Nitin Nohria was named the new dean of Harvard Business School in 2010. Had his appointment come before the banking crisis and economic recession, he might have been seen as a strange pick. The former Harvard professor of leadership and organizational behavior is widely known as a soft-spoken, but frank critic of the way business is taught and done.
"Managers have lost legitimacy... in the face of a widespread institutional breakdown of trust and self-policing," Nohria wrote in an influential 2008 Harvard Business Review article. Nohria's taken that criticism and turned it into a major overhaul of the MBA curriculum at Harvard. The business school is a seedbed of future CEO's, bankers and secretaries of the Treasury. The single most important thing Harvard can teach them, Nohria says, is moral humility.
Radio Boston's Meghna Chakrabarti discussed ethics and business education when she visited Nohria in his offices on the Harvard Business School campus.
- Nitin Nohria, dean of the Harvard Business School
Responses have been edited for length and clarity.
Meghna Chakrabarti: Your father was head of Crompton Greaves, now a multibillion-dollar engineering conglomerate in India. What influence did he have on your life?
Nitin Nohria: I remember as a young kid traveling with my father to parts of India where they were opening new plants, places where there was nothing. I then had the opportunity to go back 10 years later and saw the extraordinary transformation that business had made in these small towns, where there was no factory, there was a township. There were hospitals. People met me who had been able to send their children to school and prosper. So I saw firsthand the power of business to transform society to create prosperity for many.
In 2008 you co-authored a paper in Harvard Business Review titled: “It’s Time to Think of Management as a Profession.” It was quite critical of business education. How would you describe what’s wrong with the way MBAs are trained?
When business schools were first created, the purpose of them was to create a class of business professionals who had an identity very much as doctors and lawyers did — as people who could master of a body of knowledge that could be usefully applied, but would do so with the recognition that business enterprises were vital instruments in society. And that the reason they had to bring this knowledge to bear was, and do it with judgement and a sense of care and concern for the welfare of society, was because businesses were becoming too vital to societal interests.
I felt that business education had lost this original animating purpose. It was time to remind us that much like doctors have the Hippocratic Oath, and lawyers care to take the bar, that business leaders also had the responsibility of thinking that their first goal was to create prosperity for society. And if they created value for society, then they could keep value for themselves. But that relationship had to be remembered.
The term “value” is often used in business circles. You’re talking about value for society. But it seems that over time, the actual definition has been further and further narrowed to “shareholder value." So business leaders could argue that they have been creating value.
"Businesses exist because we have a charter from society. If we forget that, I think we end up in a very narrow definition of what businesses need to do."
It’s striking that the first dean of Harvard Business School said that the school’s purpose was to educate leaders who would make a decent profit, decently. Certainly businesses need to create profit, because in the absence of shareholder value, you don’t have sustainable enterprises. But if you narrow the focus only to that, and you don’t create value for society, in the end you don’t create institutions that create shareholder value either. We have to remember, businesses exist because we have a charter from society. If we forget that, I think we end up in a very narrow definition of what businesses need to do.
To me, the deeper question is how can we create a conversation that allows business students to think about what responsibilities they really want to internalize, and how do they make the world realize that they’re in it, not just for themselves, but that they deeply believe that business can have a positive influence on the world. And by the way, if they create that value, they’ll create value for themselves and that’s OK.
In previous interviews you’ve said that moral humility is the most important thing that can be taught at places like Harvard Business School. But right now, what students believe to be “value” is not what you saw traveling around India, but instead the difference in their income before and after they get their MBA. So how are you changing the curriculum to redefine students’ sense of value creation?
We’re trying to introduce a new strand that we hope will become a complement to the case method for which we’re well known. This new strand is called the FIELD (Field Immersion Experiences for Leadership Development) method. So, for example, this year we’re asking all 900 of our students to work with a company in an emerging market, to imagine a new product or service that company might introduce in that market.
For example, how might one introduce flood insurance in Vietnam? Millions of farmers each year in Vietnam suffer from flooding. If their crops are destroyed, their livelihood ends. So if you can create an insurance product of this kind, it could benefit enormous numbers of people and create the kind of prosperity I was talking about.
Our hope is that we’re giving students more tangible opportunity to do things where they begin to see that they have real opportunities to create value. And if they do that I hope they will also develop this deeper belief that if they create value for their customers, then they will create value for their companies.
How does an education in business ethics fit into this new curriculum?
We were the first school to introduce a required course in leadership and corporate accountability. We introduced it right after [the Enron scandal]. So I think we’re doing a lot to help our students through that course and other cases as to what their responsibilities are as business leaders. The real challenge we need to confront is how we get better at teaching them how they can live up those responsibilities in practice.
Many people would say it’s great that you have a corporate accountability class, but the sub-prime crisis, the banking crisis, happened anyway, the economy is still in recession. What good did it do?
So what we’ve learned from these recent failures in corporate governance and individual leadership is that the problem is that people get in positions where they’re under pressure. There’s an enormous amount of short-term gain to be had, so they stray from their moral compass.
This is what I think of as moral humility. That most people think they won’t do wrong things. And yet they find themselves in circumstances where they stray over the line. So understanding how we can help people stay true to their moral compass, that’s where I think we can better educate our students.
We’re having this conversation in the midst of an ongoing economic crisis. There’s the Occupy Wall Street movement. There’s also factual evidence that says income inequality is greater now than it’s been since 1928. There’s a sense out there that business leadership has failed, and is a part of the reason why there is so much distress in the country right now. So, is simply reminding students that they need to remember to follow their own moral compass enough to remedy where we find ourselves right now?
The economic crisis, and the Occupy movement, reminds us that there are other things we need to do too. One of the things I think we have to think very hard about is: how can America remain a competitive economy in this global century we find ourselves in? Because a lot of what is going on is people with a high school or college education used to be able to get middle-class jobs. There are hundreds of millions of people now who are willing to provide the kinds of goods and services we historically produced in America, but they will do it for much less. This is something that’s a deep and important question that has to be a part of the answer of how we get out of the current crisis we find ourselves.
There are students at Harvard Business School today who will become the next generation of powerful business leaders. Human nature being what it is, no matter how good one’s education is, moral failures are going to happen. Looking at this economic crisis, there have been no prosecutions of business leaders in the United States. Should there have been? And what should we do as a society when business leaders fail?
We should be as troubled when our business leaders fail as we are when other leaders we trust fail. Society does worry that business is not as critical of its own failures as it needs to be. At Harvard Business School, in response to that, we’ve become much more mindful of teaching cases of failure as we are in teaching cases of success. We think that’s one way of reminding people that if they act in ways that aren’t their best selves, they will be subject to criticism by future generations. Studying failure and being able to name it is as important as studying success.
But we have to do both. I think it’s important to celebrate success as well. You want to inspire the next generation to enter the field, and to be the next Steve Jobs. Imagine a world in which people decided that business is not a field in which you could do things that are honorable. We would lose a remarkable number of good people.
This program aired on November 15, 2011.