Leaders Must Drive Progress, Not Just Profit

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Tuesday, May 14, 2024
By Shruti Choudhary, Frederique Covington Corbett
Photo by iStock/Virojt Changyencham
How can business schools shape a more inclusive and sustainable future? By adopting a new leadership paradigm that emphasizes collective benefit.
  • Business success is no longer a zero-sum game where one can win only if others lose. Today, success is measured in ways that benefit all stakeholders.
  • In recognition of this shift, business schools must teach contemporary theories of leadership that emphasize the interconnectedness of social and ecological systems and promote collective well-being.
  • Business schools can produce socially responsible future leaders by developing labs, courses, and competitions dedicated to societal impact, as well as by harnessing the power of AI to immerse students in issues of ethics and social responsibility.

For decades, the hallowed halls of business schools have echoed with a singular mantra: profit maximization. Driven by this mantra, aspiring executives have honed their financial acumen, dissected case studies of ruthless mergers, and calibrated strategies, all to outmaneuver competitors in a relentless pursuit of growing the bottom line. Executives have learned to measure success in terms of glowing quarterly reports, soaring stock prices, and ruthlessly efficient organizations.

However, the tide is turning. This once-sacrosanct focus on profit is beginning to erode from the force of a powerful new current—the rising demand for social and environmental responsibility. From consumers to investors, all stakeholders are demanding that businesses operate with a conscience and consider the impact of their actions on society and the planet.

In this climate, sustainability is not a luxury but a necessity. Companies that prioritize environmental stewardship and social responsibility are not just aligning their strategies with public sentiment—they are also gaining a competitive edge. Responsible companies attract a more diverse and engaged workforce, inspire greater customer loyalty, and future-proof their operations in a resource-constrained world.

In other words, business is no longer a zero-sum game, where for one firm or group to win, another must lose. Rather, organizations can succeed in ways that benefit all.

As a result of this seismic shift, the world needs leaders who are changemakers, not just profit architects; it needs leaders who are capable of balancing profit with purpose. They must be adept at navigating complex ethical dilemmas and appreciate the interconnectedness of economic, technological, social, and environmental systems. Most important, they must be visionary strategists who can create shared value for all stakeholders, from communities to shareholders.

Business curricula also must be transformed to equip students with the knowledge, skills, and ethical frameworks to lead in a world grappling with profound challenges. But while business schools worldwide are integrating societal impact and sustainability into their curricula, fewer have fundamentally transformed the models of leadership they teach to align with the realities of the 21st century. They have not yet adopted new theories that reimagine leadership as a skill based on empathy, connection, purpose, and a deep understanding of complex social and environmental issues.

But we hope to see more business schools follow this path. We are at the start of a new era, in which business education goes beyond traditional mindsets and theories about leadership to instead define completely new metrics of success.

Greater Attention to Societal Impact

We already are seeing a promising trend in this direction, as business schools worldwide integrate sustainability and societal impact into their curricula. Here are several initiatives that are teaching students to consider protecting the welfare of stakeholders—not just shareholders—as part of the primary mission of business:

■ The Impact Investing Initiative at Harvard Business School in Boston assigns students to manage actual investments in an impact investing fund. They learn how to analyze, evaluate, and structure investments that generate positive societal and environmental impact, as well as financial returns. In 2022, students managed 100 million USD in committed capital and helped foster a new generation of impact-focused investors.

While business schools worldwide are integrating societal impact and sustainability into their curricula, fewer have fundamentally transformed the models of leadership they teach.

■ The Center for Social Innovation at the Stanford Graduate School of Business in California offers a vibrant ecosystem of courses, workshops, and speaker series focused on social entrepreneurship and social impact leadership. One course, Managing Social and Environmental Enterprises, delves into the unique challenges and opportunities faced by businesses that prioritize social good alongside financial sustainability. The school also awards Impact Design Immersion Fellowships—its 2023 recipients are working toward improving healthcare, offering therapy services to those affected by trauma, and supplying affordable and energy-efficient power to underserved communities, among other projects.

■ The University of Oxford in the United Kingdom delivers a suite of online sustainability courses, as well as a Master of Science in Sustainability, Enterprise, and the Environment in which students develop the expertise needed to help companies adopt sustainable economic models and transition to a net-zero economy. The program culminates in a weeklong capstone project where students collaborate with real-world organizations to design more sustainable supply chains.

This is just the start. We also can note the Impact Approach at Northwestern University in Evanston, Illinois, which supports curricula designed to produce “socially responsible leaders”; and the Sustainable Business Lab at the Massachusetts Institute of Technology in Cambridge, where students apply principles of sustainability to real-world business problems.

For the 2023–24 academic year, the Wharton School at the University of Pennsylvania in Philadelphia introduced two new MBA specializations and an undergraduate concentration focused on environmental, social, and governance (ESG) issues. The Center for Impact at the University of California Los Angeles and the Ethics, Responsibility & Sustainability initiative at Woxsen University in Hyderabad, India, each integrate societal impact throughout the curriculum.

Such widespread efforts are in step with market demand—student and recruiter interest in programs focused on ESG is growing each year, as the available jobs in the field outnumber the candidates qualified to fill them. An analysis of job postings found that, as of early 2023, the number of job listings with the word “sustainability” in the title had grown tenfold.

It is encouraging to see so many universities meeting this growing demand for sustainability and ESG course content. That said, it is equally important that schools update their curricula to include contemporary leadership theories that have greater relevance in an interconnected world.

We Must Rethink Leadership Theory

Despite a plethora of leadership books and frameworks that incorporate societal impact, the field of leadership development remains plagued with outdated models. Business programs still promote the heroic leadership paradigm in which leadership is viewed as individual, male, and personality-driven; enacted through power and control; and directed at achieving financial gains. These antiquated theories perpetuate an exclusionary approach and value individual leadership competencies to the detriment of group dynamics.

