Editor's note: Welcome to The Innovators, a new series on TheStreet.com in which experts in business management will discuss innovation and leadership in corporate America.When 400 members of Harvard Business School's graduating class signed the MBA Oath one day before taking their degrees last month, there was a fair bit of snickering from cynics who saw the oath as nothing more than a clever marketing scheme. The MBA Oath, organized by graduating HBS student Max Anderson and about two dozen of his classmates with the support of faculty members Rakesh Khurana and Nitin Nohria, seemed positively naive to some. Among other things students promised to "act with utmost integrity," guard against conduct that would serve their own "narrow ambitions" to the detriment of their companies and society, "understand and uphold" both the letter and the spirit of the law, and "strive to create sustainable economic, social, and environmental prosperity worldwide." In the wake of the recent economic crisis, with angry fingers pointing from every direction toward Wall Street and a major regulatory overhaul looming in Washington, several leading business journals suggested that the oath might be nothing more than an effort by the best and brightest new minds in business to distinguish themselves from ethically bankrupt financiers who sought short-term personal gain at the expense of their firms, their clientele, and the world economy. For once, the cynics may be dead wrong. The MBA Oath has quickly gone viral, with almost 1400 students from at least 25 other schools voluntarily signing on so far. While that number falls far short of unanimous support in the business school community, it's large enough to suggest that the oath resonates deeply with at least a significant segment of America's future executives.
Some experts attribute the oath's success to the idealist impulses of the Millennial generation, who have finally reached adulthood and eligibility for graduate school. (It's ironic -- for years, education gurus bemoaned their perception that cheating in the schools was on the rise because Millennials lacked ethical standards. Now, we're told that the MBA Oath may be proof that Millennials share a stronger moral compass than the generations who preceded them. Go figure.) In their 2000 book Millennials Rising: The Next Great Generation, Neil Howe and William Strauss characterized the Millennials as high achievers with a strong sense of social connection, an internationalized worldview, and profound dedication to conventional values. If Howe and Strauss were right, the MBA Oath may be neither a shrewd public relations gambit nor an impractical ideal. Instead, as Max Anderson and his classmates hope, the MBA Oath may prove to be an important first step toward making business management a respected profession - not just an occupation - that can provide its members with more meaningful work than simply returning money to investors through a compulsive focus on the bottom line. Professions like law and medicine espouse certain values, and require their members to adhere to ethical codes that are similar to the MBA Oath. Unlike the oath, however, professional codes of ethics are mandatory, and professionals who stray from them can lose their professional credentials, their licenses, and their livelihoods. Much has been made of the fact that the MBA Oath is not yet enforceable - yet. But there are at least three ways for the MBA Oath to become binding in the relatively near future.
First, some in the business community are working to develop a professional association for MBAs that would require its members to adhere to the MBA Oath, or something like it, as a prerequisite for continued participation. Too many people become successful in business without an MBA for membership in such an association to become mandatory anytime soon. But if membership in the association were to develop sufficient prestige to confer a real business advantage, compliance with the oath could become a professional necessity, if not a binding obligation. Second, legislators may not wait for business school graduates to get their association together. While it's not clear what will emerge out of the efforts of Congress and the Obama Administration to reregulate the financial services industry, the federal government has been known to take huge liberties with professions before. (Remember when accountants were largely self-regulated?) A new federal regulator could end up setting standards for financial managers that might look a lot like the MBA Oath. Before either of those events occurs, however, plaintiffs' lawyers may start trying to enforce the MBA Oath in court. There's a general rule that the law holds individuals and companies to standards that they voluntarily set for themselves if the plaintiff(s) relied on them to comply. Newly-minted MBAs who signed the oath may believe, quite correctly, that their demonstrated commitment to ethics will give them a competitive edge in the marketplace, and may advertise their decision to sign on. But if their customers count on them to comply with the MBA Oath, they may face tough sledding in court if they fail to live up to the promises they've made.
The MBA Oath sets admirably high standards and the students who signed it deserve to be applauded, even if they find the oath difficult to satisfy when they actually start working. Sometimes, it's possible to define abstract concepts like "utmost integrity" with Supreme Court Justice Potter Stewart's famous definition of pornography: "I know it when I see it." But determining how best to handle an ethically ambiguous situation can be problematic, and good faith actions can look self-serving in hindsight. Here's hoping that Mr. Anderson and his classmates are able to fulfill the MBA Oath and avoid the kind of ethical missteps that recently created so much havoc in the financial markets. If they can, they'll truly deserve to be recognized and respected as a profession.