PREPARING BUSINESS LEADERS TO MANAGE SOCIAL IMPACTS: LESSONS FROM THE FIELD

Transcription

1 PREPARING BUSINESS LEADERS TO MANAGE SOCIAL IMPACTS: LESSONS FROM THE FIELD Mary C. Gentile, Ph.D. Summer 2001 The Aspen Institute Business and Society Program Discussion Paper Series Discussion Paper III _ 271 Madison Avenue, Suite 606 New York, NY (212) Reprinted with permission from The Journal of Human Values, January Please do not quote without reference.

2 Our Mission To increase the supply of business leaders who understand and seek to balance the complex relationship between business success and social and environmental progress. Our Vision Businesses committed to addressing complex global problems led by executives who possess the skills, values and long-term view required to consider the social impact of business decisions and who employ social innovation as a key element of business strategy. Aspen BSP 271 Madison Avenue, Suite 606 NY, NY (212) t (212) f

3 Author Mary C. Gentile is an independent consultant in Arlington, MA. Previously Gentile was faculty member, researcher, and administrator at the Harvard Business School and Senior Manager in Responsible Business Practices at Arthur Andersen LLP. Gentile currently does executive coaching, writing and strategy design around issues of diversity and social impact management. Clients have included: The Aspen Institute, Harvard s Kennedy School of Government, Fine Line Consulting, International Women's Forum, Pfizer Corporation, Morgan Stanley, and Harvard Divinity School. Gentile s publications include Can Ethics Be Taught? Perspectives, Challenges, and Approaches at Harvard Business School (with Thomas R. Piper and Sharon Parks, HBS Press, 1993), Differences That Work: Organizational Excellence through Diversity (HBR, 1994); Managerial Excellence Through Diversity: Text and Cases (Richard D. Irwin, Inc., 1995; Waveland Press, 1998), and numerous best-selling case studies and articles. Gentile was Content Expert for the award-winning CD-ROM, Managing Across Differences (HBSP, 1996).

4 Introduction We are living in an era when the power, wealth and impact of multinational corporations not only exceed that of many national governments, but no longer strike a good number of the world s citizens as even surprising. We are living in a time when the very fact of that power and wealth has created an expectation on the part of many citizens that these corporations have a responsibility to manage their impacts on the wider social context in which they operate. And what s more, as these multinational corporations begin to feel the press of this growing expectation, they in turn pass that pressure on to the smaller, local businesses who serve as their suppliers, their customers, and simply their fellow participants in the capitalist system. These observations are increasingly sited as truisms in the business press and in policy debates. Social science researchers, political figures, even business leaders increasingly assert that informed and skillful management of social and environmental impacts is critical to the sustainability of businesses, communities, societies and the planet. And yet, the findings of the 1999 Beyond Grey Pinstripes report, a survey of accredited United States business schools conducted by The Aspen Institute s Business and Society Program 1 (Aspen BSP) and the World Resources Institute (WRI), indicate that few business schools have integrated attention to the management of social impacts into their core curriculum. A recent gathering of international business educators at the Windsor Castle concluded: The trouble is that... there is a good old-fashioned economic problem at the root of the limited supply [of educational attention to social impact management]...there is still virtually no demand for such courses from companies or business students. 2 So the question arises, if business leaders, policy makers and politicians, NGOs and activists, and even the media agree there is a need, why is there so little expressed demand from businesses who recruit at business schools and from business school students themselves? Aspen BSP has taken a systematic look at both the demand for, and the supply of, business education that addresses the complex interdependency between business needs and wider societal concerns. By means of global dialogues among CEOs and leaders of the public, NGO and academic sectors, as well as through surveys, focus groups and traditional research, Aspen BSP has gathered data that not only illuminates this question of supply and demand, but also suggests powerful levers for influencing what business scholars research and what business educators teach about the management of social impacts. What Do Business Leaders Think about the Social Impacts of Business? Each year, Aspen BSP convenes a group of international leaders of corporations and multinational organizations in Aspen, Colorado for three days of reflection and conversation about the role of the global corporation in the 21st century. Participants engage in candid, off the record discussions of environmental realities; global capital availability and impacts; labor supply and labor 1 Formerly The Aspen Institute s Initiative for Social Innovation through Business 2 Cowe, Roger. Black Hole in the MBA Curriculum. The Guardian 19 February 2000:

