University of Cape Town Graduate School of Business
PRME Sharing Information on Progress Report 2010
The Director’s Letter
Since our adherence to the Principles of Responsible Management Education, and since my arrival as director at the Graduate School of Business, we have steered the school slowly but certainly in the direction of school with a higher focus on responsibility, sustainability and relevance to societal context. In order to structure this emergence, we have agreed on a new vision and mission, that might be worth explaining before going into the detail of the actions.
Why it is time for a new model of business school and what it could look like
The vision
The UCT Graduate School of Business’ (GSB) goal is to be a leading emergent market business school that is relevant both internationally and to its local social context and excellent in research, teaching and outreach. The School is committed to building a new model of a business school – one that is grounded in values and based on the paradigm of the emergent market.
The GSB defines emergent as regions that experience high uncertainty, high complexity, and often excessive inequality. As much as this is true for what is classically called the emergent economies (such as Brazil, India and SA), uncertainty, complexity and inequality are equally issues for the company in turbulent economies. Emergent market thinking is therefore not a geographical construct. The whole world is operating within times of great uncertainty and complexity and everybody needs to learn to operate successfully within that.
The GSB trusts that the exploration of the paradigm of the emergent economy will bring interesting insights into how business could be done differently and it aims to become a world leader in this sphere within five years.
The context
Consideringcritically the causes of the current financial crisis, one can say that "business as usual" is no longerthe way to achieve sustainable success.The classical approach to business that we have seen over the last few decades does not appear to work.
Managersneed an expanded skill set that creates newmodels of business. This means that in their turn, business schools need to be autocritical andrethink what they offer to the world.
It is a viewpoint that has begun to permeate the corridors of some business schools globally.
David Schmittlein, Dean of the Sloan School of Management at MIT in the US, recently said in a speech in Paris that the current crisis should be an opportunity to change the behaviour of managers, and in particular to help them learn to be more courageous. Courageous for him means implementing long-term strategies and not focussing on short-term gain. His speech went strongly against what isclassically heard in business schools.
He stated that business has thought for decennia that the goal of all good managers is to maximise shareholder value: and the shareholders, of course, are very often just in it fora short-term profit.
If we want to avoid the next crisis, we need to deliver those courageous managers and leaders, individuals who are able – and willing – to think in the longer term.
Schmittlein said something else very interesting. If the crisisinvites business schools to teach new strategies, it will equally change our way of teaching, encouraging us to embrace a real openness and take a holistic approach to the world. In short, he encourages us to lay a more values-based foundation.
This may not be the perspective you would expect from the head of a business school, but in the context of the current economic turmoil, values are the only sure foundation to build on. Building a vision starts with identifying the values we want to realise.What are we doing it for? What do we contribute to society?
The UCT GSB is unusual among business schools in that it has a strong set of values, which were developed in consultation with the GSB community, that help it to answer these questions.
There are a number of reasons why business schools have been cited as having contributed to the economic crisis. While one should not generalise, there are elements that have become part of many business schools that reinforce the narrow focus on shareholder value.
To understand how business school curricula have evolved in this way, one needs to start by understanding the context – in the 70s and 80s of the last century we saw the rise of a very reductionist interpretation of economics and, in line with this, a very reductionist view of management. Economists like Friedrich Hayek and Milton Friedman developedthis reductionist view of value, and, due to the fact that they take the holistic viewof value creation out,shareholder valuebecame automatically prevailing.
The financial markets became the holy grail, and the concept of “the wealth of nations” was replaced by the concept of “the wealth of individuals”. Managers became more and more concerned with their share price and shareholder value in this context. The subprime crisis and other failures like Enron have shown us this clearly – managers were rewarded with big bonuses for financially exotic deals, and there was little focus on risk or real return, but rather on volume. The decline of stakeholder importance is similarly apparent in the pursuit of ever cheaper labour.
Today we can again talk about a more holistic interpretation of economics. Business schools globally have begun to re-discuss the valuequestion (or the value creationquestion) but from a different perspective. Some, like the UCT Graduate School of Business, are endeavouring to re-establish thestakeholder perspective – we are placing the focus on uncertainty, complexity, value driven management, personal development, social responsibility and diversity. The overarching drive is to create a new model of business school based on the paradigm of the emergent economy (which is characterised by high degrees of uncertainty, complexity and inequality)
Taking action: a new model of a business school
What would the model of a business school based on the paradigm of the emergent economy look like? This is a difficult question, and one that management educators globally have been grappling with of late.
In December 2008, around 300 management educators (deans, directors, professors) met in the UN headquarters in New York for the First Global Forum for Responsible Management Education.
The New York Forum was a continuation of an ongoing discussion amongst academics, which began with the presentation of six principles on responsible management education to the Secretary General of the UN at the Global Compact Summit in July 2007 in Geneva.
The December meeting was to table how these principles apply in management education. I had the pleasure of presenting the results of the workgroup on new learning methodologies.
The consensus at the Global Forum was that sustainable principles in management should address a number of domains: the spiritual, the biosphere, the social, the economic and the material (materials, energy). By preference all together, not just one of them.
What in effect is called for is a “systems thinking” approach in management education that imbues students with an understanding of the complex, interconnected world around them and the impact of their decisions on this world, as well an understanding that their own success is linked to the success of those around them.
