As our colleagues who study management have shown, purpose serves as the bedrock upon which well-aligned organizations rest. Using a less static metaphor, why we exist helps us understand how we should move forward. Typically, an organization’s purpose is institution-specific, but COVID-19 and other sustained national and global crises give rise to a sense of collective purpose. For the COVID-19 crisis, this collective purpose could be expressed as “Flatten the curve” or, in the UK, “Save lives and protect the NHS.” This collective purpose bears no resemblance to our pre–COVID-19 individual senses of organizational purpose.

COVID-19 and its aftermath have tested leaders of all institutions, including business schools. Faced with a massive, externally imposed crisis, how do we prioritize our activities? What do we stop or start doing? The answers to these questions reflect our organizations’ sense of individual purpose, as influenced by the broader collective purpose. Sustained existential crises allow us to understand the interplay between collective and individual purpose and the organizational implications of internalizing an externally set collective purpose. Are external crises, and the collective sense of purpose they engender, a force to liberate institutions like ours or are they a distraction?

Were the purposes of business schools solely defined by our customary activities – teaching and research – an external shock like COVID-19 would be a distraction. We would simply move all of our activities online, from teaching to research to professional services, in order to “keep the show on the road.” We would feel no need to change what we teach or whom we teach.

But if we strongly adopt the collective, higher purpose – to vanquish COVID-19 and the associated public health, economic, and social ills it has surfaced – might we be led to a completely different direction, as our colleagues in Oxford’s vaccine labs have shown? Might we rethink not just how we teach but the content of our curricula, the composition of our student bodies, and how we measure success?

Going beyond COVID-19, the call to “build back better” reflects the judgment that prepandemic “normal” was not ideal and that we need to come out of lockdowns creating new approaches for business to deal with the urgent global problems of social, economic, and national fissures; racial inequality; looming public health crises; and perhaps most importantly, an existential climate crisis. If we internalize these longer-term collective purposes, we might set ourselves an ambitious agenda and, in the process, fundamentally transform ourselves, changing what, who, and why we teach and research.

As a scholar, I know the value of learning from history, not to slavishly repeat the experiences from decades ago but rather to learn from how educational leaders reacted to massive external shocks that gave rise to a sense of collective purpose. Given the relatively short history of business education, there are a number of fruitful periods for studying how business schools navigated between individual and collective purpose in the face of sustained global crises. In the twentieth century, these would include World War I, the Great Depression of the 1930s, and World War II. In this chapter, I examine how business schools behaved – and therefore displayed their purposes – in the most recent of these events, World War II.

In World War II, business school deans found themselves in a changed world: the world became much less certain and predictable; international mobility was restricted; students and faculty were either unwilling or unable to study or teach due to the draft; the student experience was compromised relative to “normal” times; financial budgets were under pressure from falling student numbers due to the draft; typical metrics such as career outcomes of graduates seemed out of place; and top-down university edicts were more frequent and consequential. As the war was coming to an end, the situation was completely different – economies and societies needed to rebuild peacetime economies and absorb hundreds of thousands of returning veterans. In the first half of the 1940s, the collective purpose was “Win the war,” a call that was jarring to the more genteel activities of teaching and research – much like “Flatten the curve.” In the second half of the decade, “Win the peace” was a more familiar call to action for business schools but still as challenging as “Build back better.”

What paths did different schools take when the gap widened between the external mandate of winning wars and their traditional roles of teaching and research? Did they insulate themselves as much as possible from the requirements of the war, or did they fully internalize this externally imposed purpose? If the latter, what were the implications? In this chapter, I look at five leading US business schools in the 1940s and study how they reacted to World War II. How, if at all, did wartime – and the collective purpose of “winning the war” – change what and how they taught and how they conducted research, organized themselves, presented themselves, and made decisions? Can we learn anything from our predecessors from eight decades ago that might help us to better lead our institutions as our societies and economies face our generation’s crises?

Identifying Purpose

Words and deeds provide cues to understand how an organization sees its purpose and, in this case, how an organization might internalize a collective purpose. We could examine how the leaders, staff, and employees speak about their work to gauge changes in their conceptions of their purpose. For example, consider how firms are dealing with issues of climate change. Some researchers are studying how organizations are adopting climate-related language in their outward-facing communications. Or we could look at their actions, say, in the form of changes in their carbon footprints.

For this work, I look at both words and deeds, using “modern” authorized histories to gauge how the schools understood and internalized the collective wartime imperative of winning the war. From the current day looking backward, are the war years referenced extensively and seen as critical to the development of the modern institution? For most schools but one, the answer is a resounding no. Tellingly, as some recount their histories from the present, the war years hardly get any mention. Recognizing that this backward-looking approach may obscure the full impact of World War II on the schools, I contacted each of the current deans of the five schools profiled, asking for additional information that might not have been available in their official histories or current materials.

How can we compare the different ways that organizations internalize collective purpose – and react to crises? As a simple example, in our COVID-19 period, consider how a restaurant’s actions might reveal the degree to which it adopts the collective purpose. The restaurant might try to ignore or deny the collective purpose, running business as usual, and shun mask wearing or social distancing. It might comply with externally imposed mandates but otherwise carry out business as usual. It might go a step further and make some changes to its menu to reflect lower likely in-person customers and greater takeout orders. Or it might make major changes to its activities – for example, reconfiguring part of the restaurant into a produce store, transforming itself into a dark kitchen for takeout only, or dramatically changing its menu and pricing – perhaps donating services – to help families suffering from the economic consequences of COVID.

More generally, organizations can react to crises that induce collective purposes in four different manners:

• - Denial, in which the organization carries out its activities as usual by not taking any particular measures to take account of the crisis or the collective purpose

• - Compliance, in which the organization obeys externally imposed rules and regulations but does not go further to change its activities

• - Reactive adaptation, in which the organization goes beyond compliance to make minimal changes to its activities but leaves its core activities intact

• - Transformational adaptation, in which the organization internalizes the collective purpose and radically changes its activities.

Reactions to World War II at Five Leading American Business Schools

In a related paper on which this chapter is based (Tufano, Reference Tufano2020), I study in depth five of the leading US business schools and their reactions to World War II.Footnote ² I look at American schools not because they were the earliest nor only business schools at the time but, rather, because the earlier continental European schools, largely under Nazi occupation, were often forced to make changes by their occupiers. Their American counterparts had more latitude and management authority to determine how vigorously to adopt the collective purpose of winning the war. The five that I studied – Wharton, Berkeley, Tuck, Chicago, and Harvard – were well established as of 1941, were clearly recognized as some of the leading schools of their time, and demonstrate a full range of responses.Footnote ³

The schools’ reactions ranged from simple compliance to reactive adaptation and, in one case, to transformational adaptation, but each story is rich, deserving of far more than a label. In the following sections, I briefly summarize the histories, and then I conclude with possible lessons for leaders of business schools today.

Compliance

In general, modern authorized histories of business schools spend little time discussing the war years, but even by these standards, some schools, such as Wharton, skip over the war years almost entirely. Stephen Sass’s history of Wharton (Sass, Reference Sass1982) suggests that the school endured rather than embraced the collective wartime purpose.

By way of background, during World War II, 50 million American men aged 18–45 were registered for the draft, and 10 million were called into military service (National WWII Museum, New Orleans, n.d.). At the time, business school faculties and students were primarily men, and all students and many faculty were of draft age. Drafts would thus decimate student and faculty numbers at all schools. For example, at New York University (NYU), MBA enrollments fell from 1,196 in 1940–1941 to 1,001, 656, 707, and 1,013 in the 4 following years (Gitlow, Reference Gitlow1995, p. 120).

Wharton would suffer a similar decline, as well as a hollowing out of its faculty who were drafted or volunteered. The official Wharton history, The Pragmatic Imagination: A History of the Wharton School, 1881–1981, written by Stephen A. Sass and published by the University of Pennsylvania Press in 1982, devotes only about 3 pages out of 342 to the war. The draft reduced student and faculty numbers:

Those remaining, however, carried out business as usual: “The school continued to train large numbers of students in traditional business subjects, such as accounting, finance, and insurance, and professors and graduates in these areas also found themselves drafted into responsible positions during the war” (Sass, Reference Sass1982, p. 228). The war seemed to be a pause, not an inflection point. In the immediate postwar period, the school picked up from before, as Sass summarizes: “But as the worlds of affairs and ideas rushed headlong into the future, the Wharton School resumed its prewar routines” (emphasis added; Sass, Reference Sass1982, p. 233).

The scant mention of the war in Sass’s (Reference Sass1982) history, and the description of “all but adjourning,” teaching “traditional business subjects,” and finally, “resuming its prewar activities,” tells a consistent story about how Wharton endured the war and complied with the draft, rather than vigorously embracing the collective purpose of winning the war.

Reactive Adaptation: Doing Our Part, Innovating, and Advancing Peacetime Agendas

Although all schools complied with the draft, most went beyond this base level, joining the war effort more actively while still operating under business as usual, as much as possible. Tuck, Berkeley, and Chicago all reflect this approach, running reduced versions of their undergraduate, MBA, and in one case, PhD programs while taking into account that many of their students and faculty members would be called up or would volunteer. They shortened undergraduate programs to allow men to go to war earlier and made minor adjustments to their curricula to enhance teaching on operations and logistics. All did their part, as part of broader university programs, to train officers. Two created innovations specifically aimed at addressing wartime management shortages that would long outlast the war and used wartime to press forward long-planned changes to their peacetime programs.

For example, at Berkeley, the draft reduced the number of undergraduate commerce students (the core business degree) by about a third, to approximately 1,000. The broader University of California system adopted various changes, including pass-fail grades, some refinements in curriculum, and rule changes permitting students to complete a 4-year undergraduate program in 2 years and 8 months (Epstein, Reference Epstein2015, p. 149). Sandra Epstein – the chronicler of Berkeley’s history – remarks on the modest changes in the curriculum at the university and the College of Commerce:

At Dartmouth University’s Tuck School, similar changes took place, including providing training for military personnel. Founded in 1900, Tuck was the first graduate school of business in the United States, with a 3+2 model of 3 years of undergraduate education (if a Dartmouth College undergraduate) followed by 2 years of postgraduate business training – including non-Dartmouth College students.Footnote ⁴ The school and university took a joined-up approach when the war broke out. President Ernest Martin Hopkins laid out two goals for the college and its three professional schools: to maintain the liberal arts curriculum for civilian students and to support the war effort (Rauner Special Collections Library, Dartmouth College, n.d.). In effect, two parallel sets of activities took place at Dartmouth – civilian and military. The civilian agenda was much changed from the prewar period:

The majority of students on campus were part of military programs:

The V-12 program, launched in December 1942, was designed to train young commissioned officers for the US Navy and Marines (Herge, Reference Herge1996). Over 130 colleges and universities participated in the program, which trained 125,000 young officers. The program had the added benefit of supplementing the finances of colleges and universities whose students were being drafted. Virtually every major university, including Dartmouth, Berkeley, Chicago – as well as the University of Pennsylvania and Harvard – participated in this program.

World War II was also consequential for the University of Chicago. Although traditional undergraduate, master’s, and doctoral programs continued to be offered, after the attack on Pearl Harbor, the university took on the war effort, albeit with a characteristic Chicago approach:

Perhaps the most far-reaching wartime initiative was the recruitment of refugee scholars from Europe, including Enrico Fermi and Hans Morgenthau, as well as the “Met Lab,” which was a joint government–university project connected with the highly secretive atomic bomb project (Boyer, Reference Boyer2015, p. 305).

Adaptive Reactions: War-Specific Innovations

Going beyond participating in government consortia like the V-12 program, both Tuck and Chicago created innovative institution-specific programs to address the wartime needs for management, which have survived nearly eight decades later. Although it is impossible to know if these programs would have been created without the stimulus of the war, they provide examples of how reactive adaptation can have long-term benefits.

