Experience is not enough

Thousands of medics made healthy patients ill last year and thousands of barristers sought jail time for innocent clients during the same period.

Imagine for a moment that the above appeared as headlines, and then imagine the consequences for law schools and medical schools across Britain. The professional schools that trained those medics and barristers would be plunged into crisis, their status as the conscience of their professions and repositories of disciplinary wisdom severely damaged.

In fact, a version of these headlines did appear, but the graduates were from business schools and the professional failure was a mixture of bad advice and ignorance.

Graduates of business programmes in both the UK and the US offered irresponsible mortgage advice to potential homebuyers. Other graduates rated this advice as sound, and still others valued and traded on it. Many of these graduates made huge profits out of this rampant incompetence. And yet so far, business schools have not overhauled their curriculums. Some modest reforms have been mooted, but no radical rethinking has been announced.

Why is this? Two reasons: first, the problem of business knowledge always being judged by lived experience; and second, the failed status of business schools as professional schools. The two are connected, and solving them is the key to rebuilding the business school and the economy. The solution mixes a regulatory function with a duty of care, placing responsibility at the heart of teaching.

The danger of judging people's business knowledge only by their experience is exemplified by the BBC television show Dragons' Den. No TV programme today stands for business more than this one, and no one represents business knowledge more than the entrepreneurs and corporate bosses who make up its panel. Like business reality-TV stars in general, their authority stems from their biographies and their experiences in the "real" world.

Business schools also fetishise real-world experience, promising students that they will receive a practical and relevant curriculum as they rub shoulders with real corporate leaders and the professors who consult for them. So not surprisingly, when the current financial crisis began, business leaders and business school professors offered opinions based on what they had seen before. They were disastrously wrong.

They were wrong because technically, their opinions were uneducated. The whole point of an education is to give to someone that which lies beyond lived experience, beyond what any one life can teach us, and along the way to help us learn some humility about experience, too. But for too long, education and business knowledge have been estranged, driven apart by the fetish of experience.

As a result, ignorance undermined professional standards. Experience did not teach bankers about the lives of the poor to whom they gave bad mortgage advice, nor did it enlighten them about the history of capitalism and the precedents of the crisis that overcame them. Most of the entrepreneurial and corporate folk heroes knew little better and continued to borrow recklessly on the back of the housing bubble. As long as experience is what counts, the balance of power will always be with business and not business schools.

But now there is a chance to change all this and to create real executive education in our business schools. Regulation means that certain standards beyond any one person's experience or judgment are held to be paramount and everyone has something to learn from them. Anyone wanting to be an employer, manager, adviser or investor should have to pass national university-based exams, and then be licensed in business ethics and social responsibility, regardless of other regulatory requirements. This would offer a proper executive education and mark the beginning of professional business schools.

Regulation alone, however, is not enough. Medics have a duty of care to the sick and barristers to the wrongly accused. The best of these professionals not only care for but value these lives. Business schools must develop a duty of care to those most vulnerable in the economy - workers - by teaching responsible business practices that help sustain and develop secure employment, that value other ways of life beyond the dragons. Only then will they be truly professional.