purposes. It really does not make sense to ask questions regarding truthfulness or correctness. Those concepts are meaningless for theories.
In the same manner, I would argue that the simple narratives we use in management education are very useful for a particular range of phenomena, but unfortunately, these narratives will often have little value when you engage in the real world. And acknowledging this – and helping you deal with it – is one area that where we can do better as an academic institution. Let me give you two examples:
Is it good or is it bad? Is it legal? Is it ethical? Is it disruptive innovation? Is it socially valuable, or is it reckless capitalism? This all depends on who you ask, and when.
What is good about Über? – it provides new jobs, a new service model, service to underserved areas, and a great customer experience.
What is bad? – it threatens jobs and can undermine an otherwise well-regulated and operational taxi industry.
It is interesting to consider the typical pattern with which Über enters a market. Über begins operations, and after gaining a certain critical mass, it begins attracting criticism from local taxi operators and regulators. Pressure develops on politicians to stop Über. From here, legal orders arrive ordering a shut-down. At this point, Über often belligerently ignores the legal mandates, despite fines and legal consequences (including the jailing of executives) in an effort to buy more time to build customer support. And once it achieves a certain level of popularity among users (while operating illegally), the popularity is directed back at the politicians, and political pressure is applied to modify the legal frameworks and make Über legitimate.
Typically, Über goes through this cycle in about three years. So in this short time frame, it starts as a parasitical, unethical, illegal, pirate business and evolves into something that is legal, legitimate, and embraced in many cities, and, of course, finally legitimised by the regulators.
Should Über be permitted in Barcelona? I honestly do not know. I thought Über was great in San Francisco, but also appreciate the efforts that have been made to construct the well-functioning Barcelona taxi service (offering a service that is reasonably priced and high quality). I feel good knowing that the drivers obtain a good income. It is also one of the few industries that pays taxes in a fairly transparent manner. In Spain, this needs to be appreciated.
So the question remains as to whether Über is good or bad, ethical, or unethical, socially beneficial disruptive innovation, or reckless cowboy capitalism. I feel that the simplified narratives somehow leave us poorly equipped to answer these questions. Alternatively, perhaps they are just questions that have no utility; questions that cannot provide any meaningful or useful response.
A famous book that is often read by executives is entitled “The Rise and Fall of the Roman Empire.” I have never read it. A book I have read is called “Private Empire – ExxonMobil and American Power.” The author is Steve Coll. He previously served as the editor-in-chief at The Washington Post, and is now Dean of the Columbia University Graduate School of Journalism. His thesis is that oil companies are some of the largest, non-democratically elected concentrations of power on the planet, yet we really know little about them or what they do. Hence, more transparency is needed in the industry. He is not a friend of big oil, but his investigative journalism is serious, professional, and balanced. Please read this book! It is one of the best books on management. Exxon – like many oil companies, does many things that are morally despicable, clearly and unambiguously unethical. But it also does many things that are good, or even socially beneficial. After the infamous oil spill in Alaska, it drove some of the most demanding safety practices in the industry. This positively influenced the entire sector and, hence, was beneficial for the whole planet. But in many cases, if not the vast majority of the managerial predicaments described in the book, the behaviour of Exxon is neither good nor bad, neither ethical nor unethical. It is difficult to evaluate, and one is left with the sense that, if I were in this position (say CEO of Exxon), even with the benefit of history, I am not sure I could have made ‘better’ choices. Most of the predicaments described are just very, very peculiar and difficult.
As an example, consider doing business in the developing world. Do you deal with a corrupt government with a miserable record on human rights? Or do you deal with rebel factions that are equally brutal and do not allow girls to read? Is their presence in the nation beneficial to the locals? Are they creating good jobs and building skills, schools and hospitals? Or are they stealing natural resources for the benefit of their own wealthy shareholders in the west? And if they chose to exit that market, which less scrupulous company from another part of the world would take its place?
These types of questions are very hard to answer. But as a manager – you will need to find your own answers to these kinds of questions. That is my point. As a management school, our job is to prepare you for this kind of reality where there are no easy answers, no simplified narratives to help you with choices, important choices that will have consequences for others; confusing realities that elude being framed by simple and naive dogma.
It is also important to recognise that you do not need to be an Exxon, Nike, or Walmart to draw criticism. Some of the most socially conscious organisations, charities, religious bodies, or well-intentioned public health organisations have drawn a great deal of criticism for various reasons. At some point, when you reach a certain size, your actions will have consequences for others – positive, negative, or some not yet thought of descriptor. This is a result of doing things – particularly if you try to change things. There is a good chance that someone, for very legitimate reasons, will not agree with what you are doing – despite being as ‘ethical’ or well-intentioned as you so aspire.
I fully encourage you to be ethical, socially innovative, and entrepreneurial as you create economic, social, and cultural prosperity for others. I fully believe that business can play a strong role here. But be aware of simplified truths, naïve dogma, and of trying to frame complicated issues with simplified questions that really cannot give you any useful answers. For better or worse, ambiguity, uncertainty, and limited insight into cause-and-effect will define much of your existence when you assume a position of responsibility. And this is a tough existence for most normal human beings. I certainly find it challenging, and I think most do.
I strongly believe that making you more conscious and comfortable with this reality is one of the most important things we can do in managerial education. I know we have aspired to do this. I also know that we can do it more effectively – so I would naturally invite your input, as ESADE graduates, on how we can improve.
Enough of my psychobabble. My closing advice: continue to learn, and continue to think critically as you develop your own answers, your own narratives to make sense of this complicated world. Please remember you are part of the ESADE family, so please stay connected with us and continue to share your lives with us at ESADE and each other in the Alumni network. We are very proud of you – congratulations.