Nitin Nohria

Can He Restore Ethical Behavior in Business?

GRK Murty
It is no sin to be a businessman. But it certainly becomes a sin if
businesses are carried out in an atmosphere of ‘no trust’. For, in the
absence of trust and cooperation between businessmen, the country
would collapse soon.

That is what indeed happened in 2008, when businessmen lost

trust in Lehman Brothers: the very financial architecture of the US
collapsed, pushing it into one of the worst recessions since the Great
Depression of 1929. With it, the global economy was derailed, the
woes of which it is still struggling to come out of.

Business is an ethical activity. With globalization, the need for

ethics in business has only become all the more important. But this
simple truth does not appear to have had any bearing on the conduct
of business leaders. At least, that is what one infers from the current
Congressional hearings on Goldman Sachs: lawmakers accused
Goldman Sachs of betting against investments they had sold to
customers. Nor did the happenings at JP Morgan Chase have any
comfort to offer to the common man about the businesses and
businessmen’s conduct. Bernard Madoff, by depriving his clients of
their hard-earned savings of around $50 bn in a decade-long fraud,
further intensified the aversion of the public for financial
professionals.

The general mood of the nations, following the mess created in the
global financial markets by business leaders, was well captured by
Nitin Nohria, the newly appointed Dean of the century-old Harvard
Business School, when he said in the sidelines of his prestigious
appointment: “Throughout history, there has been this notion of the
honorable business person. Business people have taken pride that
they can do business on a handshake. I don’t know where we lost
that....”

Similar feelings were echoed by Drew G Faust, University President,

when she said that HBS students are “very concerned about the
image of business and its place in American life and the world in
general.” Nonetheless, it is encouraging to note that Nitin Nohria,
whose perspective is said to be ‘innately global’, is seized of the
gravity of challenges that he and his Business School face today, for
he said: “With business education at an inflection point, we must
strive to equip future leaders with the competence and character to
address emerging global business and social challenges.”
 Indeed, he is one of the first to suggest that Business School
students take a professional oath of conduct. In an article co-written
with Khurana in 2008, he observed that managers had ‘lost
legitimacy’ in the past decade, and suggested a ‘code of ethics’ for
the management profession, like the Hippocratic oath, hoping that it
would “create and sustain a feeling of community and mutual
obligation that members have toward each other and toward the
profession.”

Though he feels disturbed by the missing leadership bond with

employees and the public, as is revealed by the recent multiplication
of business scandals, he says it can be reestablished: “What we have
to do as a school is usher in what I think of as a new century of
innovation, to really remake business education,” so that businesses
can have leaders “with the competence and character to fulfill their
positions of power and privilege.”

While being happy with his appointment as the Dean of HBS on the
one hand, and being aware of business schools’ failure to develop
leaders who are up to the challenge of grappling with the problems
of businesses that “spill over boundaries”—whose “goals are not
clear, pathways haven’t yet been established, stakeholders are
politicized, and no one is clearly in charge”—on the other, every
Indian wishes Nitin Nohria good luck at HBS and all success in his
endeavor to provide the business world with leaders of character
and competency.

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