BEIJING: China will take part in the construction of high-speed railway projects in several countries in South-East Asia, Europe and the United States.
The Chinese Ministry of Railways, which has the world’s best technology in high-speed rail, had signed a memorandum of understanding with US-based General Electric to advance strategic cooperation in rail projects following US President Barack Obama’s visit to China last November.
Ministry officials said that they had roped in some Chinese companies which signed a separate MoU with the railway authorities in California and would bid for the state’s first high-speed rail project.
The ministry had also penned similar agreements with authorities in Russia and Brazil. The Brazilian authorities and their counterpart had agreed in principle to a deal to build a high-speed rail between Rio de Janeiro and Sao Paulo.
“After the completion of several high-speed rail projects like the Beijing-Tianjin, Wuhan-Guangzhou and Zhengzhou-Xi’an lines in China, many governments around the world are paying more attention at the development of our high-speed rail system,” Chinese Railways vice-minister Wang Zhiguo told a press conference here yesterday.
“Saudi Arabia, India, Myanmar, Cambodia, Laos, Thailand and Poland have also expressed their intention to collaborate with China in their high-speed rail projects,” he added.
From podcast lessons to virtual classrooms, the Internet is transforming educational landscapes around the world.
GONE are the days of the school master arbitrarily dictating a collection of facts for his charges to scribble into dog-eared exercise books.
The current generation of students have the opportunity to download entire textbooks, receive examination results through short messaging system (SMS), watch educational programmes on IPTV (Internet Protocol Television) and access media-rich content via sponsored netbooks.
Teachers encourage interactivity in their lessons, and students are coached to become self-directed learners — all as part of the masterplan to embrace the future with technology.
Secondary school student Michelle Tan, however, is not convinced.
Michelle claims that for her Science class, the new computers in the lab seem to act as “glorified blackboards”.
It is increasingly becoming the norm rather than exception for pupils to use the Internet to do their homework. — File photo
“The teacher just puts in the software for the lesson, and reads through them like a PowerPoint presentation,” she says.
“So, instead of leafing through textbook pages, we’re clicking through the subject with a keyboard.” Michelle’s experience may be an isolated one, but it poses a crucial question: to what extent is technology being used to meaningfully transform the way we teach and learn?
Holes in walls
One route to harnessing the full power of current and developing technology may be to question the status quo.
Collaborative learning: Students researching and discussing an assignment on campus. — File photo
For instance, the question that scientist Dr Sugata Mitra had in mind was whether children were able to pick up useful computing skills unsupervised.
In 1999, Dr Mitra chose to test his theory by placing a touchscreen computer in a carved “hole” on a wall in a slum in New Delhi, India.
Subsequent observation showed that children as young as eight years old were performing basic computer functions by the end of the week. In a month, they were downloading files from the Internet and playing online games.
The Hole-In-The-Wall project has since expanded to over 30 such computer stations in and outside of India, aiming to educate by engaging curiosity.
Dr Iskandar: The iPhone provides an extra dimension in terms of mobility for students.
Meanwhile, game designer and researcher Jane McGonigal wondered if online games, particularly alternate reality games and their networking elements, can be used to teach people how to save the world.
Alternate reality games present fictional narratives that take place in a real-world setting, where players’ actions and ideas may have an effect on the storyline.
Following that train of thought, McGonigal developed UrgentEvoke, a game which aims to engage young people in coming up with solutions for world problems such as poverty, climate change, war and education.
Funded by the World Bank Institute, the game was launched earlier this month and will last for ten weeks.
Every week, players are presented with a scenario that takes place within the game, such as famine or water shortage.
Players are then challenged to address the issue by taking action in the real-world, and post up evidence of their work in the form of blog entries, videos or photographs to collect points.
Anytime, anywhere
On the local front, educational institutions are making use of tools that encourage student mobility, thus enabling them to learn on the go.
When Cempaka School’s Cheras campus had to close down for a week of quarantine due to the A(H1N1) flu last June, classes were able to go on as usual online.
