"Educating Leaders Who Make a Difference in the World" - Harvard Business School Mission Statement
The application of the MBA is undergoing an unprecedented evolution. For decades, the Master in Business Administration degree was bestowed upon the future titans (or tyrants) in the private sector. Prominent executives like Facebook COO Sheryl Sandberg (HBS), Nike Founder and CEO Phil Knight (Stanford GSB), and Google, Inc. CEO Sundar Pichai (Wharton) come to mind when you think of successful MBA graduates. But now, more than ever, MBA graduates are using their post MBA careers to make a difference in the public sector.
One of the areas where this evolution is unequivocally apparent is state government. Seven out of fifty states have governors who hold some form of MBA distinction. How does this compare to the total population? Census data from 2014 shows that 8.5 percent of adults over 25 have a master's degree in the United States. Let us assume that 20 percent of the current master's degree holders in the United States have an MBA, given the increase in popularity of the MBA from the 1970's, when 11 percent of master's degrees were in business, until recently, with 25 percent of master's degrees in business. This means that only 1.7 percent of the population over 25 has an MBA, demonstrating that business school trained leaders are over-represented at the highest level of state government, which is often a training ground for "Leader of the Free World". Sometimes this leadership works out well for constituents (re: Governor Mitt Romney [HBS] bringing universal health care to Massachusetts), and other times, people are poisoned by their drinking water (re: Governor Rick Snyder [Michigan, Ross School of Business] in Michigan).
*Please note that this is not a dig at the Ross School of Business. It is a world class business school with great people. Many of my friends are there now. Go BLUE!
Many of you have already heard about the Flint Water Crisis (videos here, here, and here), but just in case you've been living under a rock, here's a quick summary. In 2011, Governor Snyder sent emergency managers to help economically damaged areas in the state of Michigan balance their budgets. These executive appointed managers did not answer to the elected people in their local district, and they were given enough control to dramatically change the areas they presided over. In an effort to save $5 million per year, the emergency manager in Flint, Michigan decided to source the water supply from the Flint River, which was known to contain decades of automotive company run-off. This water, with the additional chemicals added to clean it, ripped away at the existing pipe, and the result was toxic water in the homes of one of the most economically deprived areas in the country. The residents are finally getting some relief, in 2016.
As an MBA, Governor Snyder should be held to a higher standard of ethics, similar to those he was held to as CEO of computer hardware giant, Gateway, Inc. He should know better. First year students at Harvard Business School are required to take "Leadership and Corporate Accountability", which examines corporate decisions through a legal, economic, and ethical lens. Let's look at where the Governor and his team went wrong.
Legal - Snyder failed as a fiduciary
A fiduciary is a trusted party who is under a duty to act for the benefit of another. Governor Snyder was entrusted by the people of Michigan to act in their best interest, however, he blatantly disregarded the "duty of loyalty" he had with these residents by putting his own budget goals ahead of their health and safety. Through "duty of loyalty," fiduciaries must put the interests of the beneficiary ahead of any personal interest.
Economic - Snyder failed to save money
This entire fiasco was designed to save a total of $12 million. Now, given the damage done to the residents and the amount of money needed to fix the problem, the Governor has had to propose $232 million in new programming.
Ethical - Snyder's team failed his people
There was a significant amount of "moral disengagement" throughout this entire debacle. As defined in the course, moral disengagement is a process that enables people to engage in negative behaviors without believing that they are causing harm or doing wrong. Instead of notifying the residents that the water was contaminated, which officials were aware of shortly after the source change, the emergency management team withheld this information. They denied Flint residents the basic human right of access to clean drinking water - dehumanizing the citizens by separating themselves from empathy.
As business and community leaders, our choices can have overwhelming consequences. We are in business school to learn how to choose the "harder right" over the "easier wrong". Which one will you choose?
Terrance Rogers (HBS '17) worked in Financial Services for 5 years before coming to HBS, and he's passionate about figuring out how to use business and public policy to improve people's lives. Born and raised in Georgia, he's a proud public school kid who's still figuring out how to tell people he goes to Harvard. You can follow him on Twitter and Instagram @bigtrogers.