Former Columbia Dean Glenn Hubbard asks: Are business schools ready for the sea change underway in MBA students’ views of the market?
When business-as-usual causes more harm than good, business schools and MBA programs reflect the desire of students to find new ways to create a more equitable society.
Over the last decade, Glenn Hubbard – former dean of Columbia Business School and currently the school’s Russell L. Carson professor of finance and economics – has noticed a significant mindset shift amongst MBA students. They have become far more skeptical about capitalism.
It’s no surprise that MBA students are wary of capitalist systems, Hubbard says — they’ve grown up amid constant economic turmoil following 9/11, the 2008 global financial crisis, and the mass unemployment and global supply chain breakdowns caused by the Covid-19 pandemic. After years of witnessing how capitalism affects individuals and communities unevenly, they want to create change — and their skepticism is only growing.
The question, asked by Hubbard in an article last month in The Atlantic, is: Are B-schools ready to adapt to students’ new and intensifying capital-critical outlook?
IS CAPITALISM FAILING US?
In his Atlantic article, titled Even My Business-School Students Have Doubts About Capitalism, and in a recent interview with Poets&Quants, Hubbard says that those who are critical of capitalism are simply looking for a system that’s more fair – one that doesn’t leave anyone behind. While historically capitalism has contributed to economic growth, MBA students are criticizing it for the ways in which it can contribute to inequality and create further disparity between socioeconomic classes. Plus, with little social support to help individuals and communities get back on their feet if they fall behind, or have the same opportunities as those with more privilege, changes need to be made to build a more equitable country. “It’s healthy for students to feel skeptical about things,” Hubbard says.
Hubbard, a former economic adviser to President George W. Bush who retired as dean in 2019 and currently teaches Modern Political Economy and Business and Society at Columbia, likens capitalism to two sides of the same coin; on the head side is growth, dynamism, and innovation, and on the tail side is disruption. “You can’t have growth and innovation without disruption,” he says. “We all like the head side of the coin, but the tail side – when something new comes to replace the old – affects some of us more than others.”
Recently, capitalism has been accompanied by technological change and globalization. While this has brought enormous benefits to businesses around the world, it’s also disrupted many lines of work. Plus, the original idea of capitalism was that those who gained from the system were supposed to compensate those who lost. “But the gainer’s never did,” says Hubbard.
Hubbard believes that capital-critical MBA students have an important role to play in lessening the impact of capitalism’s disruption. It begins with embracing the idea that no one is successful until we’re all in the same boat. Then, it takes connecting with real people in real communities and being conscious of the consequences of business decisions.
CREATING A CULTURE OF EMPATHY
When it comes to embracing the idea that no one is successful until we’re all in the same boat, Hubbard turns to 18th-century Enlightenment economist Adam Smith, author of the foundational Wealth of Nations, for inspiration.
Smith believed in the notion of creating societies built on ‘mutual sympathy’ – in other words, empathy. In his Atlantic article, Hubbard writes that governments “should play a specific role in a capitalist society—a role centered on boosting America’s productive potential (by building and maintaining broad infrastructure to support an open economy) and on advancing opportunity (by pushing not just competition but also the ability of individual citizens and communities to compete as change occurs).”
“There’s no success until everybody’s in the boat,” he tells Poets&Quants. “The objective of mutual sympathy is to encourage mass participation, mass connection to the economy, and mass flourishing. But that’s not what we’re doing.”
‘BUSINESS LEADERS MUST REALIZE THAT THERE ARE REAL CONSEQUENCES TO THEIR DECISIONS’
As part of the efforts to create a sense of togetherness, Hubbard is wary about the dangers of business leaders who are disconnected from their communities. “Business leaders must realize that there are real consequences to their decisions, and they must listen to people in communities,” he explains.
In order to demonstrate the importance of listening to real people, he and his colleague Ray Horton regularly lead CBS student trips with the purpose of exposing them to different points of view. Rather than traveling to international hubs like Shanghai or London, the pair leads their students to communities like Youngstown, Ohio (population less than 65,000) and Decatur, Alabama (population less than 55,000).
“We all know how important diversity is, but an element of diversity that’s important and underserved is diversity of experiences,” he says. “Anybody who’s a good business leader needs to think hard about the context around business.”
