Rooted in a Sense of Purpose

Is it possible to build business schools with a social conscience? Yes, but we must do more to integrate ethics and emphasize public sector management if we are to shape the role business education plays in the future of society.
Rooted in a Sense of Purpose
“AMONG THE FACULTIES, none has a clearer sense of purpose than schools of business and medicine.” Derek Bok, former president of Harvard University, made this observation in his 2003 book, Universities and the Marketplace: The Commercialization of Higher Education. His statement highlights some of the parallels between the histories of business schools and medical schools. Both began primarily as for-profit vocational schools, both evolved to educate students in a profession, both have faced tensions between academia and practice—and both have faced high-profile criticisms that made their leaders and faculty rethink their schools’ purpose. But their later evolutions have followed very different paths.

Medical schools reformed their approach, in large part in response to Abraham Flexner’s famous 1910 report, “Medical Education in the United States and Canada: A Report to the Carnegie Foundation for the Advancement of Teaching.” In it Flexner criticized the state of medical education for among other things, being too vocational and practice-based. He recommended that the practice of medicine be based on scientific principles and research, and, in turn that medical education be based on fundamental scientific knowledge and its applications.

Flexner also argued that medicine was a profession in part because medicine is problem-driven, cross-disciplinary, and altruistic in nature; he viewed the medical profession as one dedicated to the general social good, not narrow self-interest. Thus, Flexner also envisioned professional schools as altruistic in nature, instilling in students a sense of values beyond themselves.

Business schools famously began their own transformation in 1959 after the Ford Foundation’s Gordon-Howell report. While many schools have added standalone courses in ethics, values, and social responsibility, some have done so in response to incidents of corporate scandal and greed, not from a shared sense of purpose. Instead of viewing the teaching of ethics as a fix for bad behavior business schools need to make ethics and altruism part of the DNA of the MBA curriculum—a part of their identity and purpose.

Yet 50 years after the release of the Carnegie and Ford Foundation reports, prominent business leaders, including Warren Buffet and Bill Gates, have pointed to the need for business schools to help students develop ethical identities. While many schools have added standalone courses in ethics, values, and social responsibility, some have done so in response to incidents of corporate scandal and greed, not from a shared sense of purpose. Instead of viewing the teaching of ethics as a fix for bad behavior, business schools need to make ethics and altruism part of the DNA of the MBA curriculum—a part of their identity and purpose.

Here we look at ways to integrate issues of ethics and sustainability more effectively into business programs. In particular, we explore the case of Stanford University, which uses its public sector management certificate program as a way to emphasize ethics and social responsibility in its curriculum.

Profit and Purpose

We know that it is easier to teach students how to make money than how to solve social problems. After all, problems such as climate change, education, and healthcare are too complex for an algorithm to handle. But if schools can add dimensions of social consciousness to their existing core curricula, they can help students think through how they and their organizations can help address large social issues on a regional, national, or global scale.

Students must learn the tradeoffs between "me" and "we" mentalities."
As a first step in that direction, business education could move away from its current “me-leadership” mindset, in which MBA students are taught to be concerned mostly with their individual success. Instead, we need to teach a “we-leadership” mindset, in which students focus on outcomes beyond their own near-term interests. B-schools can promote such a mindset through courses that highlight the individual, organizational, and societal tradeoffs between a “me” and a “we” mentality; explore the role businesses have played in shaping societal values; and present cases of leaders who put long-term organizational or social goals ahead of their own.

Many schools also are involved in initiatives designed to promote ethics among business students. For instance, the Yale School of Management offers a set of cases on ethics and social responsibility free to all educators; New York University’s Stern School of Business holds its annual Social Impact Business Challenge; and the Stanford Graduate School of Business (GSB) has created initiatives around social innovation and strategic philanthropy. The Presidio Graduate School in California, which came in No. 1 in Net Impact’s “Business as Unusual” ranking integrates ethics, values, social impact, and sustainability into all of its courses.

We believe business schools—perhaps even those that already emphasize social impact in their curricula—might do even more. Here are a few possibilities:

Encourage more research on social impact. Deans can persuade faculty to conduct more research on social issues by pointing out the advantages of such scholarship. For instance, such research is often problem-driven and interdisciplinary, which can ease tension between academic and practice-based perspectives. And when business faculty study topics usually left to schools of public administration, like nonprofit management, they develop trust between government and business.