As Macbooks have been on the compulsory booklist for the group’s secondary school students for past four years, the transition was seamless.
“During the quarantine, we used the existing platform and followed the roster as per usual,” explains chairman Dr Iskandar Rizal Hamzah.
“But instead of the teachers going to the classroom, they went online to the virtual classroom.
“This meant that teachers were available in real time for the students. Attendance was compulsory, and classes went on as usual.”
Aside from laptops, Cempaka Schools has also introduced Apple iPhones for its International Ladies College students.
“The iPhone provides an extra dimension in terms of mobility for students. For example, on class trips, they will be able to post notes to their project files, record videos or interviews for project work, or access their notes on the go,” shares Dr Iskandar.
However, the gadgets, which are provided by the college, are not allowed in the classroom, so that lessons are not disrupted.
He adds that the objective of introducing such technology into the schools is not just about enabling students to pick up ICT skills, but also to educate them on how to use technology appropriately.
“It also affords us the opportunity to teach life skills for technology — for example, how to behave properly online, the dangers of the Internet, online safety, etc,” he says.
Stressing that the school has a zero tolerance policy for cyberbullying, Dr Iskandar shares that although some parents disagree with their tough stance on the proper use of technology, he feels that it is more important that bad online behaviour be nipped in the bud.
Another institution that has also decided to introduce the Apple iPhone 3GS for their students is Limkokwing University of Creative Technology (Limkokwing).
This enables students to receive real-time updates on their classes and schedule, as well as refer to their notes at any time.
“Basically, it is another way of ensuring our students are on the cutting edge,” says special assistant to the president Tiffanee Marie Lim.
“Everything is being transferred to mobile technology; it is replacing the laptop, which replaced the desktop. “It makes everything faster, simpler, lighter and cooler.”
Open learning
The educational virtues of the Internet hardly worth repeating, especially in the realm of distance learning. However, a few Massachusetts Institute of Technology (MIT) faculty members decided to take their content distribution a step further – by making it freely available to anyone with a web browser.
Launched in 2001, MITOpenCourseWare offers syllabi, notes, assignments and audio-visual lecture clips of 1,900 MIT courses.
In an e-mail interview, MITOpen-CourseWare external relations director Steve Carson explains that the idea for the project stemmed from a realisation that the university was not suited to embark on a for-profit distance learning venture.
“This conclusion had a lot to do with the unique nature of MIT,” says Carson.
“The institute is very focused on the residential experience and uses a lot of hands-on experience in instruction.
“The faculty committee then returned to the MIT mission, which reads in part ‘to advance knowledge in ways that will best serve the nation and the world’. They thought about what MIT did best, which was residential education, and what the Internet did best, which was to distribute content widely and cheaply. And it occurred to them, why not combine these strengths?”
It appears that most OpenCourseWare material is used as reference by faculty and students in other institutions, to delve deeply into a specialised topic rather than to study a whole course.
“However, it’s clear that a subset of our visitors use a our courses to learn independently with great success — 43% of our visitors are independent learners,” adds Carson.
MIT’s novel concept has been credited for inspiring other ventures to tap into the Internet’s potential to democratise higher education, much to the delight of self-learners such as Charlie Hartono Lie.
“Due to financial and time constraints, local universities are out of my reach; these new ways of borderless learning have certainly given me hope in preparing for a better life,” says the 29-year-old Indonesian.
Searching for scholarship opportunities online, Charlie came across the University of the People (UoP), which bills itself as the world’s first online tuition-free university.
Currently enrolled in the institution’s computer science programme, Charlie is unfazed by the university’s unaccredited status.
“Of course, accreditation will definitely be a plus point, but my main concern is gaining knowledge,” he says. UoP founder and president Shai Reshef asserts that many of the institution’s students have a similar resolve. “We do intend to apply for accreditation, but I think that many people just want to learn; or they don’t have any other alternatives,” says Reshef.
“Plus, we already have the support of leading universities around the world, as well as the United Nations’ Global Alliance for ICT and Development.”