5 practices; shareholder influence, both individual and institutional; technological threats and opportunities; growing NGO voice and weakening government influence on the conduct of business. Predictably, consensus toward joint action is neither a goal nor a product of these dialogues. Rather the aim is mutual enlightenment and the revelation of common needs and shared directions for further exploration. Significantly however, in both of the dialogues held to date (1999 and 2000), the absolute necessity for business research and education to focus upon the management of social impacts, as well as the current insufficient emphasis in this area, emerged as areas of wide agreement. In July 2000, the top ten leverage points participants identified to address the implications of globalization, wealth inequities, and cross-sector interdependency between businesses, NGOs, and governments, included the need to: Engage the researchers. The corporate sector needs to partner with academia in order to develop case studies and other teaching tools that explore the business case [for integrating social and environmental concerns into business strategies]. We need to support the efforts of pioneering faculty to conduct path-breaking research. We also need to establish incentives... to raise the profile of researchers in this field. Develop upcoming leaders. Management education holds a key to highlighting the strategic necessity of corporate responsibility and cross-cultural understanding. The concept of enlightened self-interest needs to be explored in business schools and in corporations, as well as in the public sector. 3 Compelled by the shared emphasis placed by these global leaders upon education for values-driven judgment and for enlightened management practice with regard to the social impacts of business, Aspen BSP was driven to inquire further into the apparent disconnect between this expression of demand and the limited supply revealed by its own Beyond Grey Pinstripes research. Somehow this demand was not being communicated to or heard by the providers (business schools) and by the consumers (business school students). A number of explanations for this disconnect were possible. Was the expression of need on the part of business leaders insincere? Were the practitioners who did the actual recruiting, further down in the organization, being rewarded for attracting a different set of characteristics perhaps satisfying more immediate and short term needs in their hiring? Were both business practitioners and business educators, although aware of the need for social impact management abilities, daunted and skeptical about what could actually be taught in this area? So Aspen BSP turned to the domain of executive education and leadership development, a growth industry of dramatic proportions, to explore whether the demand for attention to the interdependency of business needs and societal concerns was helping to drive this industry and if so, to learn what the leading executive education providers had discovered about teaching this material. 3 Aspen BSP Business Leaders Dialogue 2000: Executive Summary. Aspen BSP

6 What are the Critical Challenges in Current Leadership Development Initiatives? In October 1999, BusinessWeek Online reported that spending on U.S. corporate training and education for managers rose to $16.5 billion, up 17% from...[the previous] year. 4 Clearly there is a felt need here and to learn more about it, each year Aspen BSP convenes a group of approximately 30 leaders in the field of leadership development on the subject of Developing Balanced Leaders: The Role of Executive Education. Participants include leading thinkers representing in-house corporate education, academic institutions, and professional service providers. Over three days, discussions probe what is needed, what is possible, and what is current reality in leadership development. At both of these meetings to date, in 1999 and 2000, there was strong sentiment that current and future leaders in an increasingly complex and global context need greater skill at listening and understanding diverse, widely dispersed, and changing stakeholders (consumers, employees, suppliers, host governments, etc.). These leaders need the ability to balance short and long-term agendas in their decision-making. They need to be able to improve their over-the-horizon radar for future trends and challenges. They need to be able to communicate persuasively to different populations, once they have made decisions regarding strategic direction. They need to see where the business needs fit into a larger picture of societal needs, understanding the interdependence of these overlapping realms. In other words, as they review the challenges facing their customers, these providers of executive education understand and experience a felt need for programs that address the challenges of social impact management. However, this felt need does not necessarily translate into an expressed demand from their business customers. And the reason for this has to do with another widely shared pressure experienced by these designers and providers of leadership development: the need to supply their clients with immediately and directly applicable learning, provided in increasingly rapid and time intensive doses, with little receptivity for educational experience (let alone actual leadership practice) that requires execution over time, or the need for much reflection before implementation. Thus, from both its Business Leaders Dialogues and its Executive Education meetings, Aspen BSP is hearing a consistent message that today s world requires new skills and an understanding of the interdependency of business needs and societal concerns. But it is from the providers of the executive education that another message emerges: that is, that regardless of the need for these skills and understanding, the immediate time pressures on business and therefore on their educational contractors drives out complexity and pushes toward speed and simplicity in content and methodology. What Do Business Students Want, and What are They Being Taught? Just as businesses themselves are an important customer for business education providers, so too are MBA students. Thus, in their efforts to explore the apparent disconnect between the need 4 Reingold, Jennifer, Mica Schneider and Kerry Capell, Exec Ed: Learning to Lead. Business Week Online 18 October

