Fifteenth AIJBS Conference

1. Rethinking Jesuit Business Education: Paradigms of Business Justice and Business Faith Ozzie A. J. Mascarenhas S.J.Charles H. Kellstadt Professor of MarketingDirector: Graduate Programs in Business Turnaround ManagementCollege of Business AdministrationUniversity of Detroit Mercy Fifteenth AIJBS Conference

2. “Each of us has the capacity to make business not only a source of economic wealth, but also a force for economic and social justice. Each of us needs to recognize and use the power we have to define the character of our enterprise, so they nurture values important to our society. Only then will each of us know full rewards that a career in business can yield. Only then will business achieve the true potential of its leadership. Only then will business fulfill its obligation to help build an economy worthy of a free society and a civilization worth celebrating.” [Walter Haas Jr., ex-CEO of Levy Strauss & Co.]

3. The rapidly changing world around us demands different sets and a wide range of skills – especially from teachers and students alike. • Critical thinking, • Business justice • Business faith or trust • Good judgment • Moral reasoning • Spiritual development • Personal awareness and • Social entrepreneurship

4. Some fundamental propositions and questions Our global markets are changing. Our globalized competition is changing. Our political world is changing. But: Is our University changing? Is our Jesuit Business School changing? How is it changing our teachers? Hence, how is it changing our business students?

5. What could we do ? Change the way we think Go beyond “what” our students should know To teaching them “how” to learn it and “how” to do it. Empower them to be constantly curious, critical, questioning, and searching; to be active lifelong learners. Transform them to be persistently honest, accountable and responsible, and morally more courageous decision makers.

6. I explore this challenge through the following sections Problems with management education today Concerns about Jesuit business education today Rethinking higher secondary learning today Rethinking business education today Rethinking Jesuit business education today The paradigms of Business Justice and Business Faith Strategizing a redesign of Jesuit business education for today Some radical implications

7. 1. Problems with Management Education Today Corporate accounting irregularities peaked in 2000-2002 in the form of wash trading, overstating income, understating debts, and overstating profits. Wash trading is the sale of a product to another company with a simultaneous purchase of the same product at the same price (FERC). Wash trading is deceptive because it boosts the companies' trading volume, but shows no gains or losses on the balance sheets Early 2000 marked the beginning of some of the worst corporate security irregularities in history, especially, in the utility business. Most of these scams can be traced to management graduates.

8. The Change in Management Education is long Due Our higher education needs to undergo radical change: A radical change in the core curriculum A radical change in teaching pedagogy A radical methodology for knowledge creation A radical paradigm of critical thinking A radical process for building humanizing experiences What must change is not the role of the university, but the way it fulfills the role.

9. Writes Dr. Edward Deming, the TQM Guru: Our prevailing system of management has destroyed our people. People are born with intrinsic motivation, self-respect, dignity, curiosity to learn, joy in learning. The forces of destruction begin with toddlers – a prize for the best Halloween costume, grades in school, gold stars – and on up through the university. On the job, people, teams, and divisions are ranked, with reward for the top, punishment for the bottom. Management by Objectives, quotas, incentive pay, business plans, put together separately, division by division, cause further loss, unknown and unknowable.

10. Management in the information-explosion world faces a new set of problems In an age of rapid change, how can you create organizations that are both adaptable and resilient as they are focused and effective? In an age of rapid innovation or “creative destruction” and even more rapid technological obsolescence, how can companies innovate quickly and boldly enough to stay relevant and profitable? In a time when the hidden social costs of rapid industrialization have become distressingly apparent, how do you encourage executives to fulfill their corporate social responsibilities to all stakeholders?

11. Our World is Changing and Demanding: Tomorrow’s business imperatives lie outside the performance envelope of today’s best management practices. Pressures of globalization, changes in workforce demographics, and the knowledge-based economy have made talent development and talent search extremely difficult and a most competitive asset Every talent management process in use today was developed half a century ago – it is high time for a new model? Professional and moral ideals that once animated and inspired business schools have now been just about obliterated by a doctrine that managers are merely agents of shareholders (Rakesh Khurana, HBS).

