This post is inspired by the article of the same title in the June 6th to 12th edition of the Economist.
A group of Harvard Business MBA students have made attempts to turn management into a formal profession. Doctors have their oath, so do Lawyers. CEO’s have always had one too – except it isn’t nearly as flashy or encompassing as the other formal professions. “The only responsibility of business is to maximize profits” is hardly a mission statement to live by.
“..the students promised they would, among other things, ‘serve the greater good’, ‘act with the utmost integrity’, and guard against ‘decisions and behavior that advance my own narrow ambitions, but harm the enterprise and the societies it serves.”
About half the class took the pledge. The purpose, of course, is most likely to distance themselves from the Â current gen of MBA CEO’s who have lived off the backs of consumers and are the root of the problem of the current economic crisis. Of course, detractors from the oath indicate there is no “bite” to it, but it is definitely a step in the right direction.
“Defenders of the oath reply that the goal of maximising shareholder value has become a justification for short-termism and, in particular, rapid personal enrichment. They are concerend about managers doing things that drive up the share price quickly at the expense of a firm’s lasting health. Management gurus such as Jim ‘Good to Great’ Collins argue that shareholders are likely to earn better returns in the long run if firms are led by managers with integity and a desire to play a constructive role in society”
Loved that line in the read – because of it’s obvious truth. Jim Collins not only ‘argued’ the point above, but was able to demonstrate it over a long period of time through some great research that followed the top public companies that went “Good to Great” in comparison to those that did not. Of course, applying this to real life is still a ways away. I used to be heavily involved in Politics when I was younger – I dreamt of all the changes to yet another failed, redundant and inefficient system (goverment/party politics system) and worked my way into the Federal party and found out there were a lot of people like me. What becomes apparent though – quickly I might add – that in order to get into that position of “power” that would enable you to make those important changes you have to sell yourself off along the way. Once you get that power, you quickly learn that if you don’t listen to lobbyists and the guys funding the whole thing you will be out before you have the chance to make the change. What that boils down to is this – by the time you get into “power” to make positive change you are often a shadow of your former self. You will never be in a position of power for long enough to enact the changes that are needed – no matter how strong your vision is.
My point with that, while the MBA student’s pledge is definitely a step in the right direction, let’s see what happens when they have to go out, get a job, and have to make tough choices of doing the right thing for the company, or doing the right thing for their career. Will be a tough pickle.
So, all that being said – anyone care to draft up a MMO Developer’s Pledge Forswearing Greed?
8 comments / Add your comment below
The rhetoric weakens the post and the material that inspired it. “Remember the long term” would be a more productive summary of the concept. Arguing against “greed” is either trivial or mendacious: either it means seeking profits in an unsustainable and destructive manner, in which case it is by definition bad and therefore not in need of discussion/condemnation, or it is being used in a fuzzy way to cast aspersions on legitimate profit-seeking, where an author cannot be bothered to distinguish between good and bad practices. “the current gen of MBA CEOâ€™s who have lived off the backs of consumers and are the root of the problem of the current economic crisis” is a good example.
Alternately, hit economics for the familiar subjects of principal-agent problems, misaligned incentives, and public choice.
Fair observations Zubon. I do respect your opinion greatly.
Ironically, when I sat down to write this this morning I knew what I was going to write – but not the ‘angle’. My original title for it “Rhetoric” – with the assumption it will be for our new class of MBA’s. After more thought to it I took the optimist angle, which I do hope and agree with. Time will tell.
“the current gen of MBA CEO’s…” rhetoric is based on certain truths. (I should have used a direct example to make it less rhetoric) – I read an insider article about the Lehman brothers. The CEO’s chief advisor warned him about investing in CDOS’s, and that it was a market that was sure to bust. He vehemently argued to the point that the CEO replied that he was doing it anyway, because Lehman brothers, under his watch, wasn’t going to be the only big player not playing that game. He emphasized that if the advisor brought up it again he would be fired. It was very irresponsible (and everyone knows what effect that move had on the company). Extrapolate that experience over several CEO’s in different markets and that is why we are here today.
I agree though, if I would have used that direct example instead of the typical rhetoric attitude towards the industry currently it would have held more strength throughout.
Thanks again for your thoughts.
