An Open Letter to the Deans and the Faculties of American Business Schools

I am writing to you because of the appalling and the sorry state of business schools. I am outraged over what we as business educators have allowed to develop.

At best, we are guilty of having provided an environment where the Enrons and the Andersens of the world could take root and flourish. At worst, we are guilty of being active accomplices and co-conspirators in their shoddy and criminal behavior. In either case, unless we finally own up to the underlying reasons for our actions, business schools will only continue to aid and to abet the wave of scandals that have engulfed American businesses within the last few years.

Even though we are of course not fully responsible, we delude ourselves seriously if we think we played no part whatsoever. Make no mistake about it. We share part of the blame.

The problem is not just that our underlying values are faulty. To be sure, this is a fundamental part of the problem. The real problem, however, lies much deeper.

More specifically, we have promulgated:

  1. A mean-spirited and distorted view of human nature;
  2. A narrow, outdated, and repudiated notion of ethics;
  3. A narrow and highly limited definition of, and the role of, management in human affairs;
  4. An overly reified conception of the “sub-disciplines of the field of management;” and,
  5. A sense of learned helplessness and hopelessness among faculties, students, and workers regarding control of their careers and lives.

Let me discuss each of these in turn.

1. A mean-spirited and distorted view of human nature

Without being fully aware or conscious of it, we have built and promulgated a series of theories with regard to business that are based on the worst characteristics of humans and the worst possible assumptions about human nature. Unless these characteristics and assumptions are abandoned and fully repudiated, we will only continue to turn out more Ken Lay’s, Andrew Fastow’s, Jeff Skilling’s, etc.

For the most part, the theories of business that we have developed and therefore teach are based upon the narrowest and the basest of human motives. For instance, two of the most prominent theories of business- Transaction Cost Analysis and Agency Theory- assume that at their core humans are completely and entirely ruthless, motivated solely by greed, opportunistic, purely selfish, and it should come as no surprise, totally out for themselves and no one else.

It is not the case that the preceding characteristics do not apply at all to human beings. Of course they do. But to assume that they apply in their entirety, 100% of the time, is absolutely preposterous, not to mention outrageous.

Little wonder why current economic thought and theories of business have extreme difficulty in imagining how altruism could possibly arise if people are motivated by greed, opportunistic, selfish, etc., and, to boot, 100% of the time. It’s akin to starting with the assumption that everyone is a cold-blooded, ruthless murderer and then trying to explain how anyone, save a very few individuals, would be left alive!

If one starts with the assumption that human beings are mean, and further, that meanness begets meanness, then how could any of the other virtues that human beings possess possibly exist let alone arise in the first place?

2. A narrow, outdated, and repudiated notion of ethics.

One of the earliest theories of ethics that was founded over 2,000 years ago is Egoism. Egoism assumes that self-interest, and the only thing purely motivates people, is oneself and no one else. It should come as no surprise that Egoism has been almost totally and completely refuted by contemporary moral philosophers. Once again, it is not the case that Egoism doesn’t apply at all, but rather, it doesn’t apply all of the time.

More to the point, what does “self interest” mean? As innumerable human actions show, most notably addiction, humans do not always act in ways that are in their best “self interest.”

Given pure Egoism, how could the notion of trust, without which the concept of society is not possible, develop and sustain itself?

The point is that at best our current theories of business are founded upon an outmoded ethical theory. Even worse, they assume that there has been no progress at all in the 2,000 years since Egoism was first proposed as an ethical theory. This is absolutely preposterous.

Many business school faculties make a number of unfounded assumptions and assertions about the field of ethics. First, they assert that ethics is nothing but a matter of one’s underlying values. In other words, ethics is solely about values and nothing else. Second, they also assume that by the time one gets to business school, one’s values are fixed and rigid. Third, it is the role of one’s parents and religious instructors to teach values, not business school faculty. Thus, to state it somewhat differently, business faculties have little, if any, role in teaching values.

All of the afore-mentioned assumptions are wrong. First of all, ethics is not primarily about values, although values certainly enter in. Instead, ethics is fundamentally about justifying one’s values in the light of the arguments that various theories of ethics address to our values. In other words, ethics is primarily about justifying and clarifying our values through reasoned debate and argument.