12. 2. Concerns about Jesuit Management Education Today The true measure of Jesuit education success is “who our students become.” – Kolvenbach Certain elements of the Jesuit mission remain non-negotiable - Adolfo Nicolás S.J. Our growth of Colleges and Universities “has not been without critics who wonder if we are “losing our way” in the rush to respond to ever more requests and opportunities - Charles L. Curries S. J.

13. Other Concerns of our Jesuit Business Schools Professional Jesuit business schools have proliferated in the USA more than any other discipline. The fit between professional education and issues of mission and identity is still far from desirable levels. Our Jesuit business schools are pivotal societal institutions but with decreasing social impact. A typical student in a Jesuit business school may confront a rational man in philosophy, a religious man in theology, a psychological man in psychology, a social man in sociology, a political man in political science, and an economic man in business schools. Are these conflicting ideologies? If so, can they be harnessed together under one umbrella term - a business person of justice and faith?

14. Further, a typical graduate business student may be exposed to a multiplicity of seemingly conflicting models of corporate social responsibility such as: • The shareholder return model of Milton Friedman (1962; 1970), • The Social Legitimacy Model of David (1973) • The Responsibility Model of Corporate Social Power (Keith 1975; Keith and Blomstrom 1975) • The Public Responsibility Model of Preston and Post (1975) • The Managerial Discretion Model of Carroll (1979) and Wood (1990) • The Moral Obligation Model of Frederick (1986) • The Stakeholder Model (Freeman (1984; Freeman and Evan 1999) • The Stewardship Model of Donaldson and Davis (1991, 1994; David, Schoorman and Donaldson 1997, and Fox and Hamilton (1994) • The Social Contract Model (Donaldson and Dunfee 1994; 1995;1999; Dunfee, Smith and Ross 1999, and • The Caux Roundtable Principles Model (2000).

15. 3. Rethinking Higher Secondary Learning Today Critical thinking that questions the way we think and judge We will never transform the prevailing system of management without transforming our prevailing system of education(Edward Deming). The relationship between a boss and subject has been the same as the relationship between a teacher and student – subordination is not learning. Memorization is mistaken for learning. Teaching from text books is assumed to assure student learning. If knowledge is the capacity for effective action, then knowledge is temporary, since an action is effective only in its given context (Senge 1990; 2006)

16. Learning is continuous, and we should be able to identify key attributes of strategy management and leadership that manage knowledge by: • Fostering continuous learning as part of professional purpose; • Providing continuous opportunities for educators to continuously expand their repertoire; • Communicating expectations for participation and contributions among educators; • Establishing knowledge leadership groups to inform and refine the system by identifying priorities, needs and resources; • Using technology to inform professional learning, and • Facilitating the transformation of data and information into knowledge that can be applied to practice.

17. 4. Rethinking Business Education Today Every strategic change belongs to a certain economic era or stage of industry evolution in the Post WW era: ERA COMMODITIZING DOMINANT INSTITUTIONS 1945-70 Manufacturing Automotives; UAW 1970-80 Minerals Trading GATT; Oil cartels 1980-90 Finance Trading Investment Banks; Hedge Funds 1990-00 Information Trading Internet, WWW, Search Eng. 2000-10 Carbon Em. Trading CAFÉ; Cap & Trade 2010-20 Elitism Trading? Exclusive Communities? Elite Health Trading? Exclusive Hospitals? Elite Education Trading ? Exclusive Schools? Organized Crime Trading? Elite Mafia?

18. According to Sandour (2008), under each era or decade, what created the corresponding market was a seven stage process: There is a big structural change in what is commoditized; The structural change creates the demand for capital; Some professionals develop commodity standards; The commodity standards create legal evidences of ownership which are traded; The informal markets spring and trade evidences of ownership (and not commodities or securities); The informal markets are controlled by centralized exchanges; Lastly, the next evolution emerges – mostly, derivatives resulting in complex over-the-counter transactions.

19. If Sandour’s historical analysis is valid, then we must face further critical questions such as: • To what extent have the Jesuit business schools commoditized the MBA degree process or product? • What is the big structural change under-grounding the commoditized MBA product? • What are the Jesuit business schools’ MBA commoditization standards? • To what extent are we trading or eroding such standards? • What are the centralized industry or market exchanges that determine such standards? • How do we de-commoditize the MBA product in order to humanize it for the greater good of society and the greater glory of God?