7 and the demand for curricular attention to social impact management, Aspen BSP has undertaken a longitudinal study to measure students attitudes toward business roles and responsibilities and how these attitudes may be affected by the MBA education experience. This study is being performed in waves. Wave 1, conducted in August/September of 1999, captured the responses of 1,116 first year MBA students as they were entering business school. 5 Wave 2, conducted in April/May of 2000, captured the responses of 852 students, including 515 first year students and 337 second year students. Although the study itself explores numerous issues, two findings emerge as particularly relevant to the present discussion. First, surveyed students believe that today s corporate leaders privilege the shareholder over other stakeholders in business decision-making, but the students report that they personally would favor a more balanced stakeholder approach. Secondly, a high percentage of surveyed students believe that they will have to make decisions during their business career that will conflict with their values. Interestingly, most believe that they would look for another job rather than trying to work within an organization whose values clash with their own. In an uncanny way, these two findings mirror the need/demand disconnect observed earlier among business practitioners. That is, students recognize and believe that today s business leaders must identify and be responsive to the needs, expectations and rights of a wider set of stakeholders than shareholders alone that is, they see the need. However, they do not believe that this is the prevailing belief or practice in business and they are pessimistic about the receptivity of business organizations to any value-driven change that they themselves, as managers, might attempt. That is, they expect these value clashes. They don t see much hope in expressing a demand for anything else. What s Happening in Business Schools? Finally, in an attempt to round out the picture of need/demand, on the one hand, and supply on the other, Aspen BSP has partnered with WRI in a biennial survey and benchmarking study of graduate business schools. For the 1999 report, surveys were sent to the 313 North American graduate business schools accredited by the International Association for Management Education (AACSB). This included 40 percent of the 748 business schools in the United States, and responses were received from 110 schools, with 60 reporting activities on environmental and/or social topics. Respondents included 43 of the top 50 business schools, as ranked by U.S. News & World Report, including all of the schools ranked in the top 10 and 24 of the top Information was gathered on institutional support, student coursework and faculty research, as they related to environmental and social impact management. 7 5 The thirteen participating institutions included: The Wharton School, Columbia Business School, London Business School, University of Michigan Business School, Yale School of Management, Graduate School of Industrial Administration at Carnegie Mellon, Kellogg Graduate School of Management at Northwestern University, Darden Graduate School of Business Administration at University of Virginia, Richard Ivey School of Business at University of Western Ontario, Schulich School of Business at York University, Haas School of Business at University of California-Berkeley, Notre Dame Graduate School of Business and IMC Graduate School of Business in Budapest. 6 Schools of Business: The Top Schools. U.S. News & World Report 29 March 1999: The 2001 iteration of the survey will gather data from international business schools and will expand its efforts to examine curricular offerings on social impact management. 4

