Business Schools, Leadership and the Financial Crisis
People are looking far and wide to identify the causes of the financial crisis. I recently described how a failure of policy design was one of the factors that lead to the financial crisis. Another factor that has been discussed widely is the role of business schools in creating the leaders who ostensibly brought on the crisis. Have these universities not fostered a proper sense of accountability and responsibility, and should they be teaching ethics?
Business schools should clearly promote accountability, responsibility, and ethics—these things are important, and students will need them to be successful. Many schools are already teaching these types of courses, which are often oversubscribed.
However, this is a side issue compared to the real sin of contemporary business schools: their curriculums aren’t keeping up to date.
A business school can’t function unless it is meeting the demands of its market. The focus and offerings of many business schools fundamentally need to change. Schools are offering skills made popular in the 60s and 70s—specific skills rather than business thinking—that create a mentality conducive to producing middle managers. They’re not doing things that would actually be useful to students, like teaching policy design and the differences between government strategy and corporate strategy, or reproducing the types of leadership challenges that students will inevitably face in the marketplace.
In fact, it is possible for business schools to train people to become leaders – in our study of over 2000 boards and 12,500 top teams, Nada and I found that leaders are entirely made. There wasn’t a specific character trait that marked a leader; they just needed to be smart on their feet and aware of the context (and culture) in which they operated (particularly when taking over another company).
We don’t know what fosters a real desire in people to become leaders, whether people are born with it or whether it’s the product of an unhappy childhood or something else. Not everyone wants to become a leader. But we do know that the most important trait of a good leader is that she never stops learning. This was clear from our research.
Business schools can help train people to learn in better, more efficient ways. People process more information today in their daily lives than ever before. Information isn’t as carefully packaged as before, and the ratio of signal to noise is much lower than it was in the past. Yet rather than teaching people how to better interpret information, business schools continue to feed students isolated packed of information, such as marketing, accounting and sales modules. They continue to focus on rote knowledge and business functions, not on training and developing leaders. This is their main problem; their treatment of ethics is a different (and over-hyped) issue entirely.
