Andy Hoffman’s book urges business schools to restore capitalism’s noble purpose

Shareholder capitalism is no longer serving society’s needs adequately. Capitalism needs to be restored to its noble purpose, but to do this, business education needs an overhaul, says Andy Hoffman in his new book, Business School and the Noble Purpose of the Market: Correcting the Systemic Failures of Shareholder Capitalism. Hoffman is the Holcim (US) Professor of Sustainable Enterprise and an Erb Institute faculty member.

“The question is no longer: How do we get sustainability into the market or into the curriculum? The question is: How do we adjust the market to address sustainability? To answer that question, we need to rethink the role of business and society. And that means we need to rethink the variant of capitalism we’ve had for the last 50 years,” Hoffman says. 

The Erb Institute talked with Hoffman about Business School and the Noble Purpose of the Market, what it calls for, and the conversations it aims to spark. 

Why did you decide to write this book?

This reflects a shift in my thinking over the past five years or so. For a good part of my career, I’ve been focusing on working sustainability into the logic of business, into the language of the market and into the curriculum as it exists in business education. But I’ve come to realize that when we’re talking about issues like climate change, we’re looking at a systems breakdown. To fix a systems breakdown, you have to fix the system. You have to fix capitalism.

At the same time, business schools are broken. They’ve been stuck in a model where the MBA is a package that they sell. If we’re really going to deal with issues like climate change or income inequality, we have to recognize that you can’t just drop an elective into a curriculum that continues to say: Maximize shareholder value, government has a limited role in the market, efficiency is always good. We have to change the curriculum. 

The overall message of the book is that we need to think more deeply about business education if we’re going to properly prepare students to go out and deal with these issues in the real world.

What has kept business schools stuck in this model?

The first obstacle is the reward system. I am rewarded for academic publications. Teaching has to be adequate, but publications have to be superlative, so if I’m a junior faculty member, I’m going to focus my attention on research.  

The second obstacle is the rankings, which homogenize and stifle innovation. Every school wants to look like Harvard, and that shouldn’t be so. There should be a distinct personality and a distinct focus at each business school. 

The third is that this is an institutional challenge. One school can try and move on its own, but it’s pretty risky. The whole ecosystem has to move, and that’s a hard thing to get going.

What do you hope the book will provoke? 

I don’t expect people to just accept everything I wrote, but I want to start a conversation. We need to teach our students to be stewards of the market. They need to understand capitalism, how it was originally conceived, what it has turned into, what various forms exist around the world. We need to teach about the responsible relationship between business and government. We need to look at some of the things we teach that are problematic. Some metrics like GDP and discount rate actually take us in the wrong direction. 

For example, when we say efficiency is always good, that tells you that if it lowers prices or improves the stock price, it’s good, so maybe it’s efficient to move manufacturing overseas. But what about the people in the town that got left behind? That’s not in our equations.

I really want to encourage faculty and administrators to step forward. I want senior professors to act like elders, and elders are not concerned with their own career. They’re concerned with the institutions in which others will come up. I can say this at this stage of my career, as a full tenured and chaired professor, but if I wasn’t tenured, the elder would be a risky role to play.

Have students been looking for something different from business education?

I have more and more students who come to me frustrated that the education they’re getting is not what they were hoping for. I had one student tell me she felt like her values were under attack every time she walked into the building. 

I have a chapter in the book that is aimed at students, and the message is threefold: 1. Business schools are broken. 2. Go anyway, because the power you have within business to make a difference is enormous. 3. Take control of your education. Don’t just take the curriculum as given. Challenge, question and interrogate what you’re being taught. It’s how you will learn. At times, you may decide that what they’re teaching you is not the way you want to live your life, and you have a choice to make. You are put in a resource-rich environment—take advantage of it to make the education what you want and need. Then you’ll have the beginnings of developing the power that you need to make a difference in the world.

Do you think that enough people at business schools are poised to push business education in the right direction?

I’m not the only one thinking that things need to change. A lot of people recognize there’s a problem, but people aren’t sure what to do about it. 

Who can change the system? Maybe the top-tier business schools can; or maybe they are too wedded to their rankings and their position to really go far outside the bounds. Maybe it’s the next tier of business schools that can do it, or maybe the way for business schools to derisk change is to create a separate degree that questions these fundamentals, and let the market decide—see if students gravitate towards a program that, in my opinion, would involve much more rigorous thinking about the issues of our day. 

For example, should companies be involved in political and social debates? We’re actually watching a very interesting experiment on that right now with Elon Musk. He has gotten as involved in politics as any business executive ever has, and Tesla’s getting hammered for it. Is this a cautionary tale for the extent to which corporations get involved? These are the kinds of things we should be discussing.

What do you want readers to take away from the book?  

My hope is that students will read it and be more critical in their approach to their education. I hope that faculty and administrators read it and start a discussion about what to do about it. I am pleased that several deans have come out and said: This is the conversation we need to be having. There are people out there that see the problem. They’re struggling to find a way to do something about it. I’m humble about the book’s possibilities, but it at least starts a conversation, and maybe it can coalesce a community into a critical mass.

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