But since the global COVID-19 pandemic, the boundaries of leadership have been completely redrawn. To serve business and society, universities must replace old theories with new; they must teach the next generation of leaders to be responsible stewards of the planet who are concerned with the livelihood and well-being of others. Known broadly as “adaptive leadership,” this theory emphasizes the need for leaders to overcome their egos, build their self-awareness, sharpen their emotional intelligence, be open to change, promote psychological safety, and value collaboration.

Frederique Covington Corbett, an author of this article, makes this point in her book Leadership on a Blockchain: What Asia Can Teach Us About Networked Leadership. She emphasizes that future business success will rely less on the star power of a single individual and more on the expertise of distributed teams whose members can collaborate seamlessly across time zones, geographic borders, and virtual networks.

The theory of adaptive leadership emphasizes the need for leaders to build their self-awareness, sharpen their emotional intelligence, be open to change, promote psychological safety, and value collaboration.

The only way for leaders to tackle increasingly complex problems and manage ambiguity is through cognitive complexity, interdisciplinary strategies, and systems thinking. Other “must-have” leadership attributes and soft skills include empathy, kindness, and the ability to listen and make human connections.

As educators, we must reorient leadership education to promote collective well-being, the interdependence of social and ecological systems, and a shared vision that transcends personal ambition. In the process, we can teach the next generation of leaders to move from prioritizing profit to championing sustainability and social progress.

Expanding the Horizons of Education

No matter how far we move forward, there is always room for further innovation. Business schools that want to stay ahead of the curve can consider implementing some exciting new practices:

Creating dedicated social impact labs where students can collaborate on real-world social impact projects in partnership with NGOs, social enterprises, and government agencies. These labs can provide funding, mentorship, and co-working spaces to help students bring their ideas to life.

Developing courses that tackle global challenges such as climate change, poverty, and water scarcity. These courses can take a multidisciplinary approach, bringing together students from business, engineering, and the social sciences to develop innovative solutions.

Organizing societal impact competitions where student teams develop business plans for social ventures. Schools can partner with corporations that offer funding, mentorship, and potential job opportunities for winning teams.

Harnessing the power of artificial intelligence (AI) to create immersive learning experiences for students. Using AI tools, educators can develop new ways for students to hone their decision-making skills, foster empathy for others, and deepen their understanding of the social and environmental consequences of business decisions.

AI presents an especially powerful opportunity to integrate new forms of leadership into our teaching. Let’s delve further into how this technology can revolutionize business education.

The AI Advantage to Amplify Impact

We are only beginning to discover how schools can use AI tools to enrich their curricula, but here are several ways for schools to tap new technologies to develop future leaders:

Designing AI-powered simulations. Educators can use AI to create dynamic games and simulations that educate students on sustainability principles. In these scenarios, students must grapple with complex ethical dilemmas and consider the impact of their decisions on employees, communities, and the environment, not just the bottom line. AI can analyze student choices and provide real-time feedback, highlighting the financial, social, and environmental consequences of their actions.

Imagine a business simulation game where students manage a company while minimizing their environmental footprint and maximizing social impact. This gamified approach makes learning fun and interactive while instilling valuable skills and knowledge in a competitive but constructive environment.

The future belongs to the socially conscious changemaker—the purposeful leader armed with the knowledge, skills, and ethical compass to navigate the complexities of the 21st century.

Supporting personalized learning with big data. AI algorithms can tailor the learning experience to each student’s interests and goals. For instance, AI could curate a personalized learning path of courses, simulations, and case studies for a student passionate about clean energy solutions, ensuring that the student gains the necessary knowledge and skills to make a difference in his or her chosen field.

Building empathy through virtual reality (VR). Powered by AI, VR technology can immerse students in communities that are grappling with poverty, resource scarcity, environmental degradation, and other consequences of harmful business practices. Such virtual visits can foster a greater sense of empathy and social responsibility in students, as well as a deeper understanding of the human cost of unsustainable business models. These outcomes can be powerful catalysts that motivate students to pursue careers that contribute to positive change.

In these ways, educators can leverage AI as a tool in service of humanity, helping us all become better leaders. As OpenAI CEO Sam Altman explained during the 2024 World Economic Forum in Davos, generative AI will shift our attention from accessing knowledge to curating ideas.

With AI sorting data and eliminating tedious and time-consuming tasks, we will be able to “operate at a little bit higher level of abstraction,” as Altman puts it. The hope is that AI will give us more time to make thoughtful decisions, display greater care for others, develop our collective consciousness—and discover the essence of what it means to be human.

Beyond the Bottom Line

The future belongs to the socially conscious changemaker—the purposeful leader armed with the knowledge, skills, and ethical compass to navigate the complexities of the 21st century. This reality requires business education to move beyond an emphasis on profit maximization to instead embrace the multifaceted relationships between businesses and all living systems.

Business schools are already making bold strides in this direction, but their journeys shouldn’t end there. We call on business schools to advance new models of leadership to help their students find meaning and a shared purpose in shaping a sustainable future.

The ideas we outline above are not distant possibilities—they are already here. The time for change is now. By embracing innovative practices and harnessing the power of technology, business schools can be catalysts for positive change. They can redefine business success as a measure of our collective progress and shape leaders who are committed to creating a more sustainable and equitable future for all.

Shruti Choudhary
Program Director of the Graduate Program, Associate Professor of Marketing and Branding, Chair of the Center of Excellence–Digital Transformation and Customer Experience, Woxsen University
Frederique Covington Corbett
Lecturer and Author on Leadership
The views expressed by contributors to AACSB Insights do not represent an official position of AACSB, unless clearly stated.
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