The MBA Oath is just making me Swear

The MBA Oath was started in May 2009 by Harvard Business School students. The Oath was intended to serve as a Hippocratic Oath for MBA's, encourage students to start local Oath or Oathian clubs on their campus, and promote the emphasis on greater societal good. I blogged twice about my assessment of the Oath's progress and this post represents the eagerly anticipated third installment of the series. This is probably similar to how the public eagerly waited the second Chronicles of Riddick since they had no idea that a first version was released.

How is the Oath doing? It might even be similar to the Chronicles of Riddick

• Since 2009, 6,303 students have signed the oat and the MBA Oath states that it has been embraced by about 300 schools and institutions. 37 schools were highlighted as working on significant events which I guess is kind of like getting past first base. 17 schools were highlighted as significant contributors which I guess is second base. Either the MBA Oath doesn't put out or it's not getting any action. Given that hundreds of programs graduate 150,000 MBA's per year, this is looking like less than 5% market share. From a volume perspective, it's not looking like it's impactful, making impacts, having an impact, leveraging, optimizing, or transforming. Value is not being created but at least no value was harmed in this process.
• In my first post, I praised it's slick website which is the equivalent of a corporate business card in this day and age (not saying that I consider corporations to be people since Occupy Wall Street clearly disagrees). That's good when your website is in good shape. When your website's blog and media page haven't been updated since the last World Series, that's a pretty clear out of business sign. To be fair, it looks like they moved their activity to their Facebook page which I guess is either really a savvy move or lazy move. Since moving to Facebook, most of the MBA Oath's activity has been from one very critical poster who is riding them harder then then headless horseman rode Ichabod Crane. Based on that, I don't think that it's working out too well.
• The MBA Oath's best opportunity was to position itself as a requisite for MBA's as part of a hopeful movement to provide some form of license or ways to guarantee that all MBA's come with some minimal standards. If they chose to position themselves as a resource and driver for socially minded MBA students, they would compete with Net Impact. Net Impact has a long track record of providing resources and opportunities to this segment. They seem to be trying to compete with Net Impact which is duplication of services at best but really an example of a lack of clear goals.
  

The last bullet point is what made this post timely for me since Occupy Wall Street is being charged with a lack of focus and having no clear goals. I have no shortage of snarky posts about wellness, ACO's, resumes, and job interviewing so it's not like I needed to make fun of the Oath for material. The parallels between Occupy Wall Street and the MBA Oath became fairly clear to me as I got more interested in the Occupy movement.

• Both are good examples of excellent marketing campaigns that captured a key movement of their times. They both are good shorthand for these movements with Occupy representing angry leftists trying to salvage the American middle class and the Oath representing socially minded MBA's trying to salvage the reputation of their schools.
• Both had clear goals but no clear way to get there. Occupy is about the end of corporate personhood (note the foreshadowing), boycotting national banks in favor of local credit unions, and a "Robin Hood" tax on investment transactions. They are trying to get there with human microphones, face paint, and funny hand gestures. The Oath is about doing financially well while doing good, responsible corporate behavior, and encouraging their classmates to take an oath to do these things. They are trying to get there with a petition. I would recommend adding face paint.
• Both face a backlash from those who should be their most ardent supporters for appearing to be a marketing campaign with no clear goals that is capitalizing on popular sentiment

From my visit to the Occupy Portland camp, I have to say the main difference between the two movements right now is their personal hygiene of their participants. However, I am rooting for Occupy Wall Street's legislative agenda and hoping that the rate of voting in the 18-29 segment rises above 50% in the next election.

A Ranking that Differentiates MBA programs for Employers

I was reviewing the latest MBA ranking- no not the Business Week ranking. No not the US News and World Report MBA ranking. No, don't worry it's not the Wall Street Journal ranking which you hate because it ranked your school 57th. No, not the Financial Times ranking which yes ranked London Business School #1 and yes I know that you think that Insead is clearly the top European business school. No, not Jacksonville Jaguar running back Maurice Jones-Drew Fantasy Football and top MBA ranking. Yes, I'm glad that it's not the Jones-Drew ranking because no one trusts guys with hyphenated last names.

Let me start again. I was looking at some random MBA ranking published by QS. I don't know what QS stands for and I only found it because a student of Bainbridge Graduate Institute (BGI) complained about its Corporate Social Responsibility ranking. I only know what BGI is because a Facebook friend who sought my advice on MBA programs attends BGI and posted about it.