The scary part is that even running with the rhetoric would get us better results. The argument doesn’t need to be stronger to be better than what we have at the moment.
While I agree with Zubon that “remember the long term” is perhaps a bit more comforting, but is it really useful?
What has caused the focus on short-term, profitable activities? A business can see how money other companies are making on a potentially risky activity, and often leaders are worried about missing out on the gravy train, as Chris shows in his story about Lehman Bros. In some ways, you can’t blame the CEO because if he didn’t engage in the risky behavior based on the advice he was given, investors would have just shifted their money into other, more (short-term) profitable companies and perhaps forced Lehman Bros. into financial troubles earlier.
And, as much as some people believe we shouldn’t blame the market or the customers, this is the root cause here. People are greedy, and given a choice between a 50% return on investment and a 10% ROI, most are not going to stop and wonder what the differences are. They’re going to pour their savings into the 50% return and start thinking about how plasma TVs they can put on one wall. You might argue that the job of a CEO of an investment house should be the one to educate people about the concept of “risk vs. return”, but people don’t want to hear that. So, I think identifying “greed” as the core problem is important here.
Let’s bring this back to games, shall we? Instead of “return on investment” let’s consider “fun”. Back when WoW launched, people were calling it the godsend of MMOs. They streamlined the whole game and made it easy to “have fun”. Of course, we’re now starting to see that the fun was short-term, and in order to maintain the fun they have to keep streamlining the game. The pre-60 game is now trivial and can be completed in mere hours if you know what you’re doing. The “hard” content gets nerfed on a regular basis and some people are upset that the challenge is going away.
People who predicted this were ridiculed in the past. Even now I’m sure that people will come by and throw tomatoes at this post (just like people will boo at anybody saying that perhaps housing isn’t an eternally wonderful investment). We’re starting to see the effects of having a single type of game come in and dominate so completely. We’re also seeing the problem of the expectations of having a ton of short-term fun at the expense of long-term fun. Of course, profitability covers a lot of sins, and why should game developers try to do anything else but follow a failing system when it’s proven to be so popular and profitable?
The financial crisis might show us a glimpse.
tl;dr: Greed is the main underlying cause of short-term thinking. “Fun” like “profit” shouldn’t necessarily just a short-term pursuit.
In line with Brian’s comment, I’d suggest that a truly “fiduciary” responsibility also includes a focus on the long term, or at least an awareness thereof, and an effort to educate those you’re responsible to.
@Brian: “And, as much as some people believe we shouldnâ€™t blame the market or the customers, this is the root cause here”
That is where some sort of structure is needed (both in markets, and most facets of life). If you didn’t have speed limits MOST drivers would drive faster than what they do now. The few who are nervous or unsure would drive slow. So we have speed limits, so people are forced to stay within them, so the speeders don’t kill those taking the Sunday drive. How that could be done in a free market economy, I’m not sure. But limits are needed or there will be the same sort of return to irresponsibility.
I do like you TLDR, and especially agree with the gaming connections.
This is an unusually thoughtful blog discussion. Thanks for your thoughts. My name is Max and I’m one of the students working on the oath. We’ve been trying to think of a good lines to summarize the oath, like “do no harm” for the hippocratic oath. We had “create value responsibly” but “Remember the long-term” is a bit more pithy and does a pretty good job of summarizing what this this is about.
Chris, you make a point at the end of your post that it’ll be a tough pickle for us once we start working. I agree. Most of us have 4-5 years of work experience, on wall street and elsewhere, so we know the reigning orthodoxy and that we’ll be tested often. If you have ideas on how to make the oath stronger, we’d be happy to hear them on our blog at http://mbaoath.org
@Max: Thanks for stopping by – I’ll definitely read more on the oath. Quick question (which may be answered more quickly at your own site, but I’ll throw it out there anyway) – any reason why this is limited to MBA’s only? Any thought of approaching current CEO’s? I own my own business, it is a national brand in Canada. While a lot in the oath doesn’t directly apply (as we are not publically traded) I still see value in it.
An interesting side thought to all of this – IS the purpose of a business to solely ‘make profits’ or is a business making profits simply the result of a business fulfilling it’s purpose? (service/product, etc). Is profits the purpose or is it the result? Can it be both?
I don’t think it can be both.