Business schools have generally made the mistake of believing that business management is about taking a scientific approach. This has led to executives believing that problems can be solved by distilling them to their core, and fixing that. The assumption is that when each core problem is fixed, so is the whole. That doesn’t work so well in an interrelated world.
Consistent with the demand for a systemic approach to a new paradigm of business, current and future managers need to learn new competencies and an appreciation that they cannot serve only the shareholder and hope that this is best for all stakeholders.
As business schools, I believe we are called on to better integrate a more holistic and systemic way of viewing the world into our methodologies.
While the UN Global Forum for Responsible Management has shed light on the path we can take to avoid a global catastrophe of this magnitude and nature in future, action needs to be taken now.
At the UCT Graduate School of Business, the foundation for a new type of business school is already being laid. The School has a set of values and has as one of its strengths a focus on systems thinking and action learning that very few business schools internationally can match.
A holistic management interpretation[1]
The GSB champions a holistic approach to management. Despite the fact that the prevailing Anglo-Saxon approach to management has added insight and value to our understanding of the functioning of markets and companies – it champions too narrow a focus for what is now needed in business.
A more holistic, systemic approach that celebrates diversity is required to enrich the prevailing Anglo-Saxon model. The holistic management diagram developed by Wilber helps in understanding why and how this might be achieved.
From the model it is clear that the dominant Anglo-Saxon approach (called management techniques in the diagram) does not sit in isolation or in a hierarchy in this model, but rather as one part of a whole.
Working hand-in-hand with functional management techniques are three other areas of equal importance for creating a sustainable organisation – systemic management approaches, values and culture, and personal development.
Seeing the four elements or quadrants as part of a whole, it is immediately clear that this model would create a more people-focused, value-driven and value-creating organisation than what is currently the norm.
To examine the diagram more closely, diagonally opposite to the Anglo-Saxon or mechanistic approach to management is the values and culture dimension of the holistic model. Such a vision – in which values and culture are elevated in importance and not simply a side issue to the business of profit-making – can only be translated into action by people who have the qualities and the motivation to make a real difference in the world.
In addition, the model necessitates a strong focus on personal development (upper-left quadrant) as a backbone for all managerial approaches, and highlights the need for companies to be organised around life-long learning and career development for their employees. So, in other words, human resource management becomes a key element of the management function in the holistic approach.
The bottom right quadrant is represented by systemic management approaches. Systems, in this sense, are interacting elements that create a logic of their own, that surpass the simple addition of the composing elements. So this quadrant contains the more ecological approaches to management: network theories and applications; sustainable development models; complexity theory; and concepts around diversity as a constructive force etc.
Practicing a holistic management approach requires the interweaving of all four quadrants.
It is only by pulling the four elements together that an individual can develop into a responsible manager who is able to pilot a company for sustainable performance. A manager, just as any other employee, becomes the entrepreneur of his or her own development, within a dense and intensive network of peers. In contrast, the Anglo-Saxon model is focused mainly in the upper-right corner and, therefore, although companies might pay some attention to culture, or personal development, the focus remains firmly on the realisation of financial results.
A holistic model, on the other hand, demands that organisations satisfy the needs of more stakeholders than just its shareholders.
Four pillars of excellence
The GSB’s mission is to build and strengthen four pillars of excellence that underpin and inform the new model it is seeking to develop.
1. Academic Excellence
While most business schools develop academic strength via a few strong disciplinary faculty groups (finance, marketing, strategy etc.), the GSB is developing its academic excellence in the trans-disciplinary theme of Emergent Market Business. The systemic research themes are: 1) Governance in Emergent Economies; 2) Development, Innovation & Technology; 3) Entrepreneurial Development & Sustainable Business; 4) Diversity, Dynamics & Culture; 5) Infrastructure, Reform and Regulation.
2. Societal Relevance
A business school cannot live outside its economic and social environment and has to take up its own societal responsibility. The GSB is committed to transformation and equality in all its aspects. This commitment to social responsiveness is in line with UCT’s strategic goal to enhance the university’s contribution to addressing key development challenges facing South Africa. At the GSB this is achieved specifically through: research, for example the Global Entrepreneurship Monitor research carried out by the Centre for Innovation and Entrepreneurship which investigates how to boost entrepreneurship in the South Africa economy; policy and advocacy, for example, the work around electricity regulation carried out via the Infrastructure, Reform and Regulation programme run by Anton Eberhard; strategic partnerships, for example the Raymond Ackerman Academy of Entrepreneurial Development that seek to develop entrepreneurial mindsets among disadvantaged South African youth; and student and staff outreach activities that range from fundraising to building homes for Habitat for Humanity.
3. Pedagogical Excellence
The GSB has developed teaching excellence through its application of SYSTAL (Systems Thinking Action Learning). Innovations in the areas of transformative learning and personal development are integrated into the curricula of many of the programmes. These learning processes and holistic management approaches (as outlined above) are globally recognised as being at the vanguard of management education.
4. Thought Leadership
The GSB provides genuine thought leadership, not only in South Africa, but also in the wider African continent, as well as the BRICSA countries. This thought leadership is demonstrated to business and society through strong activity in executive education, corporate learning and a robust culture of debate. The newly launched GSB PhD programme is growing a pool of home-grown African talent that will invigorate the School’s thought leadership in the region.
Principle 3
Method: We will create educational frameworks, materials, processes and environments that enable effective learning experiences for responsible leadership.