During the war, Tuck created the Tuck–Thayer program, combining forces with the Thayer School of Engineering at Dartmouth (Dartmouth Engineering, n.d.). This collaboration between business and engineering was a direct response to war needs to create leaders with backgrounds in both technology and management. The program survives today.

At Chicago, the wartime impetus to train factory managers led to America’s first executive MBA (EMBA) program in 1943. This part-time program was explicitly seen as a way to address the wartime shortage of trained managers. Although these first EMBA students’ profiles were quite different from those of “traditional” students, the content of their program and faculty were the same as for Chicago’s full-time counterparts:

The EMBA program at Chicago remains an important part of the school’s offerings, and the current website celebrates the program’s wartime origins.

Adaptive Reactions: Advancing Peacetime Agendas during the War

While wars were fought in Europe, Asia, and Africa, leaders of US business schools and universities used wartime to advance more local conflicts – pressing for change within their organizations. We see this at Chicago, Tuck, and especially at Berkeley.

In the years prior to the war, University of Chicago president Robert M. Hutchins was engaged in a controversial effort to reform undergraduate education at Chicago. With the onset of the war, Hutchins pressed and succeeded in forcing this change:

This set of changes was accompanied by an adjustment in membership in the college faculty and disenfranchisement of a number of faculty members. The implication of this university-wide innovation was to “effectively eliminate the departments and specializations from the undergraduate curriculum,” including the undergraduate business program, to delineate between the undergraduate Chicago experience and the “specialized learning offered and the divisions and the professional schools” (Boyer, Reference Boyer2015, pp. 254–255).

At Tuck, the war years were used to refine the peacetime framing of the school. In 1942, the school changed its name from the Amos Tuck School of Administration and Finance to the Amos Tuck School of Business Administration (Tuck School of Business, Reference Seatonn.d.).

Berkeley provides the most dramatic example of reconfiguring peacetime organization during wartime. In the middle of the war, the priorities of its new dean were to split its economics and business administration activities, set up the latter as a “school” rather than a “college,” establish the master of business administration graduate degree, and set up joint curricula with engineering and other departments (Epstein, Reference Epstein2015, p. 152). Indeed, in Sandra Epstein’s history of the school, the most important activity during the war, receiving far more attention in the volume than war-related activities, was the creation of the School of Business Administration in 1943 and awarding of the MBA degree in 1944.

The issues seem contemporary: wanting greater autonomy within the university, finding a positioning (“business” versus “commerce”) that had a more modern ring to it, gaining budget and space for the new school, having control over faculty hiring, and “winning long-sought independence from the Economics Department.” The war provided a backdrop for the move:

The leadership at Berkeley used the wartime crisis to forge meaningful institutional change within the university. As the war raged in Europe, North Africa, and Asia, its battles were closer to home. It is as if the war was a diversion that permitted long-standing peacetime institutional changes to move forward.

Berkeley, Tuck, and Chicago each engaged deeply in the war effort through participating in consortia to train military personnel. Tuck and Chicago went further, creating new institution-specific programs to meet the war need that were built upon their existing approaches. All three internalized the collective purpose of winning the war. But in each case, they held on to their peacetime programming, with some modifications. And each used the conditions of wartime – reduced enrollments, distracted colleagues, and leadership transitions – to advance long-sought peacetime agendas. They reacted to the war and internalized it to an extent, but they never lost sight of their peacetime purposes.

Transformational Adaptation

In the book-length histories of Wharton, Tuck, Berkeley, and Chicago, World War II plays a modest role, only receiving a few pages of discussion in each. In contrast, Jeffrey Cruikshank’s (Reference Broehl1987) history of the Harvard Business School (HBS), A Delicate Experiment, devotes 61 of its 285 pages to discussing World War II.

Like the other schools, HBS would experience a substantial reduction in students and faculty due to the draft. Like other schools, HBS would participate in consortium military training. Like Chicago and Tuck, it would create unique programming to address the needs of managers left behind – in effect creating modern non–degree-bearing executive education and a shorter-lived program bringing together unions and management. Like at Chicago and Berkeley, strong educational leaders pushed for institutional change.

But HBS took one quite large step beyond its peers: the faculty voted in December 1942 to stop offering its flagship MBA program and all other peacetime programs. Perhaps most radically, in 1945, as the war was winding down but not yet ended, the faculty voted unanimously not to reinstate any of the prior peacetime programs in what was called the “clean slate resolution” (Cruikshank, Reference Broehl1987, p. 270). In addition, while HBS celebrated faculty who left the school to work for the government as Wharton did, it also brought war-related research onto campus, as Chicago had done. In effect, during the war, HBS stopped being a business school in a traditional sense and focused entirely on the business of winning a war abroad and training those left to run factories at home.

To be clear, HBS faced the same financial and operating pressure as the other schools. Wallace Donham – who served as the dean of HBS from 1919 to 1942 – sought not to repeat the school’s experience in World War I, when it lost too many men from the MBA program, lost faculty to the draft, and ran a large financial deficit. While “doing its bit,” the school would maintain business as usual as much as possible. Robert McNamara, a young assistant professor at HBS at the start of World War II, described the dean’s concerns:

In the first year of the war, HBS’s activities were similar to those of Tuck, Berkeley, or Chicago. In the months before America entered the war, HBS took tentative steps to prepare. A Reserve Officers’ Training Course (ROTC) was established at HBS in April 1941; this did not alter the MBA training but simply added an extra course in defense mobilization.

HBS fairly quickly sought out unique opportunities to contribute to the war effort. The Naval Supply Corps School had been in existence since 1905, in two locations: Philadelphia and Washington, DC. In June 1941, these two merged, and the new Naval Supply Corps School was physically co-located on Soldiers Field Road, sharing the HBS campus alongside the traditional MBA program, “work[ing] more in proximity with each other than together” (Cruikshank, Reference Broehl1987, p. 226). “‘We do not teach these officers,’ [HBS] Dean [Donald] David noted, ‘but we do house and feed them, and we feel fortunate in having this group of outstanding officers living and associating with us here’” (Cruikshank, Reference Broehl1987, p. 226).

At first, HBS tried to maintain its status quo programs, including its flagship MBA. For example, in February 1942, HBS admitted the Navy Supply Corps Midshipman Officer School but merely bolted additional curriculum onto the existing first year of the MBA in a form of curricular co-location.

Moving first from physical to curricular co-location, HBS next made the larger leap to develop customized programs for the military. As McNamara noted, school leadership was acutely aware of the likely impacts of the draft, and as a result, the dean “sent two professors to Washington in an attempt to gain some government contracts for Harvard” (Watson and Wolk, Reference Watson and Wolk2003, p. 6). McNamara goes on to describe the creation of the Army Air Force Statistical School (Stat School), a customized program built by HBS faculty to train officers of the Statistical Control Office of the Army Air Forces with instructors drawn from the core HBS faculty.

Although financial pressures might have initially motivated HBS’s rapid expansion into wartime efforts, it ultimately chose to fully devote itself to the war, internalizing the collective purpose of winning the war. The decisive rejection of business as usual transpired a year after Pearl Harbor, in December 1942, when the faculty voted to discontinue all non-wartime programs – to shut its MBA program, even while Berkeley was working to create one. By 1943, all activities at HBS were devoted to winning the war, training the officers who would lead overseas and the civilians who would lead the factories at home, as well as conducting war-related research.

If this were merely a financial expedient, then we might have expected other parts of the school to be untouched, for example, its general approach to teaching, academic norms, or research activities. Yet all of these seemed to be altered, if only temporarily, during the war. The Stat School became a state-of-the-art program even though its content was a substantial deviation from the school’s prewar programs. Although the school was known for its devotion to written case studies, in the war, it adopted a wider variety of teaching approaches, including what we would today call “live cases.”

In the war, the school embraced the controversial idea that older executives could be taught. HBS’s modern prowess in executive education was a wartime innovation. The prevailing sentiment at HBS and other business schools before the war was that older executives were not clever enough to learn or were too rigid or set in their ways to learn. But someone needed to run the factories. HBS reluctantly embraced this idea and, at first, did not know how to do it. The result, after some missteps, was a formula that survives today and defines executive education: focusing on executives at mid- and senior levels, both nominated by their employers and self-sponsored. What seems obvious today was deeply resisted in its time. One director of an airplane division described potential students as “dummkopfs” (Cruikshank, Reference Broehl1987, p. 236). The program was initially derided on campus as the “retread” program but eventually was acknowledged as critical. According to Cruikshank, “the School’s novel concept of executive retraining seemed to be proving itself. Perhaps most important, it was clear that men and women twenty or thirty years out of school could still learn – a dubious assertion, to many, before the retread program” (Cruikshank, Reference Broehl1987, p. 257). This notion of training mid- and senior-level executives defines today’s huge executive education activities of major schools. Both Chicago and Harvard saw this need but delivered it in different ways. Chicago stayed close to its academic roots, using the same curriculum as the full-time MBA and creating the executive MBA as a degree-bearing program. Harvard innovated with a non-degree format, now its AMP program, which led the way for the broader executive education market.

Even the research activities of the school were altered during the war, directed to projects that would have a material impact on the winning of the war. There was a pointed concern for the utility of the work, such as the Air Research Program, carried out in conjunction with the aviation industry. In a spirit that characterizes the contemporary impact agenda, the program was evaluated in clear terms: “No matter how thorough a research study may be, it will be of little use if there is no interest in the subject on the part of the public or industry” (Cruikshank, Reference Broehl1987, p. 255). Research that crossed boundaries was also embraced, such as the HBS Fatigue Laboratory, done in collaboration with the Climatic Research Laboratory, combining science, physiology, and behavioral research to determine how airmen would fare in extreme weather conditions. Whereas Wharton’s professors left the school to join the government to do applied research during the war, Harvard’s model was to bring very applied research inside the school. In both cases, professors made valuable contributions, with the difference perhaps reflecting a judgment of where it was appropriate to conduct highly “useful” research.

All of these changes could be interpreted as putting the war purpose ahead of tradition. They were the product of what one junior professor at the time, Dan T. Smith, called “the temporary repression of traditional academic perfectionism” (Cruikshank, Reference Broehl1987, p. 243). Whereas peacetime has the luxury of slow, tested, and careful change, wartime does not. This partial “temporary repression of perfectionism” laid the grounds for modern business education, even though not all of these innovations persisted in the 75 years of subsequent peacetime.

At the conclusion of the war, Wharton, as described by Sass (Reference Sass1982), “resumed its prewar routines” (p. 233). Harvard went in the opposite direction. In February 1945 – well before the end of hostilities – in a 4-hour faculty meeting, the faculty unanimously passed the “Clean Sweep Resolution,” which rescinded all previous authorizations of courses (Cruikshank, Reference Broehl1987, p. 270). The faculty members voted that they would not mechanically return to their prewar ways but would determine the future from that day forward. It is nearly impossible to imagine this vote in peacetime. The postwar curriculum drew deeply from the wartime experience.

The mantra of winning the war was replaced with winning the peace. When the war was won, the cessation of wartime production and the large amount of surplus war material meant that the economy could easily go into a tailspin just as the troops returned home looking for jobs, as had happened in the wake of World War I. The clear imperative was to create a stable and growing economy. Dean Donald David acknowledged this in 1945: “Surely the School’s wartime record would soon seem incidental and would be quickly forgotten if our efforts on behalf of the men who have won this were any less determined than our efforts in the officer-training program” (Cruikshank, Reference Broehl1987, p. 275).

The Harvard example is one of transformational adaptation. By adopting the collective purpose, first of winning the war and then winning the peace, it fundamentally transformed itself. While others were setting up MBA programs, it shuttered its program. While others maintained their degree formats, Harvard experimented with non-degree courses. While others had their sights on the resumption of the past, Harvard’s faculty unanimously voted to abandon it.

