Customer Reviews

The MBA Oath: Setting a Higher Standard for Business Leaders

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This book could not be more timely. Someone ought to pack up a dozen copies and send them to the White House. This book carefully guides the reader through a moral inventory of what is necessary to make sound business decisions. Every CEO, business manager and business leader should have a copy of this handy reference tool front and center on his/her desk. The authors explore the difficulties of decision-making in business, the pits and follies of balancing bottom-line shareholder interests with the interests of the larger community. Had this book been written twenty years ago at Harvard Business School, we very well may have avoided some of the scandals which have rocked Wall Street in the past decade. Ultimately, the forces which shut down the economy were driven by individuals making individual decisions, one after the other. The authors explore case examples of decisions gone awry as well as decisions premised on morally sound reasoning. This book is probably THE book on the market today if one is interested in raising the bar for ethical standards in business. I have read every page of this book. Though the authors are humble and do not pretend that this book answers all questions, they have clearly staked out the boundaries of the discussion which every conscientious and thinking business person should be engaged in these days. Will swearing an oath similar to the Hippocratic Oath make much of a difference on Wall Street? If it causes even one CEO to stop twice and think before proceeding with a dangerous and foolish gambit (can you say derivatives?), the Oath is worth more than a fortune. Naive cynicism is not an answer to the Wall Street debacle. Managers and owners must take overt public steps to restore confidence at the heart of our nation's economy. The Oath is minimally a first such step. This book not only gives sound advice and wisdom, it's also a darned good read with some fascinating stories. I highly recommend this book.

Quick Overview:
This book is book describes what being an MBA is all about for about 99% of all of the MBAs that have passed through the various MBA programs. Most MBAs will never be the CEO of a multinational company, but those are the ones that make the news and give MBA's a bad name. The book does an excellent job of bringing to the forefront the history of how the MBA came into existence (something sadly I did not learn when I was studying for my MBA at Ball State).
If you've read "How to Win Friends and Influence People" by Dale Carnegie, then you will likely see several of the same lessons that he preached, and if you liked that book, you will probably like this book as well. This book is all about how to build proper framework to make the best ethical decisions.
If you think that following statement is true "A goal of business is to make a profit, but it should not be the only goal." then you will probably 1 enjoy this book and 2, find it helpful.
If you think that maximizing profit is the only goal of business, then you probably won't like this book.

History:
1908 Harvard starts the first 2 year masters degree in management education. The original ideal behind the MBA was that management would become a profession like doctor or lawyer. Members of the management profession would conduct the business of business with the public good in mind. The whole concept of the MBA is just a little over 100 years old. It came into existence because the leaders of business schools wanted large corporations (which were new themselves) to function in interest of society.
For the longest time, most people had little if any contact with truly large corporations, mainly because they didn't exist, most people worked on farms or small family businesses, then that all changed when large corps like US Steel and Standard Oil arrived on the scene and now all of a sudden there was this new need to manage thousands of employees across large geographical areas and time horizons.
Founders of Business Schools wanted large corps to be led by managers who saw their role as "stewardship of the public trust."

Wisdom/Quotes:
The book is packed with words of wisdom from many sources:
"...to educate a person in mind and not in morals is to educate a menace to society." -Theodore Roosevelt

-"the professional person as the adage goes, does not work in to be paid, but is paid in order to work."

-"No man is an island"

"The advice I give to individuals in our company is not to expect the company to hand you a development plan that will take care of everything. You need to take responsibility for yourself" - Kroger CEO David Dillion

-"If your rate of learning is not greater than the rate of change, you are going to fall behind."

-"Under the social entity view, managers have additional obligations: to please their customers, provide meaningful work for employees, an contribute to the public good of their communities.

Example of where a CEO's heart was in the right place but didn't balance the need of all the "stakeholders" for his company. By trying to do right by his workers after his factory burned down, not moving the company and giving home loans to his employees, the company ulimately failed."

Example of where a CEO's heart was in the right place, but balanced the needs of the other "Stakeholders" is Paul O'Neill of Alcoa. Alcoa had the best safety record in the business, but when he became CEO he said he was going to stabilize the industrial giant, instead of making announcement that the company was expanding, going into new markets, cost reductions, revenue expansions, O'Neill said that priority one was going to be safety. At the time O'Neill took over the company Alcoa's injury rate was 1/3 the US average, when he left the company it was 1/20th. He famous for saying "If anyone ever calculates how much money we're saving by being safe, they're fired!"