8 Although the survey uncovered pockets of true institutional commitment and curricular and research innovation around environmental and social impact management, the prevailing findings were sobering: 8 Much of the most intense and innovative activity was found in extracurricular areas and not in the required core curriculum. Only 30 percent of the responding schools have environmental topics in core classes, and social topics are captive to ethics and diversity categorizations, rather than being woven throughout the curriculum. In this way, the opportunity to examine the interdependence of business and wider society is often missed. The core curriculum is the only portion of the curriculum that all students encounter and a powerful message is sent when material is included or excluded from that core. Elective courses where committed faculty members have developed more in-depth treatment of these topics often do not attract large enrollments. Faculty research was sparse; even top schools had as few as three or four articles published on social impact management across their entire faculty. Scholarship is the career currency for faculty, and they draw curricular and consulting concepts from their research, thereby influencing both current and future business practitioners. So What Has Been Learned and What Can Be Done? As noted at the start of this discussion, Aspen BSP s mission is to increase the supply of business leaders who understand and seek to balance the complex relationship between business success and social and environmental progress. Reviewing the lessons from its Business Leaders Dialogues, its convenings on executive education, its Student Attitude survey, and the Beyond Grey Pinstripes research, Aspen BSP has begun to develop an analysis and a theory of change to guide the pursuit of this mission. Aspen BSP has seen that the need for managers who are trained and able to manage social impacts is, in fact, recognized by both business leaders and by business students, but the supply of education in these areas is lacking. The question emerges: why has this need not been translated into demand that would, in turn, drive increases in supply? And the answer has come back: in order for need to become demand, it must be accompanied by a sense of urgency and a belief in the possibility of effective action. Unfortunately this sense of urgency and possibility were not revealed in Aspen BSP s data collection efforts. To the contrary, the urgency that drives developments in executive education appears to be a requirement for speed, immediate application and simplicity, in an effort to respond to competitive pressures. The need for skills in managing social impacts does not yet command the same perform or perish influence; or put another way, managing social impacts is not perceived as a competitive battleground. And instead of a belief in the possibility of changing organizations that manage their stakeholders in ways that conflict with their values, business students assume that they will have to leave the firm altogether. 8 Beyond Grey Pinstripes: Preparing MBAs For Social and Environmental Stewardship, Aspen BSP and World Resources Institute

9 But in addition to uncovering the challenges, Aspen BSP s initiatives have also revealed levers for change. They provide a roadmap for unlocking demand, on the part of business practitioners, educators and students, highlighting the interdependency between these constituencies. And they offer tools for building the requisite sense of urgency and belief in the possibility of effective action. Building Demand If supply is driven by demand, it becomes critical to look at the primary sources of demand for the development of business leaders. Recruiters and students place demands upon business schools. Faculty respond to the demands of their own scholarly marketplace (i.e., the tenure process and all it entails), as well as the teaching demands of their institution and their students. And students are responding to their conception of the employment marketplace, as well as their personal aspirations and commitments. So where are the levers for influencing the sense of urgency and possibility as related to the researching and teaching of social impact management? Aspen BSP has identified several key mechanisms: Dialogue: Through the use of cross-sector dialogue, business practitioners, business schools deans and public sector/ngo leaders have the opportunity to share their felt needs, building a shared belief in the importance of addressing the social impacts of business. And of course, Aspen BSP widely disseminates the conclusions from these convenings in an effort to build the sense of shared urgency. Consumer Research: By conducting its longitudinal study of Student Attitudes toward the role of business in society, and through the eventual publication and dissemination of findings, the student voice will be strengthened and amplified, increasing its influence as a competitive factor. Competitor Research: Through the biennial Beyond Grey Pinstripes report, Aspen BSP and WRI have created a mechanism for monitoring, benchmarking and promoting those business schools who excel at integrating attention to environmental and social impact management into their programs. Social impact management therefore can become an arena for competition both among students and potential recruiters which in turn builds a sense of urgency for schools to address it. The efficacy of this combined student/recruiter pressure to influence school offerings has been demonstrated recently in the push to internationalize business curricula. Building Faculty Career Incentives: In its efforts to understand the scarcity of scholarly research and teaching in the arena of social impact management, Aspen BSP has uncovered several barriers. Most of these barriers relate to the career realities of junior faculty: in their pursuit of tenure, they need to publish in peer-reviewed journals and these journals reflect the values and norms of the academic community. For example, many of the questions raised by a critical analysis of issues at the intersection of business needs and wider societal concerns are, by definition, interdisciplinary. However, the academic departments and journals are typically structured into "thought silos that do not easily facilitate interdisciplinary research. In addition, many of these questions appear to be more normative than descriptive; scholars trained in the scientific method tend to balk at this. And finally, many of these questions defy traditional research designs because the phenomena to be studied are not easily quantified and measured. And of course, following on these more fundamental barriers are a host of other research obstacles that arise as a consequence: few senior 6

