May 25th 2010 | From The Economist online
"VALUES" are all the rage at business schools nowadays. This week around 300 graduating MBAs at Harvard Business School will take an oath, pledging to play a positive role in society once they graduate. At the last count, this is slightly fewer Harvard MBAs than took the oath when it was introduced last year; but thanks in part to a new book by the authors of the oath, the idea is spreading through business schools like wildfire. There are now over 3,000 signatories from more than 300 institutions.
It will be unsurprising if, this time next year, taking the oath is compulsory rather than voluntary at Harvard, given Nitin Nohria's recent appointment as dean of its business school. He, along with his colleague Rakesh Khurana, was an early advocate of an oath and helped the authors shape it. Even if Mr. Nohria decides not to pick a fight over the ethical pledge with the many sceptics on his faculty, he has made no secret of his support.
On the other side of the country, another dean is making an audacious bid for leadership in the somewhat implausible crusade to turn business schools into moral wellsprings. "This feels like exactly the time for a business school to take values seriously — not just post them on the wall, but to really go for it," says Rich Lyons, the dean of the Haas School of Business at Berkeley. The MBA students who arrive after the summer will take a course that has been thoroughly revamped, he says, in an effort to achieve a cultural shift that he believes will go much further than any MBA oath could achieve. "The oath has triggered lots of good discussions, but when 50% of your students sign on to something, that's a conversation not a culture. It needs to be universal."
Mr. Lyons reckons that business schools have long trailed behind leading companies in managing their internal culture. His models for cultural change are firms such as Procter & Gamble, General Electric, McKinsey and Southwest Airlines, as well as — whisper it softly — Goldman Sachs, where he was "chief learning officer" for two years before jumping ship with brilliant timing to become dean in the summer of 2008.
This approach puts Mr. Lyons in the middle of a debate about strategy that has long divided business-school faculty. One camp aims to map the competitive landscape, and position their organisations at the point on the map that offers the greatest opportunity. The other camp prefers to focus inwardly on an organisation's values and core abilities, and then to pursue success by playing to those strengths — which is what Mr. Lyons says he is doing at Haas. In particular, he wants to turn what has hitherto been viewed by business as a downside of Berkeley's culture — its radical non-conformism — into a virtue. A tendency to question the status quo can be translated into a capacity for innovation, he believes. The goal is that Haas MBA graduates will become "path-bending, innovative leaders."
Haas already has a reputation for producing a different sort of MBA from other elite schools', Mr. Lyons claims. "Business schools are known as breeding grounds for over-confidence, for hubris, for arrogance, for self-focus. But recruiters tell us that one of the defining features of our students is 'confidence without arrogance'." Indeed, a similar phrase, "confidence without attitude", is now one of four core defining principles behind the redesign of the MBA course, along with "question the status quo", "students always" and "beyond yourself" (i.e., "considering the long-term impact of our actions and the facility for putting larger interests above our own").
The reforms at Haas are being billed as one of the most radical shake-ups of an MBA programme since both Yale and Stanford changed theirs in 2006. But whereas Yale scrapped conventional subjects such as marketing, accounting and strategy in favour of more nebulous themes such as the customer, innovation and business and society, the Haas approach involves teaching the old subjects in a new way, by emphasising 15 specific skills, including experimentation, revenue-model innovation and risk-selection.
Only about a fifth of the curriculum will be different, but most of the changes will be at the beginning of each course, so students will feel a big change, says Mr. Lyons. There will be three new core courses, out of 12: problem framing, exerting influence without formal authority, and leading people. The other nine are being revamped. For instance, the focus of the statistics course will now be to get students to think about what data they would like to have to make a decision, and how they would get that data — to "turn them from consumers of data into experiment designers, producers of data."
In marked contrast to the rumblings of discontent heard at Harvard, Haas's changes seem to have gone down remarkably well with its faculty. When Mr. Lyons put his redesign to a vote four months ago, 54 of his teaching staff approved, four abstained and no one was against. Mr. Lyons says the changes have also been well-received by both alumni and incoming students, who will now be more rigorously assessed for compatibility with the culture he wants to create. At the very least, this seems intelligent marketing for Haas in an increasingly competitive MBA marketplace. What difference it will make in practice to the quality and character of its MBA graduates, only time will tell. As with the MBA oath, talking the talk is a lot easier than walking the walk.