THE WALL AND THE BRIDGE: FEAR AND OPPORTUNITY IN DISRUPTION’S WAKE
Hubbard says that the current economic issues we’re seeing aren’t new. In fact, when we look at what’s happened to the economy historically, we can gain context around the current state of business. “The reason I teach Modern Political Economy is to give students the sense that over the centuries, we’ve seen this play before,” he continues. “We’ve seen the ups and downs. And the question is, how do you build yourself to be a better leader?”
To help people gain a new perspective on the economy and what can be changed to encourage collective success, he recently published The Wall and the Bridge: Fear and Opportunity in Disruption’s Wake with Yale University Press. Written as a reaction to the current economic and political landscape, this book makes an argument for an economic policy based on bridges of preparation and adaptation rather than walls of protection and inclusion. Here, he promotes equal opportunity by suggesting tangible steps that the U.S can take, such as providing block grants for community colleges, putting applied research centers around the country to help disseminate knowledge, as well as expanding the earned-income tax credit.
“Politically, I worried that democracy itself was at risk from populist forces from the right and the left, both of whom wanted to tell people, ‘I can make it like it used to be. I’ll build protection for you,’” he says. “But if the other side doesn’t come up with a bridge, which is a metaphor I talk about in the book that refers to ways of helping people, then we’re giving ground to a wall. I wanted to give voice to economists who say, ‘Look, we’ve had it with the wall. It’s time to talk about new ways to prepare people for opportunities.’”
‘BUSINESSES HAVE TO STEP UP TO THE PLATE’
Hubbard says that building bridges, not walls, would create both challenges and opportunities for business – and business schools. “It would mean that businesses have to step up to the plate,” he says. “But I’m encouraged by these MBA students’ skepticism because they are the future business leaders. They’re the ones who have a stake in this debate.”
He hopes that The Wall and the Bridge: Fear and Opportunity in Disruption’s Wake helps MBA students gain a sense of perspective and inspire new ways to create economic equality. “We’ve had a lot of these debates and discussions before,” he says.
“I hope this book lets MBA students take a deep breath and realize that many of today’s questions have been asked before. They’ve been raised by classic thinkers like Schumpeter, Hayek, Smith and Marx. Very few problems are new.”
THE NEW WAVE OF MBA STUDENTS
Not only is the MBA mindset changing, so are the students themselves.
While the stereotypical MBA candidate used to be a junior banker or consultant, Hubbard says CBS is seeing more and more students from nontraditional backgrounds, like nonprofit or public service. According to him, now more than ever, students care deeply about pressing issues like climate change and equity, and are acting with a sense of urgency. For the many capital-critical students, it’s imperative that business schools adapt their curriculum to keep up with their changing mindsets.
Hubbard’s confident that CBS is adapting to these shifts. “I think we’re anticipating changes and shifting at the same time,” he says. “Students are pushing us to do more, and I think that’s terrific. I’m quite optimistic about their ability to be good leaders as a result.”
Aside from student trips to Ohio and Alabama, another way that the school is addressing pressing issues is at the Tamer Center for Social Enterprise. With the purpose of helping to solve social and environmental challenges, students here learn how to combine business knowledge, entrepreneurial skills, and management tools to make an impact.
‘ALL BUSINESS SCHOOLS ARE GOING TO ENCOUNTER SKEPTICISM IN THE APPLICANT POOL’
While businesses will continue to push for more globalization and technological advancement, Hubbard says that if they want MBA students to contribute, they’ll need to embrace strategies that increase economic opportunities for everyone. He believes that corporations shouldn’t just be an economic construct, but social and political constructs, too.
He believes that it’s time that MBA admissions embrace and expect this outlook from applicants; it’s a reflection of the reality that should be represented in MBA programs.
“All business schools are going to encounter skepticism in the applicant pool,” he says. “I think the challenge for business schools is to not pull this skepticism closer, nor push it away. Instead, we should be showing how we’re going to tackle these challenges and hope that that meets their intellectual needs just as it meets ours.”
The post Former Columbia Dean: B-Schools Must Adjust To MBA Students’ Growing Skepticism appeared first on Poets&Quants.