James Burke former CEO of Johnson and Johnson when the Tylenol scared happened and what he did to right the situation is mentioned

Peter Drucker said "....the single biggest source of mistakes in mangement decision making is the search for the right answer rather than the right question."

Adam Smith..."It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner.....but from their regard to their own interest."

Notes:

-The longer we have to think about cheating or on unethical behavior the more likely we will justify it.
-"The more we live with a necessary evil, the more necessary it seems and the less evil"
-We are not as ethical as we think we are
-Few people have the resources (mental or otherwise) to resist authority
-Make a commitment to do the small things right
"The second promise of the MBA Oath is a pledge to safeguard the interests of shareholders, coworkers, customers, and the society in which we operate."
-Commitments matter an are the foundation for good relationships

Six Possible Actions for dealing with externalities
1. Do not do harm
2. Do not benefit from harm
3. Compensate for harm
4. Prevent harm
5. Remove Harm
6. Do or promote good

The book mentions an experiment where divinity students were to give a talk about the parable of the Good Samaritan, you can almost guess what happens to the staged stranger in need.

Regardless of where you work you will face the temptation to fudge the truth or go along with the flow of dangerous practices

Warren Buffett's visibility test:
1. Would I be comfortable if what I am doing showed up in the papers in the morning
2. Would I be comfortable if everyone in a similar situation was doing what I am doing
3. Is this how when I leave here, this is how I would want to be remembered?
If you can answer "yes" then you can feel comfortable with your plan of action

Closing:
The book is an easy read, mainly because what is discussed is not rocket science, it just like "How to Win Friends and Influence People" reminds of what we already know, but seem to lose as we make our way through life.
If you are an MBA you will appreciate the author(s) attempt to pain the MBA as something other than a power hungry, cut throat zombie who has no feelings, and will do whatever it takes to make one more penny on the dollar for shareholders.

Quick Note:
On page 56 of the hardcover edition which showed up on Amazon.com on 4/29/2010 9 days after the BP Oil spill (I pretty sure the Economist reviewed the book previous to the BP oil spill) it mentions this chilling ethical example:
"..imagine you are the director of an oil company and you learn about an explosion at one of your oil fields. How do you think about the explosion? Is it a public relation problem to be covered up? A public safety problem to report...? A legal problem...? investors confidence problem?" It goes on to ask how do you approach it. Use the explosion as a chance to make strategy change that was needed but no support for (i.e. engaging the board of directors and governmental regulatory groups. The other approach might be to see it as a one time event and evoke damage control. The book could not be more timely in that aspect.

Personal Note:
Maybe I was too biased in my review of this book, having worked for a couple of difference Fortune 500 companies, this book preaches to the choir with me. All too many times decision seem to get made in a vacuum without regard to their consequences, usually it seems like this happens when management thinks in their own short term interests and not in the long term interest of the company. I have always believe that profit should be a goal of business, but it is not the only goal.

I have watched with dismay the congressional hearings of Wall Street business leaders. Time and time again I see men who seemingly lacked a moral core, men whose character failed them in a moment of risk and selfish opportunity. The MBA Oath is an exquisitely articulated argument for adopting an oath of ethics for MBAs and other business leaders. Wall Street has been in moral free-fall in the past decade. Many otherwise intelligent men and women are making decisions which not only cost them their careers and freedom, but the virulent consequences of those decisions are plundering the 401ks and retirement incomes of hundreds of thousands of Americans. Who in the world could possibly argue against establishing standards of ethics for business? This book argues for a new business paradigm where shareholder value is not simply measured in the last quarter's earnings but in long-term sustainable growth. What shareholder would be against that? The promises described in the book are timeless and inarguable. This book would be the perfect cross-examination tool for the use of the legislators on Capital Hill as they grill the proud, the arrogant, and the undaunted from Wall Street. Three cheers for Max Anderson and Peter Escher. This book is a beginning, and a darned good one, for getting the financial juggernaut of this country back on course.

Finally, the book is replete with stories of business leaders who made the right decisions as well as those who made the wrong ones. If you are thinking of investing in businesses, consider first their leadership. Ask them if they subscribe to the principles of the MBA Oath. I would be sure of that before investing in any business.

This book is a game changer......period. Very well written and well thought through. The authors make a very strong argument for not only a MBA Oath (can be viewed as hollow alone), but for making management a profession.

Anyone interested in the future of business should read this. With Nitin Nohria now dean of HBS (one of the original thinkers of this movement), the next phase of business will be to bring back public trust and credibility. A tall order - but the MBA Oath will be a big ingredient.

You already know this stuff is true: stock market bubbles burst from irresponsible decisions, companies exploit the poor to maximize profit, and business people don't exactly have the best reputation in regards to public opinion.

