The recent passing of economist Milton Friedman offers a timely opportunity to reconsider the future role of business and, indeed, the future role of the MBA.

It's been over 35 years since Milton Friedman declared that "the social responsibility of business is to increase profits" in an essay published in the New York Times. Freidman's words set forth a standard against which any discussions of the purpose of business were measured. His views on the role of business elevated him to an icon of laissez-faire style capitalism.

A great deal has changed in the years since Friedman's essay was published in the Times. We have arrived at a point where the catastrophic implications of global climate change call for a new discussion on the role of business - and business leaders. These days, it seems that operating in a manner that seeks only to increase profits, without regard to environmental and social costs, risks lawsuits, regulatory action and loss of brand value. Any one of these can be detrimental to shareholder value and long-term profits. The future calls for leaders that can develop and lead profitable, competitive businesses that are sustainable, both in a social and environmental way. Where will these future leaders come from?

In a recent guest opinion column in USA Today, Alan Webber, co-founding editor of Fast Company and former editorial director of the Harvard Business Review, examines the connection between the recent wave of corporate scandals and the fact that business traditionally serves no "higher purpose" than making money. He names business leaders such as Andrew Fastow, Patricia Dunn, and Bernie Ebbers, and wonders if it is a merely a coincidence that a recently published study found that among graduate students, MBA candidates in business schools were found to be the biggest cheaters.

The study Alan Webber refers to in his column, was conducted by Donald McCabe, professor of management and global business at Rutgers University. In the study, McCabe found that 56% of students at 32 graduate business schools in the US and Canada admitted to cheating. According to McCabe, "These students are doing it to win. Cheating can help them get great internships and high-paying jobs at big name companies". Alan Webber goes on to ask “What’s wrong with the business world - and, in particular, what is wrong with business schools?”

Webber points to the differences among the “professions.” Schools of law and medicine have deep historical roots in ancient times. The American Bar Association has its Model Rules of Professional Conduct and western medicine has the Hippocratic Oath. Webber illustrates how professions such as medicine and law both serve a “higher purpose”. Business and business schools on the other hand, he asserts, claim no higher purpose than higher profits.

Webber concludes by stating, “The real problem is that it (business) needs to serve a higher purpose than making a lot of money…MBA students need to think about the bigger game that asks fundamental questions about the purpose and sustainability of business”.

I have good news for Alan Webber. We ARE thinking about exactly those questions. Here’s the proof:

According to a survey by Net Impact, a network of business professionals, MBAs, and graduate students working to improve the world through the power of business, in October, MBA candidates are concerned about more than just increasing profits. The responses from survey of more than 2,000 students at 110 MBA programs showed:
  • 81% believed businesses should work toward the betterment of society
  • 89% said managers should take into account social and environmental impacts when making business decisions
  • 78% agreed that corporate social responsibility should be integrated into core curricula in MBA programs.”

Then, there’s the recent article in Forbes, which shows an increasing number of business schools around the country are taking on the challenge of incorporating environmental and social concerns into traditional business education. Columbia is midway through a plan to reorient its MBA curriculum to include corporate social responsibility. UC Berkeley’s Haas School of Business has recently opened the Center for Responsible Business. Both Yale and Stanford have incorporated corporate social responsibility into their curriculum. Newer institutions such as Presidio School of Management, Bainbridge Graduate Institute and New College offer MBA programs in which corporate social responsibility and environmental values are incorporated throughout the entire MBA curriculum.

The result is an MBA that views the role of business in the larger context of the planet - an MBA that can effectively balance the need for short-term profit with the challenge of building long-term shareholder value. According to Dr. Ron Nahser, Provost of Presidio School of Management, “Our educational philosophy enables students - who seek to engage in the world sustainably as managers, leaders, entrepreneurs and professionals in business, nonprofit, and government organizations - to serve the real needs of society – today and in the future. Simply said: business for the long term – for us all.”

Today’s business owners and managers should expect more from their MBAs. The changing nature of business demands B-school graduates who can do more than focus solely on the bottom-line. The future calls for people with the skills to deliver higher stakeholder value, while producing in a manner that is restorative of both human and natural capital.

We agree it is time to rethink the traditional MBA. We at Presidio School of Management, among many others, are developing a new generation of business leaders whose goals include increasing profits and solving the world’s most pressing problems.

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Karen Losee is an MBA Candidate (2009) in the Sustainable Management program at Presidio School of Management and Director of Sales for a pharmaceutical company serving non-profit women's clinics nationwide. A second generation Californian, Karen's passion for environmental issues has led her to serve as a member of the board of Directors of The Bay Institute of San Francisco, a volunteer docent at Muir Woods National Monument, and the chair of the Novato Community Garden Committee.