Although tuition is free, students still pay admission and examination fees on a sliding scale based on the economic situation in the student’s country of origin.
Meanwhile, Peer 2 Peer University (P2PU) has opted to radically experiment with the entire model of tertiary education.
As its name implies, the project makes full use of the peer-to-peer learning concept, giving users an online platform to fashion university-level courses from open learning resources.
“The course organisers are responsible for structuring the modules and leading discussions, but everyone in the class will pitch in with their own knowledge and help move the class along together,” says P2PU co-founder Stain Haklev.
“Our main focus is the collaborative learning process; I believe that everybody has the capacity to teach something.”
No longer a dream but a possibility, today’s youth aspire to be rich, become a millionaire by the age of 35, and are confident that they can attain their ambition.
WITH role models like Mark Zuckerberg, 26, founder of Facebook and youngest self-made businessman worth more than a billion dollars; and Sergey Brin and Larry Page, founders of Google, it is no wonder that the young think they can hit the jackpot too. The lure of being young and successful is strong – with icons that made their millions barely out of university.
In today’s world of success equals wealth, many see their paper qualification as a mere stepping stone to routes that will bring them an income beyond a simple salary.
To aspire to be a millionaire is no longer an abstract phrase but a very doable achievement. Obviously, 96% of 1,678 youth up to the age of 30 surveyed in the “So You Want to be a Millionaire” poll think so too. The poll run by Sunday Star with YouthSays and Universiti Tunku Abdul Rahman found that most youth indicated that they aspire to become millionaires.
Rajen Devadason, a Securities Commission-licensed financial planner with MAAKL Mutual Bhd, attributes the rise to the existence of successful role models like Bill Gates in the United States, Richard Branson in Britain and Datuk Seri Tony Fernandes here in Malaysia.
Role models: The success of Google founders Page (left) and Brin has spurred the young to think that they too can hit the jackpot.
“They are all exciting beacons of possibility for a generation looking for ‘heroes’ to emulate,” says Rajen. “The appalling lack of political calibre we see everywhere, both in Malaysia and internationally, and the flaky behaviour of some entertainers and sports personalities, have caused today’s young people to increasingly choose to look toward business icons as role models. Financial success is, naturally enough, tied to high achievement in that arena,” he adds.
Joel Neoh, the executive-director of YouthSays, is surprised that almost everyone who took the poll aspires to be a milionaire.
“What is interesting is how many would eventually become one. Many won’t be able to achieve the goal,” he opines.
He is not too sure if the term “millionaire” means having RM1mil in cash or collective assets or a combination of both.
“If it’s collective assets, it’s very possible to achieve it today. About 10 to 15 years of savings can amass to that amount (car, house, etc). However, if it is RM1mil cash, this is quite a challenge to do so before the age of 35 if one is a salaried worker. But if one is running a business, then the chances are higher,” he says.
Neoh believes there is a rise in the number of young adults working towards such a goal and attributes it to how materialistic society has become.
“Materialism is a big part of our society. Many of our parents tell us to get a good degree and good job. For many, being successful means being rich,” he says.
CEO of youth agency Summer Sands, Bernard Hor, shares that there is an increasing market for “how to get rich” courses, citing the many wealth academies and programmes available for those who want to learn how to make money.
“Many of those who go for such programmes are college students,” says Hor.
He adds that the multi-level-marketing (MLM) concept has the most active penetration in the campuses. He claims that research indicates that at least nine out of 10 students are exposed to what MLM has to offer. Hor says that six or seven students join MLM in one way or another.
“They have been sold the idea of making their millions through such marketing,” says Hor, adding that many of them aim to reach their goal before turning 30.
In fact, almost 75% of respondents agreed that being a millionaire was the single-most important thing in their life. So what is the motivation for becoming a millionaire? For ATCEN Founder and Group CEO Ernie Chen, being a millionaire is just sexy.
