Today’s top MBAs don’t just factor in profits, they also teach compassionate business and holistic corporate practices. David Rogers takes a look at the evolution of green MBAs.
Over the past 50 years, the master’s degree in business administration has developed into the most important grooming tool for the corporate elite. And although students acquired a wide grounding in the theories and techniques of accounting, management and microeconomics, the traditional curriculum brings them all to a single utilitarian focus: to improve the profitability of a commercial concern.
The philosophy underlying this approach was illuminated by Jack Welch, the legendary chief executive of General Electrics between 1981 and 2001. At the beginning of his tenure, he made a speech arguing that the purpose of professional managers was to maximise “shareholder value”, and that their own rewards should depend on their success in achieving that paramount goal. From this it followed that the purpose of management was to offer an ever larger dividend to the company’s owners.
This view acquired the status of holy writ in the 1980s, and as a result the percentage of corporate profit distributed to shareholders in the US rose from about 40 per cent in the 1950s to around 60 per cent today. It was only in the crash of 2008 that dissident accounts of the role of managers gained ground; for example, it was argued that rather than reducing the company to a machine for making dividends, it ought to be seen as the centre of a network of stakeholders, a concept that brought the welfare of the workforce, as well as wider environmental and social factors, into the equation and tended to redefine management in term of stewardship.
The business school reformation
It followed from all this that the central purpose of the traditional MBA came into question, and that created the space for a different approach to executive grooming. As a result, a number of universities set up what are often called Green MBAs, particularly those that already had an intramural organisation that specialised in environmental matters. One of the leading examples in the UK is the One Planet MBA at Exeter University, which already had a strong environmental research base in the natural sciences.
Professor Nicolas Forsans, the director of the course, says it was set up in 2011 after the university joined forces with the World Wildlife Fund and a number of companies with an interest in broadening the minds of their managers, among them blue-chip concerns such as Coca-Cola, IBM, Lloyds Bank, Ikea and Canon.
He says: “In the aftermath of the financial crisis business schools were blamed for producing the bankers that caused it, and at the same time issues around sustainability, climate change and food security became highly publicised. People understood that we needed to rethink the way we went about training future business leaders.”
The goal of the course is firstly to persuade students that they should embrace this more complex and diffuse account of what future business leaders should do, and then sets out to equip them with the toolkit they need to do it. At the basic level, this involves thinking in terms of the triple bottom line.
“Financial profitability is needed because otherwise you can’t invest in your business and you need to compensate shareholders because they put their money into the business,” says Forsans, “but we pay equal attention to the social and the environmental impact of business. So in a typical MBA the accounting module would teach how to interpret the profit and loss figures, but we also look at the triple bottom line – how can you take account of your impact on the environment? How do you measure your social impact? There are no easy-to-implement tools for estimating a company’s social impact, but we look at alternative approaches. Our finance module is about responsible finance and investment – in what circumstances is an investment not a responsible one?”
What companies want from candidates
In the past companies had a tendency to recruit candidates with a background in sustainability in order to improve their corporate social responsibility credentials, and to give the appearance of taking their environmental and social externalities seriously. Modern thinking has, however, progressed beyond this stage; now the green MBA candidate is seen as having something to contribute to the success of the core business.
For example, Nicolas Marang, the sustainability coordinator at French cosmetics firm L’Oréal, gave a talk at Exeter last year in which he explained that his firm was particularly anxious to recruit people who understood how social networks functioned in the sprawling city regions of Africa, Latin America and Asia. The point was not to recruit sustainability managers per se, but rather to hire people who knew how to communicate with the company’s next billion middle-class consumers, many of whom will be women living in the slums of the South, a process known to business schools as tapping “bottom of the pyramid” markets.
In more conventional businesses too, the green MBA graduate is expected to bring an extra dimension to the way they plan their future strategies. The emergence of circular production systems and zero-waste programmes, which tend to be enthusiastically supported by local and national government, are particular strengths, as is the sharing economy model exemplified by the spectacular successes of AirBnB accommodation and the Uber transport application.
Despite the fact that MBAs often cost many times more than a conventional master’s degree, students expect to make a handsome return on their investment within a few years of completing the course. This means that competition for places can be intense, and the first test of candidates’ marketing skills it to sell themselves to the admissions tutors.
Forsans says that his admissions team looks for students who know what they want to do with their qualification, and who have had enough real world experience to contribute to the course. A feature of business courses is that the students learn from each other as well as their tutors and corporate partners.
Tony Cooke, a student who completed the Exeter course and went on to take a PhD (see box right), says this was a vital part of the process. He gives the example of a fellow student in her mid-twenties who gave a dazzling presentation to the class on what could be deduced about the users of a website based on the analysis of data captured by Google Analytics.
On the other hand, business schools do not want to hire people who might be happier in an environmental NGO. Forsans says: “We don’t want activists, we don’t want hippies. We find that people who have an idealistic mindset don’t understand the constraints that businesses operate under, and they don’t fit well with our corporate partners.”
As businesses navigate their way through an environment that is being profoundly reshaped by demographic, climatic and technological megatrends, the attraction of bringing enhanced social and environmental awareness to the executive skillset is obvious. As a result more and more business schools are introducing modules and “concentrations” that tackle these areas.
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