Business Transformation Requires Transformational Leaders

We believe that a radical shift in MBA education is needed. Instead of transmitting existing knowledge or developing a set of functional skills, students must become comfortable with the process of thinking based on America’s unique contribution to the history of philosophy: pragmatism. 

Companies continue to explore DEI and implement initiatives to create a culture of acceptance and understanding, while carrying out their missions and remaining profitable. But building an effective DEI strategy calls for a new mindset among business leaders if current and future initiatives are going to succeed. This Executive Update offers four “mini-starters” to explore the DEI issue in more depth.

The inner-leader journey will help you see reality more as it truly is and give you the insight, wisdom, and courage to share it with others. I believe it is critical for our teams and team members to make this shift in order to thrive and achieve success in a turbulent world.

In this Executive Update, we explore taking a process perspective to show how concepts such as sustainability and the circular economy look in the physical world. Making these concepts concrete reveals a singular criterion for achieving a circular economy: every output generated by every process should have a consumer who uses it productively. This criterion provides managers with actionable steps and ways to measure their organization’s progress toward sustainability.

Helen Chen brings our focus on process and mechanisms to the domain of market-based social activism (MbSA), in which a business seeks to align its activities with moral principles to drive positive change at the society scale. Chen presents the Pyramid of Forces for Good framework that can be used to better organize MbSA to develop a “market for virtue” in which morally sound business activities outcompete those that are morally questionable. A market for virtue applied to green performance is based on three building blocks: (1) valid and reliable green-performance measurement, (2) fair and equitable green-performance valuation, and (3) efficient and scalable green-value apportionment. Establishing a market for virtue would make green practices economically profitable, fundamentally changing the economic system that currently makes unsustainable practices more economically profitable than green practices.

Rachana Shah explores system stability and points of intervention in a specific, highly complex system: the New York City Waste system. Shah uses systems theory to analyze specific actors and their actions to reveal key leverage points for change within the system. She prioritizes the leverage points by their potential for impact on the system, elucidating exactly what each leverage point can change, who will be affected by the change, and what effect the change could have on the system. She then explores the negative feedback processes that resist systems change, pointing out that the higher in impact a leverage point is, the more a system will resist it. Shah’s analysis demonstrates how actors can decompose a system into subsystems, identify key change points, and prioritize each change point by balancing its potential for impact against its potential to generate negative feedback from the system that cancels out the impact of the leverage point. Her focus on actors and their actions raises a valuable point for systems analysis. The way you analyze a system influences what you believe to be the key leverage points in the system and influences the effectiveness of systems change strategies built from that analysis. Conceptualizing the waste system as actors and actions highlights leverage points related to actors themselves. However, this way of viewing the system may obscure system processes and leverage points not related to actors, such as technological leverage points around material production and distribution or biophysical leverage points around waste decomposition.

The authors argue that systems are designed to produce their results, even when their results are far from perfect. Systems also have internal “negative feedback processes” that maintain system stability by canceling out disruptions. Overcoming these stabilizing systems can be challenging, and pushing a system far enough to initiate change can result in sudden, highly disruptive shifts to a new system. Rather than cause such disruptive change, the authors advocate for incremental shifts to avoid the kind of wholesale disruption that could leave financial, social, and political systems in shambles.

The authors examine the beliefs driving the dominant capitalist and democratic systems that govern the West. They believe we need to change the way we think to imagine a future where all life flourishes. For them, social transformation must be at the scale of previous transformations like the Enlightenment and the Scientific Revolution. Accomplishing this will require change across many social systems, but the authors target one in particular: MBA programs. The authors opine that business schools must ground MBA programs in the liberal arts and science traditions of the great medieval universities while challenging students to approach their work as a calling and using organizational methods and resources to create values-driven, society-scale change.