You also know that it's a very inauspicious start to a blog post when it's the 3rd paragraph and you are still rambling. And writing in the second person. The point that I was making was that while I don't know what QS stands for, their ranking unintentionally has some interesting results. The ranking is devised through surveying major employers of MBA's and scoring their responses on an curve. Based on the spread of the curve between the various places, one can tell which specialties provide significant differentiation for MBA programs.

I am applying the same methodology from a Net Promoter Survey that a market research firm did on the Medicare Advantage industry. Through their methodology, they can tell what features provide a health plan a true opportunity for differentiation. For example, most Medicare Advantage enrollees think that their health plan's customer service is top notch even those who hate their plan. The scores cluster very close together meaning there is little to no opportunity for a plan to differentiate themselves through customer service. However, few members really think their Medicare Advantage plan has a good dental offering which provides an opportunity for differentiation.

My analysis of the QS MBA rankings by specialty is not as statistically robust as the market research firm. I applied the same methodology to come up with some expected and counter intuitive results which is what one wants to make analysis interesting and probably accurate. If the results are all expected than the analysis isn't very interesting. This is like most social psychology experiments that reveal gems like people tend to get angrier at football games when their favorite team is losing and reduced to playing its 3rd string quarterback whose name sounds like the the newest character in Glee. If the results are counter all counter intuitive, then they are probably wrong due to an incompetent research assistant.

After 5 mostly rambling paragraphs, here are the results. My methodology is that I looked at the number of schools that received a score of 100 and score of the top 10 schools and top 20 schools to see the spread. The number of schools that received a score of 100 was clustered closely around 4 or 5 programs. Average ranking of the 10th ranked school was 76 and average ranking of the 20th ranked school was 49. This is all done by specialization which are:

Entrepreneurship: Five programs received a score of 100, the 10th ranked school received a score of 77, and 20th ranked school received a score of 38. This distribution pretty much matches the average scores so there is only an average amount of differentiation a program can achieve by focusing on entrepreneurship. Entrepreneurship is a fairly nebulous field so is this expected.

Information Management: Two programs received a score of 100, the 10th ranked school received a score of 80, and 20th ranked school received a score of 37. Another average distribution except the fewest schools received a perfect score. Unless, you are a Harvard or MIT graduate which achieved the perfect score, there is an average opportunity for differentiation.

Finance: Five programs received a score of 100, the 10th ranked school received a score of 48, and 20th ranked school received a score of 31. This is more interesting as there is a clear opportunity for differentiation in Finance. There are only 7 schools that received a score above 58 (Wharton, Chicago, LBS, Stern, Harvard, Columbia, and Insead). Graduates of those schools will separate themselves from the hordes of other MBA's in the field of finance (with the fin in finance pronounced like a fish's fin instead of fine by graduates of those elite programs.)

International Management: Four programs received a score of 100, the 10th ranked school received a score of 79, and 20th ranked school received a score of 51. The distribution is above average in terms of how tightly it is clustered. This shows little differentiation opportunity and a cautionary tale. International Management used to be an area of focus for schools like Thunderbird as they hung their hats on breaking into the elite circles of MBA programs through International management. While Thunderbird was one of the four programs that received a 100, USC, Cambridge, and SDA Barconi were examples of schools with just an average reputation that were close behind. All of Thunderbird's focus still results it the school having a similar reputation as the fortified Thunderbird wine.

Strategy: Four programs received a score of 100, the 10th ranked school received a score of 73, and 20th ranked school received a score of 36. Considering that strategy is thought to be as nebulous as entrepreneurship only with more buzz words, I was surprised that there was this much opportunity for differentiation. This was the most counter intuitive example as George W Bush has almost destroyed this specialization by calling it stratergery.

Operations Management: Three programs received a score of 100, the 10th ranked school received a score of 89, and 20th ranked school received a score of 60. Operations management had the opposite story of strategy with a very tight distribution all the way to the 20th ranked program. There is little opportunity for differentiation probably became most employers have only met one MBA who majored in Operations management.

Innovation: Three programs received a score of 100, the 10th ranked school received a score of only 62, and 20th ranked school received a score of 42. While innovation is more buzz word than an actual specialization, it looks like employer believe a few schools do it well (MIT, Stanford, Harvard, Wharton, IE in Spain, London Business School, and NYU Stern).