“Why wouldn’t you want to be one? Every kid I’ve met wants to have the cars and houses. They get the idea from TV shows and movies – pop culture, basically. The founders of Google were only in their 20s when they became not just millionaires, but billionaires,” says Chen who runs the Millionaire Business School.
But it is more than just being rich for glamour’s sake; saving for retirement is an important consideration too, especially with the increasing cost of living and inflation.
Loo Chuan Boon, Youth for Change (Y4C) convener, believes that the word millionaire is just a metaphor for making more money.
“There is an assumption that the price of everything will go up and there is a need to make a lot of money to survive, ” he says, adding that many youth are starting to invest in unit trust and other funds.
Alvin Chia, 21, a third-year business student, aspires to be a millionaire by 30. He cites lifestyle needs as a reason to make his millions.
Neoh: ‘Materialism is a big part of our society’.
“We know that in order to maintain the lifestyles we’re accustomed to, we need more than just a basic job to get that million ringgit. My priority in terms of a career right now would be a first job that would broaden my horizons. I’m going to try to earn as much money as I can once I’m done with studying,” he says.
Rajen says that most Malaysians now in their 30s and 40s who hope to retire between the ages of 55 and 65 are likely to need between RM500,000 and RM5 mil, depending on their lifestyles.
“The snowballing effects of inflation will almost certainly kick in well before we retire, thus necessitating millionaire status simply to afford simple amenities in the 2040 to 2050 time period,” he says.
He believes the growing ambitions of today’s youth are also indicative of higher expectations they are willing to place on themselves.
“All this suggests that more young people are willing to pay the high price, in terms of discipline, diligence and courage, to break the bounds of conventional employment and build businesses or professional practices that will grant them their lofty desired economic outcomes,” he adds.
But while almost everyone wants to become a millionaire, not everyone will succeed in doing so.
“I’ve met young people who have huge aspirations. The reality is that some will make it, some will not. If everyone does well, the economy will get better, our country will do better,” says Chen.
Hor: ‘Increasing market for courses on how to get rich’
He travels all over the country looking to recruit students for his “millionaire school”. He thinks that students are very lost because of the numerous options before them.
Spoilt for choice
“We didn’t have very many choices growing up. Now you can be anything you want. There are a lot of ‘professional dreamers’, as I like to call them, out there but they don’t take any serious action towards realising their dreams,” says Chen.
He adds that becoming a millionaire, billionaire, or achieving financial success involves a lot of hard work. And therein lies the problem.
Only 36% of those surveyed believe that hard work is essential to reaching their goal. However, 47% believe that becoming a millionaire is based on opportunities – being at the right place at the right time.
“Young people don’t understand what hard work is,” says Chen.
Similarly, Rajen believes that most youth who talk about setting such high economic goals are unlikely to follow through with the appropriate actions.
But for those who do, they are the top performers in professions like law, medicine, engineering, accountancy and financial planning; players in the oil and gas sector; successful sales professionals of financial products, including life insurance and unit trusts; and persistent entrepreneurs who are willing to face the 1-in-10 chance of having a new business succeed.
Working for someone is viewed as unlikely to help you reach your goal and this is probably the reason why almost 60% of the respondents ticked owning their own businesses and entrepreneurship as the way to achieve their target.
“The heavy emphasis on business and entrepreneurship is correct. That is the way to wealth, at least in terms of earning big bucks,” opines Rajen.
He adds that the entrepreneurs are the ones who have already learnt to be respectful and considerate employees.
“Working initially as a conventional employee for at least three years is, in my opinion, a vital step in the maturation process of becoming a great employer or business owner,” he says.
Neoh says the entrepreneurial route has been proven to work. Their yearly National Youth Entrepreneur Conference has resulted in a few successful startups.
“The Government and businesses have realised this, and are coming up with special with grants and funds for young people to start a business,” he says.
Hor believes the entrepreneurial route requires a lot of patience. He lists his own experience as painful. Many entrepreneurs who have made it big talk about the time when they had only roti canai or Maggi Mee to eat for a long time. He himself had to contend with red beans and bread for almost 10 months.