20. 5. Rethinking Jesuit Business Education Today The Constitutions of the Society of Jesus - Chapter 7 – State: • Helping souls, that is, helping people; • The greater glory of God; • Going where there is greatest need; • Searching for the magis - what exceeds mediocrity, move toward excellence, going beyond what has already been achieved; • Taking on works where no other workers are present or available; • Moving sometimes to controversial frontiers of action or knowledge, even breaking settled boundaries; • Undertaking works that promise a more universal good and a deeper reach of contact; and • Creating or joining communities of solidarity in seeking justice.

21. The Jesuit Challenge of Business Justice • Business faith that does business justice is the domain of greatest need in the business world of practice and academics today (Norm 3). • We need to explore this domain with the spirit of “magis” that wants to exceed mediocrity and move toward excellence going beyond what has already been achieved (Norm 4). • This is a new and unexplored territory (Norm 5) • Foraying into controversial frontiers of action and knowledge, even threatening to demolish accepted boundaries (Norm 6), • But promising a more universal good, deeper reach of contact and impact (Norm 7), but above all, • Creating or joining communities of solidarity in seeking justice (Norm 8). • All this can be planned and achieved with a sense of mission of universal business justice and faith. • Mission is the work we do in common.

22. Transforming Leaders • Most successful transformation change efforts begin when some passionate individuals emerge as leaders (Kotter 2008). • However, a transformation program started requires the aggressive cooperation of many individuals. • Rethinking Jesuit business education is to rethink the BBA/MBA program that produces passionate leaders of Business Faith that does Business Justice.

23. Justice-Transformation Strategies • Any transformation strategy must be willing to challenge the status quo on an extraordinary range of issues: hiring, individual performance evaluation, core competencies, core processes, core products, core standards, reporting relationships, decision networks and bureaucracies, strategic planning and budgeting, business performance assessment metrics, compensation, and shared values and shared assumptions about corporate success. • The good-to-great companies did not belong to great industries, great markets or to great industrial revolutions. Corporate greatness is not a function of circumstance; it is largely a matter of conscious choice (Collins 2001:10-11). • What are the conscious choices of Jesuit business schools that look outward to make this world a more just place?

24. The Paradigm of Business Justice • Justice is giving unto others what rightfully belongs to them (Rawls 1971). • Justice, therefore, deals with the deontological aspects of one's rights and duties in society. • Justice is fairness. It is giving each one one's due. • Justice confers an entitlement ‑ a claim based on justice is an entitlement right.

25. The Paradigm of Business Justice Aristotle (1964) distinguished three classic forms of justice or fairness Distributive justicethat deals with an equitable distribution of rights and duties, benefits and burdens, and states that equals should be treated equally and unequals, unequally. Retributive justicethat maintains that one should adequately reward a person for right done and punish (blame) people for wrong perpetrated. Compensatory justicethat affirms that one should compensate the wronged person for the wrong done by restoring the person to his/her original position.

26. Rawls (1971) proposes a contemporary version of the social contract theory that understands basic ethical rules as part of an implicit contract necessary to ensure social cooperation. His theory of justice has two major components: • a) A method of determining the principles of justice that should govern society, and • b) The specific principles that are derived from (a). • Fairness is the primary underlying value in the Rawlsian concept of justice.

27. Rawls (1971) developed a material libertarian justice principle called Fair Opportunism, a version of comparative distributive justice. Fair opportunism implies two principles: • Each individual should have an equal right to the most extensive system of liberties. This first principle, therefore, argues that equal rights are a fundamental element of social justice. • Benefits and burdens of a society should generally be distributed equally. An unequal distribution could be justified only if it would benefit the least advantaged members of the society and only if those benefits derive from positions for each person has an equal opportunity.

28. According to Ryan (1942), distributive justice looks at two important factors: What is distributed; How it is distributed.

29. The Paradigm of Business Faith Immanuel Kant (1724‑1804) in his seminal work Groundwork of the Metaphysics of Morals (1964) proposed two guidelines or “categorical imperatives” (Velasquez 1992: 79‑86): Principle of Universalizability: all moral norms or maxims must take the form of the following categorical imperative: "act so that the rule of your action can be the norm for all persons equally." Act as if you are acting for humanity; that is, every act should be based on a reason that every one can act on, at least in principle. Principle of Reversibility: the action must be based on reasons that the actor would be willing to have all others use to judge even the actor's action.

