The Golden Passport

by Duff McDonald

  It seems unlikely that the rest of Harvard realized the import of HBS’s decision to turn itself into even more of an assembly line than it had been previously, able to “manufacture” its newest executive product in just a fraction of the time it took to make an MBA. That the AMP program was a direct outgrowth of HBS’s war-related efforts would have made it difficult to reproach even if one had been so inclined. But with the introduction of AMP, HBS began selling the name of the world’s most respected university on the cheap, and to practically anyone who was willing to pay.

  The program proved an instant hit. The School offered two thirteen-week sessions a year at first, with roughly 75 men averaging forty years of age in each. Demand shot straight upward, and in 1951–52, 161 companies from 37 different industries sponsored 334 student-executives, with 29 high-ranking officers from the armed forces thrown in for good measure. The fifteenth AMP class included, for example, executives from American Can, Cargill, General Electric, Lever Brothers, Monroe Calculating Machine, Otis Elevator, and Standard Oil, which sent eight people.

  In 1954, the School broadened its midcareer offerings even further, adding a Middle Management Program for executives between the ages of twenty-five and thirty-five in significant operating roles (as opposed to top management ones). The MMP split the difference between the MBA and the AMP with an eight-month program, at the end of which participants received a certificate and the option of entering the second year of the MBA program. In 1960, the program was shortened to seventeen weeks and renamed the Program for Management Development, or PMD.

  As more of the faculty came from nonbusiness backgrounds, the interaction with working executives proved to be a fruitful one, with those “students” able to rely on actual experience (as opposed to most MBAs’ imaginary experience learned via the case method) during class discussion. Of the value to American business writ large, in 1956 Dean Stanley Teele made the claim that “[i]t is generally recognized that the program . . . has had a great impact on business and business education throughout the country.” On the first point, Teele’s assertion was so vague as to be meaningless. But on the second, he was correct: Harvard had the field to itself in 1943, but by 1957 more than eighty colleges around the country were offering some sort of executive education.

  If there has always been some question about the value of teaching a top-management perspective to a bunch of twenty-three-year-olds, few would argue that a midcareer refresher in current management thinking is of no value to a rising executive, especially if they didn’t have an MBA in the first place. And HBS has designed the courses well. They are short, sponsoring companies can control the choice of program, and an executive’s attendance can be carefully timed to his or her own career expectations as well as their employer’s plans for them. And they do provide an opportunity for executives to step back and consider their roles not just at their own companies but in their industries, the national economy, and society as well.

  The courses are also taught with the knowledge that the students are coming at it from entirely different perspectives than MBAs. MBA students, says HBS professor David Garvin, are at a formative and developmental stage of their life, whereas executive education students are at a pragmatic and instrumental one.4 For MBAs, cases provide a form of “simulated experience,” whereas for executives, they provide a way to abstract from their actual experience to draw broader, more general lessons. According to one HBS professor, “I think that my job in the MBA programs is to some extent to be a substitute for experience. That’s what a case is—it’s a vicarious experience. . . . In executive teaching, I think I have a completely different job. I’m standing in front of people who do the actual work. I almost feel like a pretender. But my job there is different—it’s to help them organize their experiences into a coherent whole.”5

  HBS professor Harry Levinson once pointed out that there’s also a psychological aspect to the programs’ enduring appeal: “Middle age is the vast gulf between 35 and the time when every man comes to terms with his own fate. It’s the time of the greatest expansion of the human personality, when the mature adult is in the widest possible contact with his environment. But it is also a time when several things happen. He’s psychologically aging, and realizes he’s no longer as competent and powerful physically as he used to be. As this stage of life comes along, they [executives] increasingly must give up on the individual competition. They invest themselves in the development of other people and . . . with evolving a new sense of purpose about living.”6

  For all those reasons and more, executive education had become a permanent fixture at HBS by the mid-1950s. (At that point, HBS had six separate educational programs: the MBA, its doctoral program, the AMP, the MMP, the Trade Union Program, and Harvard-Radcliffe, a joint effort to teach business to young women.) If there was ever any doubt that HBS was selling the graduates of even its thirteen-week courses a lifelong ability to claim a Harvard education, it was eliminated when the School began calling them “alumni,” naming class secretaries and holding AMP alumni meetings as early as 1957. (Does someone who comes to summer camp actually count as a Harvard graduate?) By 1958—just fifteen years after the program was introduced—AMP alumni accounted for nearly 25 percent of the School’s total. But they’d be asked to pay for the privilege: As with its MBAs, an AMP Alumni Relations Program was established to hit AMP alumni up for donations until the day they die.

