Business education plays an important role in developing leaders for today’s (and tomorrow’s) economy. Today’s business schools are true incubators for tomorrow’sbusiness leaders, helping to disseminate forward-thinking ideas into the world of practice and contributing to the evolution of the business landscape. In Minnesota, with its reputation for exceptional educational institutions, this bodes well for the future of business in our state.
In the early years of the M.B.A., and until recently, most economics and finance textbooks described the goal of business to be one of maximizing shareholder returns. Investors, the reasoning went, sought the greatest probable financial return. It followed logically that business executives must focus their leadership efforts and strategic planning on maximizing profits.
At its best, this philosophy leads to the short-term effort to produce ever-increasing quarterly earnings. At its worst, this philosophy leads to the corruption that produced the recent high-profile scandals that have rocked the reputation of corporate America. Rather than question poor practices they knew could have detrimental effects for customers, employees and investors, too many layers of managers “looked the otherway” because shareholder returns were being maximized.
How many Minnesota businesses are involved in the mortgage meltdown and banking crisis? Very few. Why? Because the culture of our state breeds a different philosophyof doing business. Minnesota businesses are built on the principle of delivering genuine customer value, not pyramids that siphon profits. Will the occasional bad apple surface? Of course; we are, indeed, human. But this is the land of the 5 percent club and people whose values mandate a respect for and dedication to the common good.
At the University of St. Thomas, and most directly in the Opus College of Business, we embrace a broader perspective on the role of business in today’s complex society. Our students learn that the primary goal of business is to be a good business, and the reward for being a good business is profit. It is a simple transposition of words that makes profit a well-earned reward for achieving a higher order goal, but it completelyalters the outlook of everyone in the organization.
Creating good businessFour characteristics define a good business. First and foremost, a good business provides goods and services that meet or exceed the needs of its customers at a competitive price.
Second, a good business provides a safe, respectful work environment and pays its employees a fair wage for their work.
Third, a good business is sensitive to and respectful of the communities and societies in which it operates. It gives back a portion of the profit to enhance the cultural, educational and social organizations that comprise its greater neighborhood.
And fourth, a good business is sensitive to and respectful of the physical environment, going beyond controlling pollutants to including an approach to environmental sustainability.
Look at any successful, longstanding business that you judge as operating with integrity and you will see all four of these characteristics. Look at any failed business and you will see that at least one of these characteristics was absent. Most of the failed “dot-coms” in the 1990s did not live up to all of the above criteria. The rash of corrupt businesses in the early part of this decade failed because senior executives put themselves ahead of the well-being of their customers, employees and investors.
A closer look at businesses in Minnesota helps us see that we are fortunate to live in a culture that exemplifies “good business.” This commitment to superior customer value, to a respected and fairly compensated workforce, to a clean and healthy environment and to contributing to our society is what led the Daytons, the Pillsburys, the McKnights and other business pioneers to create companies that continue to be respected and admired. It is the same perspective that influenced the Itasca Group, which uses time and resources from major corporations to address issues threatening the economic quality of life in our region. And it is the basis, I believe, for why many Minnesotabusinesses are reaping rewards today.
Indeed, it is the creation of “the good business” that every shareholder and investor should demand. The creation of good business must be the driver behind every business school as it educates and prepares future business leaders. This commitmentto good business must emanate from the top of an organization and it must permeatethe organization to its very core. Every employee must be committed to superior customer value in every aspect of his/her job because his/her participation is vital to ultimate success.
From classroom to communityAn M.B.A. education can play a critical role in creating good businesses by teaching its students to develop their ethical decision-making skills – to look at the organization notonly as a business enterprise but as a member of the community in which it operates. Experience has shown that companies that contribute the most to our robust economy are those that value their employees and their partners in the community.
A true educational leader must take its knowledge back to the business community. In the Opus College of Business we bring our ethical research discoveries to the real world of business in two ways. The Minnesota Center for Corporate Responsibility was founded 30 years ago to enhance the practice of business ethics. The Minnesota Principles for good business emerged from this group, and that organization – whichtoday is known as the Center for Ethical Business Cultures – continues that tradition at St. Thomas.We are regularly exploring new concepts and approaches to businessethics, and we use the center to bring these developments to the practical world of business.
Finally, a group of St. Thomas scholars and business practitioners collaborativelydeveloped the Self-Assessment and Improvement Process, a tool for measuring an organization’s ethical climate and then prescribing corrective processes to improve it. The SAIP Institute is now charged with disseminating and enacting this instrument on a global basis to further improve ethical business practices throughout the world.
Like the good farmers before us who learned to rotate their crops to return nutrients tothe soil and sustain its viability, those of us engaged in business education are teaching business leaders to replenish their markets and sustain their demand. This philosophy contributes to a bright future for business because today’s leaders are entering the managerial ranks with a commitment to and an understanding of what it means to be a “good business.” But even that doesn’t mean our future is assured.
If it were easy to do, we would be awash in successful, profitable companies. Since that is not the case in today’s world, we must especially respect and appreciate those whohave succeeded and seek to learn from them. This is the true premise of good business education, and this is the commitment of all of us in business – educators, senior management and aspiring leaders – who strive to make this world a better place in which to live and work.