Macro-Crises, Collective Purpose, and Business Schools

Although business school campuses of the 1940s and today might project a sense of calm and stability, they – and higher education institutions more generally – are not immune from the crises that plague our economies and societies. In the 1940s, deans and their colleagues were faced with a faraway war and an unavoidable collective purpose. We, too, are subject to wars, pandemics, economic depressions, and climate crises – as well as the implications of national, cultural, and racial divides. When a collective response or purpose emerges in our communities, we choose how we react. In many ways, universities – or more accurately, university students – have been at the forefront of the cultural reactions to macro-crises like wars, as we saw in the US protests against the war in Vietnam in the 1960s or the student protests in Germany against the Nazis in the 1940s, such as the nonviolent White Rose movement (Ray, Reference Rayn.d.).

Although history will, in time, judge how we dealt with COVID-19, eight decades of hindsight allows us to draw a few conclusions – or perhaps hypotheses – from the experiences of our predecessors in World War II and how they internalized the collective purpose of winning a global war.

First, although all schools confronted the war and social imperative, they reacted in different ways. All complied with the requirements of the draft, but organizational reactions ranged from compliance to reactive adaptation to transformational adaptation. All of the schools were strong before the war and continue to this day, so clearly, there was no one “right” answer.

Second, although it is difficult to offer a satisfying explanation of why different schools behaved in different ways, the histories suggest a key role played by the specific leaders of the different institutions. Academia cherishes academic freedom and integrity and tends to embrace concepts of academic democracy. Institutionally, academic democracy is enshrined in bodies such as academic senates or advanced in an extreme way, such as in Oxford’s “Congregation” – a 5,500-member “sovereign body” that has the ultimate authority to decide on virtually any matter in the university if 20 members of the university advance the proposal and it receives a majority vote (University of Oxford, Governance and Planning, n.d.). The wartime experiences of the different schools, as recounted in their histories, often deviate from the ideal of academic democracy and involve strong leaders, such as Chicago’s President Hutchins, Berkeley’s Dean Grether, or Harvard’s Deans Donham and David.

As an example, Dean Donham at Harvard piloted the school as it went into the war during his last year as dean after serving for more than two decades of leadership. In May 1942, he was “six weeks from retirement…. [He] apologized for having taken a series of unilateral actions without adequate faculty consultation, but said that the fluid circumstances necessitated this approach” (Cruikshank, Reference Broehl1987, p. 223). In one amusing exchange, Donham informed a faculty member, “You are volunteering for the job [to work with the government]” (Cruikshank, Reference Broehl1987, p. 226).

The highly deliberative, consultative process of peacetime was replaced with a temporary new model: more rapid, centralized, strategic decision making, granting others closer to the battlefront (classroom) the flexibility to make tactical decisions.

Third, why these leaders made the decisions they did is less clear. Was it national fervor in support of the war or more practical consideration? Secondary research cannot uncover the motivations of these leaders, but there are clues that the decisions were motivated by a range of considerations. Chicago’s President Hutchins strongly opposed the war, at least until it started, and so was not a natural person to advance a wartime agenda. Donham’s initial concerns were clearly to protect the finances of the school, as indicated in Robert McNamara’s reflections. There is a strong parallel in how businesses or business schools might find themselves engaging with climate measures: some might frame this as a moral imperative; others might simply see it pragmatically as good business.

Perhaps most importantly, the five examples present two quite competing yet consistent implications of the power of purpose to maintain or transform an organization.

The first is individual purpose as anchor. The histories of Wharton, Berkeley, Chicago, and Tuck display the role of purpose as anchor. Each school held fast to its prewar institutional purposes. While accepting the draft and joining government programs, they never wavered in delivering traditional business programs to a small number of young business students. They kept operating their MBA programs, even with reduced numbers. They kept the content of their curricula largely unchanged. When they innovated, they built directly onto existing programs (Tuck–Thayer), or they maintained the same degree standards as before (Chicago’s EMBA). They advanced prewar academic initiatives and continued to fight their domestic university battles, most vividly at Berkeley, while the war raged elsewhere. Their prewar individual purposes anchored them throughout the war.

The second is collective purpose as liberator. After a tentative start, Harvard all but abandoned its prewar individual purpose and embraced the collective wartime effort. Innovation flourished in nearly every aspect of the school. For a while, it welcomed new types of students (young and old, business and unions, men and women, those of all races). It created new programs, such as the retread initiative, that bore no resemblance to its prewar MBA. It emphasized new subjects, such as statistics, that had not been at the heart of its curricula and briefly moved away from its case-method approach. It brought onto the campus new research approaches. Ultimately, the faculty voted not to slavishly re-create the prewar past by rescinding all prewar course authorizations. By embracing the demands of the war and accepting “temporary repression of academic perfectionism,” the stage was set for the postwar HBS.

I believe these lessons are not only relevant but critical for leaders of business schools and other organizations today. We can never waver from our traditional goals of delivering excellent teaching and research – nor can we abandon academic freedom. Nevertheless, our world faces threats – and opportunities – that arise from pandemics, a climate emergency, and gaping inequality that have given rise to dangerous national, social, and global fissures. As business schools, we can hold fast to our individual purposes, downplay these issues, and reluctantly begin a few initiatives while we carry on largely with business as usual. Or we can use the emerging collective purposes in society – around public health or climate issues – as invitations to transform ourselves.

In our discussions of our purpose at Oxford Saïd, one of my very perceptive colleagues asked a disarming question: What’s the purpose of purpose? Although we will always exist to deliver excellent research and teaching – helping advance the careers of students, improving the performance of organizations, and protecting the academic freedom of our scholars – to what end? Would a goal of advancing economic, social, and climate justice be constraining or liberating?

A collective or higher purpose doesn’t liberate an organization from the laws of gravity or its financial equivalents. A collective or higher purpose doesn’t allow us to deliver poor-quality education or research or fail to train our students for the next steps in their lives. Collective purpose does not and must not silence the important role of critical inquiry in a university. But in our tradition-bound, sometimes inertial institutions, adopting a collective or higher purpose may enable us to unleash innovation that might otherwise be inconceivable and reinvent our institutions as we put ourselves at the greater service of the world.

Introduction

The first business schools, which appeared in the nineteenth century in Europe and then began to proliferate as the Industrial Revolution spread to the United States – notably in the early years of the last century – were set up to train the cohorts of managers needed to fill executive positions at companies (Kaplan, Reference Kaplan2014). Their guiding principles can be traced to the Greek philosophical concept of techne, a term referring to technical education in classical Athens (Parry, Reference Parry and Zalta2020).

The study of management soon developed into an academic discipline within the social sciences, where it has largely been confined to this day (Lamont and Molnár, Reference Lamont and Molnár2002). But as the principles of management are now increasingly applied to noncommercial activities, it has become clear that business schools need to broaden their teaching to include not just the systems that allow for the efficient running of a company but also to developing leaders at different organizations who can tackle the challenges of an increasingly uncertain and volatile postpandemic world (Christakis, Reference Christakis2020; Galloway, Reference Galloway2020).

If it is to nurture the multitalented leaders we increasingly need in response to these challenges, business education now needs overhauling, and its horizons need broadening. I believe the best way to do this is by loosening the restraints of techne and providing tomorrow’s managers with a solid grounding in paideia, another Greek philosophical concept that refers to the training of the physical and mental faculties with the goal of producing a broad, enlightened, and mature outlook that is harmoniously combined with cultural development. In other words, the humanities.Footnote ¹ That said, for this to happen, business schools will have to rethink the way they teach and their research methodology, faculty profile, and learning analytics.

The First Business Schools

As the Industrial Revolution spread throughout Europe and the United States in the late nineteenth century, business schools responded to the needs of large corporations, notably the railroad industry, by teaching a dry combination of economic theory, management techniques, and industrial relations (Wolmar, Reference Wolmar2012).

Harvard Business School, which was founded in 1908, sought from the get-go to meet the needs of industry. For example, alumnus George Leighton argued that railroad management ought to be recognized as a science, which meant the men keeping the country’s trains running on time required a range of skills: “Management is one of the most versatile of all professions” (Cruikshank, Reference Cruikshank1987, p. 8). Similarly, Charles Eliot, the president of Harvard University between 1869 and 1909, wrote: “What can I do with my boy? I want to give him a practical education that will prepare him better than I was prepared to follow my business or any other active callings” (Cruikshank, Reference Cruikshank1987, p. 20). In the end, his son studied landscape architecture in Europe.

Wharton Business School, the first business school in the United States,Footnote ² was set up in 1881. Chief among Joseph Wharton’s goals was “to teach economic protection of U.S. global interests,” which had already made him a powerful lobbyist for protective tariffs in Washington.Footnote ³

In contrast, the vocational character of France’s commerce écoles reflects their creation by the country’s municipal chambers of commerce, to which they belonged and from which they received funding, some of them still today. Initially, the écoles de commerce were not recognized by universities, and it was only with the formalization of studies, and US influence, that their courses were given degree or postgraduate standing (Blanchard, Reference Blanchard2009).

In 1959, a major change to business schools and management education took place when a report by the Carnegie and Ford foundations criticized what they saw as the disproportionate emphasis on technical and practical teaching at business schools – reflecting their vocational origins – and recommended a more scientific approach (Iñiguez de Onzoño, Reference Iñiguez de Onzoño2011, p. 126). In response, business schools at universities such as Carnegie Mellon, Harvard, the Massachusetts Institute of Technology (MIT), and Chicago began to highlight academic excellence, generating research on a par with their other social sciences schools. Since then, we have seen a huge growth in conferences and specialist journals looking at specific aspects of business education, a trend replicated in Europe and around the world (Podsakoff et al., Reference Podsakoff, MacKenzie, Bachrach and Podsakoff2005).

The result is a self-perpetuating academic marketplace. As Wharton’s P. H. Shoemaker (Reference Shoemaker2008, p. 120) points out: “The field has beefed up its academic standing by promoting faculty with deep scientific roles.” That said, he also notes, somewhat critically: “Over time, however, these scholars often took business research in directions no longer comprehensible or relevant to business students and managers” (Shoemaker, Reference Shoemaker2008, p. 120).

In recent years, however, the nature and the impact of research developed at business schools have been subjected to further scrutiny. Some years ago, the European Foundation for Management Development (EFMD) invited me to chair a commission to define the concept of “research” for the EFMD Quality Improvement System (EQUIS) accreditation standards board,Footnote ⁴ so as to develop criteria to help auditors establish when a school applying for accreditation had developed enough research, in terms of both quantity as well as quality. The first challenge was to tackle business schools’ myriad definitions of research based on what they saw as their mission.

We did this by not defining research as simply the output of contributions in academic journals, instead taking a well-known concept from business: research, development, and innovation (RDI), which would include knowledge output – from articles in academic journals to brown books on industries, including teaching materials (case studies, technical notes), books, and articles in professional journals. In effect, working on a case-by-case basis and requiring a customized analysis of the institution in question, its management processes, and its competitive standing. As a result, RDI requirements for the accreditation of institutions vary: an executive education center, for example, is required to develop practice-oriented materials, whereas a university-based business school offering PhD programs would produce conventional academic research.

The RDI approach is an up-to-date tool to assess the academic contribution of an accredited school. I wonder, however, whether the scheme has produced its intended objectives.Footnote ⁵ In any case, the framework applied to most management disciplines has been analogous to that common to other social sciences.