The need to support one’s family can be a big obstacle in venturing out and taking risks.
“Many want to be bosses and own their own businesses, but after university, they have to send money home. Entrepreneurs don’t get a salary for nine to 18 months. They have no choice but to opt out of the dream and take up a regular job,” says Hor.
Chen, however, says that there are many ways of achieving financial success. “You can be a millionaire even if you are an employee. The key is having businesses on the side and investments,” he says. Source: RASHVINJEET S.BEDI and SUMISHA NAIDU sunday@thestar.com.my
CAMBRIDGE – In the world of economics and finance, revolutions occur rarely and are often detected only in hindsight. But what happened on February 19 can safely be called the end of an era in global finance.
On that day, the International Monetary Fund published a policy note that reversed its long-held position on capital controls. Taxes and other restrictions on capital inflows, the IMF’s economists wrote, can be helpful, and they constitute a “legitimate part” of policymakers’ toolkit.
Rediscovering the common sense that had strangely eluded the Fund for two decades, the report noted: “logic suggests that appropriately designed controls on capital inflows could usefully complement” other policies. As late as November of last year, IMF Managing Director Dominique Strauss-Kahn had thrown cold water on Brazil’s efforts to stem inflows of speculative “hot money,” and said that he would not recommend such controls “as a standard prescription.”
So February’s policy note is a stunning reversal – as close as an institution can come to recanting without saying, “Sorry, we messed up.” But it parallels a general shift in economists’ opinion. It is telling, for example, that Simon Johnson, the IMF’s chief economist during 2007-2008, has turned into one of the most ardent supporters of strict controls on domestic and international finance.
The IMF’s policy note makes clear that controls on cross-border financial flows can be not only desirable, but also effective. This is important, because the traditional argument of last resort against capital controls has been that they could not be made to stick. Financial markets would always outsmart the policymakers.
Even if true, evading the controls requires incurring additional costs to move funds in and out of a country – which is precisely what the controls aim to achieve. Otherwise, why would investors and speculators cry bloody murder whenever capital controls are mentioned as a possibility? If they really couldn’t care less, then they shouldn’t care at all.
One justification for capital controls is to prevent inflows of hot money from boosting the value of the home currency excessively, thereby undermining competitiveness. Another is to reduce vulnerability to sudden changes in financial-market sentiment, which can wreak havoc with domestic growth and employment. To its credit, the IMF not only acknowledges this, but it also provides evidence that developing countries with capital controls were hit less badly by the fallout from the sub-prime mortgage meltdown.
The IMF’s change of heart is important, but it needs to be followed by further action. We currently don’t know much about designing capital-control regimes. The taboo that has attached to capital controls has discouraged practical, policy-oriented work that would help governments to manage capital flows directly. There is some empirical research on the consequences of capital controls in countries such as Chile, Colombia, and Malaysia, but very little systematic research on the appropriate menu of options. The IMF can help to fill the gap.
Emerging markets have resorted to a variety of instruments to limit private-sector borrowing abroad: taxes, unremunerated reserve requirements, quantitative restrictions, and verbal persuasion. In view of the sophisticated nature of financial markets, the devil is often in the details – and what works in one setting is unlikely to work well in others.
For example, Taiwan’s use of administrative measures that rely heavily on close monitoring of flows may be inappropriate in settings where bureaucratic capacity is more limited. Similarly, Chilean-style unremunerated reserve requirements may be easier to evade in countries with extensive trading in sophisticated derivatives. With the stigma on capital controls gone, the IMF should now get to work on developing guidelines on what kind of controls work best and under what circumstances. The IMF provides countries with technical assistance in a wide range of areas: monetary policy, bank regulation, and fiscal consolidation. It is time to add managing the capital account to this list.
With this battle won, the next worthy goal is a global financial transaction tax. Set at a very low level – 0.05% is a commonly mentioned rate – such a tax would raise hundreds of billions of dollars for global public goods while discouraging short-term speculative activities in financial markets.
