MBA Programs Must Adapt to Navigate American Culture Wars
Just when the battle between Florida Governor Ron DeSantis and The Walt Disney Company over the state’s “Don’t Say Gay Law” was over, another global brand–this time sportswear juggernaut Adidas–found itself captured by controversy. The German company was forced to part ways with hip hop megastar Kanye West over antisemitic comments that set Hollywood and social media on fire and led other major brands, such as The Gap and Balenciaga, to break with the rapper. This was undoubtedly a challenging decision for Adidas’ executives; the Yeezy brand, a collaboration between Ye and Adidas, had an estimated $2 billion yearly topline impact–nearly ten percent of the company’s annual revenue. Adidas has indicated that the split cost the company almost $250 million in income last year.
The economic significance of the fallout from the Yeezy debacle is undoubtedly the main reason those company executives stalled for weeks amidst mounting public pressure to drop its association with West. But in the end, principle beat profits. Adidas “does not tolerate antisemitism and any other sort of hate speech.” the company said in a media statement. “Ye’s recent comments and actions have been unacceptable, hateful, and dangerous.”
What course at Harvard, Stanford, INSEAD, or any other top business school, could have prepared Adidas executives to make such a weighty decision?
Given the reality of today’s politically polarizing business landscape, it seems unimaginable that not one prominent MBA program in the U.S., or abroad, has required coursework dedicated to how politics and media shape the environment in which businesses operate. Few, in fact, even have courses on politics, media, and public relations offered as electives.
Of course, there are a handful of students every year who graduate with dual master’s degrees, pairing an MBA with a degree in public policy, urban planning, or related social science, for example. But most of America’s newly minted MBAs graduate with little to no appreciation for how government policy impacts the economic climate or political winds.
And that’s a big problem.
“It’s a big blind spot not only in the C-Suite and board room but even in academia–especially in the country’s top MBA programs,” said former CNN anchor Rick Sanchez, now a communications consultant for CEOs of several Fortune 500 companies. “Business schools aren’t teaching the next generation of leaders about the real-life push and pull of operating in an increasingly politicized and polarized operating environment.”
Casual observers of both the DeSantis vs. Disney blow-up and the breakup between Ye and Adidas might be tempted to chalk those incidents up as outliers. But across the board, politics and cultural wars are crossing the paths of the world’s largest corporations. As we wrote in an earlier piece in this series, politics is now front and center in corporate decision-making, and CEOs are grossly underprepared to deal with the effects of this collision.
“As anyone who has served as an executive at a Fortune 1000 company knows all too well, government and the ebbing and waning of its policies have more impact on your bottom line than all of your competitors put together,” said Leila Aridi Afas, director of Global Public Policy at Toyota. “But in recent years, a new, separate vector has emerged that is distinct from public policy. Now raw geopolitics is gnawing at the seams of big business. New MBAs must be prepared for this new business reality—they must understand world history, geography, and policy-making. Many business school graduates don’t understand how the government works and functions, even at a basic level. That knowledge gap opens the door to reputational risks and potential public policy downsides across global industries.”
Politics in Business is Not New
The conflict between politics and big business has been smoldering for at least a decade. In 2015, many may recall, there was a dust-up between Salesforce and then-Indiana Governor Mike Pence over legislation that many saw as decidedly anti-gay. With nearly 3,000 employees in the state, Benioff threatened to sanction the state of Indiana if the measure became law. “CEOs are very much the advocates of their customers and employees, as well as of the environment and local communities,” Benioff said after forcing Pence to tone down his proposal. “The most successful CEOs today are advocates for their stakeholders, not just their shareholders.”
Taking on the governor marked a bold move by Benioff, and it was no doubt a risky move. The costs of uprooting the Salesforce business and moving it out of Indiana would have been costly, but in the end, Pence blinked first. Benioff had sent a clear message to Republican governors around the country. More importantly, he communicated to his most important stakeholders—his employees—that Salesforce would go to bat for LGBTQ rights. By taking the lead, Salesforce also paved the way for other CEOs with a footprint in Indiana—from Apple to NASCAR—to take similar positions.