  If corporate recruiters have long used schools like HBS as a screening mechanism for their recruiting programs, the reverse holds true in Executive Education: HBS can assume at least some level of applicant quality by virtue of the fact that their employers are willing to foot the bill. By the mid-1950s, about twenty large companies—including Westinghouse, RCA, and IBM—had already begun sending one or more men to each session as part of longer-range management development programs. Overall corporate interest soon threatened to crowd out the free agents that the retread program had been designed for in the first place. A school concerned about American executive talent for its own sake would have continued accepting non-company-sponsored executives into its programs. But HBS was not that school, and in 1957 decided to restrict enrollment to those who had corporate money behind them. “They are more homogeneous in the best sense of the word,” Dean Teele wrote when explaining the decision, a further nod to the fact that HBS wasn’t for renegades, even of the executive sort—it was for soldiers in America’s corporate army.

  Growth in the programs continued apace during the 1960s, with occasional milestones such as the first female AMP student and the introduction of a capstone “integrated case” that ran more than a thousand pages in 1961, the introduction of computer-based business “games” in 1965, and the construction of dedicated classroom and dormitory buildings at decade’s end. But the real milestones were in executive suites themselves: As of June 1967, 460 current board chairmen and presidents in U.S. companies were AMP alumni. That same year, HBS was so proud of its pioneering efforts that Professor Kenneth Andrews published a book, The Effectiveness of University Management Development Programs. And in 1972, it added yet another program, the Smaller Company Management Program, for entrepreneurs and heads of companies with $1 million to $100 million in sales. (The name was later changed to the more impressive-sounding Owner/President Management Program.)

  The 1970s were not so kind to HBS’s favorite money-minting business. Total enrollment in executive programs declined 30 percent between 1972 and 1975, in part because of the external economic environment, but also because the School kept jacking up prices: The cost for AMP enrollment rose from $4,060 in 1969 to $6,850 in 1975.7 But the power statistics held up: In 1977, nearly 1,250 AMP alumni were chairmen or presidents of U.S. companies. (That compared to a total of more than 4,000 Harvard MBAs in such positions.) Inflation held up too: By 1979, tuition for AMP was $8,700, and by 1981, it was $11,100.

  In the 1980s, enrollment started growing again, and HBS tried an experiment in 1984 aimed at luring �
�those three to five individuals at the summit of industrial and commercial organizations who determined the strategic direction of the institution, appoint its key executives, and make its most important decisions.” In other words, they wanted to re-create the Cabot Weekends, but for real money. The effort didn’t fly. Why? Unlike doctors, who have very real needs to stay up-to-date with developments in the science and technology of medicine, the CEOs of the country’s largest corporations don’t need—or want—“continuing education.” Nor do they need the real benefit of HBS’s executive education courses—the name and the network—because by that point they already have both.

  If HBS wasn’t able to lure actual big-company CEOs into class, it was able to lure enough midlevel executives that the School eventually found itself in the uncomfortable position of telling some sponsoring companies that they had no guaranteed seats just because they’d already sent men through the course. What did guarantee seats? Money, of course. Consider the case of the Industrial Bank of Japan. In 1980, IBJ managing director Yoh Kurosawa enrolled in the AMP program, following in the footsteps of his boss, Kaneo Nakamura, who had attended AMP in 1966. Japan’s economic star was ascendant at the time, and Kurosawa asked one of his professors, Hugo Uyterhoeven, about the feasibility of IBJ becoming the first Japanese company to endow a chair at HBS. Uyterhoeven, then in charge of corporate fundraising, replied that the School would be happy to let them do so, but that the price would be more than $1 million.