Support for a global financial-transaction tax is growing. A group of NGOs have rechristened it the “Robin Hood tax,” and have launched a global campaign to promote it, complete with a deliciously biting video clip featuring British actor Bill Nighy (www.robinhoodtax.org). Significantly, the European Union has thrown its weight behind the tax and urged the IMF to pursue it. The only major holdout is the United States, where Treasury Secretary Tim Geithner has made his distaste for the proposal clear.
What made finance so lethal in the past was the combination of economists’ ideas with the political power of banks. The bad news is that big banks retain significant political power. The good news is that the intellectual climate has shifted decisively against them. Shorn of support from economists, the financial industry will have a much harder time preventing the fetish of free finance from being tossed into the dustbin of history.
By Dani Rodrik, Professor of Political Economy at Harvard University’s John F. Kennedy School of Government, is the first recipient of the Social Science Research Council’s Albert O. Hirschman Prize. His latest book is One Economics, Many Recipes: Globalization, Institutions, and Economic Growth. Copyright: Project Syndicate, 2010. www.project-syndicate.org
The state has not only kept the structures in place, but has given the banks unlimited access to not only the taxpayers, but the money supply. These banks now, due to the mergers and acquisitions of weaker banks, are even more powerful economically and politically. Lastly, there hasn't been any serious attempt at reform yet, and its has been over a year since the crisis began. It is becoming increasingly obvious that private ownership of finance is doomed to reach these proportions of instability, because of Minsky argues, stability leads to instability and it also leads to agents who have lots of money and have disproportionate political influence, because of much lower costs associated with 'rent-seeking'. In addition, the ability of capital to aggregate has no end leads to the subsumption of democracy under the tyranny of the market. We are all seeing this happen, but does anyone really have an answer to this crisis, an answer that would not just recreate the conditions in teh future, without some radical change? I don't think its possible, but I could be convinced otherwise. http://perspectivos.blogspot.com/
I WAS in Manila for a gathering of governors and trustees of the Asian Institute of Management. Among them were the cream of the Makati business community, and a cross-section of entrepreneurs and scholars from India to Korea and Japan, as well as from the United States, Britain and Australia.
Supported by the Harvard Business School (HBS), the institute was founded 42 years ago. It’s the oldest post-war business school in Asia. This set me thinking about the MBA (Master of Business Administration) in the wake of the financial crisis.
A thirtysomething asks: “Don’t we ever learn?” He’s referring to the Generation Y’s concern over negative perceptions about banks and bankers, following big bankruptcies in the early 2000s, and now exacerbated by the financial crisis.
We seem to be stuck in an evolving quagmire of intense rage against big business’ bloated profits and outlandish bonuses. To be blunt, there is loss of confidence in financial institutions – investment banks, credit rating agencies and regulators even, including business schools. Surely, MBAs have lost a bit of their lustre.
I’m angry because many people at the heart of the crisis – from Christopher Cox (former US Securities and Exchange Commission chairman) and former Treasury Secretary Hank Paulson (ex-Goldman Sachs chief) to former Merrill Lynch CEOs Stan O’Neal and John Thain, and Rick Wagoner, the ousted General Motors CEO – each carry a Harvard MBA. They should have known better.
To be fair, although some of the worst culprits had MBAs from other schools, lots of others didn’t (Bernard Madoff for one). It is easy to confuse correlation with causation.
I am angry because the teaching of ethics and values-based leadership was not taken seriously enough. Critics point to many MBAs being not well-equipped to make good judgements, and didn’t have enough good sense to take corporate social responsibility (CSR) to the next level.
I am angry because many MBAs have a dangerous overdose of quantitative models, with underexposure to management of systems-wide risks. MBAs are good at analysis, not always at managing.
Still, greedy appetites in a “corrupt” eco-system can overpower even the best management education. For comfort, CEOs (with MBAs) of Canada’s two largest banks did just fine. While Wall Street bankers had no qualms in gearing their borrowing at 34 to 1, Canadian institutions played it safe with 18 to 1. They are doing well, of course, while their US counterparts are on life support.
