[NOTE: In the following story, Professor Stephen Kaplan characterizes Philip Delves Broughton in a way that was offensive. Kaplan has since apologized to Delves Broughton.]
LIANE HANSEN, host:
There's a growing debate and a good deal of soul searching at the nation's business schools these days. At issue: who's to blame for the current financial crisis? And to what degree must business schools accept responsibility for what went wrong? After all, they trained many of the people who had their hands on the tiller when the nation's economic ship ran aground.
Anthony Brooks has more.
ANTHONY BROOKS: Business schools had their critics before the economic crisis cost millions of Americans their jobs and their retirement savings. Now the critics are louder and the questions they raise are being taken more seriously.
Mr. JAY LIGHT (Dean, Harvard Business School): This is really a time for great introspection for this institution.
BROOKS: This is Jay Light, the dean of the Harvard Business School. He set up a faculty-led taskforce to assess, among other things, how well the school prepared its students prior to the financial crisis.
Mr. LIGHT: I think a number of wise men have said, never let a good crisis go to waste. And I think those are really wise words.
BROOKS: Especially these days when everyone could benefit from some wisdom or at least some positive PR. Consider this ad from DirecTV, which makes fun of cable TV executives and takes a swipe at business schools.
(Soundbite of TV commercial)
Unidentified Man #1: I learned this in business school when I read about business school in a book. We can't improve our service, but we can improve the price. We can make it higher.
Unidentified Man #2: You know what? That's not a bad idea.
Unidentified Man #3: We'll get the people with disposable income and they can dispose of it to us.
BROOKS: Then there are the serious critics, like Phillip Delves Broughton, an alumnus of the Harvard Business School, who says a procession of Harvard-trained MBAs played starring roles in the economic collapse.
Mr. PHILLIP DELVES BROUGHTON (Alumnus, Harvard Business School): George W. Bush was a Harvard MBA, Hank Paulson was a Harvard MBA, the CEOs of General Electric, Proctor and Gamble, across the Fortune 500, the heads of hedge funds, private equity funds.
BROOKS: In a piece he wrote for The Times of London, Broughton calls this group Harvard's masters of the apocalypse.
Mr. BROUGHTON: There are a lot of people in private equity and hedge funds whose names you never have heard of, but they all came from Harvard MBA program or Wharton or Columbia, wherever it may be. And I think you have a group of people who have the same education, who know each other, who've created an economic system that has created an enormous amount of hardship for people and, I think, unnecessary hardship.
Professor STEPHEN KAPLAN (University of Chicago, Booth School of Business): No, he's nuts. He's completely nuts.
BROOKS: That's Stephen Kaplan, a professor at the University of Chicago's Booth School of Business. Kaplan says to blame business schools for the crisis is wrong.
Prof. KAPLAN: You look at the global economy since 1980, it's stunning. Productivity growth around the world has been terrific. You know, where did all this come from? There's a huge success story of the tools of markets and economics that are taught at business schools.
BROOKS: Kaplan says the current crisis had many causes and it's too simplistic to hold business schools primarily responsible. Jay Light, the dean of the Harvard Business School, also rejects dumping blame on a handful of Harvard MBAs.
Mr. LIGHT: I think that's misleading. Look, we've got 70,000 living alumni.
BROOKS: And he says hundreds of them are running successful companies. Still, Light says business schools can share the blame with just about everyone, including CEOs, government regulators, even homeowners - all of whom failed to understand the risk of a fragile financial system.
Mr. LIGHT: And it's pretty clear why, too, because frankly, the world hasn't seen much downside. We've had a spectacular 25-year period of primarily growth, primarily profits. I think we've spent less and less time thinking about the other side - how could things go wrong? And that for sure we should all have been thinking a lot more of, and I think business schools are included in that.
Mr. ERIC HEART: What this crisis has highlighted is just how systemic risk can be.
BROOKS: Eric Heart is a second-year student at the Harvard Business School. He says it's true, many of the biggest players in the financial meltdown were MBAs from schools like this. But he's confident that he's now learning the right lesson.
Mr. HEART: I think risk in the past and probably the way I thought about it coming in was more individual risk confined to certain kinds of investments and certain kinds of industries. But looking forward, it's something that I will think about a lot more from a business perspective. How do we avoid the risk that's all around us, even if we're not creating it?
BROOKS: Beyond that lesson, the financial crisis is energizing an old debate about what the role and mission of business schools should be. Some say it adds urgency to the case that business schools must do more than just teach managers how to maximize profits.
Professor RAKESH KHURANA (Harvard Business School): That basic model, that fundamental model, which really made up the fabric of contemporary business education has to be revisited.
BROOKS: Rakesh Khurana is a Harvard Business professor who says business schools have drifted away from their original mission, which he says was to create a true management profession for the benefit of society, rather than just churn out consultants and hedge fund hotshots. He says students need to emerge from business schools with a different mindset.
Prof. KHURANA: One of the most important things would be I will create value than simply extract value. And not, I'll get back to society after I make a lot of money. They have to start seeing that giving back to society in the course of business is possible when one conducts oneself along the lines of a professional ethos.
BROOKS: Khurana says business schools have yet to agree on a shared body of knowledge and values in the way that medical schools and law schools have done. Angel Cabrera agrees. He's the president of the Thunderbird School of Global Management in Arizona. Cabrera says in the wake of the current crisis, business schools must do more than just tinker with their curriculum.
Dr. ANGEL CABRERA (President, Thunderbird School of Global Management): We're talking about something deeper - to look at management as a true profession -professions like medicine or law that we haven't covered sufficiently well in the business school. One is, professions exist to serve the greater good. And number two, professions have codes of conduct to minimize the harm that they can produce because of the power that they are given by society.
BROOKS: The kind of harm that so many bad and shortsighted business decisions have caused for so many people in the current crisis. Cabrera says all business schools should agree on ethical codes that go beyond the rules and regulations of the marketplace. For example, at Thunderbird, his graduates can opt to take a kind of Hippocratic Oath.
Dr. CABRERA: For example, our oath establishes a commitment to respect the rights and dignity of all individuals that are affected by the corporation. It establishes a commitment to combat corruption. I have no doubt that if we were successful at creating a consensus around a set of principles, across business schools around the world, decisions would've been quite different right now.
BROOKS: It's not clear how a Hippocratic Oath could even work in the real world, where competition often means driving your competitor out of business. And the critics point out this kind of self-examination is not new. When the dot-com bubble burst, business schools rushed to add courses on ethics. That was much to their credit, though it didn't help avoid the current crisis. But many hope that this new round of soul-searching can help avoid the next crisis.
BROOKS: For NPR News, I'm Anthony Brooks.
HANSEN: For more information on the debate about the role of business schools in the current financial crisis, go to NPR.org.
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