MAPping the Future

Context

 

The widespread economic and social suffering resulting from major shifts in the global economic and political landscapes, global warming, the coronavirus pandemic, and other global crises, have brought into sharp focus the social responsibility of business.

 

Business is increasingly being called upon to address the major problems faced by Philippine society today. Foremost among these is the marginalization of a large segment of society that is mired in abject poverty, and the increasing concentration of wealth and income in a small number of individuals. This observation is supported by the most recent report of the Social Weather Stations which shows that as of the end of 2022, fully half of all Filipino families consider themselves as Poor, and only one-fifth regard themselves as Not Poor. SWS Emeritus CEO Mahar Mangahas laments that despite substantial increases in our Gross Domestic Product and a doubling of per capita income in recent years, “so little of it is shared.” At the recently-held World Economic Forum, OXFAM reported that the seven richest families in the Philippines accumulated more wealth in 2022 than the poorest 55 per cent of the population.

 

While economic inequality is largely the outcome of the failure of the state to serve the material needs of the economically disadvantaged members of the community, and to provide equal access to economic opportunities to all, business, too, has been equally culpable.

 

By long-standing tradition, business firms seek to maximize profits for their owners. The single-minded pursuit of profits was often carried out at the expense of the economic interests of customers, workers, business partners, and the community.

 

A contrary view holds that business enterprises can best achieve their profit objectives by creating economic value for, rather than by appropriating value from their stakeholders.

 

 

This idea has the following strategy implications:

 

 

• Create value for consumers by enhancing product quality, by selling products and services at reasonably low prices, and by providing adequate customer care;
• Create value for workers by offering comfortable wages and other financial benefits and by providing a healthy work environment;
• Create value for suppliers and distributors by engaging them in a mutually beneficial, trusting and collaborative relationship;
• Create value for the rest of the community primarily by developing the untapped productive potential of those at the bottom of the social pyramid – the poorest and the least productive members of society; and
• Devote resources to maintain a healthy and sustainable eco-system.

 

To do so, however, business must change the way it does business. It goes without saying that management educators must change the way they teach future business managers.

 

Rethinking Management Education

 

By and large, existing programs and courses in management are business friendly and emphasize measures by which business firms can enhance profits, or shareholder wealth.

 

We propose instead that business education should be rethought to make it more focused on the material interests of the firm’s stakeholders, notably the economically disadvantaged members of society.

 

Existing Program Formats

 

Most existing graduate programs in business offer a number of courses in common. Typically, introductory courses include Economic Analysis and the Fundamentals of Management. In addition, the MBA program of the Virata School of Business also require Corporate Financial Planning and Managerial Accounting and Control at the beginning of the program.

 

The introductory management course typically includes the long-standing concepts and principles which consist of (1) the traditional sub-classifications of management into planning, organizing, staffing, leading and controlling, and (2) usual textbook principles of management (division of work, unity of command, unity of direction, subordination of individual interests, chain of command, etc).

 

Progressive management thinkers and practitioners regard these concepts and principles as hackneyed and of little relevance in today’s world of business.

 

Basic, or core subjects typically consist of the so-called four functional areas of management, namely, marketing, production, financial management and human resources management.

We should note, however, that in the real world of business, management problems and concerns such as the launching of a new product, or scaling up operations seldom fall exclusively within a particular management function, and should therefore be treated holistically.

 

Interspersed among the required subjects are elective courses such as Quantitative Methods (aka Management Science), Management Information Systems, Managerial Economics and courses that cover specialized sub-areas of the four functional fields such as Financial Markets, Management of Innovation, and Managing Organizational Culture.

 

In our thinking, statistical and mathematical models of choice such as Linear Programming and other quantitative tools are inappropriate for dealing with situations that are in a continuous state of flux. Today’s managers face complex and ill-defined problems that are said to be “out of equilibrium” and are best “solved” with the help of sophisticated computer algorithms and applications such as high- performance computing, cloud computing and Big Data Analytics.

 

As a rule, the capstone Strategic Management course is offered at the tail end of the program. Also known as Strategic Planning and Control, this course typically covers long-standing concepts and procedures such as environmental scanning, preparing the organization’s vision and mission statements, and specifying the organization’s goals and objectives.

