Angel Cabrera, Leadership, Education and the Crisis

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During my early days working at the Instituto de Empresa Business School (“IE”) in Madrid, Spain, I had the great pleasure to learn from and become friends with Angel Cabrera, the former IE dean and now the current president of the Thunderbird School of Global Management. Angel (I sound like Sarah Palin, “do you mind if I call you Angel?”) recently created his Global Leaders Can Be Made blog.

Since the Enron scandal, Angel has been a key figure in rethinking business education to focus on breeding professionally responsible leaders. With that in mind, I wrote him an email the other day about the financial crisis and the implications for leadership training, saying,

In a sense, the financial crisis is an extension of Enron. Now more than ever in globalized markets where average citizens, businesses, and financial institutions are all dependent on one another (think about the credit interdependence that has caused the crash), we need better leaders. Leaders need to step up to the plate. The whole paradigm of corporations defined exclusively by their profits alone can no longer be seen as valuable to society. Transparency, sustainability, even paying taxes (the new patriotism) are now vital both to capitalism (finally) and society’s survival.

Angel kindly gave Grave Error a well needed plug by directly responding to my email in a post about whether business schools are responsible for the current financial mess, writing

Eric, as you would guess, I couldn’t agree with you more.  We need better leaders.  Leaders who understand and accept the professional responsibilities of managing a public corporation, to create true lasting value to society at large while providing competitive returns to investors that are commensurate with the risks they assume.

Some journalists are asking whether business schools may have some responsibility in the current financial mess for the way we have trained business leaders in the last two decades.  My answer:  absolutely!

It is refreshing to see someone out there asking to being held accountable for the mess and responsible for the clean up, as opposed to the easy blame Wall Street, blame Washington game.

Back in December 2001 just prior to getting a job at IE, I was completing IE’s International MBA program. I already had a JD and had worked as an attorney, but I thought that a master’s degree in business administration would give me that added insight into managers’ business concerns needed to become a more effective advocate. Throughout the MBA program, though, two things surprised me, making me believe that my JD was by far a more valuable degree, at least from an intellectual perspective:

  1. An ignorance on the part of the students and an absence in the course work about what a corporation really is, and
  2. A failure to instill a “managerial” identity and spirit in the MBA candidates.

The first problem I saw was that my fellow classmates, even those who came from professional and academic backgrounds in business and finance, had absolutely no idea what a corporation really was. Like I said, as an attorney, I felt that I was lacking in business acumen, but was shocked to see that business students had no idea what it meant for a corporation to have legal personality or why legal personality was important. Few students understood what equity meant; in other words, what a share in a corporation stood for. Likewise, people were clueless about the duties that corporate directors owed to their shareholders, and there was no place in the curriculum to make room for these either. Business education was focused on the pure mechanics of a classic understanding of management, without ever questioning or addressing the cosmological and ontological sides of the subject matter: the big picture and the reason for being.

Then there was the total lack of identity. The notion of a business person, manager or executive as a member of community of professionals simply did not exist. As a result, the graduate was left without a common pool of values, underlying principles, a guiding light or reference point. There was no governing or self-regulating body, no continuing education impulse, and no special sense of purpose.

In contrast, American law education is obsessed with engendering lawyers with the belief that they hold a special, exclusive place in society. In law schools around the country, students are indoctrinated with, in at least all of their core courses, this notion that lawyers play a unique role in protecting the rights of others and upholding the rule of law. We learn that we are monopolists, and just as doctors are exclusively authorized to treat the sick, lawyers are the exclusive custodians of justice. As such, lawyers owe an even greater responsibility to society and their clients. Law students must take ethics courses in law school to graduate, are required to taken a nationwide professional responsibility exam before being permitted to practice law, and most state bar associations have continuing legal education requirements. Furthermore, state bar associations actively and publicly penalize, censure and disbar attorneys for misconduct.

Go ahead and laugh. We all know that lawyers have a horrible reputation. Even if for that reason alone, legal education and the law profession strive to protect their monopoly. If people stop believing that they can trust their lawyers, say with regards to confidentiality or privileged communications, then no one is going to use lawyers anymore and the profession will die. So regardless of the bad rap, the legal community works incredibly hard to instill a sense of professionalism and profession and to maintain the privilege of the public trust.

Without knowledge of and discussion about what a corporation is (in its essence) and without a sense of community amongst professionals, what are you left with after earning a business school degree? This is why leading thinkers in business education like Angel have been calling for a new framework so that, instead of hoping for responsible leaders, we will in fact breed a class of accountable and responsible “professional” leaders.

As I commented on Angel’s blog post,

I remember back in the old days after Enron, how you fought an upward battle against many in the business school community who were still very reluctant to embrace the need to rethink the way in which business schools addressed the role of managers and corporations in the society around them. As I mentioned in my email, today we are seeing that the issues you brought up then are even more relevant and important today.

I am not surprised at all to see that you are still fighting the good fight. I hope that your new blog will serve as a helpful starting point, not necessarily for the solutions, but for the debate.

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