09 August,2010 07:20 AM IST | | Anuradha Sengupta
He's taken over as Dean of Harvard Business School at a time when businessmen and their methods are being questioned by governments, regulators and the public at large. In an interview with CNBC-TV18's Anuradha Sengupta Harvard Business School Dean Nitin Nohria spoke about the perception problems faced by the business community and what changes he's making to set that right.
Q: What are key challenges as you see them or urgent changes that need to be made?
A: I have been appointed Dean at a time when business as a whole and business education as a result has found itself at an inflection point. We have just come through the great economic crisis in the US -- businesses have come under attack in all kinds of ways, trust in business leadership has been lost, many people are worried that business schools and the leaders that they have educated in some ways may, in part, have even been responsible for the crisis that was created. So you might imagine that being a business school Dean right now is being put in a hot seat because there is a lot of expectation.
Q: Currently does the world think that MBAs are not ready to cope?
A: I think the world is not sure that MBAs are going to contribute to this problem and this is what I think business education has to address -- which is business leaders have always been admired because they have solved society's most significant and pressing problems. It is not the only player but think about anything important that has been done, whether it be the clothes we wear, the materials we consume, great technologies like the internet, any product or service you would imagine including financial products that have created prosperity for so many people.
Business has been a vital part of creating prosperity throughout the world and if you look at the challenges that lie ahead, I think business has this opportunity yet again.
I believe, in fact, that the next century is going to be a century of remarkable innovation and what I wanted to do at Harvard Business School, in fact my vision for this school, is that we should be thinking about ushering a new century of innovation at Harvard Business School and to usher a new century of innovation in business education.
Q: I am sure you spent the better of the past two years trying to understand why people, why individuals and companies behave the way they did and why we are now in the grip of this economic crisis.
A: When you are in the midst of a single crisis, you somehow seem to forget that this is not the first crisis that we have had. The history of humanity is full of examples of crisis that have occurred -- all the way back to the French Revolution where we had rich people sayingu00a0 why don't they eat cake when people didn't have food. So the history of sometimes people who are doing well getting disconnected from the rest of the population is not a new one and in recent times that it has happened again. But if you forget those moments or those blips in history, you have to remember there has also been an enormous amount of history in which business leaders have done remarkably good things for the world.
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Q: One of the perceptions that business leaders need to cope with or deal with is the fact that they have been seen as these people who are out there just to profit for themselves.
A: I think that society has never had any grudges about paying people or having people become rich if they become rich in the process of creating value for society. So if you are engaging in actions that generate value for society, if you keep some yourself typically, I think that is a social contract that has long been accepted in society.
Take Bill Gates, take Warren Buffet, nobody complains about the wealth that the two of them have made because it is seen to be wealth that was made in the process of creating a lot of remarkable value for society as well.
When people get a little troubled about executive pay and high levels of executive pay is when it seems to have been done when no value was created for society or when value was destroyedu00a0 could protect your own pay pocket that is what I think the controversy in executive pay is all about. So I am not in favour of caps, I am not in favour of trying to regulate pay to say let us put a cap on it, I am much more of the view that let us make sure that when people almost in a philosophical way understand that high pay has to be correlated with high value creation. And, as long as you do that, society will be quite comfortable with the money that you make.
Courtesy: www.moneycontrol.com