 

In a world characterized by rapid, unpredictable change, strategic decisions are made in real time. In such dynamic settings, visioning, missioning, goal setting and planning are inappropriate.

 

A Proposed Program Format

 

To make management practice and the training of managers more attuned to the times, we propose instead the following list of courses to form part of our recommended program format:

 

• Introductory courses
• BUSINESS AND SOCIETY – A description of an innovative approach to management by which firms pursue their traditional goal of profit maximization by creating value for ALL their stakeholders – their customers, their workers, their business partners, and the communities of which they are a part.
• CURRENT ISSUES IN BUSINESS AND MANAGEMENT – A discourse on economic and business topics relating to current global trends and developments, such as isolationism among nations, political polarization within nations, global warming, rapidly evolving technologies, the coronavirus pandemic, and the Ukraine war and other conflicts; a discussion of what these imply for business strategy and economic policy.
• A GENERAL THEORY OF THE FIRM – An overview of alternative concepts of the firm from the perspectives of neoclassical economics, behavioral theories of the firm, structural functionalism, social Darwinism and complexity theory.

 

• Basic courses – a breakdown of Stakeholder Strategy into its four basic components, aka Environment, Social and Governance, or ESG, Investing.
• Strategies for creating consumer value
• Strategies for creating worker value
• Strategies for creating value of business partners
• Strategies for creating value for the community

 

• Electives
• KNOWLEDGE MANAGEMENT – Classification and properties of knowledge, network effects, the Learning Organization
• THE ORGANIZATION OF PRODUCTION 1 – The boundaries of the firm – vertical and horizontal dimensions.
• THE ORGANIZATION OF PRODUCTION 2 – The digital platform business model, extended value networks (aka supply chains), Value Capture Theory
• BIG DATA ANALYTICS: An Introduction

 

• The capstone strategy course –
• BUSINESS STRATEGY IN THE POST-COVID ERA – A discussion of how stakeholder strategy can help achieve the U.N. Sustainable Development Goals; illustrative business cases.

 

A distinctive feature of this program is its focus on the interest of ALL stakeholder rather than the exclusive concern for profit or shareholder wealth.

 

Directions for curricular reform

 

To make business more inclusive and more egalitarian, we propose that management courses and programs should be revised to give more emphasis on the creation and utilization of Human Capital, today’s most important resource, and of which knowledge is a major component, and less on physical and financial capital. Knowledge is more readily and more cheaply available to the economically disadvantaged members of society, including the unemployed, manual workers and street vendors, who are among the poorest of the poor.

 

We also suggest that greater importance should be given to the training of workers, individual entrepreneurs and managers of SMEs which comprise the majority of productive enterprises in the country and employ the larger majority of workers, and less on the development of managerial and technical skills of future executives of large corporate entities.

 

Finally, we recommend a number of guidelines in the implementation of our proposed curriculum:

• Design basic courses around broad strategic objectives and general problem areas and those that stress the ability to deal holistically with wide-ranging, inter-related issues, rather than the computational skills required to “solve” isolated and well-defined problems.
• Develop elective courses that focus on behavioral and relational skills that enable organizational leaders to build cohesive, adaptive and productive organizations.
• Eschew long-standing “management principles” and so-called “best practices” that are of little usefulness in specific contexts.
• Stress ingenuity, adaptability and flexibility as opposed to strict adherence to rules, procedures, plans and programs.

 

Caveat

 

We fully realize that pulling off our recommendations for curricular reform is easier said than done. There are a number of reasons for being less than sanguine:

• Change tends to be resisted by incumbents whose interests lie in the status quo.
• Change is resisted if externally imposed (not made here mindset)
• Change must be tied to the institution’s performance evaluation and reward system in order to encourage position holders to cooperate in its implementation.

 

But change we must. It’s about time!

 

 

(The article reflects the personal opinion of the author and does not reflect the official stand of the Management Association of the Philippines or MAP. The author is a Retired Professor of Economics and Management at UP Diliman. Feedback at <map@map.org.ph> and <nspoblador@gmail.com>).