A little bit of history
The MBA started life in the 1900s (at HBS in 1908). The aim was to train professional managers to run large institutions (like Standard Oil and GM) so that they wouldn’t take undue advantage of markets and consumers. CSR was also strongly advocated. Giant enterprises need to be managed for the public’s good, not for short-term gains.
After World War II, the Ford and Carnegie Foundations supported serious reviews to modernise the MBA. It was a time of market liberalisation. Nobel-winning economist Milton Friedman and the Chicago School increasingly dominated business thinking. Their ideology glorifies markets as efficient and capable of regulating themselves, and all managers have to do is to maximise shareholder value.
Critics argue that this very thinking got us into so much trouble today. This is the point made by HBS professor R. Khurana in his 2007 book on the history of MBAs, From Higher Aims to Hired Hands, which concludes that business schools (B-schools) have veered from their original purpose of “training managers to rule in the name of society”.
This new preoccupation with quantitative methods and mathematical models, including the use of advanced analysis, unfortunately gave MBAs the illusion of being able to control financial risks. Moreover, their teaching was flawed by ignoring a good sense of ethics (“largely a waste of time” anyway) and imparting lots of moneymaking know-how.
I overheard this at MIT-Sloan last summer: “In physical science, three laws explain 99% of behaviour; in finance, 99 laws can explain at best only 3%.”
The trouble with rankings
As I see it, BSRs (B-school rankings) are part of the problem. Sure, market pressure from BSRs exert the needed competition to improve curricula and teaching. But undue attention to drive up BSRs can have unintended consequences: (i) higher starting pay means admitting the more mature; (ii) stress on higher paying sectors skewa curriculum to favour Wall Street; (iii) funds are misdirected towards coaching students to perform well at interviews so as to raise job offers; and (iv) the focus on professional education is undermined – instead, students ask: “How can I make the most money?”
Ratings target short performance drivers, and needlessly bias B-schools’ marketing efforts. Prof J.M. Podolny (Apple University and formerly of Harvard, Yale and Stanford) was emphatic: “I do object to the manner in which rankings have legitimised most business schools’ myopic focus on the short term.”
Management education adds value
When asked whether the MBA is still relevant, HBS professor Quinn Mills gives a quick and crisp response: “Yes and more than ever.” According to him, business has become more important as financial crises challenge political stability and economic welfare.
MBA training helps students better understand the ecosystem and master developments. The education has two elements – one is about business and economics and the other, management and leadership.
The first looks outside the firm to its context (customers, suppliers, regulators, markets), while the second looks inside the firm to its effectiveness, efficiency, planning and implementation. Both are important to the success of individuals in a leadership position.
Mills is convinced the problems in financial markets involve more than the business element. Problems arise in what financial firms are doing to others and to each other, not in how efficiently they are managed. Many say it’s all a leadership problem. If Wall Street firms were better led – less greedy and more responsible - these problems would not arise. Many major MBA programmes emphasise technicalities of finance – training people to work in banks, not to lead them.It is in financial engineering that problems have arisen.
Unfortunately, nations have yet to reform financial regulation. Sad to say, B-schools have not sufficiently revised curricula to reflect lessons from the crisis, though in individual courses and cases, there is much that is now up-to-date.
Financial engineering continues to be taught, but is also updated to reflect disasters that have occurred (complicated securitisation, credit default swaps and complex derivatives) so that similar errors might be avoided in future. Also, ethics courses have been strengthened in response to dramatic cases of fraud (Madoff, Stanford, etc). Hopefully, students are better prepared to meet the world as it now is. Through it all, acceptances to MBA programmes are significantly up in 2009. In the end, this simply means more business as usual.
Too little core revamp
Nevertheless, there has been since a lot of soul searching, including at HBS. Prof Nabil El-Hage (HBS senior associate dean) has this update: “We concluded that teaching critical thinking skill is one area we must do better. Our students go on to be leaders; they need to know how to think and challenge the status quo in a clearly analytical fashion.”