  Nakamura was open to the idea, but only if a “fruitful relationship”8 developed between IBJ and HBS as a result. And by that, he meant ongoing access to the School’s Executive Education programs for the bank’s executives. Uyterhoeven responded that no company—whether it was IBM, General Electric, or IBJ—was allowed to send more than one student per year to AMP, a policy put in place to keep large companies from dominating the student rolls. That said, if IBJ endowed a chair, IBJ could, “at its discretion,” send one person to AMP and one to PMD every year. “Officially, there would be no guarantee of admission,” writes J. Paul Mark in The Empire Builders, “but Uyterhoeven would explain the situation to the admissions directors of the AMP and PMD, and with a wink and a handshake the deal would be struck.”9

  Over the next four years, that “fruitful relationship” blossomed, with eight senior IBJ managers going through AMP and PMD. By 1984, at which point Nakamura had been promoted to president of the bank, he followed through on his part of the deal, writing a check to establish the IBJ Professorship in Finance.

  What did the two Japanese men actually learn in their AMP classes? That’s an interesting question, because in 1991, Nakamura, who at that point was IBJ’s chairman, stepped down in the face of a multibillion-dollar fraud, and Kurosawa, then president, was forced to eat a 50 percent pay cut. In explaining his decision to resign, Nakamura compared himself to a samurai, adding, “This is very Japanese, and has nothing to do with Harvard-style decision making.”10

  HBS may have held firm on its policy of no more than one person per company per AMP session, but that didn’t mean it wasn’t going to find other ways to exploit the program as a source of new funds. Take the case of IBM. By the 1980s, the computer company had been a friend of HBS for decades, through both its membership in the Associates as well as personal connections such as the friendship of HBS professor Theodore Brown and IBM chairman Thomas Watson. In 1964, for example, IBM gave HBS $5 million to support a ten-year program on technological advances and social change.11 By the 1980s, the company was one of only two computer suppliers to the School, and George B. Beitzel, MBA ’52, was a senior vice president at IBM as well as a member of the board of the Associates.

  The company’s financial dealings with the School were myriad, but two merit specific mention. The first started in 1982, when an IBM-HBS joint study on “the applicability of micro-computers to the School’s educational mission” resulted in the sale and lease of 180 PCs to the School’s Executive Education program in 1984. For IBM, the puny investment promised potentially invaluable results. Each AMP session, which by that point had a few hundred executives in it, would, as part of their “education,” spend three weeks learning how to use the company’s PCs.

  In the best-case scenario, the AMP graduates would return to their companies and place large orders for IBM products. But even if they didn’t, the company saw value in a captive market research sample of exactly the kinds of executives they were targeting for sales. In normal circumstances, it would be nigh impossible to convince nearly two hundred executives to first use their equipment for dozens of hours and then spend another few hours answering questionnaires. But what if HBS made both—the training and the questionnaires—a mandatory part of the AMP coursework? Amazingly, the idea was deemed in alignment with the “educational mission” of the School, and so that’s what happened. “The responses gained from those questionnaires were handed over to IBM for analysis,” writes J. Paul Mark, “and did, in fact, prove to be worth a fortune.”12

  The second instance of IBM and HBS finding ways to exploit the School’s students was in the MBA program. At the same time they had their eyes on AMP students, the company was trying to persuade then-dean John McArthur of the merits of requiring MBAs to buy PCs. McArthur initially refused, in part because asking students to spend three thousand dollars on computers seemed excessive, but also because the School had no software that was compatible with its library of cases. What would they use the PCs for? IBM countered by offering to help develop new software to bring the case system technologically up-to-date. That was a start, but McArthur was still reluctant to compel his MBAs to buy computers.