The Tension between the Humanities and STEM

Based on a belief that our world is now dominated by digital technology, over the course of the last few decades, a growing number of governments and universities have prioritized science, technology, engineering, and math (STEM) courses, assigning a secondary role to the humanities, not that this hasn’t been criticized by many leading academics.Footnote ⁶ Martha Nussbaum, for example, has convincingly argued that the absence of the humanities from curricula has a negative impact on the nurturing of civic virtues and on the development of both creative imagination and critical thinking (Nussbaum, Reference Nussbaum2010). In line with classical thinking from Aristotle to Cicero, Nussbaum rightly believes that developing global citizens and strengthening our democracies requires a key role for the humanities.Footnote ⁷

The importance of the humanities in forming the next generation of business leaders and entrepreneurs can be illustrated by comparing the approaches of US and European universities. In continental Europe, they are largely specialized and are still based on the ideas of Wilhelm Von Humboldt: undergraduates attend programs that will prepare them for a specific profession. Thus, mining engineers study subjects like geology from the first day of university and are not “distracted” by other areas (Sorkin, Reference Sorkin1983).

At the same time, this narrow specialization is reflected in the structure of university departments, which encourage focused research, the upside of which is a huge leap in scientific knowledge over the last century, matched by exponential growth in academic publications. This approach has created professionals with very specific skills that can be adapted and updated to meet the demands of companies and institutions.Footnote ⁸

In contrast, many US universities and colleges offer a generalist degree program, typically focused on the humanities and the liberal arts, with specialization only happening at the master’s or equivalent level. The evidence shows that one of the many benefits of a business education rooted in the humanities is a honing of students’ ability to innovate and their capacity for entrepreneurship. This underpins the arguments of venture capitalist and author Scott Hartley (Reference Hartley2017), who questions the division of university programs into the arts and the sciences. At Hartley’s alma mater, Stanford University, fuzzies is the term used to describe students of the social sciences and humanities; techies are those enrolled in engineering and hard sciences. In his 2017 book The Fuzzy and the Techie, Hartley points out that despite universities’ efforts to keep the two disciplines separate, plenty of technology entrepreneurs have a background in the humanities (Hartley, Reference Hartley2017, pp. 5–6).

The division between the social sciences and the humanities reflects a long-standing acceptance that we must choose one or the other. This approach is instilled in students from an early age and eventually decides students’ careers, making it very difficult to move into other professions or areas should they change their minds. I would argue that the time has come to provide young people with a grounding in the natural sciences and the humanities, allowing them to develop the soft social skills that create a more rounded personality.

Among the many people Hartley names in support of this approach are Stewart Butterfield, founder of communications platform Slack, who studied philosophy at the University of Victoria and the University of Cambridge; LinkedIn founder Reid Hoffman, who completed a master’s in philosophy at the University of Oxford; Peter Thiel, cofounder of PayPal, who studied philosophy and law; Ben Silbermann, founder of Pinterest, who studied political science at Yale; Airbnb founders Joe Gebbia and Brian Chesky, who graduated in fine arts at the Rhode Island School of Design; Steve Loughlin, founder of RelateIQ, who studied public policy; Parker Harris, cofounder of Salesforce, who studied English literature at Middlebury College; Carly Fiorina, former CEO of Hewlett-Packard, who majored in medieval history and philosophy; YouTube CEO Susan Wojcicki, who studied history and literature at Harvard; and Mark Zuckerberg, founder of Facebook, who studied liberal arts at the Phillips Exeter Academy before entering Harvard (Hartley, Reference Hartley2017, p. 5). And last but not least, there’s Steve Jobs, who attended the liberal arts institution Reed College; Jobs said, “technology alone is not enough – it’s technology married with liberal arts, married with the humanities, that yields us the results that make our heart sing” (Hartley, Reference Hartley2017, p. 7).

There is also evidence that soft social skills help business teams perform more efficiently, as Harvard economist David Deming’s research shows. “The fastest-growing cognitive occupations – managers, teachers, nurses and therapists, physicians, lawyers, even economists – all require significant interpersonal interaction” (Hartley, Reference Hartley2017, p. 205). Most of us know from personal experience that many of the most important things we learn are only useful in the long term and guide the formation of our personality, our worldview, our beliefs and principles, and the mental structure that allows us to order and associate the rest of the knowledge we acquire throughout life.

What’s more, the value of the humanities is precisely because they are not a technical or applied body of work; they don’t teach us how to use machines or apply systems. As well as helping us to develop more abstract capacities, the humanities underpin democratic societies.

A decade ago, during his second, failed, election campaign, Nicolas Sarkozy made the headlines when he asserted that only “a sadist or an imbecile” would have put the seventeenth-century novel The Princess of Cleves on the syllabus used to test candidates in a public service entrance exam (Iñiguez de Onzoño, Reference Iñiguez de Onzoño2017, chap. 9.1). I disagree; after all, why shouldn’t officials have to answer questions similar to those asked of nonnationals who wish to acquire French nationality?

I would argue that knowing how to read literature hones skills that are just as useful for civil servants as understanding procedures that will soon be carried out by machines or artificial intelligence (AI). What’s more, politicians should always encourage better educational standards rather than making populist appeals to ignorance (Iñiguez de Onzoño and Ichijo, Reference Iñiguez de Onzoño and Ichijo2018, chap. 1).Footnote ⁹

“Physics Envy”: The Ascription of Management to the Social Sciences

“Institutions are social structures that have attained a high degree of resilience,” writes US sociologist William Richard Scott (Reference Scott1995, p. 33), one of the founders of institutional theory, the basis for many academics’ research on business phenomena. “[They] are composed of cultural-cognitive, normative, and regulative elements that, together with associated activities and resources, provide stability and meaning to social life. Institutions are transmitted by various types of carriers, including symbolic systems, relational systems, routines, and artifacts. Institutions operate at different levels of jurisdiction, from the world system to localized interpersonal relationships. Institutions by definition connote stability but are subject to change processes, both incremental and discontinuous” (Scott, Reference Scott1995, p. 33).

The alignment with social sciences methodology in many business schools’ research led management guru Sumantra Ghoshal (Reference Ghoshal2005) to note: “Our theories and ideas have done much to strengthen the management practices that we are all now so loudly condemning” (p. 75). He argues that the social sciences have an inferiority complex, what he calls “physics envy,” because their assumptions, models, and conclusions are not governed by causal paradigms. Instead, the social sciences’ prevailing model is functional, an attempt to explain how individuals behave. What’s more, as he points out, there’s a reductionist aspect to fitting our behavior to functional paradigms. “[No scientific theory] … explains the phenomenon of the organized complexity … [of companies], possibly because companies are not empirically observable natural phenomena like volcanoes or animals … [and don’t] follow any predeterminable pattern” (Ghoshal, Reference Ghoshal2005, p. 79). The risk of reducing the study of management to the level of scientism has been to downgrade humans to little more than homo economicus, whereby human behavior is simply about meeting basic needs.

Meanwhile, back in the 1970s, the Chicago School’s liberalism argued that companies exist solely to maximize shareholders’ return on investment.Footnote ¹⁰ This has led to companies being shaped by institutional theory, with corporate governance based on independent board members, separation of the CEO and the chair’s functions, and the provisioning of directors with stock options so as to align their interests with those of shareholders in order to avoid agency theory (Cuevas-Rodríguez et al., Reference Cuevas-Rodríguez, Gomez-Mejia and Wiseman2012). Ghoshal argues that this leads to an amoral theory of business that can encourage questionable behavior. “Unlike theories in the physical sciences, theories in the social sciences tend to be self-fulfilling” (Ghoshal, Reference Ghoshal2005, p. 77).

Citing Enron and Tyco, Ghoshal (Reference Ghoshal2005) fears a vicious circle in which theory and practice feed off each other. He reminds us to remember that there is always an ideology behind every management theory: “Social scientists carry an even greater social and moral responsibility than those who work in the physical sciences because, if they hide ideology within the pretense of science, they can cause much more harm” (Ghoshal, Reference Ghoshal2005, p. 87). The solution, says Ghoshal, is better social excellence objectives that reflect the interests of all stakeholders.

Educating Committed Leaders: Bringing Management into the Humanities

I have long advocated that the study of management, or at least a good part of it, should align with the humanities. Experience has taught me that the reasoning behind strategic management has little to do with science: the “golden rules” of management are not written in stone. Although it’s true that senior management’s decision making is empirical, the underlying assumptions are nevertheless open to question.

After all, decision making in business is not like forecasting the weather: it’s a constantly evolving environment, and over the years, we have seen countless times how the appearance of a disruptive company like Airbnb can force long-established rivals to change their business models.Footnote ¹¹

Admittedly, many MBA programs now illustrate the complex nature of strategic reasoning through simulations that can outline a wide range of future scenarios based on evaluating alternatives and outcomes (Larréché, Reference Larréché1987; Seaton and Boyd, Reference Scott2008). Algorithms can simplify the relevant data and then indicate the best likely decision. Which is all well and good, but to be honest, if I were about to make a major investment, I’d choose Warren Buffett over an algorithm any day of the week.Footnote ¹² Strategic reasoning can be aided by sophisticated algorithms, but there is also an intuitive dimension to choosing one variable over another, of thinking disruptively.Footnote ¹³

Academics such as Henry Mintzberg have argued convincingly that good management is more an art than a science and that we should temper our belief that it can be taught conventionally and accept that it is best acquired through close and sustained contact with other experienced managers (Mintzberg, Reference Mintzberg2004).

Veteran campaigners who have long argued that the humanities should play a bigger role in management education have been encouraged in recent years by the growing number of philosophers now focusing their attention on business, thus providing a much-needed complementary perspective. Traditionally, economic thinkers at universities have often been associated with left-leaning political options – and thus not overly welcomed by many companies and business leaders (Tierney, Reference Tierney2011). It’s also true to say that philosophers who have studied organizations have usually explored the roles of the state and government as decision makers in society rather than looking at the private sector, despite its growing influence.

That said, most business schools now include ethics in their programs, along with new disciplines such as management or leadership philosophy, driven in part by the appearance of academic journals and professional publications focusing on these issues. At the same time, growing numbers of universities are making connections between philosophy and the business world.

In conclusion, I would recommend that those who are skeptical about the role of the humanities in business education should read Nussbaum (Reference Nussbaum1997, Reference Nussbaum2010). If we are to nurture managers and entrepreneurs with a global outlook and whose decisions are based on cutting-edge knowledge, who understand the impact of their decisions not just on the business environment but society and the environment, then they must be cultivated and given a solid grounding in the history, art, literature, and culture of different societies: the minimum requirement if they are to lead diverse teams. As CNN’s Fareed Zakaria wrote in his 2015 book In Defense of a Liberal Education: “Creativity, problem solving, decision making, persuasive arguing and management” are the skills the liberal arts teach us (as cited in Hartley, Reference Hartley2017, p. 14).

The Humanization of Management: Reflections from Thought Leaders

The great Peter Drucker once explained that he owed his impetus to modernize management theory – central to which was the importance of the individual – to John Maynard Keynes. One day in 1934, he was attending a class given by the father of modern macroeconomics at Cambridge University: “I suddenly realized that Keynes and all the brilliant economics students in the room were interested in the behavior of commodities, while I was interested in the behavior of people” (Drucker, Reference Drucker1993, pp. 75–76).

Since then, business schools have continued to come up with and refine theories on corporate governance, the role of the CEO, or what makes a great business leader, but at the end of the day, management boils down to working with people, which makes applying hard-and-fast rules within professional structures pointless, particularly at a time when organizations are thankfully becoming more and more diverse. It cannot be overstressed that the human factor needs to be taken into account regarding how and what is taught at business schools.

For example, the case study, one of the most widely used methods of teaching management, recognizes that it is an organization’s people who either create or destroy value. Most business schools now teach students that learning how to see things through the eyes of whomever they’re dealing with is as important as economic theory.

