The MBA and Social Responsibility

Recently, I had the honor of speaking at the University of British Columbia for the opening of its new MBA House, a residence that is dedicated to students in its MBA Program. The visit brought me back to my roots—102 years ago, my father was born not far from here; the son of the minister of Saint Andrew’s Presbyterian Church, now St. Andrew’s Wesley. I was born and grew up in Toronto. And so, I returned with a warm heart and a sense of genuine excitement about the Sauder School’s Centre for Sustainability and Innovation. I share my comments from that evening here.

UBC is unquestionably one of the world’s finest research universities, but I was especially fascinated in my visit to see that the university’s research mission had two primary emphases. It was to position the university on the cutting edge, but it was also clearly focused on leaving this world a better place.

The Sauder School of Business’s Centre hews closely to that mission. Its scope is wide ranging, embracing issues beyond corporate social responsibility—those of poverty, famine, and illiteracy; global warming; and human rights abuse.

There is no question that the issues addressed are broad. As one who relished the all-night debates in my undergrad years in residence at Queen’s University, I expressed a hope the residents of Sauder’s new MBA House will see midnight oil burned as they wrestle with issues of sustainability, corporate social responsibility, and the role of the MBA in society.

The university has declared its commitment to a “triple bottom line”: Social, economic, and environmental. I can think of no more noble framework for a university.

And as a school within the university, the Sauder School, I assume, embraces it. But I think that it may be worthwhile to explore this assumption. How does the “triple bottom line” apply to MBA students?

As a framework for this intellectual journey, let me turn to UBC’s President, Stephen Toope.  President Toope has said that, as an undergraduate, he asked himself three questions:

1. Where do I fit in?

2. Will I fail?

3. How will I know the right path for me?

Let me suggest that the MBA ought to ask himself or herself those same three questions. Many will go and serve society directly, bringing the skills and knowledge that they learned here to nonprofit organizations. But most, I suspect will go or have gone into the private sector.

I would like to suggest another question as well: Should the MBA program espouse a triple bottom line or a single bottom line that is subject to two constraints? Stated differently, can you function with three bottom lines? What if they are in conflict? Does one always trump the other?

Let me be so brazen as to suggest that the primary role of the MBA to build economically viable entities that can contribute to society. My sustainable business model would be defined as an adherence to “responsible sustainable growth.” I run a not for profit but to this day, I tell my colleagues that “not for profit” is simply a question of tax status. It ought not to dictate how you run the operation.

Without a margin, you can have no mission. Without a margin, you cannot grow or thrive or reinvest in the community.

That said, the responsible leader of an enterprise today must embrace with a passion the need to operate within the constraints of social responsibility and environmental sustainability. But the social and environmental elements are not the organizational objective function. Let me give you two examples.

A few years ago, Costco, the large retailer based in Kirkland, Washington, realized that when it was shipping its round 40 oz. jars of cashews to its stores, the jars left considerable space in the square boxes. They were, in fact, shipping a lot of air. And so, Costco redesigned the 40 oz container into a square jar. According to Costco, “Only 288 round jars fit on a pallet, now 432 square jars fit on a pallet. The new jars reduce the number of pallets by 24,000 per year—equal to approximately 400 truckloads.”

The second example is very close to home. In 1997, the GMAT was converted from a paper-and-pencil test to one that is delivered electronically. From test registration to the test day itself, to candidates’ score reports and all reports to schools, we targeted a paperless model. In aggregate, just by converting the test alone, it is estimated that we saved 10,000,000 pages a year—50 tons of paper. If the pages were laid end to end, the string would reach from Vancouver to Thunder Bay or Washington, DC to Albuquerque, or from Amsterdam to Lisbon. Our decision was driven by the opportunity to provide better service to test takers and schools, to provide a better assessment, and to dramatically enhance test security.

In each case, Costco and GMAC made the right economic decision, but it also had a positive environmental impact.

As a CEO, the first thought I have each morning is for the 130 people who work with me and for the 300 who count on the continued survival of the company to feed their children, provide healthcare, and pay their mortgages and tuition.

And when I make a decision, one dominant consideration is whether the decision I make will contribute to our own sustainable growth—to our ability to keep and to challenge our people.

At UBC, I learned about Pooja Visnanathan, a PhD student in computer science, who has invented an intelligent wheel chair for people who are suffering degenerative diseases. As one who has a family member suffering today from Alzheimer’s disease, Pooja’s creation has a special meaning for me. Indeed, any one of us might benefit from it someday.

UBC’s mission speaks to its role in “improving the quality of life through leading edge research.” Pooja’s research can “improve the quality of life through leading-edge research.” But for her to achieve that goal, for anyone of us to benefit from her chair, she will need support: production, sourcing, distribution, marketing, financing, capital structure, intellectual property protection.

This is the stuff MBAs do. It is these skills that MBAs bring to society. Just as Pooja used her knowledge to build a prototype, MBAs must use their knowledge and skills to let society benefit from her genius. They must give her invention a path to society.

And in using the knowledge and skills gained from pursuing an MBA to bring her genius to those with degenerative diseases, an MBA student is no less noble than a talented researcher.

For many years, Athens was one of the smaller city states. But it was a constant leader militarily, socially and economically. But its citizens also held to an oath.

“We will ever strive for the ideals and sacred things of the city,

Both alone and with the many.

We will unceasingly seek to quicken the sense of public duty.

We will revere and obey the city’s laws.

We will transmit this city not only not less

But greater, better and more beautiful than it was transmitted to us.”

To me, this defines the sustainable business model; a model of responsible and sustainable growth. This defines the dream that the MBA ought to hold. It is not to sustain but to transmit this city not only not less but greater better and more beautiful than when it was transmitted to us.