Three Rules for These Times
10:42 PM Monday May 18, 2009
by Alan M. Webber
Most economists agree that the worst of this financial meltdown is now behind us. Unemployment is at a 25-year high, it's true, but at least the pace of lay-offs has slowed. If there was a doubt before, it seems safe to conclude that we're going to make it through this mess. There will be enormous social costs. People have lost their livelihoods and their life savings. Seniors have seen their retirement nest eggs disappear; young people have seen their employment hopes vanish. But we're going to make it.
The question is, what, if anything will we learn from this disaster? Already economists are subjecting their field to a long overdo critical review. In their thoughtful book, "Animal Spirits," George Akerlof and Robert Shiller, suggest that economics has left out the human factor--the emotional components that drive economic behavior. Alan Greenspan has publicly acknowledged that his mental model of the economy clearly did not match reality. It seems clear that we'll soon see new regulations put in place, new oversight and legislation designed to change the way the public sector referees the behavior of the private sector in economic matters.
But what if the problem isn't economics? What if the problem is a business problem--a failure of management and an absence of leadership? Shouldn't business and business schools be looking at their practices and precepts with the same critical eye as the economics profession? I recently wrote a book called Rules of Thumb, a collection of 52 life lessons. I think three of them can help propel the thinking on these issues in the right direction.
Years ago, when America's competitiveness appeared to be failing, two legendary HBS professors, Bill Abernathy and Bob Hayes, challenged business schools and business leaders to take a hard look at themselves. "Managing Our Way to Economic Decline" became a must-read text. Isn't it time for another such review?
What is the business of business school? And what is the purpose of business?
At least once per decade for the last 30 years we've seen American business go seriously off the rails. The reengineering fad, Mike Milken and junk bonds, the savings and loan crisis, the dotcom boom and bust, the Long Term Capital Management panic--only a partial, abbreviated history of business disasters--suggest that something systemic is wrong with the way business goes about business. An individual with this track record of crises would be a candidate for an intervention, a time out in a recovery center, and life-long participation in the 12-step program of their choice. Something is wrong--and it's time to face it.
Business schools teach finance and strategy, marketing and HR, IT and operations management. Those are the courses of a trade school, not the developmental curriculum of a profession.
The first question business schools should teach their students to ask is my Rule #3: Ask the last question first. The last question is, what's the point of the exercise? Jack Welch famously said it was to maximize shareholder value--a terrible answer in retrospect. Peter Drucker famously said it was to make and keep a customer. What is the answer that fits our situation in 2009, and beyond? Today, business schools need to teach students to ask the last question first--or risk taking their company down the old dead-end path.
The next piece of the curriculum has to be Rule #23: Keep two lists, one that holds what gets you up in the morning and one for what keeps you up at night. Managers and leaders have got to know themselves before they know their businesses. They've got to have passion for their work and concern for their world. Otherwise they're just punching the time clock and risking everyone's future.
Finally I'd teach Rule #4: Don't implement solutions. Prevent problems. Everything that will be put in place as a clean up to the mess we're in now won't be enough if we keep creating new disasters. We need a new generation of business leaders who anticipate problems and prevent them from happening. It's smarter, cheaper, and more effective than the every-ten-year clean up we've become accustomed to.
Every one of these three rules has two things in common. First, they cut across all the disciplines of traditional business school. They are ways of seeing the world, ways of making sense of everyday business realities. They teach a way of thinking and a way of synthesizing the world of work that every crisis--and every opportunity--shows us we need. And second, they are about people, not about business. They are about the human side of enterprise. They carry the message that work is personal. That each individual has a contribution to make and a decision to weigh. That we have to decide not only what we will do in business, but even more important, how and why we will do business the way we do it in the first place.
It's time for new course-ware in the business of doing business.
Alan M. Webber is an award-winning, nationally-recognized editor, author, and columnist.
