Business Education and Life out of Balance

Posted: February 23, 2015 in Books, Responsible business
Tags:
21st Century citadel

Citadel for 21st Century aristocrats?

One thing absent from this blog is a ‘Theory of Everything’, reducing everything back to one fundamental explanation. The closest I’ve come may be a recurring line that humans tend to make decisions in a reactive way, a.k.a. short-termism. Locke and Spender’s book Confronting Managerialism: How the Business Elite and Their Schools Threw Our Lives Out of Balance certainly provides a grand unified theory of everything wrong with the world of commerce, including the issues with globalisation that I highlight on this blog and a lot more besides.

The idea can be summed up very briefly: “managerialism” (as distinct from management) is the belief that membership of the management caste and its codified knowledge gives one an entitlement to govern, and not just to govern companies but governments and nonprofit institutions as well. This knowledge is acquired in business school. Yet, the authors argue, business school education is disconnected from real life. It describes the world in quantitative terms that assume perfect, closed systems and ignores tacit knowledge. It mistakes the balance sheet for reality. Despite its hubris, Business education had no role in instigating the biggest revolutions in business in the last 40 years: the quality revolution and the tech start-up phenomenon, both of which happened in spite of rather than because of what people learn in business school.

That wouldn’t be so bad if managerialism was a purely theoretical belief but business schools are not fringe organisations; people instilled with these notions do become real-world managers. The result is managers who, with their excessive emphasis on financialisation, believe their main task is to drive up the stock price, not to make products well. Products are of secondary importance only. The results speak for themselves: tottering companies in the Anglophonic world that lurch from one stock price boosting initiative to the next, undermining their own long-term value before being bought out or collapsing under their own weight (not that the responsible executives care, having long since departed for new pastures). Locke and Spender contrast this with German and Japanese firms where managers do not think of themselves as a caste apart and adopt more collaborative governance styles aimed at the long-term prospering of the enterprise for the benefit of all involved including, not least, customers.

Locke and Spender also comment on the failure of Christian Churches in the English-speaking world to provide a moral counterbalance to the amorality of Business School education (something I too noticed last year in this post). In both the Chinese and Islamic worlds, economics is paired with ethical imperatives. By contrast, ethics as taught in Business school is subservient to economic values and therefore ultimately futile:

self-interest in financial firms cannot be a “good” unless their market trades are involved in wealth creation. Since they are not, and business schools are doing nothing institutionally to promote financial markets as wealth-creating entities, business school talk about ethics is a concoction of fantasy (p. 173).

Ouch.

My only criticism of the book is that it spends lots of time talking about cultural differences which is all very illuminating but I expected more space would have been allocated to business education specifically. I’d suggest William Deresiewicz’s Excellent Sheep might make a better starting point for anyone interested.

Postscript

Right on the second page, there is an acknowledgment of former Christian Brother Godfrey Regio’s film Koyaanisqatsi as the source of the book’s subtitle “How the Business Elite and Their Schools Threw Our Life Out of Balance”. In a pleasing circularity, the end credits of Koyaanisqatsi acknowledge the work of former Jesuit Ivan Illich for ‘inspiration and ideas’ and Illich, fittingly, is best known for a book titled Deschooling Society.

I wrote about Illich’s ideas in this post.

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