The Power of Water: A Key Resource of the 21st Century

During my recent trip to Asia I read much of David McCollough’s book on the Johnstown Flood. Those living in Pennsylvania still pay a tax adopted to pay for rebuilding after that tragic event. The rebuilding was completed years ago, though the tax continues to be paid – but that is an issue for a different entry. For those unfamiliar with the flood, some history: During a very wet period in 1889, a private dam burst on a reservoir high above Johnstown and the resulting torrent of water destroyed virtually everything in its path including several villages and the city of Johnstown. Over 2,000 people and even more animals were killed. Residents saw the situation as Judgment Day and the destruction wrought by the water, the debris it carried, and ironically a massive fire was attributed to the power of God.

The power of water has been experienced in Asia too. The Asian tsunami of 2004 was estimated to have killed 230,000 people while devastating the countryside throughout south Asia. In 2011, another tsunami caused a major radiation incident when the Japanese nuclear plant at Fukushima Daiichi was inundated. This disaster reduced dramatically the confidence of people in the nuclear power industry.

In the future, water shortages, created by climate change, population growth, pollution, and waste will threaten civilization and cause many changes. Travel to Hong Kong, Bangkok, Singapore, Mumbai, Bangalore, Beijing, Shanghai, and many other Asian powerhouse cities shows their location in places where water is vital to the economy and prosperity. Yet, even where water is abundant, it is often not potable. Over time, this will limit economic growth and development. Water problems exist in many other places, including places in the developed world. For example, the western United States relies heavily on the Colorado River basin for water – so much so that the river is virtually nonexistent at the point in Mexico where it meets the Pacific Ocean.

In discussions with alumni and executives in South Asia, one of the interesting questions raised was about water. In particular, with the population size and growth in Asia, many wonder how governments will provide enough water to meet the needs of people and agricultural industries. Already, it is necessary to drink bottled and purified water in many countries because the available water is not fit for consumption. In the future, because of climate change, it is possible that the availability of water will generate national security issues for many countries, as governments seek to ensure a supply adequate for national needs.

Many budding entrepreneurs have seized on the notion that water will become the key resource of the later part of the 21st century. Nations and places unable to secure adequate water will end up in conflict with others. In the United States it is estimated that the Colorado River has inadequate water to provide an adequate supply for many major western cities. A similar situation exists in India, China, and many Asian countries. It is not clear that this makes places with abundant water new Saudi Arabias. But it does suggest the importance of investment in the water sector.

My purpose is not to identify places or companies in which to invest. Instead it is to point out that the power of water – as demonstrated by floods and tsunamis, as well as the capacity to support commerce – is going to be seen in a different way in coming years. Water will be increasingly important to commerce.

Business schools need to look at the challenges this will create and prepare students to find solutions and opportunities to generate profit and support society. Some will do so through creation of investment vehicles in which people will invest in water infrastructure, treatment facilities, and desalination plants. Some will do so through consulting jobs aimed at improving management and use of water. Some will focus on sustainable practices and educate students to adopt approaches that offer optimal ways to use available water. Others will make assessments regarding the impact of water on agriculture, trade, and shortages of food and agricultural commodities.

Business schools in the developed world will have an additional challenge of getting students not to take the availability of water for granted. It will also be necessary to re-think approaches that treat water pollution as an externality that firms may choose to ignore. Ironically, on a planet that has more water than land, we increasingly find that places with large populations have dramatic water shortages – some of which occur as a result of floods.

The water challenge is one that will get worse because of current trends. At the same time, it will provide an opportunity to those who anticipate how it will change patterns in the economy and affect people’s lives. In a world in which availability of water propels commerce, business students must be well positioned to understand the power of water.

(A shortened version of this post was published in the Huffington Post.)


