BiGS Actionable Intelligence: Business schools are starting to realize that they aren’t adequately addressing issues faced by today’s or tomorrow’s CEOs. There’s a growing movement to encourage business schools to evolve education and produce more relevant research that can support new models of capitalism.

BOSTONAugust 22, 2023—If tackling existential issues like climate change and racial inequality requires fresh thinking, isn’t the same true for how we teach tomorrow’s business leaders?

Yes, argues Andy Hoffman, a fellow with Harvard Business School’s Institute for the Study of Business in Global Society (BiGS). He finds it downright baffling that higher education seems to be fixated on preserving the status quo when it’s time for radical change.

We need a “radical rethink” in both business education and business research, Hoffman argued in his recent op-ed in The Financial Times.

The next generation is focused on these issues, he points out. Surveys show that 60 percent of Gen-Z and Millennials are alarmed or concerned about climate change, and more than 70 percent of the Gen-Z business school cohort want content that responds.

His op-ed is particularly timely, coming as the United States marks the one-year anniversary of the Inflation Reduction Act (IRA), which many say is ushering in a new industrial policy, focused in part on addressing climate change, and the world experiences unprecedented weather extremes including the deadliest wildfire in the U.S. in more than a century in Maui.

Hoffman is a professor of sustainable enterprise at the University of Michigan’s Ross School of Business and School for Environment and Sustainability who has been teaching future business leaders for more than 30 years.

Same education, same results?

“The capitalist model that’s been with us since the 1970s and 1980s now faces systemic problems like climate change and inequality,” he told The BiGS Fix during an interview on campus. “We’re watching this model die under its own weight. To fix a systemic problem, you have to change the system that caused it.”

“The question is, what comes next? We must ask tough questions if we’re going to address things like climate change,” Hoffman said.

Business education has been evolving over the last 30 years, prompted by a change in corporate culture as a whole. Today’s business school students can also learn about corporate sustainability strategies, circular operations or the social purpose of the firm in addition to the usual three C’s—company, customers and competitors.

Ways to move forward

But Hoffman argues that a quantum leap is required in business education and research, writing in his op-ed: “It is time to take management research to the next level. That requires challenging the outdated research culture and norms that dominate business school scholarship.” Among his recommendations:

  1. We must explore changes to the shape and structure of the current models of shareholder primacy, unfettered global trade and laissez faire government policies that have been in place since the 1980s.
  2. Research theories must now treat economic systems as intertwined with the primacy of natural systems.
  3. Research should explore such questions as: the purpose of the firm; the relationship between the market and the government; whether we can address climate change in an economy based on unlimited economic growth and unbridled consumption; and whether we can bring about a just and orderly end to the fossil-fuel sector.
  4. We must challenge the current research norms and culture by exploring what metrics will reflect environmental and social impact, not just scholarly impact.
  5. We must look beyond narrow human utility and ask how to address the widening climate divide between the poorest people, who are least responsible for climate change but most at risk, and the most affluent, who are most to blame and have the resources to adapt to its effects.

Hoffman’s thinking is influenced by his own evolution as a management scholar. As a PhD student at the Massachusetts Institute of Technology (MIT) in the early 1990s, he said that “a professor at a top-tier school that turned me down for a job said they loved my work on organisational theory but thought it was too focused on the environment.”

Today, he is a visiting fellow at HBS studying climate change. The stark difference is not lost on him. “How far things have come.” And yet, Hoffman adds, "Things have so much further to go."