He adds: “The other, perhaps more mundane, area is risk management. This is difficult to teach. It is not exciting, it is not fun, and it is not so much about leadership. But if businesses focus strictly on the upside and lose sight of inherent risks, then crises are bound to recur. So, we are thinking long and hard about how to deal with this.”
In the final analysis, I believe real change will come through punishment by the one factor B-schools understand best: the market.
A promise to be ethical
The original sin of B-schools has been that there has been no real focus on business ethics and CSR. In the post-Madoff era, this is now urgent. But quality teaching is a problem since these “were kind of shunted in” after the early 2000s scandals, wrote P.D. Broughton, in his tell-all book about his years at HBS, Ahead of the Curve. Khurana confirms ethics was brought in like “academic theatrics” and have been since “quietly abandoned or marginalised”.
But students are not happy. Last summer, I attended Harvard’s Commencement, when new HBS graduates took on the MBA Oath, saying essentially greed is not good. This is a voluntary student-led living pledge to “act with utmost integrity and in an ethical manner” and to guard against “behaviour that advances my own narrow ambitions but harms the enterprise and society it serves”.
This is not unlike that of Columbia: “I adhere to principles of truth, integrity and respect. I will not cheat, steal or tolerate those who do.”
What’s being done appears serious, mirroring the Hippocratic Oath of doctors “not to do wrong” or the US lawyers’ pledge to “uphold law and constitution.” When I was at Harvard for the Commencement, 200 (grading class of 800) had already signed up.
This movement has been contagious. Diana Robertson of Wharton doesn’t think it will just fade. “It’s coming from students; we’ve not seen such surge of activism since the ‘60s.” For Khurana, it is now timely to transform business management into a true profession. This will involve licensing and an oversight body to police members. But he is not optimistic this will happen. It’s still very much work-in-progress.
Mills doesn’t see how business can really gain. The management/leadership element of MBA, he says, is too much an art for it to be professionalised. The finance side is already governed by a quasi-professional standard – the fiduciary responsibility rule (a financial advisor is legally bound to put clients’ interests above all). In practice, this rule is already not much honoured by financial advisors, money managers and courts. Mills sees little reason why new professional rules will perform better. He has a point.
How best to regain trust
We may not feel it as much in Asia. But even on Wall Street, there is resentment building up on the way MBAs are educated. The world has changed. B-schools have yet to change with it. To reduce distrust, MBAs need to show they value what society values.
As I see it, what is not taken seriously enough are the “soft” disciplines (leadership, values and ethics) and greater attention to detail (big picture education is not good enough). Leadership responsibilities need to be brought to the forefront – not just the rewards.
There are no quick fixes. Podolmy pointed to five possible ways: (a) foster greater complementary – integrate the mix of disciplines, linking analytics to values; (b) appoint team teaching – ensure “hard” and “soft” disciplines are jointly taught, giving a holistic understanding of problems and solutions; (c) incentivise qualitative research – cultivate a more eclectic approach, encouraging faculty to better weave “soft” disciplines into the main fabric of education; (d) stop competing on rankings – regain professional focus and downplay money as the end-all of business; and (e) withdraw the degree – oaths work when behaviour is monitored and credentials withdrawn on violations.
I think these warrant serious consideration. They are difficult to accept and hard to implement. Once upon a time, kings engaged jesters to bring them down to earth. Maybe, it’s now timely for B-schools to do likewise by encouraging faculty and students to prick bubbles, expose management fads, and even rough up “hero” managers. Yes, in a sense, to bite the hand that feeds them.
Realistically, I am convinced such changes are unlikely since it requires B-schools to re-invent themselves. Says Dean Light of HBS: “The crisis has not resulted in a systematic reinvention of curriculum, nor should it.” After all, as in every crisis, enrolment is up. So what’s your problem?
Source: Tan Sri Lin See-Yan - Former banker Lin is a Harvard-educated economist and a British Chartered Scientist who now spends time promoting public interest. Feedback is most welcome at starbizweek@thestar.com.my