Faculty, Unions, and the Future of American Higher Education

Recently, much attention has been paid to technology’s effect on higher education.  Many observers have commented on the increasing role of online classes, as well as the ability of MOOCs, flipped classrooms, and other technology-intensive approaches to revolutionize higher education. However, little has been said about how professors feel about this intrusion. At least in the short term, faculty views will greatly shape the expansion and limits of technology in the classroom. This reality is a reflection of faculty governance—and the deliberative approach it supports.

The growth of technology in higher education is inevitable, but it will slow as faculty evaluate its impact on educational outcomes and the professoriate. Whether or not this is an effort to protect entrenched interests, it is driven by legitimate concerns about educational outcomes and faculty governance.  At a time when pressure is rising to reduce costs, deploy technology and provide a 21st century experience for students, especially in public institutions, it is critical to avoid the creation of divisions between faculty and university leaders.

College professors have historically resisted union campaigns because academic governance structures fostered communication between faculty and administration and protected the voice and role of faculty in university decision-making. As the external pressures on universities grow, faculty may worry that their influence will diminish, making them receptive to union-organizing campaigns. 

Indeed, in recent years, unionization efforts have increased in universities, albeit with a focus on graduate students and adjunct faculty members. A recent story of the life circumstances and death of an adjunct faculty member at Duquesne University in Pittsburgh has received widespread attention as part of a union campaign to organize adjuncts.  The campaign’s arguments for fairness and justice will resonate just as well with full-time faculty, especially if they feel threatened by technologically-imposed educational changes or other pressures.

Unions have historically been more successful at organizing faculty in public universities than private schools because of the rules created by state public employee labor laws.  In addition, unions have had more success organizing at teaching schools than at schools whose faculty conduct considerable research. Some exceptions have occurred (for example, at top SUNY-system universities in New York); however, the most prestigious universities and virtually all private schools remain nonunion. This situation will change as technology intrusions expand and faculty become concerned that the working conditions and situations fostered in the past will not be facilitated in the future. 

Beyond its effects on faculty unionization, technology’s march into new territories within higher ed has three important implications for universities. First, it has the potential to cause a realignment of reputation in higher education, as universities in dire straits – lesser ranked or financially strapped schools – and for-profit universities aggressively adopt technology, while well-regarded schools sit idle. The cautious approach of the latter, which will be greater in today’s well-reputed schools, can potentially reduce the fortunes of the late adopters. While faculty governance may facilitate resistance to change out of concern that technology-enhanced education is a poor substitute for the techniques honed over the past 500 years, student demand for new approaches will move the market.

Second, and ironically, the situation will likely increase the number of universities believing that there will always be students willing to pay a premium to attend a high-quality residential college.  However true the statement may be, it will decrease differentiation among the colleges expressing it and will serve primarily as a vehicle for administrators to delay painful discussions about technology’s proper role and the extent to which faculty are allowed to resist. Once the typical midmarket major university accepts this view, competition among these schools will grow dramatically as the technology-adopting universities (nonprofit and for-profit) gain market share.  The resulting pressure will cause a variety of effects, including an increase in unionization efforts by university faculty.

Third, the combination of academic governance conventions and potential unionization will further slow the response of universities to technological advances in education.  This, in turn, will pose a significant challenge to university administrators.  Those who attempt to move too rapidly will not survive the onslaught of faculty complaints and use of governance processes to undermine leadership. Those who respond too slowly or fail to anticipate the interactive effects of academic governance processes and unionization will facilitate a process in which costs remain uncontrolled and faculty and faculty unions have substantial control of organizational outcomes.  Either way, universities will be affected substantially.  While I leave it to readers to conclude whether the effect is good or bad, there is no doubt that it will be substantial. 

At the point that faculty become concerned that government, university administrators or others are advocating too much change or reducing the social contract expected by professors, a period of discord will occur in universities. This has the potential to cause the United States’ higher education system to become stuck. Debates over MOOCs and other changes to the delivery of education are only symptoms of the underlying battles to come. 