Of course, moving academics to conduct scholarship on social problems might be no easy task, given that they have powerful incentives to adhere to their current research tracks, from the publication requirements for achieving tenure to the types of scholarship that earn the most respect among their colleagues. As Robert Calkins, former head of Brookings Institutions, mentioned to Arjay Miller when Miller was about to take over the deanship at Stanford’s GSB in 1969, “It is easier to move a graveyard than to get faculty to change their minds and ways.” But if a business school can provide a climate where this change is a natural progression of its mission, faculty are all the more likely to join the effort. And when business school deans commit to a sense of social purpose, they are more likely to encourage faculty to research societal issues, even if those issues fall beyond the usual boundaries of their academic expertise.

Hire strategically. When Miller was at Stanford GSB, he hired professors interested in working on social problems and interdisciplinary projects. Some of these individuals did not have a business school background, but had broader experiences that helped them understand how governmental and nonprofit organizations worked and were managed. These faculty included Harry Rowen, former president of RAND Corporation, and Alain Enthoven former U.S. deputy assistant secretary of defense. Miller also hired George Schultz, an economist who had served as U.S. secretary of labor in the Richard Nixon administration, as well as dean of the business school at the University of Chicago.

By tackling difficult ethical topics, we can help every future manager develop a social conscience.
Establish research chairs. Deans often direct most of their fundraising efforts to new buildings and facilities. But raising funds to establish chairs dedicated to promoting values and purpose could be even more important to the future of the business school.

Seek out students with a sense of purpose. To attract students, many b-schools present data on their graduates’ salaries and placement. But if they also presented data on their graduates’ long-term contributions to society, they could appeal to students interested in social impact who otherwise might not consider business school.

Integrate public management into the curriculum. Most public management programs are housed in schools of public policy, but what if they were based in business schools? By integrating public management into their programs, business schools would not just integrate profit and purpose into the curriculum, but also facilitate conversation and collaboration among business, nonprofit, and government sectors, as well as encourage students who are more interested in applying business solutions to social problems.

A Case Study: Public Management at Stanford

The goals outlined above motivated Miller to establish a public management program (PMP) within the MBA program at the Stanford Graduate School of Business in 1971. The goal was to attract students with an interest in contributing to public organizations and service, as well as those with business degrees who planned careers in the public sector. Within the program, students heard speakers from the public sector and nonprofit organizations, organized fundraising events for charities, and followed a curriculum with public management topics embedded. Each student who completed three public management courses as part of the MBA program received an MBA degree and a PMP certificate.

Miller was passionate about starting this program, because he had come to believe that public management should be an inextricable part of business education. During his tenure first as a manager and eventually as president of Ford Motor Company, he learned that management was about more than solving business problems. It was about solving human and social problems as well, a point too often overlooked in discussions of systems analysis and economic perspectives on organizations. In the 1960s, a time when society was experiencing economic, social, and political turmoil, Miller felt that business leaders must develop a strong concern for values beyond themselves.

Although public administration existed as a field at the time, it was largely ignored in business schools. Likewise, schools of government largely ignored business management. For Miller, this gap in business education represented an opportunity. If business schools could develop public management programs, they would do far more than simply help managers develop business skills. By bringing management principles to bear on public sector organizations, they would build trust and mutual understanding between business and government. By focusing on management and its role in society, they would bring better balance between corporate interests and social responsibility. And, most important, by creating space to tackle difficult and intangible topics such as ethics and social responsibility, they would help every future manager develop a social conscience and sense of purpose.

As noted earlier, Miller recruited faculty with experience and interest in management within government and nonprofits. Stanford’s existing faculty, both within the GSB and across campus, also contributed to the development and delivery of new public management courses, which included those in business and the changing environment, federal budget policies and processes, and power and politics within organizations. The PMP also taught functional business disciplines—such as management, economics, marketing, and financial analysis—through the lens of public sector organizations.

Miller also sought to revise existing courses to include components related to ethics and social responsibility, because he didn’t just want to launch a new public management program.

He wanted the GSB to be known as a “business school with a conscience.”

In the beginning, only a few students earned their PMP certificates. But enthusiasm for the certificate program soon grew among faculty, students, and local businesses. However, over time it became more difficult for graduates to resist the higher salaries offered by private sector organizations. In addition, there was a growing perception among business students and in the public at large that government was part of the problems that society faced, not a source for solutions. Students became less attracted to public service, and in the late 1970s and early ’80s, PMP enrollments began to decline.

Then, in the mid-1980s, new initiatives, including a student-led effort called the Public Management Initiative (PMI) sought to help refresh the program. Through the initiative, each first-year class of PMP students selected a topic in which they all had the most shared interest—such as the environment, education, or social innovation—which drove their coursework, guest speakers, and other activities for the remainder of the program. By allowing students to have more input into the program’s content, the school was able to reinvigorate the PMP. By the 1990s, the PMP had adapted to social trends and student preferences, and enrollment began to increase once again. Since the program’s inception, more than 1,000 students have earned PMP certificates. Of the approximately 500 students who received master’s degrees in 2015, 101 also had earned their PMP certificates. In 2016, 124 earned the credential.

