The CEO and the Liberal Arts

By Bob Gariano

More than 40% of the Chief Executive Officers in US publicly traded companies today have undergraduate degrees in areas that we would call liberal arts. This might seem strange in a global business environment that is based on technical and financial ideas. Many successful enterprises today have their foundations in engineering or financial ideas; however, people who are trained in the broader disciplines of political science, philosophy, communications, and history seem to be highly valued as senior level leaders in these large global companies.

There is a clear reason for this disconnect between the hard science of business and the leaders who have a more basic educational background. Effective and enduring business leadership skills are often based on broader, more fundamental curriculum that teach ideas that are centuries old. This might at first seem remarkable in a world of commerce that has come to value specialized, contemporary technical knowledge above broader philosophical concepts. Nevertheless, the Boards who select CEOs often see the value of more fundamental education and skills, especially when these fundamentals are exhibited by the executive in their daily work.

In my view, the reason that leaders with skills in the liberal arts are so highly valued is because the role of business leadership is more complex and interconnected today than ever before. This places a premium on people who can formulate and communicate big ideas that affect many constituents on a global basis. The skills involved with conceptionalization and communication of compelling ideas do not come out of an Excel spreadsheet. These ideas come from the broader appreciation and synthesis of global trends and human interaction. The CEO of today has a need to understand and use these broader global ideas.

Recently, Leo Hindery wrote an editorial article for Barron’s that was entitled, “A Plea for Corporate Conscience”. In the article, Hindery makes the case that US corporations must strive to raise worker skills and global productivity in order for America to retain “global economic primacy”. Hindery discusses the ideas put forth by Reginald Jones, the GE Chairman and CEO who preceded Jack Welch. I was fortunate enough to join GE in 1974, the year after Mr. Jones became Chairman and I was captivated by his succinct and persuasive presentation of these global ideas. Mr. Jones viewed his responsibilities as equally split among GE shareholders, GE employees, American industry, and the nation as a whole. I clearly remember Mr. Jones making this case to all of us a GE as well as to his fellow business leaders in such forums as the Business Roundtable.

Mr. Jones argued for a new and broader sense of responsibility for American business leaders. Just as important as his genius in being able to see these concepts was his ability to formulate and communicate these ideas to all layers of his constituents, from other senior business leaders down to the rank and file workers at GE’s dispersed factories and field offices. Without being able to present these ideas to people who could act on them, the ideas would have been only fossilized concepts without potential or promise. Even compelling ideas have all the utility of riding a hobby horse if they are not communicated persuasively to the people who can act on them and make things happen. Mr. Jones was not a great CEO because of his engineering and technical insight nor was he an especially noted financial innovator. His skill was in conceiving big ideas that would create a more valuable organization into the next decades and in being able to communicate these ideas in a compelling fashion to a global enterprise of more than 200,000 people.

The Economist magazine recently reviewed the writing of the novelist, Joseph Finder. The article described a fictionalized case study written by Mr. Finder that will appear in the Harvard Business Review this October. The title of the Economist article is “Chief Fiction Officer”. What could a fictionalized account of life within the boardrooms and executive suites of a global business have to do with the reality of running an actual business?

Finder is a popular novelist whose books describe modern business relationships and the personal dynamics of leadership. The value of his writing lies in the broader ideas and dilemmas that he encourages business people to think about in our everyday activities. Finder is a journalist and a storyteller who brings these ideas forward in a realistic and persuasive manner that illuminate truths found in many large organizations. His books range from descriptions about corporate espionage and intrigue, where he did research by interviewing leaders at Apple, Cisco, and Hewlett Packard, to global executive relationships where the Japanese company, NEC, helped him understand what it is like to be an American working for a big Japanese electronics company.

A principal in a major consulting firm told me this story: “In business school we were taught that every business situation, every investment opportunity, could be put on a spread sheet. We took great confidence and pride in our ability to analyze future cash flows and predict the net present value of our proposed investments. When I came out of graduate business school and started my consulting work, I found that this wasn’t how businesses worked at all. Sure, we still did all the arithmetic and our clients always read the formal analysis with polite attention. But when decisions were really made, they were based on stories. The wisdom of the business was captured in the stories of success and failure from earlier company experience. The modern sophisticated global business doesn’t run on spread sheets. They run on decisions made from intuition and the collected wisdom of the company’s tribal history. Companies use story telling to spread this wisdom.”

Beyond the need to captivate and motivate a large global audience and win their support of long term strategies and business ideas, the modern business leader finds that fundamental education develops skills that help the leadership deal with the complexity of the future.  Technology is driving change at a breakneck speed. Acquisitions and joint ventures change the commercial and competitive landscape with the stroke of a pen. Products and services with great promise yesterday are anachronisms today. Dealing with the complexities and vulnerabilities of a cloudy crystal ball is a primary challenge for today’s CEO.

Predicting and reacting to the complexity of the global commercial environment requires the broadest and most imaginative approaches to building prosperous businesses. Leaders who lack the innovation and vision to feel at home in this environment of change will doom their enterprises to being less successful market followers rather than the market place leaders who create value for shareholders. The innovative business leaders often rely upon the skills and intuitions developed from a broad based education, especially at the undergraduate level. This allows these leaders to put their challenges, and opportunities into a wider historic and cultural perspective. Much of the liberal arts curriculum teaches the process of problem solving and analysis based on the broadest of human experiences.

In today’s complex and global commercial environment where technologies change rapidly, there is a demand for leaders who are educated in the broadest historic and cultural terms. These leaders often bring a perspective to business situations that transcend the purely technical or financial techniques that are the more immediate basis of company activities. The liberal arts education often provides a valuable background for business leaders who need the communications skills and conceptional perspective that helps them be effective leaders in their enterprises.