Benioff didn’t learn how to deal with the issue in Indiana from a textbook and certainly not from a vaunted MBA class—in fact, the billionaire founder never went beyond a bachelor’s degree in his studies. But the reality is that these types of confrontations are now becoming part and parcel of how business is conducted across the modern corporate landscape. Governors and other elected politicians on both sides of the aisle are playing footsie with culture wars and putting businesses in seemingly no-win situations. As CEOs peer out from their corner offices at the rest of the C-Suite, they find that generally, no one on their leadership teams has the requisite skill set to navigate these uncharted waters. The groupthink for most C-level executives is to keep out of politics at all costs—a safe theory but hardly a tactical move when these issues are already at the gate.
“…I hope that MBA programs, especially the top MBA programs that are developing new generations of corporate leaders, will include this important skillset in their core curricula,” said Gary Sheffer, former head of Communications at GE. “But it’s a huge blind spot that needs to be addressed. MBA students need exposure to grey issues at the crossroads of corporate strategy, political acuity, and public relations.”
Harvard’s MBA program, often considered among the most prestigious business programs in the world, does not have any required courses dedicated to preparing future corporate leaders for a politically-fraught business environment. Although a handful of students pursue a dual degree in conjunction with the Harvard Kennedy School to study public policy and government, the vast majority do not. Stanford’s MBA program allows interested students to engage in political outside the core curriculum. Still, it’s unclear if these courses address head-on the dynamic that is playing out in boardrooms across the country in which governing authorities press companies to stay silent or take action at odds with the will of the majority of its stakeholders. Even the MBA program at Georgetown University—often considered the premier school in the country for all things political—has not one course (including electives)—that appears to address this suite of issues related to political navigation and corporate stewardship.
“If leading MBA schools don’t start teaching public affairs as a key business strategy—and our recent study shows that half don’t—many companies will find their future leaders aren’t prepared to deal with a tough political environment,” observed Doug Pinkham, president of the non-partisan, Washington, DC-based Public Affairs Council. “Domestic and global issues are getting more challenging, not less challenging. And that means more proposed regulations, scrutiny of big corporations, and greater expectations for companies to serve the public interest.”
Columbia’s MBA Program: a Glimpse into the Future
But only some top MBA programs are failing to take the plunge. Columbia University has made a concerted effort to introduce curricula over the past decade that leans into the politics of business. “Business and politics have long been intertwined,” commented Dan Wang, the Lambert Family Associate Professor of Social Enterprise and Faculty Co-Director of the Tamer Center for Social Enterprise at Columbia Business School. “Coursework on Corporate Strategy used to be very much finance-focused, but here at Columbia, we have added non-quantifiable issues to the mix. We want our students to learn how business decisions are connected to the spillovers from and back into society.”
“Are current corporate leaders prepared to make these hard decisions? Decidedly not; most don’t have the requisite tool kit or framework,” added Wang, who teaches two courses, ‘Business in Society’ and ‘Executive Ethics’ to MBA and Executive MBA students at Columbia. “For example, we have looked at what CEOs say about social issues or post on social media, and it’s generally all over the place. They show a certain disconnect from where society is on any given issue. CEOs trained 20, 30 years ago never had this curriculum—they never had this training.”
Whether it happens at the MBA level or becomes an appendage to executive training programs at corporations, it seems inevitable that many more MBA programs will be taking a cue from what Wang has been pushing at Columbia University. Soon this new suite of topics will receive the attention it deserves, with plenty of case studies to draw from.
The Disney situation with DeSantis was a preview of what will likely become a more frequent collision course between businesses and politicians. And it will not come just from elected officials; the Supreme Court’s reversal of Roe v. Wade has thrust countless companies into uncomfortable territory as their stakeholders demand certain protections at odds with local and state laws. Many of America’s most powerful tech companies—Tesla, Amazon, Apple, and Microsoft, to name a few—moved swiftly to provide additional benefits to employees living in states where abortion laws are already being clawed back.
“We need to train MBA students not just to be leaders, but to become changemakers,” said Alex Budak, a faculty member at UC Berkeley’s Haas School of Business. “CEOs are facing increasing pressure not only from their boards and shareholders, but from employees, customers, and other key stakeholders, which makes navigating rapidly changing external political landscapes a challenge. Politics used to be something that was mostly on the periphery of a CEO’s field of vision—now it can sometimes appear front and center in the company’s business. As educators, we need to develop new curricula for MBA students that will help them learn to navigate these new and complex challenges.”
Current MBA students gazing out at the business world they will soon be joining probably wish they had been given the opportunity to add these valuable political tools to the toolkit they will be taking into the job market.