Corporate Social Responsibility/Ethics: Fourteen programs received a score of 100, the 10th ranked school received a score of 100, and 20th ranked school received a score of 97. Despite all the talk, the MBA Oath, and general interest in the area, employers believe all the schools have the same capabilities. There is no current opportunity for differentiation which should be cause for concern for BGI or other programs which are trying to use this as a point of differentiation. Currently, employers believe there is a larger difference in students skills with a financial calculator then there skills in resolving an ethical dilemma. A BGI student blogs that the recent MBA's dubious role in the financial crisis should lower their schools' scores. However, the Notorious BGI student fails to explain what their program's students would do any differently. Would they get jobs at the SEC and better regulate the financial industry? Would they become CEO's and require their bankers to submit essays on their ethics? Would they even get jobs in the financial industry by touting their ethical skills? This survey suggests these skills would not impress future employers.

The results of this survey show the a stratergery of differentiating in Corporate Social Responsibility would have even a worse outcome than schools that placed all their chips on international management. There is little differentiation and what difference there is easy to replicate.

I'm not cursing about the MBA Oath

Four months ago, I authored my own opinion of the MBA Oath, a project launched by members of the Harvard Business School's graduating class. The MBA Oath follows the medical Hippocratic Oath where MBA's sign the oath and pledge to "create value responsibly and ethically".

My post about the MBA Oath was somewhat critical. Prior to business school, I was a social worker and during business school I was very active in volunteer programs, Net Impact, and was elected the social conscience of my class (not really but just painting a picture). I was very concerned that the HBS students were capitalizing on the national movement towards service and good citizenship and was not confident about their commitment to what they preached. The last thing that we (we meaning any MBA with a serious track record in being a responsible member of society) was a short-lived movement that would provide a shining example of how MBA's were not really serious about social change, had an average attention span, and were just as opportunistic as ever. To underscore this point, I submitted my blog post to the MBA Oath essay contest. To their credit, they promptly thanked me for my entry.

Four months later and with 1,661 signers of the MBA Oath, I have to give the MBA Oath creators respect and credit. Their blog is updated and they have capitalized on their marketing success with a long-term vision of creating different chapters on different campuses. The Economist still mentions the oath in its articles about business school. I had assumed/hoped that the creators of the oath had a track record in social responsibility but the proved it. Students and alumni are still signing the oath and it appears to have carved out a niche with the potential to trigger bigger change. I'm also not concerned about the nuances of the oath and the questions about whether managers have a social responsibility. As citizens of a warming planet with growing inequities, we all have a responsibility and the oath provides an outlet for MBA's. There is still the curse of potential but I'm not cursing about the Oath creators' potential anymore.

Instead, I curse about the lack of participation by certain MBA programs. First, I have praise for Kellogg, NYU, Oxford Said, and the Singapore Management University who have the most signers outside of the HBS (half the signers graduated from Harvard). The students and alumni of these 5 schools have made the commitment and publicly acknowledged the importance of the principles of the oath. What makes it more remarkable as how different these schools are from each other as support of the oath seems to be the only thing in common. My own institution, Wharton, has an abysmal performance with only 20 signatures despite some direct outreach efforts.

I hope that employers and recruiters who value the principles of the oath reward and honor those schools and its graduates accordingly.

Ethics Lessons in Unusual Places: the Bear Sterns Collapse

I just finished William Cohan's "House of Cards" about the implosion of Bear Sterns. It was a very enjoyable finance drama that reinforced my belief that my classmates who work in financial services on Wall Street were crazy. However, I also read the book with the frame of ethics and business after my post about the MBA Oath. Given the discussion about ethics in the MBA program and the role of an oath due to no harm, I thought there would be many lessons in this book. There were lessons but not the ones that I had thought I would learn. There was not a lot of outright flaunting of ethical guidelines. Instead it was a tale of very principled men with strong codes of conducts navigating a very grey world. The lesson that I learned were more about how that even characters in a "Tale of Hubris and Wretched Excess" made decisions with what they deemed to be the greater good in mind. I never thought that I would write this, but there is a strong sense of ethics on Wall Street.

