An Interview With Nitin Nohria, Dean of the Harvard Business School

Harvard Business School Dean NItin Nohria (Photo courtesy of Harvard Business School)

How do you see people dealing with that moving forward, especially young businesspeople? Do you see a change in the way they view business or in the way they exercise leadership?

It’s my hope they do. I was struck by the recent MBA Oath movement. The specifics of the MBA Oath are actually less important than the signal it represented. Here was a group of students who felt it really important to declare that they stood for different values than what were being portrayed as the values of business leaders—that we’re all about greed, we’re only in it for ourselves, we don’t care about society more broadly. So here is a group of people who said, “No, no, no, I didn’t join business because those are my values. I joined business because I really believe in the kind of positive role that business has for society. And what I want to stand for as a business leader is a difference in our values.”

The world is increasingly interconnected, and these global links will become stronger in the future. What differences do you see among leaders around the world? Is there anything that American business can learn from and better develop in terms of values, or attitudes, norms for doing business?

I think there are quite different values that animate business in different parts of the world. In Europe, I think that respect for the role of the state is still very high, for the most part. In America, we’re enormously suspicious of the role of the state. In parts of Asia, there is great respect for the state, but there are other parts of Asia, like in India, where there’s no respect for the state. I think the same is true in Latin America, where in some parts of Latin America the state enjoys respect and in other parts the opposite is true.

One thing that Americans need to recognize is that the relationship you can have with the state doesn’t have to be one of permanent hostility—you can actually have a productive relationship with the state as well. While regulation can often overreach, as we have found recently, the complete absence of regulation is equally problematic. So some form of productive regulation might be a useful thing for us to think about.

The other difference that you certainly have in America is that when things go wrong, relative to any other place that I know, Americans are willing to cut their losses and move on. You look at Japan and other places, there’s so much anxiety about the costs of confronting the mistake you made because it’s going to inevitably lead to social dislocation of some kind. They just postpone taking pain that is necessary to confront the mistakes that they made. Whereas I think one of the great strengths of the American economy, relative to any other economy that I know, is the capacity to say, “Okay, we made some mistakes, but this is going to be costly: we’re going to take the costs, we’re going to write off the cost quickly.”

Look at the length of a recession in America. America recovers from recessions faster than most places do because it is willing to take the losses more quickly. But it cuts the other way, too. So you can say in some countries, there is more empathy for people who are disadvantaged. Whereas in America, some of that empathy might be missing, but that lack of empathy also creates this capacity to move forward more quickly.

Another issue that I think is very important is that Americans have a self-concept of being much more committed to innovation than any other part of the world. And for the most part, I think that’s true. The American capacity for innovation and entrepreneurship is much greater than it is anywhere else. But the rest of the world is catching up very fast.

So I think that we in America have to be more conscious of recognizing that the global battlefield is not just about other countries competing on low-cost wages relative to American entrepreneurship and innovation, but other countries are also going to compete on innovation and entrepreneurship, in addition to just competing on low cost. And this is a very profound shift in terms of the dynamics of global competition that I’m not sure we in America have fully come to terms with.