While the program once was dedicated solely to public management, the GSB recently expanded its scope—the PMP is now known as the “certificate in public management and social innovation.” But its public sector emphasis is no less valuable as a means to help students build a foundation in ethics and social responsibility. With public management still a key component in its name and content, the program continues to emphasize to students the importance of values beyond themselves.

Students can help build bridges between sectors.
In addition, programs that combine public and private sector management could present an opportunity to today’s business schools that is at least as great as—and perhaps even greater than—they did when Miller started the PMP in the 1970s. After all, even if students do not initially take jobs in the public sector, an increased social awareness is likely to make them far more sensitive to the impact of business on society. By knowing more about public sector management, they will help build bridges between sectors. They will be more engaged in their communities; more likely to pursue philanthropic activities later in their careers; and most important, more aware of the long-term role—and the ultimate impact—of business on society.

A Long-Term Vision

Professional associations also must play a role in making sure business develops a social conscience. First, they can ask business educators to consider the long-term role of business schools in society. We already see moves in that direction. For instance, the theme of last year’s Academy of Management annual conference was “Making Organizations Meaningful.” And the fact that AACSB International’s standards now encourage business programs to include ethics courses is an important step. But we’d like to see more research from our professional associations that takes a critical look at the long-term impact of our industry on society, not just short-term surveys on particular courses or the financial success of alumni.

Just as the American Medical Association undertook such research on medical schools in the years before the Flexner report, organizations such as AACSB can play a similar role for business schools. For instance, ten years ago, AACSB examined the positive impact of b-schools in its report “A World of Good: Business, Business Schools, and Peace.” In addition, in 2016, AACSB released its “Collective Vision for Business Education,” which includes the goal for business schools to become “enablers of prosperity.” EFMD also has taken steps toward a strong emphasis on ethics, including adding coverage of ethics and social responsibility to the EQUIS criteria framework. And the Association of MBAs has launched initiatives related to issues such as global collaboration for responsible management education. These efforts all signal that our industry is making a commitment to broader goals, by promoting the responsibilities of businesses and business education.

We would welcome seeing these associations intensify there efforts, perhaps by launching a Flexner or Gordon-Howell report of their own. The aim: to produce graduates motivated by purpose, not just profit.

Curricula with Conscience

Business schools often design content on ethics and social responsibility to counteract bad practices, forgetting that early deans and scholars of management education viewed ethics in more proactive terms. They placed special emphasis on building social awareness into the heart of their programs. In 1909, Edwin Gay, the first dean of Harvard Business School, emphasized that business schools should teach students both the social and scientific sides of business. In the book A Delicate Experiment: The Harvard Business School 1908–1945, author Jeffrey Cruickshank highlights Gay’s argument that the goal of business education was not to turn students into “money makers” or to teach them “to get the better of their competitors,” but to make them better citizens. Leon Marshall, dean from 1909 to 1924 of what was then the University of Chicago’s College of Commerce and Administration, shared a similar view. In his February 1913 article about the history and formation of the business school for the Journal of Political Economy, Marshall noted, “However important it may be to turn out businessmen who can make money, social workers who can command good salaries, civic workers who can rise to positions of influence and affluence, the most important task for all is to aid in promoting the progress and welfare of society.”

We would like to see business schools return to viewing educating socially responsible business leaders as a central goal of business education. We hope that all business schools go beyond a peripheral treatment of ethics and social responsibility in standalone courses and activities to embed social impact into all courses. That is the only way to turn out students who understand that just as profit is the key to economic growth, purpose is the key to the long-term sustainability of an organization and the communities it serves.

If we are to produce socially conscious graduates we must do more than react to “a few bad apples” in business. If management education were an apple tree orchard, we could simply trim branches and discard rotten fruit—or we could adopt long-term solutions to try to create an orchard where “a few bad apples” would be less likely to grow.

Mie Augier of the Naval Postgraduate Academy and Arjay Miller, formerly of Stanford, call for business schools to make social responsibility the central goal of business education. Mie Augier is an associate professor at the Graduate School of Business and Public Policy at the Naval Postgraduate School in Monterey, California. Arjay Miller is a former member of the “Whiz Kids”—a group of World War II veterans who became executives at Ford Motor Company. Miller went on to serve as Ford’s president from 1963 to 1969, and then as dean of the Stanford Graduate School of Business in California from 1969 to 1979. Augier and Miller are researching ways in which business schools are incorporating values, public management, and ethics into their teaching, research, and administration.

This article originally appeared in BizEd's May/June 2017 issue. Please send questions, comments, or letters to the editor to [email protected].