The re-Education of a businessman

What business schools need to do

From The Statesman

CYBER AGE - ND Batra

Business schools emphasise quantitative analysis and sophisticated computer modelling as if real life in the street could be enclosed in a Gaussian Bell Curve and events could be predicted within margins of error. But modern tools of business and economics cannot capture outliers, for example, the rare and extreme event such as the global financial crisis that is crushing us today.

While one cannot prevent a tsunami from hitting a country, one can certainly imagine such an extreme event occurring and build enough reserve resources to reorganise and restructure.Nor do business schools teach how to resurrect and rebuild the most invaluable human asset: trust and confidence. How do you restore people’s faith in a system that has failed them?

When the CEOs of Detroit’s big three automakers went to Congress for a $25-billion bailout to avoid bankruptcy, member after member asked them why they should trust them for doing the right thing for taxpayers and consumers. Show us your business plans before we give you the money, they said, after scolding them for flying in in their private jets. The best argument the trio could muster was that bankruptcy would put millions of people out of job, which was not only unpersuasive but also a dangerous half-truth.

The foreign automakers ~ Honda, Toyota, Hyundai, BMW and Mercedes ~ who run non-union auto plants in the South are after all doing not that badly in these bad times. No one wants Detroit to disappear as an important auto-manufacturing hub that radiates its energy through every walk of American life and directly and indirectly affects the lives of 2.5 million people.

But Detroit is an exemplar of failure in persuasion. It has failed to persuade the American consumer that its cars are better than those made by Germans, Japanese and South Koreans. It has failed to persuade Congress that it is capable of making better cars ~ fuel-efficient and green. Business schools claim that they create future business leaders but they don’t teach the fine art of how to become influential in a democratic society. They train technocrats who feel more comfortable with their BlackBerrys and talking into Bluetooths rather than sitting across a hostile group of people such as a congressional subcommittee and turning them into friends.

In the ultimate analysis doing business is about persuasion. Therefore, what business schools need to do is to develop a new concentration of courses that prepares MBA students for creating and exercising soft power. For want of a better term, some people call it lobbying, though I believe advocacy is a better word. Mr Richard Hall and Mr Alan Deardorff of the University of Michigan wrote in the American Political Science Review (2006) that, “Professional lobbyists are among the most experienced, knowledgeable, and strategic actors one can find in the everyday practice of politics.” But lobbyists are sometime reviled as unethical because most people think of lobbying as greasing, golfing, wining and dining ~ an unfortunately negative attitude about a socially useful activity.

Lobbying is a multimillion-dollar global service industry. China, India, Israel, the EU and Arab countries, for example, have hired some of the best lobbyists to look after their interests in the US. The US-India nuclear deal would have never been passed by Congress but for the excellent work done by some very talented groups of people who changed perceptions about India even though the country did not sign the Nuclear Non-proliferation Treaty. Chinese lobbyists want to ensure that Americans do not turn protectionist.

American lobbyists abroad (call them by whatever name you like) prowl and trawl throughout the world wherever decision-making power is concentrated. They know how to negotiate with the powers that be and use the news media and other resources to protect their national interest. Lobbying substitutes the power of the gun with the power of the tongue. In the US, lobbying is a legitimate activity protected by the First Amendment. In other democracies too, lobbying is considered a rightful and justifiable activity.

One of the most arduous tasks for anyone is to unravel and understand the labyrinthine activities of the US Congress ~ how it works and wields power through its committees, subcommittees and public hearings. How issues emerge in the public consciousness and how they are transformed into bills that become laws.

It is important for us to understand and appreciate the role of lobbyists in the halls of power and how they facilitate legislative processes both at Capitol Hill and in state capitals. If you take away lobbyists from Washington, Congress might turn into a permanent lame-duck institution. In fact, the failure to help the Detroit automakers is as much a reflection on Congress’s disarray as it is of the big three automaker CEOs’ inability to change the perception that they can do better.

Apart from being extremely knowledgeable and strategic thinkers, lobbyists put to use an indispensable tool of persuasion, which is negotiation. While it is said that most things in life are negotiable, the art of negotiation does not come easy whether one is dealing with friends or foes.Another important aspect of lobbying is to build and manage public campaigns, which include political (presidential), corporate (as the big three are doing now), and global (environmental, human rights) campaigns.

Besides teaching negotiation and campaigning skills, business schools should teach students how to work with the news media and use the Internet and social networking sites for grassroots community building.The learning focus could vary from the outstanding success of Mr Barack Obama’s presidential campaign to the ongoing international bailout efforts to save the international financial system. Advocacy, negotiation and campaigning should be central to every management programme.

(ND Batra is professor of communications at Norwich University)