Ethics vs. Jack Welch at the West Point of Capitalism

You may have heard about the recent so-called MBA Oath undertaken by some students at Harvard Business School.  Do click the link, it’s a short read, but to summarize it even more, it’s an oath to behave in ethically, non-selfishly motivated, socially responsible ways.

MBA Students For Ethics and Social Responsibility?

Here’s the May 30 NYTimes story,  as of which date “nearly 20% of the graduating class” had signed the oath.  When I read that, I resolved to blog about it in a week’s time.  It was clear to me on May 30 what I was going to say:

No biggie.  In my own class (1976) it wouldn’t have surprised me if as many as 10% would have signed such an oath.  That would suggest either a doubling or a 10 percentage point increase every 35 years.  

By that arithmetic it would take either until the year 2061 or the year 2114 for 51% of Harvard MBAs to agree with such controversial statements as “I will act with utmost integrity and pursue my work in an ethical manner."  Oath?  Much ado about nothing.

Well, shame on me, o me of little faith in my descendant classmates, because as of June 3 (according to the Economist’s story), that number was up to 400—roughly half, by my close-enough calculations. 

Now, half is considerably larger than 20%.  In fact, I think it’s more like 50%, though HBS MBAs in my day weren’t all that great at math (‘go hire one from MIT if you need it’ was the not-so-tongue-in-cheek phrase we heard).  And I am quite sure, as I mentally run down my list of classmates, that nowhere near 50% would have signed the oath back in the day.

Ethical Progress at Harvard Business School?

I’ve previously critiqued the ethics course at HBS  and b-schools in general for not getting it right, but this is different—as a whole, this manifesto gets it very right.

I don’t like using superlative buzz words, but the “sea change” metaphor comes to mind.  Or, to mimic Verizon’s FIOS ad, “This is big.”

How big?  Let’s contrast it with Jack Welch. 

Welch was recently trotted out from the dead to reprise his greatest hits at a Bloomberg/Vanity Fair economic forum.  It had a shot at being an intelligent economic dialogue until Jack popped open the coffin lid and shouted “buy or bury the competition!”  thus drawing loud applause from the over-60 crowd in attendance. 

Now, GE’s stock price when Welch left in 2001 was 50; it since dropped as low as 8.  Today it’s 14.  But don’t tell me that’s the fault of his (handpicked) successors; it’s what happens when a formerly great strategy meets seriously new times (and Imelt can’t work Welch’s old opaque GE Capital magic anymore).  That applause at Bloomberg  was the sound of the old guard waxing nostalgic, still hoping to believe in the old verities.  But they’re gone, gone. 

Jack Welch, Old School: Interconnected World, New School

Jack WelchThe old strategy?  Competition, competition.  Your customers and your suppliers are your competitors.  Be boundaryless–right up to  the boundary of your own company, where it becomes bury the enemy. 

The new strategy?  Collaboration, collaboration.  It’s a flat world; joint venture, alliance, outsource, teamwork, network, share.  Your customer is your purpose for being, and your supplier is your life partner.  We’ve finally gotten past Thomas Hobbes–and just in time to deal with global warming and global supply chains.

Which strategy is right for the times?  Look at Detroit; a fervent worshiper of the Competitive Gospel.  According to Welch, Detroit’s downfall was unions, pension laws and health care.

Booshwah; Detroit’s Achilles’ heel was an ideology that, unlike Toyota, pitted them against their own suppliers in an era where supply chain relationships proved the key to lower systemic costs; where one team measured "long term" in 3-year cycles, and the other measured it in generations.

Dealing with GE today is still like dealing with Welch.  They’d rather do reverse online auctions than engage in relationships.  They are shooting their own economics in the foot by declaring,  like old Bolsheviks, "we will bury you" at their fellow commercial travellers.

Me, I’ll bet on the new kids in town, who understand 1+1 >3,  and 1 vs. 1 <2; who say things like

>I will safeguard the interests of my shareholders, co-workers, customers and the society in which we operate.
and
>I will manage my enterprise in good faith, guarding against decisions and behavior that advance my own narrow ambitions but harm the enterprise and the societies it serves.

Good for you, HBS class of 2009.  I say you done us proud. 
 

5 replies
  1. Ron Shevlin
    Ron Shevlin says:

    MBA grads took an oath to "behave in ethically, non-selfishly motivated, socially responsible ways" ?

    Hahahaha.

    Who’s going to enforce that? What’s the penalty for violating the oath?

    What an incredibly empty and meaningless gesture.  If Harvard — or ANY business school for that matter — wants to address what it sees as ethical issues, then it should it should get its grads who are ALREADY IN senior management positions to sign the oath, and commit to forfeiting bonuses and/or stock options for violating.

    Not that I’m sure who’s going to be judge of that.

     

    Reply
  2. Charlie (Green)
    Charlie (Green) says:

    Ron,

    I think you miss the point of an ethics oath.  If it requires someone to enforce it, or define penalties for it, then it ain’t ethics and it ain’t much of an oath.  That’s why they call it ethics and not law.

    Of course, y0ur comment indicates how far down the road we’ve all gone in confusing "ethics" and "compliance." Which is part of the problem.  When good people like yourself mix them up, it illustrates how badly we do need people to behave more ethically. 

    A public oath is only as good as the word of those who sign it.  400 people signed it, put their name to it, publicly.  They and everyone else will be the judge of how good their word is.  There is no better "enforcement" mechanism than the approval or disapproval of the their peers and the public at large, and I applaud them for taking this step.

    Now comes the hard part, and you are totally right, the proof is in the pudding. 

    Reply
  3. barbara garabedian
    barbara garabedian says:

     I heard the NPR  story on the HBS grads signing the Oath. I have to say, my 1st reaction to it was the same as Ron’s. I’ve been hearing about this and I’m of the mindset that its  just "a jumping on the bandwagon kind of deal." That said, I suppose it is some kind of a start.

    If the Oath is to be of significant value and stand for any type of substanitive behavior, it should be woven into the fabric of the entire business school, from start to finish (entrance criteria, each and every course and case study should relate back to it, etc) and by graduation, you might have something to be proud of. At least they’d go out into the world w/ the Oath as something other than than lip service.  I also think they should borrow from the Docs, first …do no harm !!!!

    Reply
  4. Tom "Bald Dog" Varjan
    Tom "Bald Dog" Varjan says:

    This is rather enlightening in the light of other articles reporting from the dark side of business schooling, like  "Academic Dishonesty in Graduate Business Programs" in The Toronto Star at http://tmgcanada.wordpress.com/2007/02/07/mba-students-likelier-to-cheat/

    Or…

    In a 2005 study by Wetfeet, over 800 students, who pursued careers in management consulting, were asked: “Please select up to 3 factors that make your top ranked company appealing to you.” Only 2 (0.25%) people said that “Ethics” was one of their top 3 factors for choosing a consulting firm. (Even the category “Others” was rated more highly than “Ethics.”).

    But the good thing is that progress is being made.
     

    Reply
  5. barbara garabedian
    barbara garabedian says:

    "Bald Dog": Some of us are old enough to remember when management consultants used to be thought of and called, "Snake Oil Salesmen". Gosh, I thought the profession had improved over the years… never mind!!!

    Reply

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