10 faculty working in this area means few mentors, collaborators and reviewers for the work of junior faculty, few recognized, peer-reviewed journal outlets for publication, few sources of research support, and difficulty in accessing research sites. On the other hand, Aspen BSP identified some significant faculty aspirations, which, if tapped, could create powerful incentives for greater faculty research and teaching in the area of social impact management: namely, the desire for relevance and the commitment to knowledge generation. Aspen BSP continues to hear from faculty that, given a compelling research question and the belief that there may be a legitimate method for answering it, they would be drawn to our agenda. Faculty are also drawn to publishing in influential venues that attract a practitioner readership, regardless of whether or not these publications will count toward tenure. 9 Given these barriers and aspirations, Aspen BSP has determined to build faculty career incentives by focusing its research support on the re-definition of the field of inquiry and reframing the terms of the debate over the role of the corporation in society. Aspen BSP is supporting research initiatives that attempt to analyze and critique previous normative research questions and re-focus them as descriptive and managerial analyses, and that examine new methods for defining and measuring the phenomena of social impact management. Aspen BSP structures these initiatives in ways that enhance the career-building aspects of this research, thereby building the field of inquiry as a viable arena for research and scholarly competition. For example, Aspen BSP funds: broadly publicized awards for faculty working in the area of social impact management 10 ; junior/senior and inter-disciplinary faculty research partnerships; discipline-based as well as topic-focussed conferences that bring academic and corporate practitioners together to define new, mutually relevant, managerial research agendas; and demonstration conferences, where top quality senior researchers showcase research in the area of social impact management before junior scholars, with the promise of follow-on opportunities for junior scholars to receive research funding and continued opportunities to forge relationships with senior academics. Building Student Interest: Learning from the findings of the Student Attitude survey, Aspen BSP recognizes the need to build a sense of the possible among students who may serve to drive the demand for social impact management education. Thus, Aspen BSP strives to build student audiences into the design of research and practitioner conferences held at business school sites. Aspen BSP supports and collaborates with Net Impact (formerly Students for Responsible Business), an association of students and alumni from business schools who are concerned about the intersection of business and wider society. And responding to expressions of both student and faculty need, Aspen BSP is building a web-based database of case studies and other educational materials in the area of social impact management, in an effort to provide students who request greater attention to these issues with the resources to support those demands. (See 9 This includes venues like the Harvard Business Review and the California Management Review, as well as editorials in major newspapers. 10 These faculty pioneer awards are part of the Beyond Grey Pinstripes report. 7

11 The Measure of Success Aspen BSP s efforts have provided insights into the apparent disconnect between, on the one hand, business practitioners felt need for training on how to manage the social impacts of business, and the lack of a demand-driven supply of such training on the other. This same research and activities have uncovered reasons why this need has not translated into demand : namely, that the requisite sense of competitive urgency and the belief that effective action is a possibility are not present. Therefore, Aspen BSP has designed its various initiatives around this twin message of urgency and possibility. Its efforts are designed to gather the data necessary to make the case for urgency, and to enable and publicize effective actions, thereby expanding the view of what is possible. And all of these activities are targeted at the interlocking constituencies of business practitioners, educators and students. Finally, the Beyond Grey Pinstripes report provides Aspen BSP with a mechanism by which to measure progress in the education of managers for social impact management. Through these efforts, Aspen BSP works to repair the disconnect between recognition of the need for greater understanding and skill at managing social impacts and the actual expression of this need as demand. In the end, however, the true measure of success will be seen in the way business is conducted and in the impacts that business has on the wider society of which it is a part. 8