30. Simpler and more practical versions of Kant’s categorical imperatives are: Treat others as they would have them treat you – the golden rule. Trust people as they trust you – the golden trust rule. Respect the dignity of each human being. Respect the fundamental human and moral rights of others. Treat people as autonomous persons with personal freedom. Treat all persons as ends in themselves and never only as means to our own ends. Treat subjects as capable of living their own lives and not as mere objects that exist for your purposes. Cease treating employees as mere factors of production or mere “resources” to be managed.

31. 30 articles outlining basic human rights The Universal Declaration of Human Rights that contains 30 articles outlining basic human rights or categorical imperatives • Article 1:All human beings are born free and equal in dignity and rights. They are endowed with reason and conscience and should act towards one another in a spirit of brother- and sister-hood. • Article 2: Everyone is entitled to all the rights and freedoms enshrined in this Declaration, without distinction of any kind, such as race, color, gender, language, religion, nationality or political affiliation. • Article 3:Everyone has the right to life, liberty and security of person. • Article 4: No one shall be held in slavery or servitude; slavery and slave trade in all forms shall be prohibited. • Article 5: No one shall be subjected to torture or to cruel inhuman or degrading treatment or punishment. • Article 10: Everyone is entitled in full equality to a fair and public due process (i.e., hearing by an independent and impartial tribunal). • Article 23: Everyone has a right to work, to free choice of employment, to just and favorable conditions of work and to protection against unemployment. • Article 25: Everyone has the right to a standard of living adequate for the health and well-being of the individual and one’s family. • Article 26: Everyone has a right to education.

32. Business Faith as Interpersonal Trust • The urgent need of trust has been expressed for well over 40 years • One of the most salient factors in the effectiveness of our present complex social organization is the willingness of one or more individuals in a social unit to trust others. • Interpersonal trust can be an important social resource for facilitating cooperation and enabling social interactions between various actors in a turnaround environment. • Stakeholder trust is an essential element in building strong stakeholder relationships and sustainable market share. • Given these considerations, we define business trust as genuine human relationships that foster reciprocal transparency, respect and cooperation among all stakeholders of a business exchange.

33. Hence, it is a moral duty to build trusting relations among our business management students, staff, and teachers. • To what extent does the MBA curriculum incorporate the concepts, theories, models and strategies, and best practices and cases of business trust in at least one or more courses? • In our day-to-day interactions with teachers, students and the staff, what is the depth and quality of trusting relationships that we strive to develop, and what are our mechanisms to eliminate mistrust and diminish distrust? • Given the psychological theories of trust (see Table 2), how does the MBA/BBA program develop the personal traits of trust such as confidence, benevolence, interdependence, and willingness to be vulnerable? • Given the social psychology theories of trust (see Table 2), how does the MBA/BBA program develop the social traits of trust such as commitment to promises, contracts, and covenants, team spirit, forging lasting partnerships, and mutual confidence that respects but does not exploit the vulnerability of each other? • Lastly, given the organizational theories of trust (see Table 2), how does the MBA/BBA program develop in our students the skills and mechanisms to reduce the risk of opportunism, without over-reliance of contracts, guarantees, safety nets and other monitoring devices?

34. Some Key Instances of Market Injustice USA in the 1970s – M & A ( Merger and Acquisition ) USA in the 1973’s - Fuzzy financial instrument markets (Fischer Black and Myron Scholes ) Ripple effects of the collapse of Wall Street financial giants

35. Re-designing the Prevailing System of Management to infuse Business Faith that does Business Justice Most market injustices are “wicked” problems that are hard to tame. In view of these structural systems of market injustice, some practical questions are: • How can business innovate to improve society every day? • What are the primary mechanisms through which businesses can improve society every day? • How can companies simultaneously enhance society and increase profits? • How can we teach only those business concepts, theories, models and strategies that improve society every day? • How can you make the poor profitable for all every day?

