Sustainable Management Education

Three facts about 2016: UN reported that 102 million people were on the brink of starvation, up 30% on 2015; Sir Martin Sorrell, MBA, defied investors and paid himself £70m; asked why he hadn’t paid any tax over the previous eighteen years, Donald Trump replied ‘[b]ecause I’m smart’. Is there a connection?

The world is facing destruction in various forms, from the loss of social cohesion by unsustainable and ever increasing levels of inequality of wealth and income, both between and within economies, the waste of finite resources, the pollution of oceans and atmosphere, a looming mass species extinction and the avoidable inevitability of global warming. All that against a background of exploding global population, from 1bn in 1800, 3bn by 1960, 7bn by 2012 and forecast to reach around 9.5bn by 2050.

Business historian Alfred Chandler suggested that business was the most important institution in the economy and its managers the most influential. It was, he argued, considerably more powerful than Adam Smith’s ‘invisible hand’ of market forces. Clearly, business could play the lead role in correcting those damages. But business is destroying the Earth.

Business leaders do not just command business. They are also influential over finance and the media, as well as academia through their funding of research and academic institutions, especially business schools. And they are hugely influential over political decision making through their £multi-billion funded lobbying industry, politically oriented think-tanks and the operation of revolving doors through which individuals progress between these various sectors and government. Those are the various components of what Roosevelt referred to as ‘organised money’ when he ended the austerity driven Great Depression by introducing the New Deal back in the 1930s. ‘Government by organized money was,’ he said, ‘just as dangerous as Government by organized mob.’ Today it is far more dangerous.

Those various components of organized money are mostly led by the products of business school education.

The late Sumantra Ghoshal argued that such ‘shareholder-value obsessed, win-at-any-cost’ management, was the result of the ‘bad theory’ that was being taught across the globe which freed students ‘from any sense of moral responsibility’.

A 2013 Financial Times report on business education confirmed that ‘[w]hile there is growing consensus that focusing on short term shareholder-value is not only bad for society but also leads to poor business results, much MBA teaching remains shaped by the shareholder primacy model’ …‘Craig Smith, Professor of Ethics and Social Responsibility at INSEAD, agrees. “Students come in with a more rounded view of what managers are supposed to do, but when they go out, they think it’s all about maximising shareholder value.”

Not only did they teach it, but academic economists invented a false theory to validate it, based on a misapplication of the legal agent – principal relationship in order to justify Milton Friedman’s assertion that ‘corporate officials’ had ‘no social responsibility other than to make as much money for their stockholders as possible.’

The result has been a financialising corruption of business and management. The focus of real business is on achieving long term profitable growth for the business entity, by innovation and development of its products, processes and technologies. That requires management to have knowledge and expertise in the business operations, its people, customers, and markets. That is a demanding and creative, motivational role.

However, the majority of big businesses follow the financialising route, focusing solely on maximising shareholder take. Its top management is therefore concerned only with short term financial results. All that is required is some basic understanding of finance and a willingness to risk ‘other people’s money’. The simplest and quickest way to achieve results is by merger and acquisition deal making, either to increase power over existing markets to enable the fixing of prices etc, or to diversify into speculative conglomeration.

The impact on management education has been profound. The simple message at the core of mainstream management education is that greed is not just good, but a duty, a social responsibility, to be exercised without restraint of moral responsibility. Many graduate examples have been cited on this blog over the years such as Bob Diamond, MBA, Ivan Glasenberg, MBA, Jamie Dimon, MBA, Richard Fuld, MBA and Martin Sorrell, MBA. But there are many others who have also contributed to the destructions referred to at the beginning of this post.

For management education to be sustainable, it will need to take full account of the damage being done. Also, as Ghoshal suggested, teaching the ‘bad theory’ will have to be stopped. Many involved in management education agree. MBA graduates themselves, recognise the bad teaching for what it is and its disastrous impacts. Some have formalised their disquiet into a Hippocratic style of MBA oath. The aim is ‘to facilitate a widespread movement of MBAs who aim to lead in the interests of the greater good’ and to ‘create value responsibly and ethically.’ The website – – includes ‘articles about how people think business schools need to change.’

But the idealism of disenchanted management teachers and their students will not be enough to change the status quo. Moreover, that change will not be easy for mainstream business schools which depend on the support of organized money. But it is those business schools and relevant university departments themselves, which will need to make their commitment to real management education. Their curriculum needs to be based on knowledge and understanding of the 21st century business context, as well as business processes and people, and how technologies, products and services might be creatively developed to achieve real sustainability.

Business schools and management departments adopting such a curriculum could play the critical role in achieving the necessary change of culture. Their students will, in due course, become leaders in all the constituent parts of organized money. And when they take command real culture change could be achieved. But the need for change is urgent. It is this generation which must accept responsibility for bequeathing to its successors a truly sustainable planet earth.

Sorrell needs to restrain his greed, Trump pay his taxes, and the benefits so accrued, need to be made available to provide the essentials of living to all people. Business can play its part if properly educated.

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