The Good
Two CEO's, JP Morgan's Jame Dimon and Bear Stern's Jimmy Cayne showed clear Kohlbergian moral reasoning at a stage 5 by asking "What makes for a good society?". Some could put them at stage 6 the highest level depending on interpretation. When the government approached Dimon about purchasing Bear Sterns, his thought process showed weighing the good of the country, good of the financial systems, and good of the shareholders. There was even empathy and concern for Bear Sterns in the mix.

One could argue that Cayne was more expediant in his reasoning. His lowest level was in the decision to not participate in the rescue of Long-Term Capital Management. He did not look at the greater good of the community but the greater good of Bear Sterns. I would argue that Bear Sterns was his community and Cayne was aware of the implications of his refusal to participate and did try to warn the group. This was his low point but otherwise, Cayne was very clear about his principles of how Bear Sterns should be run and how it should be fair. When Bear Sterns was being sold for $2/share, Cayne did show how he thought of the impact of shareholders, bondholders, and employees. Ultimately, he did support the sale since it was the right thing to do even though others were suggesting more nuclear options.

While Cayne was not a shining example of morality, you do realize that he is not a burning example of lack of it. Additionally, a 5 year old on a sugar rush has greater attention to detail and he was Machiavellian in his quest for power. However, he had his own definition of who was part of the greater good and very principled about how to support it.

The Bad:
Ralph Cioffi and Matthew Tannin were the only ones that provided a clear, easy example of lapse of ethics. They mispresented the risk level and subprime exposure of the Bear Sterns hedge funds to investors. The mispresentation was so blatent that a Bear Sterns employee was able to note the contradiction in subprime exposure on 2 different investor communications. This clear demonstration of lack of ethics was not common in the book at all. Cioffi was known to have such poor attention to detail that he couldn't follow basic compliance guidelines for completing a trade. He was a classic Randy Moss type player or talented athlete who immense talent was only closely followed by their inablity to follow basic rules. However, both extremes are rare.

The Ugly:

The biggest surprise to me is the moral quandry that exists in the financial world. There were 2 specific examples that are Solomn-esque in terms of their complexity.

1. Goldman Sachs valued mortgage-backed securities that made up a large part of the Bear Sterns' hedge fund's porfolio at 50% the price that everyone else did. This caused the value of the assets to drop since everyone is required to use the average valuation price. The drop was one of the big drivers that led to the hedge funds melt down. Goldman knew the consequence of what their pricing and also had exposure just like everyone else. However, they felt that their prices were truly accurate and to not publish them would also be unethical. Pricing what someone believes to be accurate can torpedo the entire financial sector today. This is an issue of Talmudic proportions.

2. If a bank does not project an image of financial strength, they risk a run on the bank and their demise. This is what happened to Bear Sterns, Lehman, and others. One could argue that overstating one's position is necessary to prevent a bank from being positioned 6 feet under in the future. Therefore, there are equally compelling reasons to be truthful about a bank's financial status and to overstate.

After realizing how bankers face these challenging ethical issues everyday, I was no longer surprised about the strong sense of ethics and principles that some of the executives in the book exhibited. The Cioffi's and Tannin's don't last long enough in the business with these daily ethical challenges.

I had expected to read stories of strip club-fueled orgies on borrowed dollars or "Barbarians at the Gates" effort to squeeze out every last dollar from a deal as a measure of one's worth. Instead I sympathized with Bear Sterns as a company that thought that they were doing the right thing and was bewildered by their demise. Their greatest sins did not appear to be of the flesh or of ethics but of not planning well for the future. They ran their business one deal at a time. While this opportunitistic culture gave them the flexibility to be nimble with deals, their lack of a plan for the future left them vulnerable to the whims of the market.

MBA Oath: Solemnly Swear to or Just Swear at?

I opened up my issue of the Economist to find an article on "A Hippocratic Oath for Management". A group of 2nd year Harvard Business Students started a campaign for MBA's to sign an oath to "create value responsibly and ethically" or basically not be stereotypical MBA's. MBA's have done harm in the business world and this is a pledge to do no more harm and prevent others from doing harm.

When I first read about the oath on the student's website, I had some of the reactions that one would expect. I stuck my finger in my mouth in mock vomit motion and rolled my eyes. I took my laptop and pantomimed wiping my posterior with it. I raised my leg in mock- OK you get the idea. This is what the Economist so elegantly described as "You may snigger." When read in a British accent, how could I compete with the phrase?