36. At a deeper and broader spiritual level, these business justice questions translate to: • How can agendas of earthly kingdoms yield to God’s developmental and universal plan for this world? • How can earthly short-term business values yield to long-term God’s values for human society? • How can earthly standards of service (mixed with human pride, selfishness, greed) yield to the standards of heaven (e.g., humility, selfless service, and agape - unconditional and absolute self-giving love) that translate into selfless service)? • How can business education seek, find and witness the will of God such that it reflects the standards of heaven in human choices and corporate strategies? • How can business education advocate love (agape) and foster win-win relationships that support love in all business transactions and not optimization at the expense (zero-sum game) of competition?

37. Radical Innovation to Bring about Business Justice One crucial way to bring about business justice is to “innovate innovation” (Kao 2007): Think outside our box of specialties and disciplinary silos. Thinking inside the box is to think within self-imposed constraints and exploring alternatives within a confined space. Hence, we must learn to change constraints or set the right constraints, and ask the right kinds of questions. Innovation moves beyond old and established ways of thinking, computing, measuring and assessing. Innovation is interdisciplinary and should cross man-made boundaries. Innovation realizes value from new and old ideas. Innovation is not just about intellectual property and patent law. It goes beyond it. It is not about high tech only; but transcends it. It is beyond the Silicon Valley formula of “better, faster and cheaper” products. Innovation entertains “impossible” possibilities, conducts meaningful experiments, consults outsiders with widely different backgrounds and divergent opinions, and takes daring intellectual and economic risks.

38. Catalytic Innovations that transform even the Poor to be Profitable Catalytic innovators share five qualities (Christensen et al. 2008): They create systemic social change through scaling and replication. They meet a need that is neither observed (because the existing solution is more complex than many people require) or, not served at all. They offer products and services that are simpler, less costly than existing alternatives. They generate resources, such as donations, grants, volunteer labor, or intellectual capital, in ways that are initially unattractive to incumbent competitors. They are often ignored, disparaged or even encouraged by existing players for whom the business model is unprofitable.

39. Examples of Catalytic Innovations Low Cost Eye glasses.netAshoka Skoll FoundationAIF AccionFocus Hope

40. Spiritual Development as Radical Personal Innovation The “five disciplines” of Senge (1990; 2006) affirm new principles of management as executive spiritual development (ESD): There are ways of working together that are vastly more satisfying and more productive than the prevailing system of management. Just getting people to talk to one another in an open dialogue as to how their firm can be re- structured can create a SCA. This is a form of ESD. Organizations work because of how its people work, think and interact. The changes required ahead are not only in the organizations we work, but in ourselves as well. Organizational learning is about each one of us – personal mastery is core. Personal mastery is another form ESD. In building learning organizations there is no ultimate destiny or end state, only a lifelong journey. This journey requires enormous reservoirs of patience, and the results we achieve are more sustainable because the people involved have really grown. Health corporate growth is ESD.

41. God’s Standards for Business Faith that does Business Justice Kazuo Inamori, founder CEO of Kyocera, has his corporate motto: Respect Heaven and Love People. According to Bill O’Brien, a former president of Hanover Insurance, spiritual development is advanced maturity Max de Pree, retired CEO of Herman Miller, views human relationships beyond contracts to covenants Peter Senge (1990; 2006) postulate five disciplines for spiritual development: self-mastery, shared vision, mental models, team-learning, and systems thinking. Each discipline can reflect God’s standards for ESD.

42. Executive leadership is about motivating others to achieve superior results. It demands that individuals rise above the five inherent human temptations to CEOs that Patrick Lencioni explores (1998): • Choosing one’s corporate status over corporate results; • Choosing one’s popularity over accountability; • Choosing certainty over clarity; • Choosing harmony over productive conflict, and • Choosing invulnerability over trust. Fighting all these executive temptations needs deep executive spirituality that is grounded in honesty, integrity, vulnerability and authenticity.

43. Strategizing a Redesign of Jesuit Business Education Strategic rethinking of business education in Jesuit business schools should involve minimally the following critical issues: Questions that relate to the Jesuit vision, mission and identity, strategic thinking and strategic planning. Who are we? What business, market, industry are we in? Who are our customers? What are their needs that we can serve? Questions relate to Jesuit strategic inputs, strategic resources, inputs mapping and inputs sourcing. What are we? What are our tangible resources? What are our intangible resources? What are our strengths? What weaknesses? What is our sustainable competitive advantage? Questions that relate to Jesuit assessment, evaluation, strategic mapping, and process mapping. Where are we? What is our position in innovation, in business faith that leads to business justice, and in this regard, what are learning-patents, new products, new markets, new customer segments, new outreaches (e.g., neglected customer niches), national and global standing, alumni/alumnae satisfaction and delight, and out sponsor assessment?