This is neither the time nor the place to go into details as to what these differing theories of ethics are. Suffice it to say that they have been developed by some of the best minds that the world has ever seen. Now it is not the case that these so-called “brilliant minds” were entirely right, but rather it is through an engagement with their thoughts that we clarify our own values.

It is also not the case that one’s values are fixed. If this were the case, then it would absolutely preclude the possibility of human development over the course of one’s entire life. Thus, not only is this presumption invalid, but it is also absolutely preposterous.

Finally, it would be much easier to accept the assertion that business school instructions do not act in the role of surrogate priests or rabbis were such faculty themselves not promulgating their own values through the theories that they have developed, namely ruthlessness, selfishness, and so on. Thus, once again, our basic theories are not only built on a narrow, but an invalid base. For this reason alone, it behooves us to go back and to revisit and to reconstitute the fundamentals of our profession.

3. A narrow and highly limited definition of and the role of management in human affairs.

We have also adopted some of the narrowest definitions of management. We assume primarily that management is about making money and therefore can be captured solely if not predominantly in economic terms. While to be sure this is important, it is not the only important definition of management that is possible.

There are all kinds of management problems that business schools do not even begin to recognize. For instance, if one reads William James, arguably one of America’s greatest philosophers, if not the greatest philosopher that America has produced, then one finds the notion that epistemology — i.e., what is “truth” and how we humans can know and produce it — is the “management of truth.” Now to be sure, just to put the matter in these very terms is a dangerous notion. The “management of truth” connotes that one is willing to do everything in one’s power to twist and to distort numbers, facts, and conclusions in order to support one’s predetermined purposes, a “fact” that I would note has been all too prominent in the most recent business scandals. But this is not fundamentally what James means by the notion of the “management of truth.”

Of course, the distortion of truth is always a real possibility. But James’ fundamental point is that “truth” is something that is produced by humans. It is the product of human activity. It is, in fact, one of the supreme achievements of human beings. But, how humans “manage” truth is little discussed in business schools except under the paltry and limited umbrella of scientific methodology, which is itself but a subset of the different ways of managing inquiry.

Thus, on two major fronts, we see a narrowing of business school education: (1) with regard to the theories and the motives underlying human behavior, and (2) in the narrowing of the concept of management.

One of the most important management problems is virtually never mentioned at all in business schools. This is the “management of spirit.” Once again, James is extremely relevant. For James, the “management of hope” is one of the most important problems ever undertaken by humans.

In a choice between two conflicting theories of human behavior, each of which appears to explain the facts of a particular or even a general situation equally well, James opts for choosing that theory which leads to greater hope, i.e., the will to persevere in the face of adversity.

There is also another juicy problem that business schools rarely mention. This is the “management of reality.” What a strange concept, and yet it is one of the most important of all problems. Let me give an illustration.

Recently, we have been beset by fears of mad cow disease. One of the most interesting facts about the unfolding of the mad cow crisis is that supposedly the blood of cows cannot be fed to other warm-blooded animals. For some reason or another, and we can well guess what those reasons were, pigs were not included in the definition of “warm-blooded animals.” Thus, the blood of cows could be fed to pigs.

Thus, don’t tell me or anyone else that definitions don’t matter, and yet, the “management of definitions,” of reality itself, is little discussed in business schools. Once again, we see where a whole interesting and important definition of the concept and the purview of management has been narrowed.

To be perfectly clear, I am arguing that the philosophical foundations of business are in need of fundamental and serious revision. We have founded modern day management on a series of outmoded and highly dubious assumptions. In the language of William James, they are not merely dubious but “highly unethical.” It is not that James has a monopoly on what is “ethical” or what is not, but rather, that thinkers like James force us to re-examine our smug assumptions and our beginnings.

In short, I am arguing that philosophers such as William James need to be brought into our conversations regarding the design and the management if you will, of business schools themselves. Why a philosopher? Because when things are rotten to the core, the foundations have to be dug up and repaired. This is precisely what philosophy is all about.

If ethics is important, then surely it underlies everything that we do and teach as educators. If this is the case, then the recent notion by the deans of some business schools that it would do ethics an ill service to put it in a separate course is not only fallacious, but once again, outrageous and preposterous. Indeed, would anyone be willing to say, “Well, Accounting is so important that it should be sprinkled throughout every course and not diluted by putting it in a separate course by itself?”

