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April 01, 2008

Q and A: Success, Greed and Tradeoffs

Glenn Hubbard
Dean and Russell L. Carson Professor of Finance and Economics
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The following is based on a PBS interview with Bill Baker and is part of our series this week on leadership and ethics.

Bill Baker: What are the characteristics of successful businesses and successful business leaders?

Dean Glenn Hubbard: Successful businesses tend to be very entrepreneurial. They tend to seize opportunities as they come about in the marketplace, in a way that somebody else hasn’t. So successful business leaders are, in a sense, entrepreneurs, even if they didn’t start the business. They are also people who have a great global sense, and an enormous sense of the social context.

BB: Is it a lot more difficult to run or work in a business today and become successful than it was decades ago?

DH: It is. Businesses have always been very complex organizations, but all the more complex today. The pace of change has picked up so rapidly, in part because of globalization, but also because of technological change. You really have to be able to adapt quickly. Leaders often don’t stay in their chairs very long. The route to leadership is a long and winding one and yes, it’s much more complex.

BB: How have students changed over the years? Have their values changed?

DH: Well, I’m actually very encouraged by the current generation of MBA students. I know it’s fashionable to worry about the values of the young. I don’t. I see the social concerns of these future business leaders as being far greater than students who were in business school when I was in graduate school, say 25 years ago. It used to be that social enterprise was a marginal club activity related to not-for-profits alone. Today more than half of the students in the MBA program view this as a very serious area of interest, and all of them are exposed to it. It’s hard not to be impressed by that kind of attitude.

BB: What has happened to greed? It used to be that one always assumed that good business schools and good business students were just greedy. That doesn’t seem to be the case anymore. They seem to have much more nuanced value systems.

DH: I think that’s true. I say to the students at orientation, or in commencement that what I care about is not the change that’s jingling in their pocket, it’s the change they are going to make in the world. And what’s more important is that that’s the way they think about themselves.

Of course, they do want to do well, they do want to make money. That’s part of why they are in business school. But I think most of them have extremely serious interests outside of the financial realm that you might not have seen a generation ago.

BB: But what about the pressures of the real world? How do they react to those?

DH: Well I hope that we give them preparation for that. Part of the purpose of our values curriculum at the school is to help people deal with tradeoffs. I don’t view our role as teaching ethics to 27 or 28 year-old men and women. I view our role as being able to help manage tradeoffs. And I think these students are very well prepared to do that. They understand, particularly given events of recent years, that it’s leaders with strong values who actually do succeed in the marketplace.

BB: You talked about students interest more than ever and doing things the right way, doing things with integrity. Do you think the future will hold a time when more and more people will be getting wealthy by doing the right thing, not just by being greedy?

DH: Absolutely! I believe that leaders and entrepreneurs with strong values are the ones who tend to have the greatest success in the marketplace over long periods of time. I think most of our young business school students who are aspiring business leaders fit that mold very, very well. I am very optimistic for that future for our country and for the world.