Nevertheless, Henry Mintzberg believes that most business schools are still falling short. The problem starts with their raw material. The vast majority of MBA students are too young to learn management. “It’s like trying to teach psychology to a person that has never known anybody” (Mintzberg, Reference Mintzberg2004, p. 9), he says in his 2004 book Managers Not MBAs, which foreshadows many of the ideas of a new generation of thinkers and academics who have dominated the debate on management education since. Mintzberg’s pioneering work laid the foundations for many increasingly common practices, such as requiring work experience of applicants for MBA programs, in comparison with those applying for a master’s in management, which is aimed at students with no professional experience. This is now common practice at business schools, at least in Europe.

The case study, gaming, or projects carried out in real companies appear practical but are dismissed by Mintzberg as pastiches of a much more complex reality. The outcome is students with a skill set that includes the confidence to make decisions quickly, streamline complexity, and tackle technical problems. They may be wizards of strategy, but they can’t implement solutions.

Applying the equation “confidence minus competence equals arrogance” (Mintzberg, Reference Mintzberg2004, p. 74), Mintzberg’s most serious charge is that MBA programs produce overconfident graduates who may be skilled in breaking down the mysteries of accounting or marketing but who have no understanding of the reality of business. Unsurprisingly, Mintzberg’s statistics on value generation in businesses where the CEO has an MBA, or graduate start-ups and the large number of well-known entrepreneurs who have never been near a business school, have proved contentious. And although I have found Mintzberg’s work highly illuminating, I, too, have some cavils with his arguments.

First, my own experience has taught me that management skills can be cultivated in students and young people with no hands-on business experience, for example, in a bachelor’s in business administration or a master’s in management program. This type of educational environment can create the conditions within which the entrepreneurial spirit can flourish.

Quoting George Gilder, the cofounder of the Discovery Institute, Adrian Wooldridge (Reference Wooldridge2009) of The Economist cites the myth that young entrepreneurs are “orphans and outcasts.” Clearly thinking about the Bill Gates and Steve Jobs types of this world, who left college to set up their own businesses and who are frequently used to illustrate the irrelevance of university studies in becoming a successful entrepreneur, he talks about “lonely Atlases battling a hostile world or anti-social geeks inventing world-changing gizmos in their garrets” and goes on to say: “In fact, entrepreneurship, like all business, is a social activity. Entrepreneurs may be more independent than the usual suits who merely follow the rules, but they almost always need business partners and social networks to succeed” (Wooldridge, Reference Wooldridge2009, para. 1 under “Five Myths”).

I would also disagree with Mintzberg’s (Reference Mintzberg2004) assertion that age and experience are required to fully develop managerial talent and leaders. Perhaps the main challenges for business schools in training young people are identifying young leaders, finding a way to channel their nascent entrepreneurial abilities, and then hooking them up with the main stakeholders in the business world.

Then there is Mintzberg’s (Reference Mintzberg2004) criticism of business schools’ teaching methodology, particularly the case study, gaming, and simulations: he says the decisions made by students in these situations have no real repercussions. That can also be seen as an upside: take the analogy of a flight simulator used to train pilots. If something goes wrong, nobody dies. Instead, it gives pilots the opportunity to deal with the kind of situations that will probably happen once they earn their stripes. Similarly, cognitive psychology students are introduced to the problem of the map and the territory. A map is a faithful representation of a real territory, but it can never reproduce its aspects in full. Although the journey to knowledge requires maps to help us re-create the geography of a specific territory, we also learn not to confuse the two things (Wuppuluri and Doria, Reference Wuppuluri and Doria2018).

Nevertheless, Mintzberg (Reference Mintzberg2004) is correct when he says some business schools fall into the trap of believing that a case study is the same as reality. At the same time, Harvard Business School case studies always include the following footnote: “HBS case studies are developed solely as the basis for class discussion. Cases are not intended to serve as endorsements, sources of primary data, or illustrations of effective or ineffective management.”Footnote ¹⁴ In other words, it’s a map, not a territory, and should not be confused with reality.

By the same token, I would say Mintzberg (Reference Mintzberg2004) would be mistaken to believe that the anecdotes told by a veteran manager in a course for senior directors are largely drawn from memory and thus of questionable academic rigor, even if, as in life, many of our ideas and decisions are based on the experiences and emotions shared with us by others. I know from personal experience based on conversations with innumerable MBA graduates that the case studies they took part in have helped them to understand and address many of the situations they have faced. I suspect that the case study, along with other interactive methods used in business schools, may not be perfect but is still the most effective way to teach management skills.

Because business education is one of the most dynamic and responsive sectors in higher education, many of Mintzberg’s (Reference Mintzberg2004) suggestions are being taken up by business schools and outlined in the growing body of revisionist literature. This has led many business schools to seek a balance between the teaching of hard and soft skills and to develop students’ analytical abilities and emotional intelligence. For directors, this means developing their professional ethics and commitment to social issues, along with a more technical approach to providing functional knowledge and a more general and overarching approach to the world of business.

Recently, Stefano Harney and Howard Thomas (Reference Harney and Thomas2020) have gone a step further in converging management education and the humanities, aligning themselves with the Carnegie Foundation’s 2011 report, Rethinking Undergraduate Management Education: Liberal Learning for the Profession (Colby et al., Reference Colby, Ehrlich, Sullivan and Dolle2011). “Rather than focusing solely on technical business skills, management education would welcome the humanities as the foundation of its curriculum, and the two forms of education, professional and liberal, would be melded into a holistic curriculum. Thus planted at the heart of management education, the liberal arts would by implication also face a very different future” (Harney and Thomas, Reference Harney and Thomas2020, p. 18). In short, an association between business education and the humanities can certainly help generate a more enlightened and ethical managerial profile.

Indeed, given that the bachelor in business administration (BBA) has become the most sought-after program in many universities around the world, the merger of management and the humanities could result in a renewed platform for liberal arts studies.Footnote ¹⁵

Some Experiences at IE Business School

In recent years, IE Business School has introduced subjects and sessions dedicated to the humanities in our MBA, master’s in management, and BBA programs.

Our goal was twofold: to broaden management studies and free them from the confines of the social sciences to the wider realm of the humanities and sciences, highlighting the interconnectedness of the models, concepts, and theories of a range of disciplines, so as to provide a better understanding of the individual in business. This in turn would help develop well-rounded managers and enlightened directors. We believe that studying history provides key references that enable directors to make better business decisions, on the basis of an understanding of the experiences of the past.

I believe that a grounding in the history of art strengthens our observational and perception skills, which are necessary for making more reflexive or considered decisions, providing a counterbalance to the heuristic approach of most people in the business world. As Drew Faust, the first female president of Harvard University, said: “History teaches contingency; it demonstrates that the world has been different and could and will be different again. Anthropology can show that societies are and have been different elsewhere – across space as well as time. Literature can teach us many things, but not the least of these is empathy – how to picture ourselves inside another person’s head, life, experience – how to see the world through a different lens, which is what the study of the arts offers us as well. Economic growth and scientific and technological advances are necessary but not sufficient purposes for a university” (Faust, Reference Faust2010, n.p.).

Many business school programs are now overspecialized and thus subject to the silo syndrome whereby academics deal only with same-subject colleagues and students are taught through the narrowest perspective on knowledge. In response, I believe the time has come to include the humanities in business education. By making the humanities a core part of all degree programs, we can cement the learning experience and develop open-minded and well-rounded graduates. This is the spirit that inspired us a decade ago to launch our executive MBA program with Brown University (IE Brown, n.d.).

It is time to bring all the benefits of a classical education to business schools: by teaching modern art, for example, we cultivate skills such as perception and observation that can help managers to take a more measured approach toward risk assessment. At the same time, studying how other societies work can help in leading cross-cultural teams. Critical thinking modules can empower tomorrow’s business leaders to question unethical decisions imposed by their bosses.

The counterpart to this alignment of business education and the humanities is to teach management across all university degree programs. In fact, we might as well include management as a core subject at primary school, along with mathematics or literature, which would provide the opportunity for all children to acquire at least the basics of running an organization, a skill they will find useful even if they do not go into business. After all, good management underpins the best professional practice, whether it’s a hospital or an architectural practice. If we want tomorrow’s graduates, regardless of their area of study, to make the world a better place, then we’re going to need them to be able to practice the best and most sustainable management practices.

Conclusions: Some Proposals for “Humanizing” Management

Following my argument in support of the association of management and the humanities, and given the pivotal role that faculty play in the learning process, I would like to provide some proposals that may be key in the implementation of this strategy:

• - Restructuring postgraduate management programs so that they include a variety of approaches to research, as well as cultivating a cross-disciplinary mindset in students. Doctoral programs should foster the kind of close and regular contact between students and business leaders that can provide them with firsthand management experience.

• - Modifying university tenure systems to encourage partnerships between all departments as a way to overcome the silo syndrome and encourage cross-disciplinary research. Innovation often comes as the result of combining a wide range of subjects.

• - Promoting sustainable contact with business leaders, either through membership of boards or through consulting work. Overall evaluation will still emphasize research output, but we need to find a balance that will allow academics to begin incorporating these kinds of initiatives.

• - Creating interdisciplinary centers that bring academic departments together with companies to work on projects. As well as producing interdisciplinary research, these centers help develop training programs that address specific issues relating to business management. Business schools’ boards and advisory councils should also be aware of the strengths and weaknesses of their respective institutions. These councils are generally made up of businesspeople or alumni who can provide vital feedback about the knowledge required out there in the real world.

• - Strengthening ties between research-oriented teachers and practitioners. Until now, such cooperation has usually taken the form of jointly developing teaching material, but it can be extended to other areas. Making this happen should be a key objective of department heads, who can advance joint-research initiatives.

• - Establishing ways to access knowledge produced outside the academic environment. Business schools need to take on the role of knowledge hubs, collecting new ideas and models from the wider world, such as consultancies, professional fora, and a wider range of organizations and businesses. There is limitless potential for exchanging ideas and information through knowledge networks and platforms supported by social networks.

• - Creating a new platform for the study of the humanities by introducing liberal arts content into the curriculum of BBA and MBA programs.

• - Recruiting the support of accreditation agencies such as EQUIS so that a cross-disciplinary approach and a grounding in the humanities are included among their research and teaching criteria.

To conclude this chapter, I would like to praise the job that EFMD has done for the promotion and recognition of best practices in business education, particularly through its fostering of diversity, closeness to the professional world, and international reach. The humanistic approach is also distinctive of most of the EFMD’s initiatives and programs, which paves the way for better and sustainable business education in a world with more challenges than ever before.

Introduction

The mission of most business schools, at least in a generic approach, has been to educate business leaders for the world. However, at the beginning of the third decade of this century, this challenge seems more complex than ever before. Some of the most renowned of these institutions aimed at training leaders of corporations that were flourishing at the end of the nineteenth or the beginning the twentieth century, in a completely different historical context. Two of the most prominent examples are Wharton Business School and Harvard Business School (HBS). The former was founded in 1881, making it the first business school established in the United States; its mission is to create leaders to change the world (Wharton, Reference Whartonn.d.). The latter was established in 1908, and its mission is to educate leaders to make a difference in the world (HBS, n.d.).

Fast-forward one century, and the world is dramatically different, specifically the business world and the education activity. We have never experienced such disruptive and continuous change, mostly due to the digital revolution, which is affecting human life in multiple dimensions: social, cultural, economy, labor, education, and health, among others. The importance of the technological and scientific revolution underway, known as Industry 4.0, is here to stay. Technology will continue to provide society with a drive for change in social dynamics and cultural patterns, with unprecedented speed and global reach.

In such a challenge, adaptation appears to be the natural path to follow. However, because the main purpose of business schools is to educate leaders, and leadership is not about following but anticipating, discovering, and showing the paths to the future, business schools, even those in top positions in the market, are confronted with two crucial challenges: first, the need to reimagine the business world in this new era; second, the need to reinvent and redesign management education for a time of ongoing accelerated disruption in multiple dimensions.

