Executive Interviews: Interview with James O’Toole on Business Schools and Business Ethics
July 2010 - By Dr. Nagendra V Chowdary

James O’Toole
Daniels Distinguished Professor of Business Ethics at the University of Denver’s Daniels College of Business.

• Professor, you have been deeplyassociated with managementeducation and business schools’system for quite some time now. Overthese years, what are the systemicchanges that have thrilled you andpained you?
  I don’t want to start off this interviewwith a negative tone, but the pain overthe years has been far greater than thethrills, I assure you. The biggest thrillrecently was the appointment ofNitan Nohria as the Dean of theHarvard Business School. He is theright person and has been appointedat the right time and brings in a hopeof reforming business education.According to me, his focus onleadership and ethics are exactly onthe target.

• How is the tone in the businessclassrooms these days versus, say,two years ago? Do you see big shifts instudents’ attitudes and expectationstoward what they should be gettingout of the business schools?
  The good news is that there is agreater concern for ethics andenvironmental sustainability amongmost business students. The badnews is that many business studentsare so worried about getting jobs inthe current, prolonged recession thatthey seem willing to put those valueson the back burner in order to pleaseemployers. I hope this is a short-termphenomenon.

• In one of your recent articles(“What’s Need Next: A Culture ofCandor”, HBR, June 2009), whileexhorting the organizations to develop a culture of candor, you havecautioned that, “ ..it is horribly easy tocreate situations and systems inwhich good people cannot resist thetemptation to do bad things. But, on amore hopeful note, we can just asreadily design systems that lead tovirtuous behavior”. How shouldorganizations create such positivesystems to nurture the culture ofcandor? Any benchmark practices forthe same?
  There are no easy ways to generatethe needed candor, but it all startswith leaders who listen, whoencourage and reward contrarians,and make sure that all managerialinformation is available to everyone inthe organization. Since the naturaltendency of all mangers is to hordeinformation, and to treat everypossible problem as a potential crisisthat requires secrecy, the cardinal rulewith regard to information should be:“When in doubt, let it out."

• “People don’t simply lack trust inbusiness schools; they activelydistrust them”, observed Joel MPodolny (“The Buck Stops (andstarts) at Business School”, HBR,June 2009). “Managers have lostlegitimacy over the past decade in theface of a widespread institutionalbreakdown of trust and self-policingin business”, argued Rakesh Khuranaand Nitin Nohria (“It’s Time to MakeManagement a True Profession”,HBR, October, 2008). Why is it thatMBAs and business schools havelost trust? What’s the differencebetween lack of trust and distrust andhow to supplant them with trust andfaith?
  The problem is that managers can’tcreate trust; instead, it is a byproductof their actions. Trust comes about asa natural result of leaders who tell thetruth and who are consistent in theirevery word and deed. Leaders whoact with integrity inspire trust amongfollowers, and that is true ofinstitutions as well. I think that wasthe greatest lesson that MahatmaGandhi taught us.

• In recent times, MBAs have beenaccused of destroying value. Is thiscriticism justified or is it a misplacedone? Have business schools becomemere ‘trade’ schools?
  Yes, B-schools have increasinglybecome trade schools. HenryMintzberg is correct when he saysthat the degree offered by businessschools should be called the MBS(Master of Business Skills). RakeshKhurana’s proposal that businessschools should become trueprofessional schools is the bestantidote, but I fear that we really don’tknow how to accomplish that.

• Business schools are expected topromote behavior that is consistentwith society’s values. However, whathappens if a particular society’sacceptance level of any wrongdoing isquite high and in many cases thehonest people are either punished ormeted out with injustice? Howshould business schools resolvesuch dichotomies?
  Actually, in America, India, andEurope I think the values of societyare much higher than the values nurtured in many B-schools, so weprobably don’t have to worry aboutthat!

• Have rankings legitimized mostbusiness schools’ myopic focus onthe short term? Have theyundermined the focus onprofessionalization? Should businessschools be forced to abstain fromadvertising their rankings?
  The rankings have not caused theproblems at business schools, theyhave merely exacerbated them. Theproblems have resulted mainly fromthe misplaced focus of the faculty ontheir own research interests at theexpense of the professionaldevelopment of managers.