Steps to Restoring Confidence in the America’s Corporate Economy

by Colonel Kenneth Allard (US Army, ret.)

The biggest single revelation from the Wall Street crash was how quickly the previously unimaginable sum of a trillion dollars could be squandered. Second only to that reality was this equally troubling thought: How are we preparing future leaders to become the CEO’s on whom the nation’s prosperity ultimately depends?

After Enron, I wrote a mostly overlooked book called Business As War that analyzed this issue. Undaunted, business school faculties added a plethora of dreary ethics courses, placing great weight on codes of conduct and protecting whistle-blowers. But if you watched the waves of disgraced executives testifying before Congress this week, it seemed as if the American CEO had received rigorous training only in the techniques of personal survival, evasion and escape. Business faculties as well as their students might have been more edified by the example of firing squads rather than the ritual tut-tutting of congressional hearings. (We might still get around to executions if things don’t improve.)

The primary reaction to Enron was the naïve assumption that enough legislation (Sarbanes-Oxley) could be passed and enough regulations (federal, state and local) written to eliminate the worst corporate excesses. We mostly succeeded in guaranteeing full employment for the legions of accountants who are now obliged – at the risk of severe penalties – to wade through the ledgers at truly impressive billing rates. With illusions being stripped away by the hour, do we now need even more laws and regulations? Or can we imagine something truly outrageous: a revolution in how we train future business leaders. Its jumping-off points include:

1. Prize (and evaluate) character rather than just teaching "Ethics." The late Nobel laureate Milton Friedman famously said that “I don’t think there is such a thing as business ethics. A business can’t have ethics any more than building can have ethics.” B-school faculties, fixated on teaching the alleged science of economics, naturally tended to agree. They compromised by settling on least-common-denominator “situational ethics,” avoiding the much tougher issues on which character is evaluated and built. Overlooked were the moral absolutes taught at places like West Point, a public institution which demands that cadets not lie, cheat, steal or tolerate those who do. (Should they run afoul of the honor code, former cadets can later apply to business schools.)
2. Select and train a new generation of "servant leaders." This is not an argument for producing more social workers, community organizers or even a kinder and gentler cadre of CEOs. We simply need to identify a talent-pool of future executives capable of subordinating their own egos and compensation to the larger interests of their corporations, employees and investors. According to MSNBC, more money was spent last year on Wall Street bonuses than on the entire foreign aid budget of the United States. Can you spell C-O-R-R-U-P-T? But with such naked excess and unbridled selfishness reigning as institutional norms, is it any wonder that malfeasance and incompetence soon follow?
3. Teach the new skill-sets of 21st century business. I teach at UTSA – the University of Texas, San Antonio – one of the few places where future business leaders practice dialogue techniques for harvesting bottom-up knowledge from overwhelmingly top-down cultures. Last semester I even taught an experimental course in business intelligence. (While hardly standard MBA fare, such topics are carefully studied by the same countries now holding our debts.) But the core ideas are these: Leaders need to create new ways to exploit information while eliminating useless layering between the people who really know (on the bottom) and those who only think they know (the overpaid ones on top).
4. The reigning ideas about leadership are dead wrong. This semester, I'm trashing the existing textbook lessons on "business leadership," simply because they use far too many words to convey the academic-sociological theories masquerading as truth. In their place: One Bullet Away, Nathaniel Fink’s memoir of highly-networked, small-unit leadership. (If you caught Generation Kill recently on HBO, then you saw Fink's unit.) His Marines – incredibly profane and hemorrhaging political incorrectness – could hardly distinguish spread sheets from toilet paper. But in their commitment to the mission and to each other, they put their lives on the line without the slightest hesitation.

Want to restore confidence in our corporations – from the foreman to the Board of Directors? Want to educate – really educate - the people we allow to lead such institutions? Then join me and let’s begin this revolution – right here and right now!