With most of these challenges in mind, at the business leadership chair that I preside, we conducted the study “Business Leadership 2030 in Latin America.” The purpose of this initiative is to enhance the quality and effectiveness of business leaders to promote more inclusive and sustainable growth and development in that region. The outputs of this study – with over 100 interviews with presidents and CEOs from six countries in the region (Argentina, Brazil, Colombia, Chile, Mexico, and Peru) – provide some insights relevant to understanding the unprecedented challenges (COVID-19 included) and opportunities we are currently experiencing, from a business leader’s view. The central point that is revealed by this study is the multiple consequences emerging from the unparalleled set of ongoing changes – technological, cultural, and social – with strong influences on people and organizations everywhere, both locally and globally.

Some outputs of this study, along with my work on business schools’ value propositions and strategies since 1995, inspired this chapter, with the aim of shedding some light on the unmatched challenges business schools confront – and will continue to face – in educating business leaders for the world.

For half a century, the European Foundation for Management Development (EFMD) has played a central role in shaping the global approach to management education, and it has provided a unique forum for information, research, networking, and debate on innovation and best practices. Let’s celebrate its 50th anniversary by envisioning business education for the next fifty years.

In that sense, let’s start by unveiling the logic behind this radical change while identifying the impact of these transformations to figure out key leadership competencies and how they can be developed in an ever-changing world.

The Dawn of the Era of Accelerations

When Thomas Friedman reflects on today’s world, he cites the creation of the first Apple smartphone in 2007 as a turning point, symbolically speaking. At that time, the author argues, we entered “the era of accelerations,” driven by technology, globalization, and climate change (Friedman, Reference Friedman2018). That same year, a few new companies were born that would have a profound impact. Together, those companies have changed the way people and machines communicate, create, collaborate, and think.

Twitter was developed on its own platform and started growing on a global scale with its microblogging model; Google launched Android, a platform for mobile devices; Amazon launched Kindle, starting the revolution of the eBook; and Airbnb was created in an apartment in San Francisco.

In the first two decades of this century, the digital and scientific revolution resulted in a radical change of context that affects life and the dynamics of society as a whole. The lengthening of the life span and the coexistence of more generations that have such different worldviews also contribute to the new conception of the world.

New dynamics of exchange and development are making their way in this context. These interactive and ecosystemic relationships make it possible to meet people’s needs more effectively, if we are able to stop, reflect, think, and create while we keep speeding up our pace of learning. In this context, the task of leading any institution, whether political, social, business, academic, or scientific, and even a family, is being challenged and needs to be revisited.

In a time of disruptive and far-reaching change, an approach to understanding its consequences needs a multilevel perspective: technological, cultural, and sociodynamic. Then, we can find new ways to continue learning at a fast pace in an ever-changing reality.

Scope and Impact of the Technological Revolution

Klaus Schwab, president of the World Economic Forum, referring to the dimension and speed of change, briefly explains that “the unprecedented advances that are taking place at once in artificial intelligence (AI), robotics, internet of things, autonomous vehicles, 3D printing, nanotechnology, biotechnology, materials science, energy gathering, quantum computing and other areas, are redefining industries, erasing traditional borders and creating new opportunities” (Herder-Wynne et al., Reference Hawkins2017).

A key aspect of the digital revolution is its condition of an interconnectivity system. One of the effects that runs through all human relationships, work, and life in all its dimensions is that we live “in real time.” This leads us to network with other sectors – and with a 360-degree view. The new challenge forces us to establish a new approach to reach all the stakeholders. This relationship begins by identifying the actors; analyzing the opportunity to incorporate them as allies; knowing their interests, potential, and relevance; and defining an action plan related to each one of them (Fragueiro, Reference Fragueiro2020).

Global Communication, Interconnected Globalization

Globalization is a term that has been widely used to describe modern societies, especially since the end of the twentieth century. In the third decade of the twenty-first century, the digital revolution produced a disruptive acceleration of this process.

Web 2.0 directly influences our social, political, and everyday lives and, of course, the business world. There are new articulations among people, in which individuals can express their opinions because communication 2.0 is interactive, horizontal, public, and universal. The level of exposure becomes absolute and public, which means that companies should try to reinforce the quality of their management and reinvent their communication strategy toward multiple partners to build a better reputation. In this regard, businesses should first identify all their stakeholders and then know their interests and expectations in order to keep up (Fragueiro, Reference Fragueiro2020).

Interconnection helps to enhance shared information, check data in a global way, and develop integrated and adaptable strategies for the possibilities of each specific environment. Processes are constantly accelerating, and everyone can access massive amounts of data at any time. The new dynamics are quickly interwoven and networked; a co-creation system has definitely come to stay.

The New Ecosystemic Dynamics of Business

Because of the aforementioned effects of communication 2.0, the volume of voices in the market has increased exponentially; therefore, the business world exists in what we can call an ecosystem. Nowadays, nothing happens in isolation. This systemic conception has come to stay; it is transversal to all human activities, including business activity. To compete, companies will need to adapt and expand their traditional linear perspective, focused on industries or sectors and with entry barriers, which requires rethinking and discovering new competitive advantages. We are immersed in a broad global ecosystem that integrates companies with governments, civil society organizations, media, countries, multilateral organizations, various institutions, and men and women connected by social networks.

In a context of constant and accelerated change, it is no longer enough to align and inform; it is necessary to add wills in pursuit of a shared purpose. In this new citizen culture, companies must adapt their approach to a more proactive communication involved with the purpose it manifests in public. The members of a community will validate the work and profitability of a company as long as they understand what contributions that company offers to society.

In the current ecosystemic context and network dynamic, to understand others’ interests through dialogue and a collaborative approach becomes a critical success factor.

This new way of understanding the world requires a holistic view and systemic intelligence to visualize the “interconnections and interdependencies” of both internal and external stakeholders. A business ecosystem is made up of diverse actors who co-create, and their contributions produce value when they collaborate with each other. The idea is that each of those parties can benefit from the collective effort.

Stakeholder Approach: Systemic Intelligence

Information and relationships become a key source of competitive advantage and provide a view beyond the traditional and narrow focus on short-term shareholder value. The context of interactive, horizontal, public, and universal information and communication, with an ecosystem perspective, broadens the companies’ scope by providing them with new opportunities to create value in their interactions with other stakeholders.

With a systemic vision, it is possible to design and execute a strategy that identifies and defines with whom, when, and how to build a coalition with a common purpose, a clear focus, and well-defined objectives.

In other words, the new challenge and opportunity of entrepreneurial leadership in the context of the Fourth Industrial Revolution is to establish a new strategic perspective of relations with stakeholders. It starts by identifying them; analyzing the opportunity to incorporate new ones; knowing their interests and ideologies, potential, and relevance; and defining an action plan for each of them, with all these steps being iterative. Today, more than ever, AI makes it possible to know, in real time, what people need and expect. Products and services have quickly become “solutions” to human needs and aspirations.

In short, stakeholder leadership has become a central challenge for business success in the third decade of the twenty-first century, involving stakeholders from both outside and inside the organization. With external key actors, it is based on a long-term and holistic perspective, achieved through systemic intelligence and collaborative capacity. With collaborators, it is achieved through a purpose embedded in the management and leadership style, complemented by incentives in tune with the defined purpose, values, and culture.

Business Citizenship: The New Demand from Society

In today’s ecosystemic dynamics and “all-visible world,” both companies and their leaders are called upon to act as role models. They need to contribute profitably with goods and services while managing in a way that adds value to society in general and its institutions, communities, and the environment in particular. This broader approach of value creation for society is now at the core of business leaders’ role in this century (Fragueiro, Reference Fragueiro2020).

In this sense, and enhanced by social media, the reputation of the company and its leaders has become an issue of strategic relevance. Businesses and their leaders are exposed to constant scrutiny, given that everything is visible and subject to the judgment of society.

We are faced with a specific demand that arises from the very nature of the company and its activity: as a social reality, it needs the asset of trust with its stakeholders, and they expect it to exercise a citizenship role.

As a new cultural reality, in order to be sustainable in the long term, within the framework of the Fourth Industrial Revolution, the company needs to explain, communicate, and specify in practice not only the value contributed to each stakeholder but also the different types of value that it creates and contributes to each one of them.

An essential contribution that companies make is that to human development, which usually applies to team members and their families, customers, communities, and citizens in general. In short, companies are the creators and promoters of culture and values. The real culture is shown in the face of difficult decisions, especially in times of crisis.

In the Digital Age, Adaptation Is Key

If you had asked a farmer a hundred years ago what skills his kids would need to thrive, he would not have hesitated to answer that they would need to know how to milk a cow or plant a field – general skills for a single profession that changed slowly. This is how it was for almost everyone throughout human history. In just a few decades, we have witnessed more changes than in the last 300 years.

While many jobs have disappeared, others have been created. Machines have automated much of manufacturing, for example, and they will inevitably automate even more soon. We are currently in the midst of a massive shift. Skills that have traditionally been in demand are now declining. The World Economic Forum’s The Future of Jobs Report 2018 listed things like manual dexterity, management of financial and material resources, and quality control and safety awareness as declining abilities (World Economic Forum, 2018).

Although technology is the engine of transformation, companies and their workers hold the key to change. We need to adapt the talent, develop continuously, and keep pace with technological evolution. Talent will be the clear differentiator in a highly competitive business environment and in an increasingly digital world. People are at the center of the revolution. The challenge of being competitive in the digital age will not be solved by consuming more and more technology or by replacing humans with technology.

Furthermore, humans possess key differential factors that machines do not, a set of skills known as the four C’s: communication, creativity, critical thinking, and collaboration. These are central to working in teams and are a reflection of the “hyperconnected” world we live in today.

In addition to the four C’s, successful entrepreneurs across the globe are demonstrating three additional soft skills that can be integrated into the classroom: adaptability, resiliency and grit, and a mindset of continuous learning. These skills can equip business leaders to be problem solvers, inventive thinkers, and adaptive to the fast-paced change they are bound to encounter. In a world of uncertainty, the only constant is the need for agile adaptation.

The Future of Work: Human and Machine Collaboration

Work can be defined, quite simply, as human skills applied to problems, although it is a concept that has been shifting shape over time. We humans create value by applying our skills to solve problems in the world. There is always a need for problems to be solved and a demand for human skills to satisfy that need. There were plenty of problems to solve in the world before coronavirus, and now we have even more. It is undeniable that the pace of automation has accelerated as a consequence of the pandemic, but companies were already automating processes long before.

Productivity is the main reason companies want to automate workforces. Yet repeatedly, the largest increases in productivity do not result from replacing humans with machines but, rather, from augmenting machines with humans. It all comes down to collaboration. Many car manufacturers, for instance, experienced an increase in productivity when they replaced their traditional – and already automated – assembly-line process with human–robot teams.

It is also worth mentioning that every time a technology goes exponential, a whole set of new opportunities opens up. Taking advantage of these opportunities requires adaptation, which demands workforce retraining, yet the result is a net gain in jobs, not otherwise.

Finally, as AI becomes our user-friendly interface with technology, we will begin to see a major change in the talents required for retraining. For a wide range of jobs, technological fluency and agility will definitely replace mastery in hard skills.

Stakeholder Leadership: The Big Reset

The third decade of the twenty-first century presents a context of constant disruptive change, accelerated by the COVID-19 pandemic. This demands that the leaders of all sectors be able to anticipate and understand the profound transformations that are taking place in the cultural, labor, and educational realms and in all other areas of society. The novelty of the twenty-first century is that the old barriers and defenses tend to disappear, and the creation of value is enhanced by network interaction.

