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Sir Andrew Likierman
Business school dean

Sir Andrew Likierman

Professor Sir Andrew Likierman is Dean of London Business School. He is also non-executive Chairman of the National Audit Office and a non-executive Director of Barclays Bank plc.

Don't blame the business schools

In a month dominated by all that volcano stuff - at least for those with travel plans - it's tempting to make an analogy with who was to blame for the credit crisis. Since the eruptions of anger from 2007 to 2009, tempers have cooled, with further rumbling during the 2010 bonus season and more prolonged activity in the UK General Election, where the parties currently compete on who can be nastiest to bankers.

Of course it's natural to look for someone to blame. The candidates include: senior executives who fouled up their risk management; credit-ratings agencies who gave the wrong ratings; house buyers who borrowed too much; consumers who bought things they couldn't afford; banks who lent house buyers and consumers too much; regulators who let them do it; and governments that didn't regulate the regulators.

If that list doesn't provide an answer, what about the people who supposedly had the ideas that allowed all this to happen and trained those who carried them through - the business schools?

Business schools present an easy target. They have a track record of attracting some of the cleverest people. They operate at the cutting edge of business and finance. Indeed, if business schools are not generating ideas, they are not doing their job.

So it is easy to hold them responsible for the ideas at the root of almost anything new. That applies to innovations with obvious business benefits, but also to the complex financial instruments and models that played their part in the credit crisis.

Alas, the idea that business schools drove the world to financial ruin is to credit them with altogether too much influence. It ignores the normal operations of the economic cycle, which existed long before business schools were invented.

It also ignores the fact that business schools are concerned with a much wider range of subjects than finance. Financial markets are only one aspect of what business schools teach. They are not finance schools or banking schools. They teach a wide range of managerial skills - risk management and corporate social responsibility as well as finance, about people, not just markets. Their graduates can be found in organizations of every kind.

Business schools also offer their graduates an a la carte menu of ideas, and these ideas must often be traded off, for example, nurturing talent for the long-term versus short-term financial returns. Choosing the ideas and striking the right balance between them are judgments that make all the difference between good and bad managers.

Embedded in the critique is another assumption: that business schools provide a certain "line" or set of ideas -- a business school philosophy. This notion is as laughable as the proposition that any of the world's best universities impose ideological uniformity on its academics or students. In London, we are proud to have high standards of intellectual rigour with a collection of individual faculty members with freedom to express themselves. As long as academics satisfy their peers about the basis of their thinking, they can come to whatever conclusions they like. Long may that remain so.

The same argument applies to the problems of the financial industry. Individual finance faculty had a wide range of views about how banks were run. But all agreed that risk management was one of the key tasks of management. It is not the information in risk management that counts, but what you do with it. It's hardly fair to pin collective blame on business schools for those few bank managements who bet the shop and lost.

So will we at London Business School respond to the crisis in what we do? Of course we will, because teachers will always need to reflect the dynamism of the world in which our students operate. That includes ethics, which we added to our core curriculum long ago, recognizing its importance to students and organizations.

Business schools will continue to attract talent and prepare students for stellar careers in many fields. That is what they are in business to do.

By Sir Andrew Likierman

 |  April 26, 2010; 4:26 PM ET
Category:  Economic crisis Save & Share:  Send E-mail   Facebook   Twitter   Digg   Yahoo Buzz   Del.icio.us   StumbleUpon   Technorati  
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Looks like someone isn't reading Dilbert...

Posted by: Apostrophe | April 29, 2010 10:21 PM
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Likierman, you heap more harm than good upon yourself when you defend yourself from only the most general critiques. You must concede that b-schools played a hand in the economic downturn: investment banks sold derivatives which were based on the most complex statistical models. These models, now proven erroneous, bore credentials from the most elite b-schools in the form of Ph.D dissertations. Without them, derivatives could not have been considered so sound and could not have done as much damage. If you want to evoke more public empathy, I suggest writing a "what business schools have learned" opinion piece instead. Anything else reeks of hubris.

Posted by: skeptik3 | April 27, 2010 1:43 PM
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Absolutely blame business schools and their Ivy league pals! A more ethically vacant landscape one would be hard pressed to find. Maximizing the short term profit level is so normal these days that any time a slight longer view is followed is noteworthy. Likierman is an apologist scoundrel who has mentored jackels.

Posted by: citizen625 | April 27, 2010 12:20 PM
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DCJacobson should note that correlations can be tricky. In Parkinson's Law it is pointed out that there is a very close relation between sales of Scotch whisky and the average stipend of Church of England clergymen

Posted by: baj3 | April 27, 2010 12:13 PM
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Nobody was even blaming b-schools...Professor Sir Dude doth protest too much, methinks.

Posted by: dkp01 | April 27, 2010 11:20 AM
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Sorry your comments don’t stand up.

To get an idea of the feelings against your comments please read Archibald MacLeish’s work Called “the Irresponsible’s’ written in 1942. He correctly singled out academics for their cowardice in retreat From intellectual integrity at a time when WW2 was
Raging and we in America and you in Britain needed everyone In the foxhole to fight the enemy. The academics did
Not ight with us.

Now you an academic did the same thing and I know you do nto speak for the Britain Brits that some american relatives fought with to preserve out civilization.

Someone in your government should have vetted yoru comments for its effect on american sensibitiies.

But that aside

Now we have the academics again turning coat against Their own countries and they did so for money—pure and simple.

There’s no ‘intellectual’ purpose; their disloyalty has one cause, Greed and its fleeting by-product: public adoration.

We in America do not need a British camouflage of empty Straw men such as ‘B-schools”, the very word a conger of vague visions such a faculty, an administration or perhaps bricks and mortar
Causing worldwide economic havoc. I don’t think so.

No we are quite more specific. It is the flesh and blood academics who have names. You know the academics who behaved
Like jackals with prey. we know who they are. They Wrote and they left a paper trail. They are still teaching
or still in their second job: a government job. Just like you Andrew. In fact you seem to the Brit counterpart to
Larry Summers, another of the jackals that destroyed this country.

The active participation of academics provided the Avenues that Wall Street could use to prey upon their own countrymen.

They Not only provided the ideas that proved toxic to our country, But were active designers in the securitization CDO business and profited from it. Many academics set up their own
Non profit corporate entities and played behind the scenes for profit.

we know who the enemy is by name.

Posted by: JohnAdams1 | April 27, 2010 9:46 AM
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Well, in the USA, there is a definite correlation between the increasing number of MBAs graduating and the increasing number of disasters they help bring about.
The more MBAs we have, the worse we do as a nation.

Posted by: dcjacobson | April 27, 2010 9:35 AM
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the blame is on human nature - greedy since day one.

Posted by: adrienne_najjar | April 27, 2010 8:59 AM
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????? This article was written - why? Sounds like a defense that no one has asked for - and - it is disingenuous to say the least.

Posted by: therev1 | April 27, 2010 8:47 AM
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