Do we really believe that we would do ethics an injustice by having a separate course devoted to it and further that no benefit would derive from such a separate course? Apparently, the answer is “No” if one believes that ethics is merely about pushing one’s values on students. But certainly, the answer is a strong “Yes” if one believes that ethics is fundamentally about engaging students in arguments in order to clarify their values against the strongest “test” that can be arrayed.

For James, however, there is no question whatsoever as to the importance of ethics. Indeed, for William James, the notion of “ethical accounting” and “ethical finance” are not oxymorons. The fact that we barely even talk about such things, let alone that we have barely developed ethical accounting and ethical finance theories that make use of some of the notions of ethics that have been developed in the 2,000 years subsequent to Egoism is itself a moral outrage.

The preceding points were made about a year ago by the distinguished sociologist Amiti Etzioni in a by now famous Op-Ed piece that he wrote for the Washington Post. In it, Etzioni recounted his experience as a visiting professor at the Harvard Business School where he taught a one-year course in ethics. At the end of his limited tenure there, there was a faculty meeting by the entire faculty of the Harvard Business School to discuss whether the course in ethics should be continued or not.

Some of the discussion was downright bizarre. A number of the Finance faculty said openly, “If we teach a course in business ethics, then it will only show that what I am teaching is unethical. Ergo,…” I have no doubt as to the accuracy of Etzioni’s observations. If a larger body of faculty shares them, then we are truly in deep trouble.

4. An overly reified view of the “sub-disciplines of the field of management.”

Recently I chaired a Ph.D. qualifying exam for one of our brightest students. Needless to say, the student passed with flying colors. Nonetheless, one aspect of the exam was highly disturbing.

A considerable part of the exam was devoted to the student’s potential Ph.D. dissertation topic. A number of the faculty noted that the proposed topic cut across the fields of Organization Behavior, Organization Theory, and Business Strategy. While they didn’t wish to preclude outright the student from tackling a subject that would cut across a variety of fields, they raised “serious concerns” with regard to the student’s “welfare.” They were concerned that if the student pursued the particular topic then the student would have trouble getting a job.

In giving the typical job talk based on the student’s dissertation, the faculty worried that those listening to the talk would be confused. A number of the members noted that they themselves experienced considerable trouble when they pursued similar topics early in their doctoral careers. Thus, the comments were phrased in terms of “helping the student.” It was not the case that they wanted to prohibit the student from undertaking the topic, but that they wanted to warn the student about the possible dangers of doing so.

Once again, I find James extremely relevant. While the categories of Organization Behavior, Organization Theory, and Business Strategy deserve to be taken seriously, they should not be reified. By “reified,” I mean that we should not act as if these are totally separate and distinct categories of human experience. They are not. They are merely convenient categories that we have created in order to carve out and to distinguish different aspects of human behavior from one another. But they neither exist on their own separate from the others. They help us to manage our world. They are not real or distinct in themselves.

For those students that are capable, we should be encouraging them to undertake topics that bridge the categories that we have created, not putting barriers in their way and discouraging them. To the extent that we do this, is it any wonder why we have produced so few minds that are prepared and capable of bridging diverse aspects of management, let alone human affairs?

5. A sense of learned hopelessness and helplessness.

Finally, there is another aspect about business school education and faculties that is also highly disturbing. This is the fact that so many faculties have an attitude bordering on utter helplessness and hopelessness. They believe and act as if they have no power whatsoever to change the system in which they find themselves. It as if some giant hand over which they have no control rules their lives.

For instance, they believe that they have little power if any to change a system that demands that they publish in so-called “A” journals and the types of things that get into such journals. Whether so-called “A” journals are truly “A” is itself another point. The point that matters is: does it help to have so many people teach who have a sense of helplessness about their own lives? Are these the people that we want to be putting in front of young minds? I think not!

About imitroff

Dr. Ian Mitroff is Professor Emeritus at the Marshall School of Business and the Annenberg School for Communication at the University of Southern California in Los Angeles. He is the president and founder of Mitroff Crisis Management, a private consulting firm based in Oakland, California, that specializes in the treatment of human-caused crises. He is a Senior Investigator with the Center for Catastrophic Risk Management at the University of California, Berkeley.
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