The popularity of the late economist Milton Friedman's philosophy among business people has never surprised me much. After all, telling business people that "the business of business is business" is rather like telling people that eating dessert is actually good for you. It tells your audience what they want to believe, and relieves their guilt feelings about doing what they want to do anyway. No need to worry about pesky issues like employee welfare, environmental impact (unless required), or improving the social fabric of the community. No need to weigh the intangible costs to others of moving a business overseas, closing a factory for a quick profit, or paving roads through the Amazon to extract and export the oil.
By concentrating on the bottom line as the almighty measure of success, Friedman's philosophy also tends to focus employees on numbers as a measure of their own success. That focus, of course, encourages employees to work harder to increase those numbers. Which, in turn--surprise, surprise!--improves the company's bottom line even more. It's an incredibly convenient system that offers the appeal of neat and clean boundaries, and maximum profit for the company. Really ... what's not to like?
What's not to like, of course, is an uneasy feeling that sets in, periodically, that perhaps the world isn't as neat as Friedman's economic model suggests. That by focusing exclusively on their own bottom lines, businesses can do extraordinary harm. (See: recent economic meltdown and the BP oil disaster in the Gulf of Mexico.)
As a result of some of those recent disasters, as well as increasingly complex global markets and a growing belief that today's business executives need what investment icon Charlie Munger calls a "latticework of frameworks" to solve the growing number of "wicked" problems confronting them, a movement has begun to change what business students learn. At undergraduate and graduate business schools across the country--including Wharton, Harvard, Stanford, Yale and a host of other big names--curricula are being changed to include a greater focus on multi-disciplinary approaches, ethics, critical and integrative thinking, and even, in some cases, history and literature. (I wrote about this trend for the New York Times last winter.)
Roger Martin, the dean of the Rotman School of Management at the University of Toronto, has said openly that he's trying to create the first "liberal arts MBA." And when I asked David Garvin, a professor at the Harvard Business School and co-author of the recently published Re-thinking the MBA: Business Education at a Crossroads what he thought about that, he answered, "Is business education becoming more like the liberal arts? If the question is, 'are we trying to teach more about how to be a well-rounded human being who happens to be practicing business,' the answer is absolutely, 'yes.'"
On one level, these changes are an effort to assuage society's concerns about bloodthirsty and uncaring business executives bringing down economies or risking the destruction of an entire coastline in the name of profit. But on another level, they reflect a growing belief that the kind of complex, critical thinking and ability to look at problems in larger contexts and from multiple points of view that a liberal arts education instills (at least in theory) actually leads to better decision-making skills in business executives.
It's a viewpoint I actually endorse. Quite enthusiastically, as a matter of fact. But I recently came across a bit of history (in a New York Times article) that offered a bit of a cautionary tale on this front--at least in terms of businesses buying into the goal of making managers more well-rounded human beings.
In 1952, the president of Bell Telephone of Pennsylvania apparently became concerned that his managers, most of whom had purely technical backgrounds, did not have the broader knowledge they required to make superior business decisions. "A well-trained man knows how to answer questions," the Bell executives were reported as reasoning. "But a well-educated man knows what questions are worth asking."
Bell paired up with the University of Pennsylvania to offer a 10-month immersion course in the Humanities and Liberal Arts for up-and-coming Bell managers. The managers studied history and architecture. They read classics like James Joyce's Ulysses and poetry by Ezra Pound. They toured art museums and attended orchestral concerts. They argued philosophy from multiple points of view.
At the end of the 10 months, the managers were reading far more than they had before--if, in fact (as the article's author pointed out), they'd even read before. They were far more curious about the world around them. And in the polarized world of the early 1950s, at the height of McCarthyism, the Bell managers now "tended to see more than one side to any given argument." As hoped, they were far more equipped to make better and more thoughtful decisions, and to figure out what questions were worth asking.
By all appearances, the program was a rousing success, as well as a ringing endorsement of the benefits of a liberal arts education. There was, however, an unexpected twist in the program's impact on the Bell managers. After learning about how much more there was in life than business, one of the questions they apparently decided was worth asking was, "why am I working so darn hard?" As the article put it, "while executives came out of the program more confident and more intellectually engaged, they were also less interested in putting the company's bottom line ahead of their commitments to their families and communities."
Within a few years, Bell had discontinued the program.
It's an interesting and--when you think about it--completely reasonable outcome. Aside from developing the ability to think critically and approach subjects from multiple perspectives and disciplines, the idea of a liberal arts education is to develop--as Professor Gavin said--a more well-rounded person. And being a workaholic is antithetical to a well-rounded person's psyche.
The current movement to make business students "more well rounded human beings who happen to practice business" will almost assuredly create managers who think more about long-term consequences, impact on external audiences, being a good global citizen, and balancing the numbers with more intangible metrics of success. They may also be far more agile and creative thinkers who find successful middle ground between entrenched or polarized camps, generate more innovative solutions to sticky problems, and devise ingenious ways to responsibly benefit both their companies and the communities they serve.
But these more well-rounded managers may also go home earlier, or choose options--for themselves or for their companies---that put some other value above maximizing profit for the company or its shareholders. Like Adam and Eve discovered, a little knowledge can be a very dangerous thing.
The question will be, somewhere down the line, what businesses or shareholders think of all that. For all the lip service we pay to wanting more well-rounded managers and responsible corporations, are we prepared to back that when it's our own income, stock or profit that's affected by those more balanced and responsible decisions? Or will we gravitate once more to Friedman's far less conflicted philosophy that--whatever else can be said about it--conveniently aligns the numbers-oriented thinking and motivation of managers with the best interests of their employers?