Honoring Nelson Mandela with A B-School New Year’s Resolution

On December 5, 2013, with the death of Nelson Mandela, the world lost a true leader and inspiration. While a complex and sometimes controversial man, Mr. Mandela’s dogged persistence led to the demise of a prejudicial policy and the transformation of a nation. Much has and will be written about Mr. Mandela and observers more expert than I will provide new insights into his psyche, successes, and impact on the world.

On the other hand, I am interested in a mundane question that is probably not going to be raised by those experts, or for that matter at any business conference. Specifically, could B-School produce a Nelson Mandela? While the question may seem odd or misplaced, it is intended as a simple query to assess whether business education somehow screens out, discourages, or chokes off those who are different – in terms of their values, goals, views, or concerns. If our educational approach does so, we will not produce a Nelson Mandela. We likely won’t even attract individuals with characteristics resembling a Mandela to apply to B-School.

While I see this possibility as a loss for B-Schools, some observers may wonder whether it is a waste of time to address such a question. After all, individuals need to select the paths that conform to their views – and B-School is not for everyone. Ironically, however, if B-School cannot produce a Nelson Mandela, it inadvertently precludes potential leaders from gaining skills relevant to business, entrepreneurship, and job creation. Should we be surprised if those leaders turn to different approaches to guide nations? And for those who wonder about this as a theoretical exercise, recall that B-Schools are comprised of a smaller proportion of women than most other professional programs – e.g., law, medicine, pharmacy, dentistry, etc. I would not be surprised if clerics and pastors were similarly underrepresented in B-School. It is difficult to characterize these enrollment gaps as a good thing.

Is there something about our programs that repels people like Mandela? Do we unknowingly encourage uniformity, in its worst case driving a herd mentality that leads students to seek the same pots of gold at the end of the rainbow – investment banking, consulting, and other high-paying jobs? Do we overemphasize monetary outcomes, fueling yearly blog stories on the highest paid MBA graduate across all schools? Do we devote too little attention to poverty, inequality, and other societal issues – making it appear that we desire such results?

Because it is easy to count dollars, we measure many of our outcomes that way – salaries of students, alumni, and faculty, as well as the size of the gifts given to a school. We accept the value provided by markets. We skip metrics that are different as if we assume that it is bad for a business student to choose to become a Teach for America volunteer, set up a nonprofit serving veterans, decide to accept a lower paying job in order to make a difference in the community, and so on. Sadly, even if B-Schools embraced these alternative metrics, it would hurt our rankings because the “experts” who rank us generally weigh dollar measures above all others. That means that alumni, university presidents, current students, and faculty who seek top rankings will look poorly at B-School leaders who choose to suggest nontraditional opportunities to students.

Nelson Mandela stood up and suffered for his principles and goals. His determination and perseverance contributed greatly to his success. Did those attributes come from his education, upbringing, or innate character? Although I can only conjecture an answer to the question, I am certain that elements of a B-School education would be valuable to a future Nelson Mandela.

For B-Schools to produce a Nelson Mandela, we must capture the imagination of today’s young people and demonstrate that business thinking can change the world in positive ways. This requires a focus on more than the salaries that students will earn, a celebration of markets that ignores inequality and externalities, and the glorification of the wealthy. We must tolerate a different orientation and support idealistic thinking. We must recognize our vulnerability and admit that easy solutions rarely exist to the significant problems faced by mankind. For example, how will we solve the challenge of climate change, the problem of over-fishing, the lack of potable water for an ever increasing number of people, and the operation of a modern economy using less fossil fuel? B-Schools must help tackle such challenges, yet the students interested in these generational problems do not generally see business education as an asset. If those individuals see us as ignoring such foundational problems, we will lose the next generation of students.

As we enter the New Year, we must vow not to forget Nelson Mandela and what his movement achieved. We must also reflect on what B-Schools need to do to recapture the central issues and problems of our day. Otherwise, we risk becoming the trade of the wealthy and a less-important area of professional study. We must attract the next Nelson Mandela to business school. Although that will require us to change in potentially uncomfortable ways, it is a worthy New Year’s Resolution.