Now that I've gotten that out of my system, I am ready to give some serious thought to this project. Like many others, I am not surprised that this started at Harvard Business School (HBS). HBS has always been known as an incredible place to pursue an MBA in non-profit management due to resources such as the HBS Social Enterprise Initiative. There are non-profit management concentrations, summer internship fellowships, and post-graduation leadership fellowships to work at non-profits. With students who are attracted to those resources and HBS's dedication, I would expect HBS to have more students open to social responsibility and the oath.

Getting back to the oath, my favorite response vehicle is always a bullet pointed good, the bad, and the ugly.
The Good:

• The MBA Oath website is slick and shows thought and dedication. Blogs, twitter feeds, and Facebook profile are all set up. Websites have been described as a company's public business card or their public face. You can tell from the website that the Founding Oathers (or Oathians perhaps?) are serious.
• There is potential with the oath to help further the licensing of the MBA degree. The Economist had this view point and I've blogged before about how the MBA is a non-licensed trade degree. A code of conduct or this oath could be part of the licensing process which would go a long way towards establishing more trust and confidence in the MBA degree.
  
• Again, potential, which is both the strength and curse of this endeavor. If McKinsey or other blue chip firms required MBA's to sign this oath before being extended an offer, that would send a message. If the Founding Oathians' employers did something similar, that could create change. Or if this doesn't happen, that transitions to my points below:
  

The Bad:

• You don't really need to read the oath. It is overly flowery prose that reminds me of bad MBA essays. A better written oath would be more clear, simple, and specific.
  
• I am not impressed with the current 648 signatures (or however many they have). In fact, I think that's really low. In today's hyperconnected MBA world where every MBA student is Facebook friends with half their class, every school has 10 bloggers, and every conjoint marketing analysis survey gets spread virally, the oath should have thousands of signatures. There is no reason for anyone not to sign it. For guys, it is an easy way to impress that nursing student you've been working (or veterinarian student if you're really slick and followed my advice). For women, well they tend to be naturally more attentive to the needs of society, and if not, they can impress the art student that they picked up in a bar. If there are not 2500 signatures by the end of the summer, I will be disappointed.
• MBA applicants that I work with rarely struggle with the ethical dilemma essay. It's an easy straight-forward essay unlike the the Why do you want an MBA or Why this school essays. Therefore, it's not really an issue of understanding ethics but application. The oath does not address the application which is the real issue. With the media attention, this is a missed opportunity. A phrase like "Just because your competitor is doing it is not a reason to change underwriting" would help with application. Instead the oath has a line about vague "sustainable practice".
  

The Ugly:

• Recently, the health care industry pledged to save the US $2 trillion dollars over 10 years. After the initial euphoria faded, it became apparent that this was more of a marketing tactic than anything of real substance. With that back drop, I have concerns that this oath could have the same fate. Once the blog posts, interviews, and articles stop, the website could cease to be active and this initiative would fade, leaving everyone even a little more cynical. I hope that I am wrong, but it does have to be the potential to be just a marketing strategy.

Even though, I have pretty much described the oath as a nice website with vague flowery language that I would purge off applicants essays and a real danger for overhyping, I am signing the oath. While the Founding Oathian urges me to do more and spread the word, I'm not ready for that level of commitment.

I am being harsh with this post because I don't want anyone to start the victory lap yet. There is national attention but I want to see if the Founding Oathians have the commitment for change before I commit more. I don't want to get fooled again by a good marketing campaign. Media attention is a limited resource that should be used wisely. Now is the time for responsibility. I hope that that the current momentum is channeled, the oath is continued and long-term goals remain the driving force. This could feed into the next transformation of the MBA program complete with a working ethical framework that candidates must study to achieve an MBA license. That is exciting.

Or it could be used as an example of how MBA students are not really serious about ethics if these efforts don't continue. Founding Oathians, you have seized the mantle of leadership. I have no doubt that many of you have a long track of social commitment. I am sure that you have the capabilities and there is a clear market need, no- a clear hunger for this kind of change. I hope that when I revisit this in 3 months, I will compliment more than your website. I hope that you move beyond media attention and short-term signatures and focus on a 3 years vision. Congrats on starting the project but by reaping the media focus, recognize the responsibility that comes with it.

Make us proud.