  At some point along the way, the planned 1985 rebuilding of HBS’s Anderson House, which contained faculty offices, became linked to the decision about MBAs and PCs. IBM knew what to do, and offered to help fund the $4 million renovation, which included the installation of PCs, laser printers, and the School’s first local area network. And then, voila! In February 1984, HBS became the first business school in the country to require its students to buy PCs, each to the tune of $2,800. McArthur, of course, described the decision as completely in line with the School’s “educational mission,” the result of “more than two years of development and experimentation on the place of [PCs] in the School’s MBA and Executive Education programs.”13 That would certainly prove true in time, but in 1984 the suggestion was laughable: Fewer than fifty out of the four hundred cases in the first-year curriculum had any use for the PCs.

  The overhaul would take time, too, as it required the faculty to spend time converting cases that they could otherwise use consulting (with companies like IBM) for personal profit. HBS tried the carrot, offering a royalty to any faculty who computerized cases that were subsequently sold on diskette. Even so, by 1986, only forty-four cases were being sold on nine diskettes, with the School’s most prominent professors not even bothering to pretend they were interested. At that point, Michael Porter had written just one, and the likes of Theodore Levitt, John Kotter, and C. Roland Christensen—the School’s case guru—none at all.14

  The majority of students who enroll in the MBA program at HBS do it for more reasons than the education they will receive. Foremost among them: improving their career prospects. The key to that: the credential of an HBS degree and access to the School’s powerful network, which is one of the largest—and most loyal—in all of business. But there’s also no arguing with the fact that two years studying with some of the best teachers in all of business is worth the price paid on its own. When it comes to Executive Education, on the other hand, the value of the actual education is clearly subordinate to the credential and the network. And while the exact “value” of those things is hardly quantifiable, it can be weighed against alternatives: One partner at a consulting firm says that it is not unusual for employees to forgo raises in exchange for the company sending them to HBS for periods as short as one week.

  Part of the draw, of course, is that graduates of HBS’s Executi
ve Education programs will henceforth have the opportunity to say such things as, “When I was at the Harvard Business School . . .” If you pay $78,00015 for an eight-week AMP program, that’s part of the bargain. In 2012, model Tyra Banks alternated between claiming she had “graduated” from HBS and Harvard itself, despite only receiving a certificate from HBS’s nine-week OPM program. “It’s pretty exclusive, but it’s worth it,” she told CBS News, seemingly unaware that it wasn’t exclusive in the slightest. (Her marketing professor surely didn’t mind the misrepresentation, having convinced her to be the subject of a case study while she was there.16) She was still at it in 2014, telling Allure magazine: “A lot of people were wondering why I went to Harvard Business School, and I couldn’t say why. . . . I went because I was going to start this cosmetics business and wanted to make sure I had all the tools in order to create it, launch it, build it, lead it, grow it.”17

  Others have simply lied about attending AMP in the first place. In an effort to burnish his almost nonexistent administrative credentials, Paul Casimir Marcinkus, a Catholic priest from Chicago who was put in charge of the Vatican Bank by Pope Paul VI in 1971, told at least one journalist that he’d attended such a course at HBS. Marcinkus, who was later nearly arrested on charges of fraudulent bankruptcy in the collapse of Roberto Calvi’s Banco Ambrosiano, later admitted that wasn’t true, but insisted that was only because his schedule hadn’t permitted it: “I didn’t do a course because I didn’t have time.”18 (And then there are those who lie about attending the MBA program itself, including Ahmed Zayat,19 the owner of racehorse American Pharoah.)

  At this point, of course, enough students have gone through the program that it can point to some serious success stories among its alumni. James A. Lovell, the commander of the Apollo 13 lunar mission, took the AMP course in 1971. Others include Minoru Makihara (AMP ’77), president of Mitsubishi Corporation when it was the world’s largest company in the 1990s; Jeanette Sarkisian Wagner (AMP ’83), former vice chairman of the Estée Lauder Companies; Carol Goldberg (AMP ’69), former president of Stop & Shop; and Donald Platten (AMP ’66), a chairman of the former Chemical Bank. And a couple of Donald Stewarts thrown in for good measure: Donald M. Stewart (AMP ’83), former CEO of the College Board, and Donald A. Stewart (AMP ’91), former CEO of Sun Life Financial.