Instead of sitting on our asses and complaining that it's never going to get better, it's a million times better to jump on board with the MBA Oath and be the change we wish to see in the business world.

Max Anderson and Peter Escher (with the help of lots of other people) have put forth a document that calls managers to lead with the utmost integrity, make decisions without just thinking about themselves, and take responsibility for their actions as managers.

Anderson and Escher spend the book, line by line, argument by argument, laying out a case for why you should take the MBA Oath, be accountable to others for doing so, and be a manager who creates long-term value for shareholders, employees, customers, and society at large.

The MBA Oath is not naïve cynicism or unrealistic idealism. The MBA Oath is a bold, challenging, well thought through document that is going to shape the culture of business over the long-term.

This is the start of something big.

Book was recommended by a friend. Easy to read, could not put it down once I started reading the book. Excellent

I always found it interesting the MBA program does not have any standard format that each school has to follow. I finished my MBA through the University of Phoenix which had a strong focus on ethics while some schools don't really seem to address ethics. The MBA Oath is a good treatment to ethics and a solid response to some negative press the MBA program has received lately.

The book starts off with the oath which stresses integrity, managing in good faith, responsibility for your actions, and safeguarding the interests of shareholders, customers, coworkers, and society among others.

The book interestingly touches on how MBA students are taught to "juice" returns with debt. Some students take on huge debt loans with the thought process they will easily be able to pay back the loan. This easy credit behavior may have led some down a path levering up their companies or units. A good quote from Teddy Roosevelt in the book is "to educate a person in mind and not in morals is to educate a menace to society." Along with finance, operations, and marketing ethics needs to be part of the curriculum at all schools.

The leaders who come out of business schools like leaders of the military have a responsibility to society and to protect shareholders, society, and consumers as their decisions shape the world. The book is good for business students to understand the importance of what they are learning about. Would be great to see some case studies built into this oath to better drive home some of the ideals.

I am almost finished reading the MBA Oath, and I have been impressed with the care the authors take to address the history of the MBA degree and the principles that support a professional oath for MBA graduates. This is a controversial and important discussion, difficult to resolve with one book. But, I believe the authors make an excellent case for the need for such an oath. I am a recent MBA grad and feel that my program did not adequately address some of the ethical issues and responsibilities of business leaders that this book addresses.

Helpful background on where the MBA originally came from; a purpose to serve society. In addition, some well thought-out arguments for why MBA's should bring value back to the degree by re-introducing that purpose into their degree - and career.

Names/identifiers deleted for privacy reasons.

To: HBS MBA Admissions
Subject: What is going on over there at Harvard Business School ?



I recently read a story in Bloomberg that up to 150 fellow business school students and faculty are campaigning for the acceptance of an MBA ethics pledge modeled on the Hippocratic Oath taken by doctors. As a physician I am writing to ask, what took you so long? If this "pledge" is a mea culpa then you can keep it

I, like many Americans have been following the exploits and crimes against society of the graduates of your illustrious school. It appears that better than anything, Harvard ingests young men and women and turns out criminals whose only goal in life seems self indulgent greed with
little regard for their fellow Americans. It is 2010 and Harvard is just getting around to realizing that you have a serious problem and considering an ethics pledge? If you have a pledge already, scrap it and start over .."it ain't workin" as they say. If you have classes on ethics then you need a serious rewoeking of the curriculum. Ethics cannot mean "what can I get away with" or "what is legal". There must be roots that are planted much deeper and it appears that Harvard ethical roots run shallow .On your application to get into Harvard is there any opportunity for you to review the ethics of the people you are letting into the institution? I know Harvard has an esteemed place in the educational pantheon in this country, and the world for that matter, but if recent events are to be believed then that reputation is tainted. What good is a Harvard degree if one has no regard for his fellow men and women? Seldom has one institution turned out so many criminals, albeit white collar (which seems to somehow have bought Harvard a reprieve). As a citizen of the United States I am both disgusted and sickened by your institution and the suffering it has inflicted on our society. If your students, MBA, undergraduate, doctorate or otherwise have not learned right from wrong by the ripe old age of 25 or 30 then god help us all. No pledge is not going to help. As they say down here in Virginia, "that dog won't hunt". Harvard may have turned out many distinguished scholars and many humanitarians but that does not excuse the criminality that is the Harvard MBA program? One of the most famous criminals in the US today. Mr. Lloyd Blankfein, CEO of the illustrious house of Goldman Sachs, graduated from Harvard undergrad and law school. He thinks he is "doing God's work" (I kid you not he said it). For the record, if history is to be believed, very few people graduating from Harvard Business School are likely to have any remote association or relationship with the Almighty. In fact, based on their treatment of other human beings, they are very unlikely to even have heard of the concept of compassion and respect for others. They believe in one thing..the Harvard MBA motto..."make as much money as you can. no matter what the cost". I propose the following ethics program:


The Harvard Pledge

1. I got into Harvard, that does not give me the right to turn the screws on humanity until it bleeds.

2. As a Harvard graduate my only pursuit in life cannot be money

3. If your mother did not teach you right from wrong, our professors cannot

4. There is more to life that me, myself and I

5. Morality does not originate in the office legal counsel of Goldman Sachs..it ends there

6. I am a citizen of the United States of America and I have a responsibility to my fellow citizens.



If this letter sounds angry and vitriolic it is because I, like many Americans are sick and tired of the criminality and wanton disregard for ethics demonstrated by graduates of your institution. Instead of strengthening this nation it is becoming more and more apparent that the lack of an ethical framework and a moral compass is a fundamental part of the Harvard intellectual framework. It would be one thing if this was an occasional bad apple, that of course is beyond the control of any institution. But Harvard has raised the bar to a new level. If you claim the mantle of education dominance and primacy then you will be held to a higher standard. There are many cracks appearing in the Harvard MBA wall of ethics and it is becoming more and more apparent to many Americans that this educational castle is built on a foundation of sand.



A fellow disappointed American,


THE RESPONSE:



I was forwarded a copy of your message to Dee Leopold from last week. Thank you for taking the time to share your thoughts and concerns with us. You obviously have very strong negative views of Harvard Business School and Harvard University. I don't expect that there is much I can do to change that. Speaking only for the business school, I can tell you that we are very proud of our students for taking the initiative to write the oath and to use it to create a movement that has sparked conversation and debate on many business school campuses around the world. The seeds of the oath were planted in classrooms at Harvard Business School by faculty who care deeply about the values and character of our students. Our newly appointed dean, Professor Nitin Nohria, introduced the concept of the MBA oath over ten years ago. Under his leadership we will continue to look at everything we do with an eye towards ensuring to the best of our ability, that our students leave here with a deep sense of responsibility and accountability.



It is true that some - very few - of our 70,000 alumni have acted unethically over the years, but the vast majority have led highly productive and successful careers, creating value for themselves and others by leading large and small organizations in both the for profit and nonprofit sectors. Our graduates have founded and run companies that create jobs and prosperity for millions of people around the world, all of which contributes to the betterment of society as a whole. So although it pains us when anyone associated with HBS acts irresponsibly or unethically, we feel great pride about the fact that HBS alumni continue to play an important role leading many of the great companies and institutions that drive the global economy, which is important to the welfare of everyone.


THE REPLY:


I actually used to have a very high opinion of Harvard. [deleted for privacy] I was writing you because I was shocked that students are "taking the initiative" to take an oath. That is an absolutely horrible commentary on the state of business in America. You shouldn't have to brag about ethics training. This sounds a bit like patting oneself on the back for helping the blind man across the street. I would be ashamed of this. As a doctor it would be like me being really proud of the fact that I don't abuse my patients. It is a given, a moral imperative and is not open to debate. Its surreal that this what we have come to in the United States of America in 2010. My question is what took Harvard so long. What ethical framework do your graduates operate on pre-2010 ? Before the oath were Harvard graduates just "winging it" or what ? In the last year it has become apparent to many Americans, myself included, that institutions such as
Harvard have developed into training grounds for those whose mission it is to enrich themselves devoid of any responsibility to their country. This may be interpreted by many as populism gone wild but I can assure you the anger is real and Mr. Blankfein is a sterling example of this. In fact, I would not be surprised to hear that Mr. Blankfein has since his escapades received many an invitation to speak to Harvard about his "success". Instead I wish that you have a blue collar worker (let's say a miner from West VA or a factory worker from MA) visit your classroom and talk about what being laid off means. it is important for your graduates and students to realize that real people are hurt when Wall Street plays games. I think oftentimes the "elite" business schools make great businessmen but in the process extract the humanity that makes a compassionate human being. Something to think about and I do hope that Harvard is not just getting around to
wondering if ethics are important. Ethics can be studied, dissected, taught, examined and discussed...in my experience it is tough to teach. I hope that the sense of right and wrong was inculcated into your students before they arrive in Cambridge. If not then god help this country because 2008 and the Wall Street crisis is destined to be the opening act of the downfall of American economy.