“With Great Power Comes Great Responsibility” – Business Schools must help fix our world
24 October 2023
Daniel Traça, Former Dean of the Nova School of Business and Economics writes about the challenge of change and the new agenda needed in business education
The demands falling upon CEOs have expanded dramatically in the political economy of the 21st century. In America, Disney´s CEO´s struggle with Florida´s governor on the state´s policy on civil rights, spurred by the political stand of the company´s employees and customers, is a vivid example of the challenges faced by leaders and the implications for organizations. The recent challenges faced by the banking industry in Spain and Italy facing windfall taxes on the rise in interest rates provide another example, across the ocean.
According to a recent survey by the Edelman Trust, in 19 of 28 countries surveyed (including all western nations), less than 50% believe that business can avoid being political when it addressed contentious social issues and a large majority expect CEOs to take a public stand on Treatment of Employees (89%), Climate Change (82%), Discrimination (80%), Wealth Gap (77%) and Immigration (72%).
New demands on leaders, new demands on business schools
The critical point is that business leaders are now expected to lead beyond the organization and its business functions through the unstable and unpredictable context that has sprung up forcefully in the last decade. For this, they must rely less on established institutions and norms, which are constantly being upended, and increasingly on their savvy and skills to juggle the conflicting interests and views of consumers, employees, shareholders, policy makers and the public at large.
The traditional business school curriculum must urgently adjust to prepare managers to adjust to such turbulent times. This is a new space for innovation by Business Schools. It must include a wider coverage of social and political dynamics in the curricula and the promotion of a research agenda that looks at their interaction with business.
As Minouche Shafik[1] forcefully discusses, at the core of this instability lies the inadequacy of the socioeconomic institutions developed in the post-war period to face up to the simultaneous disruption from technology, globalization, demography, climate change and the recent pandemic. This failure has bred inequality, insecurity, debt, immigration crises and geopolitical instability, along with distrust, polarization and conflict.
Create the future
The only way out is to creatively reimagine our shared institutions, based on the insights that modern science has to offer and on an inclusive dialogue among stakeholders. As Abraham Lincoln said, “the best way to predict your future is to create it.” Reimagining our institutions to create such a stable, shared future establishes a second, even more formidable, challenge to the curriculum and the life of business schools.
Over the two centuries since the enlightenment the intellectual, the economic and social elite, including the leadership of business, has been paramount in junctures where this reimagination has mattered. For example, during the 1990s, as apartheid floundered in South Africa, business leaders played a pivotal role in negotiations. Prominent business figures engaged in talks that led to Nelson Mandela's release and the eventual dismantling of apartheid laws, demonstrating the influence of economic leaders in shaping social and political change and bringing about a stable, democratic and prosperous regime through reforms. Top down regulation mattered less, than the commitment of these business leaders and their companies to rebuild their societies in the face of unprecedented challenges. This was also a matter of survival, in the face of unstoppable dynamics.
The elites, understood here as those with economic or political power and intellectual determination, have a fundamental role to play in reimagining and reforming institutions and norms (formal and informal) in period of crisis, looking to improve their suitability to create harmony and prosperity in society. In the past, where they have succeeded, social stability and been reestablished and the elites have been able to survive. Where they have failed, revolution and conflict have upended their privilege, often with tremendous cost in terms of lives and livelihoods across, not just for them but for the entire society.
The risk of revolutionary alternatives
And here we are again, facing an enormous crisis, now at global level, that increasingly chips away at popular support for our institutions, with risks expanding for business and business leaders, but also for modern capitalism as a system. In this sense, self-preservation for business, business leaders and capitalism, aligns with the common interest, as the risk of revolutionary alternative will certainly entail a more costly and unpredictable path to a transformation that is unavoidable.
In this sense, preparing business leaders to react to challenges is a must, but falls short of the mission of business schools for the next few decades. We must engage the power of our research and our educational programs to deliver insight and talent that help reform our society, our institutions and modern capitalism, to reestablish harmony and prosperity for all.
Several novel approaches arise, in the context, as Deans try to steer their business schools to increase their impact and the impact of their graduates. I will propose some below, which have been part of my own experience, knowing full well that many other Deans and Business Schools are exploring and experiencing with these themes. My first thought is to invite the community to share their ideas and experiences in this transformation of our institutions for the transformation of our society.
Collaborate, connect, create
First, an interdisciplinary rapprochement to political science and sociology departments (similar to what has happened with engineering departments having to face up to technological disruption), in curricula and research agendas looking at the political and societal role of business, beyond the value to shareholders. The connection to environmental science departments also comes to mind to address also the Climate challenge. What is expected is a collaboration that provides critical insight and talent to business, but also jointly creates solutions to society´s rising challenges.
Second, engage deeply with the technological change that will underpin the coming decades, ensuring not just a deep understanding of these technologies and their expected developments, but also of their impact and the challenges they create for society and for business. Here, the connection with social and political sciences becomes tripartite, with departments of engineering or technology.
Third, a strong engagement with social entrepreneurship as a tool to impact prosperity and, more important, to empower graduates on the role they can play. Social entrepreneurs should become core role-models at business schools, encouraging managers to seek purpose, efficiency and impact. In the context of their careers, this is a first step to expand the social responsibility in business.
Fourth, the promotion of the engagement of students and alumni with the transformation of our institutions, moving away from the customer stance of our students, looking to be served and catered to by the school, to become co-builders of a community of impact, purpose and professional development. This may be achieved through academic nudges and, more important, recognition by peers, school leadership and external stakeholders. Such an approach not only will develop better citizens, but will create better professionals, as this cooperative, engaging, team-spirited attitude is increasingly favored by organizations the world over.
Fifth, act forcefully to attract students from non-traditional communities and backgrounds and ensure that their experience is shared, in an effort to promote awareness of diversity, and of societal inequities and to promote access and social inclusion.
Purpose not power
As the new generations change their life´s outlook, understanding the need for change and personally embracing the pursuit of purpose and impact instead of wealth and power, these changes are likely to enhance the competitive position and the attractiveness of the business schools that pursue them. The generation gap in outlook towards life is evident in personal interactions and in the voting patterns in recent elections and referenda. The youth is increasingly concerned and pessimistic about our common destiny and willing to take action to turn things around. Unfortunately demographics works against them and change is slower than they would hope for. But as the core market for universities and business schools, we must start catering more to their outlook.
In the movie Spiderman, Peter Parker faces existential doubt about the personal costs and hassles of living up to his life calling of making the world better. His Uncle Ben´s last words: “With Great Power Comes Great Responsibility” are key to help him choose the life of a superhero, prioritizing the common good. As Dean, I have always fought inculcate this principle in the incredibly powerful (bright, entrepreneurial, driven) students that I had the privilege to help educate and develop. Today, as our societies faces such difficult moments, the relevance of these words has grown dramatically. They serve also for us, as Deans of business schools that wield ever more power to shape the insights and talent that will deliver the future of our companies and of the society our graduates and our children will live in.
This text was written with the help of Chat GPT. The ideas are my own and any faults or errors are my responsibility.
[1] Shafilk, Minouche, What we owe each other, Princeton University Press, 2021