44. Questions that relate to Jesuit future, industry foresight, direction, destiny, outcomes-mapping and strategic architecture. • How do we understand our future? • Where do we want to go? • Why do we want to go there? • How do we reach there (strategic architecture)? • When do we plan to reach there? • How would we know that we have reached there? • Who do we want to be three, five, seven, or ten years from now?

45. Questions on Jesuit education strategy, strategy process, and strategy mapping • What is our current understanding and accomplishment of business faith that does business justice? • How do we reinvent the future? • How shall we identify new challenges, horizons and new opportunities in this regard? • How do we reshape the education industry to mold and shape our students to be champions of business faith and justice? • What new resources and new competences shall we build? • What new core products should we develop with what new functionalities such that all of us, administrators, teachers and students alike, pursue business faith that does business justice to all our stakeholder communities? • How do we deliver old functionalities in new ways?

46. Employee Challenges of Business Faith • What motivates employees is not money necessarily but their attitudes toward work and the organization. • Other things being equal, job performance is the product of one’s ability and motivation. • Understanding organizations means understanding people. • Even though human nature is simple, it can be very complex. • Understanding employees as human beings and respecting their human dignity in all its forms is the clarion call of business faith that does business justice.

47. Corporate Leadership to Eliminate Business Injustices: They • Are visionaries who are able to generate a great sense of mission; their enthusiasm is infectious; they are willing to take risks. They personify the old adage: nothing ventured, nothing gained. • Do not rule by an organization chart; people are more important than paper positions. They make other people’s success, their success. • Have their door always open such that anyone can talk to them about anything. • Take full responsibility for their actions, and never finger-point to others for blame. • Are persons of integrity, courage, resilience and strength of character; they are somebody we can count on when the chips are down. • Are never afraid to have people around them who are more accomplished than they are. President Harry Truman was not afraid to have brilliant people surround him; he had the best cabinet of any president since George Washington. • Never ask any of his reports to do anything they would not do themselves. • Have the power of persuasion – the ability to get people to do what they ought to know to do without being told. • Listen – listening means asking good questions and taking in what people have to say. It also means hearing what people are not saying – what is bothering them about the job, their company or country. • Never feather their own interests or popularity at the expense of corporate results; they neverput their own status before that of the corporation. • Have very high standards and live up to them; they have a sense that their work matters, that their efforts contribute to something bigger than their salary.

48. Discerning God’s Standards in Business Justice and Business Faith An important aspect and skill of Jesuit mission is discernment Fr. General, Adolpho Nicolás, adds, “if you are attuned to the inner movements of the Spirit, to where your heart is vibrating at its deepest level, then you will know where God is working in your lives. Common mission becomes real through genuine relationships of trust, shared actions and practices. Such joint processes can challenge co-workers to explore into new ways of thinking, doing, being and becoming.

49. Concluding Remarks: Some Radical Implications Curriculum Redesign Suggestions Understanding Resistance as a Strategic Resource Guiding Student Career Ambitions New Corporate Social Responsibilities

50. Just two Core Courses Ethics of Business Justice: • Deontological justice (Kant), teleological justice (utilitarianism, consequentialism, enlightened egoism), distributive justice, Canons of distributive justice), and subsets of distributive justice such as malfeasant justice (ethics of avoiding evil), corrective justice (compensatory and retributive justice), procedural justice (procedures for promoting good), preemptive justice (preventing harm), protective justice (protecting from harm), and beneficent justice (doing good). • The course should supplement Western classical ethical thinking paradigms and ethical systems with Oriental thinking paradigms and ethical systems. Whatever we do in business and in business education, we should safeguard major aspects and theories of individual and communal justice (see Table 1), especially those that reduce inequality of income and opportunity (Sen 1992; 1997). • We should draw from electronically archived and “spinscaped” local, national, international, and global cases and best practices of business justice and its gross violations or disempowerment.