This situation requires leadership with aspiration and permanent transformational capacity. New leaders need to be inspired by a future open to changes that are hard to foresee. At the same time, though, they should be in tune with global trends driven by the digital technological revolution and by its derivatives, such as AI, machine learning, and robotics, as well as data-driven intelligence, in order to discover new trends, human needs, and aspirations, thus creating products and services faster to deliver solutions.

Social dynamics, traversed by technology in everyday life, is adopting new logic: innumerable opinion groups defend humanitarian, social and environmental, and natural resource preservation causes, and all of them are empowered by interactive, public, and universal communication of the networks. This social interaction is in its infancy and already marks a new cultural era that demands more and more transparency and coherence from institutions and their leaders.

The twenty-first century, on the other hand, levels us horizontally: authority no longer appears on thrones or podiums; today, it is acquired by proximity, coherence, and personal example, as well as from the essential knowledge to exercise its function. Leadership in this century is exercised and legitimized in interactions with citizens, team members, colleagues, and opponents or competitors, according to their role in society.

The new leadership paradigm is based on systemic intelligence. Peter Hawkins (Reference Hawkins2017) suggests the following transitions in order to lead companies by 2030:

1. 1. Moving from leading my people to “orchestrating business ecosystems”

2. 2. Moving from heroic leadership to “collective and collaborative leadership”

3. 3. Moving toward leadership driven by a shared purpose and values that create value for all stakeholders

The context of the digital revolution includes the leadership of remote teams, networks, and alliances. Outer leadership must change from an approach based on command and control, centralization, vertical decisions, and authority based on hierarchies, all driven and validated from the top, toward a leadership that promotes collaboration, shared or distributed leadership, autonomy and self-organization, empowerment, decision making at the local level, local interaction, trust, and transparency. In short, emerging leadership thinking includes collaborative, authentic, servant, and cross-silo leadership.

The Major Leadership Challenge: Integrating Transformation with Collaboration

The personal qualities common to these types of leadership are usually presented as two complementary and even opposed leadership styles: the transformational and the situational and collaborative. However, the context of continuous and disruptive change, combined with the instantaneous and interactive reaction, places leadership in a dilemma. On the one hand, it must have a transformational vision and conviction, capable of projecting, mobilizing, and even anticipating new realities and, thus, inspiring and guiding toward a future of disruption and uncertainty. However, in this era of constant transformation and universally active communication and interaction, it must also possess competencies of situational and collaborative leadership, together with systemic and emotional intelligence, to provide closeness and the perception of individual sentiments and desires to orchestrate a new leading style with different stakeholders, people, teams, and even other institutions.

Let’s review some key competencies of these two leadership styles to better understand the challenge ahead. The competencies that follow have been selected from Leadership – Theory and Practice (Northouse, Reference Northouse2019), which includes insights from authors like Bass and Avolio, and “Leading Ever-Changing Companies” (Fragueiro, Reference Fragueiro2020).

Competencies for Transformational Leadership

1. 1. Long-term vision and holistic thinking: systemic intelligence, contextual vision, and full knowledge of trends and their complexities. Identify and distinguish causes and effects.

2. 2. Intellectual stimulation: motivation of creativity and independent thinking of collaborators, allowing taking risks and challenging premises.

3. 3. Ability to inspire and motivate attractive, hopeful, and inspiring communication of a vision, instilling a deep sense of purpose that helps to overcome attitudes of personal interest.

4. 4. Idealistic influence and authenticity: personal integrity and living example of the proposed change. Good guide for collaborators, reliability, credibility, intelligence, coherence of deeds and words. Ability and attitude to rectify.

5. 5. Vision of rupture: conception that the very mission of the role includes radical changes.

6. 6. Desire to excel and willingness to transcend self-interest: ability to create a new development model through a multidimensional change (cultural, relationship with stakeholders, etc.) that seeks to contribute to the common good of society or a group.

7. 7. Strategic vision: clear notion of the context, timing, and stages of the processes and of the various interests of internal and external stakeholders. (Fragueiro, Reference Fragueiro2020; Northouse, Reference Northouse2019)

Competencies for Situational and Collaborative Leadership

1. 1. Inclusion: creation of value from incorporating the contribution and participation of the greatest number of stakeholders possible.

2. 2. Close communication: clarity, generation of dialogue, consensus building, and ability to negotiate with whoever is necessary at all times.

3. 3. Orientation toward a common purpose: shared, dynamic, and adaptable value proposition. The purpose mobilizes all actors in the ecosystem, energizing all sectors (public, private, and third sector) to achieve shared and mutually beneficial goals.

4. 4. Search for dialogue and collaborative capacity: encouragement for frank conversation and collaboration. Construction of a culture and environment of freedom that facilitates the raising of doubts and allows suggesting and questioning honestly. Generation of agreement when pertinent.

5. 5. Adaptation: ability to distinguish between purely technical and adaptive problems, linked to abilities, knowledge, tastes, beliefs, and personal values of a permanent nature.

6. 6. Diversity and pluralism: there are leaders of all races, religions, genders, generations, and philosophies. A fruitful dialogue between them from different sectors can only be achieved if all of this diversity of leadership is known and accepted. (Fragueiro, Reference Fragueiro2020; Northouse, Reference Northouse2019)

The combination of two leadership styles as diverse as transformational and collaborative presents a great challenge: they do not usually occur naturally in the same person. However, in the face of such obvious signs from the context, we think that it is possible to achieve such a combination if leaders have a full understanding of the phenomenon, determination, and systemic intelligence. To achieve this, it is necessary to incorporate two key competencies into situational leadership, whose potential contribution is essential to highlight.

On the one hand, it is necessary for the leader to have “systemic intelligence”: the leader needs to be able to appreciate the interconnections and interdependencies of the system as a whole and at all its levels, understanding “cause–effect” relationships or how changes in certain parts affect the whole.

Second, the new dynamics of relationship and network activity typical of a world of value-creation ecosystems require situational leadership “collaborative and transversal capacity,” avoiding silos.

The Future of Business Schools: Understanding the New World

As we have seen, the fast pace of change has far-reaching implications. Business schools have to take advantage of the digital revolution to fulfill their mission: educate business leaders who understand the nature, relevance, and consequences of this revolution and, most important, its human impact. Leaders must have a new capacity to explore, reflect, and anticipate human needs and aspirations, based on data-driven and automated processes, to ignite human creativity and empathy. In this sense, it is crucial to understand the biggest shifts that are taking place in the leadership world:

1. 1. From content-driven knowledge and skills to dynamic and ongoing learning with an open mindset

2. 2. From a top-driven individual leadership approach to a horizontal team-building approach, which orchestrates competencies and the proper mindset

3. 3. From vertical, silo-driven management dynamics to a data-driven, systemic, and collaborative intelligence

4. 4. From an exclusive, short-term, and narrow focus of business success to an inclusive, medium- and long-term sustainable future

5. 5. From a static, vertical, compartmental organizational structure with a short-term incentive system to an ecosystemic, diverse, flexible, and cooperative network of team projects.

Business Education in the New Era: Two Paths for Moving Forward

Over time, and particularly in the last decades, most top business schools have focused their core management education on providing value at three levels:

1. 1. Knowledge (“knowing”)

2. 2. Skills (“doing”)

3. 3. Values (“being”)

Most programs are designed with that simple and effective framework, which still remains valuable but requires some reshaping, according to this new era of constant transformation.

Regarding knowledge, particularly related to digital technology, it deserves special attention, as was asserted before, to focus on the logic behind digitalization and the tools it provides, such as big data, AI, machine learning, robotics, the internet of things, autonomous vehicles, three-dimensional (3D) printing, nanotechnology, biotechnology, materials science, energy gathering, and quantum computing, among others.

Concerning skills and competencies, on the one hand, those related to human interaction with digital tools are key. Even more in the new era, new core competencies and skills are required, and it is of particular relevance to identify and focus on those that differentiate humans from machines; repetitive and systematic technology-related tasks, analytics, and automation, to mention a few, will not be core human activities at work anymore. On the contrary, human talents related to open reasoning, creativity, empathy, and collaboration, among others, will be core competencies to enhance human impact, leveraging the technological and scientific revolution.

As for values, the “being” of leaders’ education becomes the compass for a deep understanding of people’s dignity and for inclusive, sustainable development. In an era of acceleration and disruptive change, values serve to set a clear roadmap for human well-being and development.

In the words of one of the world’s top business leaders in the industry of technology, Satya Nadella, CEO of Microsoft (2014–present), one of the most critical challenges is that “we want to build intelligence (AI) that augments human abilities and experiences. Rather than thinking in terms of human vs. machine, we want to focus on how human gifts such as creativity, empathy, emotion, judgement, … can be mixed with powerful AI computation – ability to reason over large amounts of data and do pattern recognition more quickly – to help move society forward” (Nadella et al., Reference Nadella, Shaw, Nichols and Gates2017, p. 201).

A first and central path to move forward with business schools’ value contribution, in an era of ongoing transformation, must focus on rethinking and delivering a new proposal of education to facilitate “lifelong learning” for business leaders in terms of knowledge, skills, and values. Because learning and unlearning have become two of the most critical competencies, to develop this ability and willingness will require a new mindset in the three stakeholders: business leaders, companies, and business schools. This new key competency could work in a dynamic interaction of co-creation among those three.

A second path – and critical challenge for business schools in this era – lies in an open mind regarding rethinking the approach to designing and deploying management education. As for many other industries, rethinking and redesigning the traditional education portfolio, in particular, long programs such as MBAs and executive MBAs, should be the next challenge. The need and will to prioritize an earlier entrepreneurial working experience, either in large or medium-sized corporations or even in a start-up, is a clear trend in young professionals.

In summary, as constant transformation and ongoing education throughout life become the new normal, continuing and close interaction with executives, individuals, and companies over time becomes a key central process in transforming business schools’ model.

In conclusion, more than ever in history, perhaps, education has become central in respecting human dignity. As the world’s dynamics change the way people learn and work, a new approach to education is the path to follow, and so for business schools, in educating leaders for a new world.

Introduction

The year 2020 will be remembered as a moment of omni-crisis at the intersection of public health, politics, and economics. A global pandemic on a scale not seen in a century struck tens of millions and left a wake of devastation. Governments around the world responded in divergent ways, from competent and well organized to chaotic and inept, with predictable consequences for their citizens. Their economies suffered the consequences as well, with many facing skyrocketing rates of unemployment and business failure. Those at the low end of the income spectrum fared the worst: in the United States, employment in the foodservice industry dropped from 12 million to 6 million in a single month, leaving the equivalent of the population of Denmark out of work.

A key lesson from the pandemic is that policy responses rooted in credible science yield better outcomes. Countries in which governments paid attention to scientific expertise and adjusted their actions in response to systematic evidence were much more effective in keeping their populations safe than those driven by whim or anecdote.

Like governments, businesses also stood to benefit from relevant expertise rooted in research. How should workplaces be organized to limit the spread of a virus? What are viable alternative sources of distribution if face-to-face contact is not possible? How can employees be kept engaged and connected when they are working from home? How can manufacturing facilities be rapidly reconfigured to make emergency medical equipment? Moreover, how can we build back better once the virus is vanquished?

In this situation, research in business and management could provide crucial guidance. Business schools hold a unique vantage point between academia and practice. Like an estuary, they stand between the fresh water and saltwater of the world of academia and business and policy. Given the wealth of expertise that resides in business schools, we might anticipate that executives would be making pilgrimages to seek out our counsel. However, with some key exceptions, business faculty members were not equipped in practical utility to help address this crisis. More to the point, many senior faculty members would have a hard time advising their untenured colleagues to take on this challenge because it would not contribute to the publications needed to achieve tenure. To be fair, over 80,000 COVID-19 related publications have emerged, but there has been a large number of retractions, even among top medical journals.Footnote ¹ Relevance without rigor is also a poor bargain.

