An issue that will determine our understanding of what effective business leadership is and the responsibilities we ascribe to those who are involved in the education of new leaders. Unlike medicine or law, no license or diploma is required to engage in business. Many of the greatest business leaders from Ford to Gates had no formal business training other than their personal experience in the trenches of corporate life. Yet more than 100.000 students graduate with an MBA each year, seeking to improve their career opportunities. If management is de facto becoming a profession, we need to ask what the implications of such transformation may be.
There is no doubt that medicine is a true profession, a profession dedicated to the preservation and improvement of human life. Physicians diagnose patient conditions, infer likely causes and effects, and identify the most effective treatment for each condition. Medical decisions are constrained by a set of ethical and legal guidelines as to what constitutes an acceptable treatment. In making these important decisions the medical profession draws from a system of knowledge and values that is perpetuated, advanced, and transmitted by higher education institutions. Since Hippocrates, teachers of medicine have understood their social mandate not as mere providers of technical skill or scientific knowledge, but as educators of true professionals capable of applying the technique and the science to the service of human kind. Medical schools, the modern descendents of this Greek tradition, make new doctors aware of the responsibilities associated with their professional practice by transmitting a code of conduct that goes beyond the requirements of the law: respect for the health and dignity of the patient, non discrimination, care, and even the commitment to life-long learning and professional update.
How does business management compare to medicine? Like doctors, managers diagnose business conditions, infer causes and effects, and identify effective and acceptable interventions. Like medicine, management is a complex task, with its own system of knowledge maintained, advanced and transmitted by business schools. Managers deal with complex and important human problems related to how capital, labor and natural resources are utilized to create economic wealth. Management decisions impact the well-being of society through the creation of work opportunities, the provision of goods and services, the use of natural resources, and the delivery of financial returns to investors. The impact of management in society has in fact been amplified by recent global trends, that place the private corporation at the center stage of almost all aspects of human activity. Through globalization, deregulation, and privatization, the limited liability corporation in any of its national variations has become the dominant social device to create and manage wealth almost every where in the world. So, if social impact is the measure of true professionalism, management is not less a profession than medicine or law. Yet, while no one questions the idea that medical education would be incomplete without the perpetuation of a set of professional values we have not yet dared impose such obligations on business educators. At least not unanimously nor unequivocally.
This is why, during the Geneva meeting, the idea came up of developing a formal code, a pledge, that would one day be accepted by graduating business students around the world, just like graduating medical students have done for centuries with the so-called Hippocratic Oath. The pledge we envisioned would have to be universally acceptable and should capture the essence of the management profession. It should make graduates aware of their responsibilities but also proud of their achievements. And it should contribute to strengthen the idea of management as an honorable professional tradition. The pledge we drafted identified four obligations: to create endurable financial wealth, to respect the right and dignity of employees, to engage in honest and transparent commercial transactions, to utilize natural resources in a sustainable way. Above all, it underlined the commitment to the creation of wealth and progress for society as a whole.
At the time we thought the pledge was conservative enough to appeal to a broad constituency. It turned out not to be that simple. While select educators from Europe, the US and Latin America immediately embraced the idea, others have raised a number of concerns, ranging from philosophical to very pragmatic. The philosophical claims are related to Friedman’s classic argument that business’ only responsibility is to produce value to shareholders. But we know that, while they may be the best device we have invented to create wealth, corporations are by no means risk-free. In the absence of perfect markets, narrow-minded profit maximization can not solve endemic problems related to environmental sustainability or social development, even under the rule of well-intentioned but nevertheless rationally bounded governments. Only an enlightened management mindset that incorporates a socially sophisticated world view can contribute to the solution of pressing social problems.
Other people have questioned the capacity of higher education to shape an adult’s value system. But if students learn to value financial returns, competitive dynamics and customer service throughout our programs, then why shouldn’t they be equally sensitive to values concerning the impact of business on society? The question is not whether we should teach values in business schools or not, but whether the values we already teach are the right ones or are complete enough.