How is it possible that helping to save a business from collapse and saving workers from unemployment would be considered too risky for many faculty? Moreover, how strange is this state of affairs? In this chapter, we trace how business research evolved from anecdotes and war stories to highly rigorous social science with limited application in the real world. We then describe recent efforts to change the ecosystem surrounding research in business and management to be more responsible, producing work that is both rigorous and relevant.

Why We Do Not Live Up to the Promise

Those unfamiliar with business schools may be surprised to learn that they are at least as research intensive as the rest of the university. Business faculty routinely publish in top journals in economics, statistics, sociology, psychology, and political science, as well as field-based publications in accounting, finance, marketing, management, and operations, with rejection rates well above 90 percent. Moreover, the typical article in an academic business journal is at least as obscure and inaccessible to practitioners as work in other fields.

It was not always this way. Business schools spread across the United States in the early twentieth century to provide vocational training for managers to work in the new corporate economy, and research was decidedly secondary. According to the 1959 Gordon and Howell report “Higher Education for Business,” funded by the Ford Foundation:

The authors urged business schools to recruit faculty trained in core social science disciplines to increase their rigor.

Business schools embraced this prescription with gusto over the next generation, creating a robust infrastructure for research and implementing evaluative criteria for faculty that favored research over teaching. Schools such as Stanford, Harvard, and Chicago hired scholars from top departments of economics, psychology, sociology, statistics, and elsewhere. Standards for tenure increasingly came to resemble those elsewhere in the university, with a strong emphasis on publication in scholarly journals. Applicability came to be increasingly detached from the evaluation of research.

Part of this detachment comes from how business research is both funded and evaluated. Business schools often rely primarily on internal funding sources for research and evaluate outputs based on publications and citations. Thus – ironically for a professional school aimed at improving practice – business schools are oriented almost entirely toward internal metrics of evaluation (“A” publications and Google Scholar citation counts), without the external accountability that comes from grant funding, as in other parts of the university.

Within the United States, business is perennially the most popular undergraduate major, year in and year out. Moreover, business education has spread around the globe and may count as one of the most successful American “exports.” Along with the standard model of business, education has spread the standard model of research. “Management” journals indexed in the Web of Science tripled between 2003 (67) and 2019 (226), and the number of articles published each year increased from 2,730 to 11,668. There is an astounding amount of research, although its impact beyond academia remains in doubt.

The Responsibility Turn

Questionable science in business and management research and its perceived lack of relevance to an executive or policy audience has fashioned a global industry of critical publications. Ironically, writers have submitted these critiques to the very research audits that have helped fuel and shape the culture of “rush to research” at the root of the misguided behavior about which they speak. The malaise is widespread across the sciences and jeopardizes Merton’s (Reference Merton1942) pillars of universalism, disinterestedness, communality, and organized skepticism, thus making the search for truth almost impossible. Ritchie (2020) speaks of

Science finds many cures, but it requires considerable “self-correction” if it is to find an urgent cure for itself. Riddled with the problems of fraud, bias, negligence, and hype (Ritchie, 2020), the recovery may be long and painful. A vaccine that focuses on the root causes rather than the symptoms is likely to have more remedial traction.

The Community of Responsible Research in Business and Management

The threat to the credibility of science in the business disciplines is well documented (Bedeian et al., Reference Bedeian, Taylor and Miller2010; Schwab and Starbuck, Reference Schwab and Starbuck2017; Tsui, Reference Tsui2016). However, distinctive from the natural sciences, there also is a concern about the practical relevance of business research. Beginning in the early 1990s, many senior scholars, including the presidents of the Academy of Management (with almost 20,000 members, the largest management research association in the world), called for attention to improving the connection of our research to the world around us. Don Hambrick’s presidential address in 1993, titled “What If the Academy Actually Mattered?,” was considered the first to formally call for a critical examination of the relevance and meaning of our work. His description of our annual academic ritual was sobering:

Subsequent presidents, including Andy Van de Ven (2001), Denise Rousseau (2005), Angelo DeNisi (2009), James Walsh (2010), and Anne S. Tsui (Reference Tsui2013), and more recently, Anita McGahan (2017) and Jackie Coyle-Shapiro (2020), have issued a similar call (e.g., Tsui, Reference Tsui2013). Their addresses emphasize the need for our research to focus on fundamental problems in our world, to improve the practical relevance of our studies, and more importantly, to have relevance for creating a better world. The president of the American Finance Association asked (and answered) the question, “Does finance benefit society?” during his presidential address in 2015 (Zingales, Reference Zingales2015). Editors of leading business journals (e.g., Davis, Reference Davis2015; Reibstein et al., Reference Reibstein, Day and Wind2009; Tang, Reference Tang2016) also joined the chorus by publishing an editorial on the same question of relevance. In essence, the business and management field faced both a “credibility crisis” and a “relevance crisis.” These two crises were the impetus for the creation of the Responsible Research in Business and Management (RRBM) network.

The RRBM is a multidisciplinary network founded in 2015, representing the core disciplines of accounting, finance, management, marketing, and operations management in business schools. The founding team consisted of 24 highly accomplished senior scholars from 23 universities in 10 countries, along with four institutional partners, the European Foundation for Management Development (EFMD), the Association to Advance Collegiate Schools of Business (AACSB), the Principles for Responsible Management Education (PRME), and the Aspen Institute Business & Society (Aspen-BSP).

The 28 cofounders authored a position paper (RRBM, n.d.-a) that begins with a vision statement for business and management research. It notes that by 2030, business and management research will be used widely in business and nonbusiness organizations to improve the lives of people in our societies – that is, it notes that “executives [will] be making pilgrimages en masse to seek out our counsel.” The RRBM’s mission is to inspire, encourage, catalyze, and support credible and useful research in the business and management disciplines.

Responsible research is scientific work that produces credible knowledge that is also useful for practice. Achieving either alone does not qualify as responsible research. Responsible scientists work on fundamental problems for society and engage in rigorous research design to ensure the findings are reliable and replicable, along with careful estimates on the consequences of wrongful conclusions. The cofounders further formulated seven principles to guide research design, as described in the next section.Footnote ¹⁰

A Multidisciplinary Responsible Research Example

The significant challenges that confront societies today do not respect the tidy boundaries of academic disciplines. Consider the COVID-19 pandemic. For an individual who has caught the virus, it is a medical problem. For the broader community concerned about contagion, it is a public health problem. For governments at various levels (city, county, region, nation), it is a public policy problem. For those who run businesses and must balance the needs of customers, the safety and economic well-being of employees, and the demands of investors, it is a business problem. All these levels are interconnected, and durable solutions require insights that cross boundaries. Nevertheless, relevant experts often speak different scientific languages and apply different frameworks. (“Aerosol” means something very different to an epidemiologist and a marketing professor.)

We propose two things. First, interdisciplinary scholarship, rooted in the principles of responsible research highlighted previously, will be most effective in addressing societal challenges. Problems cross disciplines; thus, so must solutions. Second, we see business schools as being uniquely appropriate hubs for hosting such efforts. Earlier, we described business schools as an estuary between academia and the world of practice. At a fundamental level, business schools are about how to organize people and resources to get things done, and this is what all societal challenges require, from taking on pandemics and climate change to reducing inequalities across gender and race to ensuring access to food, education, and health care.

Consider an example. How does physical space shape social interactions, and how do these interactions, in turn, influence innovation in organizations? Answering this question implicates several different fields. Architecture scholars are skilled at measuring the attributes of the built environment and have developed quantitative methods to characterize the relations among different spaces as nodes in a network. Sociologists employ tools of social network analysis to quantify the relations among actors in a social system and how they change over time. Psychologists have theorized about the different properties of groups that influence creativity, such as the group’s diversity. Strategic management scholars study the nature and production of innovation in organizations. Any of these fields has something useful to contribute to the question of space, interaction, and innovation. However, all of them together will likely yield far greater insights that can inform the production of innovative solutions.

This example is not entirely hypothetical. One of us (Davis) was a co-principal investigator on a study of precisely this question, along with colleagues in the College of Architecture and Urban Planning, the Sociology Department, and the School of Information (Wineman et al., Reference Wineman, Hwang, Kabo, Owen-Smith and Davis2014). The National Science Foundation in the United States funded the research, which unfolded over several years. Architects on the team used electronic charts of the floor plates of buildings to create heat maps based on which spaces were on the shortest paths between any given pair of rooms. Sociologists surveyed employees about the people they interacted with to analyze their social networks at work. Business scholars found ways to measure innovations as they developed from the gleam in the eye to a finished product. The study examined a diverse set of workplaces (involving software development, truck manufacturing, medical research, and engineering) to maximize the chances for generalizability and application. In the most intensive study setting, an entire floor of an office building was wired with location-tracking tools, and employee participants in the study carried location-tagged badges that allowed the team to track their interactions at work over several weeks. Participants also completed written surveys, and one of the researchers took up residence in the office for participant observation and one-on-one interviews. The result was a rich portrait of social networks at work and how they shaped the innovation process, demonstrating the different facets of “networks” observed using different methods. Moreover, one of the dissertations to emerge from this project created an entire suite of new dynamic network measures.

We now have a much richer understanding of how to organize space to create the kinds of social networks that yield innovation in organizations. However, we also have a strong sense of the points of maximum leverage for making a workplace safe in the event of a viral pandemic, which are – ironically – in opposition to those for creating innovation. Innovation thrives when the average geodesic (the shortest network path between any two people) is low, but this is also the prescription for maximizing viral spread. Sometimes even the researchers may not realize the ultimate applications of their work.

The potential audiences for work such as this are as diverse as the scholars who produced it. How should architects design buildings to promote human relationships? How should businesses organize spaces within buildings to encourage innovative networks? How should managers organize staffing engagements to yield the most productive and creative teams? Moreover, how can work be reorganized after the pandemic to balance needs for safety and innovation? Interdisciplinary work guided by principles of responsible research has rich potential to benefit society.

Conclusion

Effective multidisciplinary work, often embedded in practice, takes time, but that is time worth taking because the outcome is richer and more useful than operating with a single lens. Multi-lens work is becoming increasingly widespread. Indeed, some business schools (e.g., in the UK) that were doing little before the outbreak of the recent pandemic have responded to their government’s calls for grant-aided research into the disease’s impact on, for instance, manufacturing output, the homeless, care homes, and frontline workers. Much of this work involves combinations of academics from different disciplines, often in conjunction with medical scientists, spurred on by a national consciousness to pioneer solutions for the good of society. COVID-19 has triggered a portfolio of multidisciplinary activity that was not there before and may well continue after that. Practical relevance may have returned on a large scale, taking business and management research back to its roots.

In parallel, a whole swathe of global movements have kicked into action to counter the paucity of good science underpinning research and, most importantly, the credibility of the research results on which policy decisions depend. Among these, the RRBM has gained considerable traction in a short time because of the need for action recognized by many academics, especially junior ones with little influence over the system they had entered who have concerns about the practice inside it. Finding senior academics sponsoring a movement and taking actions that they dared not, or could not, take must have come as a blessing. Although it must also have seemed strange to them that the RRBM’s birth came by way of the EFMD – an agency concerned with management development and recognized globally as an accreditation body (EQUIS) for business schools. Why would an accreditation agency be interested in quality and impactful research? Often, external eyes see things more clearly than internal ones – especially across the breadth of a sector. The EFMD’s eye was broad because of the nature of its work. Its executives saw the need for action but also knew that the academics involved had to heal themselves. The EFMD’s foresight in sponsoring the RRBM and its support throughout the years have been invaluable. The EFMD played its part in transforming the behavior of academics in the sector. We congratulate the EFMD on this achievement and upon its remarkable 50th milestone!