The Golden Passport

by Duff McDonald

  In the 1920s and 1930s, HBS had been too preoccupied with its own growing pains to pay too much attention to the state of business education outside America’s borders, save for Georges Doriot’s involvement in the establishment of the Centre de Perfectionnement aux Affaires, the first European center for advanced training in business management, which opened its doors in Paris in 1930. That same year, the heads of thirteen European and Asian business schools visited HBS to assess it as a possible model,1 but such interactions were one-offs, not part of an institutional effort.

  It was more than a decade before another HBS professor acted in a capacity similar to that of Doriot, when J. Anton de Haas, a professor of international relations, visited Bogotá, Colombia, in 1942 to assist in planning for a college of business administration there.2 But the war soon put an end to that sort of thing—by the end of the year, HBS’s three foreign alumni clubs, in London, Paris, and Shanghai, had all suspended operations.

  Turning their gaze outward once again in the late 1940s, HBS professors helped launch a five-week management training course at the School of Business Administration at the University of Western Ontario in its founding year.3 The 1948 initiative led to that school’s adoption of the case method to an extent rivaled only by HBS itself. The University of Virginia’s Darden School of Business is the only other one that comes close, and in 2015 was the second-largest publisher of cases in the country.4 Its dean? Robert Bruner (’74).

  But Canada had, in many respects, already been colonized by American managerial ideology. It was the rest of the world that needed to be converted. When George Marshall announced the Marshall Plan in June 5, 1947—at Harvard, no less—he claimed (inaccurately) that “[o]ur policy is directed not against any country or doctrine but against hunger, poverty, desperation and chaos. Its purpose should be the revival of a working economy in the world so as to permit the emergence of political and social conditions in which free institutions can exist.”5

  Historians are still squabbling over the particulars of the Marshall Plan, but it did succeed in helping revive most of the economies of Western Europe. Between 1947 and 1950, industrial production in the region leapt 45 percent, and by March 1951 was already nearly 40 percent above its prewar level. In 1950, exports from Marshall Plan recipients were more than 90 percent greater than in 1947.6

  HBS got involved in the effort through the United States Technical Assistance and Productivity Program, or USTAP, which brought European managers, workers, educators, and engineers to the United States to learn how real management was done—more than six thousand had done so by the time the Marshall Plan ended on December 31, 1951. HBS had done its part, hosting a two-week session on U.S. productivity for European managers at the School. While billions of dollars were spent in the reconstruction effort, at least one historian has suggested that the relatively tiny $30 million spent on USTAP was “the Marshall Plan innovation with the biggest bang for the buck.”7 Through the end of 1958, when USTAP was finally shut down, it spent an additional $154 million in its efforts to “mount a massive transfer of American business ideology, practice and education into Western Europe.”8

  In its early years, the USTAP had focused on educating foreign labor unions, but by 1950, agency head William Joyce had pivoted it toward educating managers, arguing that “we must change the attitude of [European] management [if] we expect to aid in the development of non-Communist unions . . . and the sharing of the benefits of the successful use of technology, between management, labor and the consumer.”9 Joyce and his colleagues would have preferred that actual practitioners of American management show their European counterparts how it was done, but the American competitive instinct being what it is, they found few takers. And so they settled for their handmaidens, professors of American management, instead. And the Europeans were okay with that anyway. According to history professor Jacqueline McGlade, “Many European teams credited the symbiotic nature of university education and business management as an important key to American industrial success.”10

  It should come as no surprise that the Central Intelligence Agency got involved here, too. While the ties between Harvard University and the CIA have been probed in depth elsewhere, journalist Jeff McConnell observed that “[s]everal officials and faculty members of the Harvard Business School founded and helped administer front organizations for the CIA”11 as part of its efforts to “beam U.S. propaganda into Eastern Europe.”12

  More importantly, they also founded and helped administer front organizations for the cause of capitalism itself. HBS helped get six new international business schools on their feet in just a decade and a half—the Turkish Institute of Business Administration (HBS’s first formal overseas relationship, in 1954), IMEDE (Switzerland, 1957), IESE (Spain, 1958), the Indian Institute of Management–Ahmedabad (India, 1962), INCAE (Costa Rica, 1963), and the Asian Institute of Management (Philippines, 1969). In 1958, twenty faculty members participated in programs in eleven different countries, all under the oversight of Harry Hansen, chairman of the HBS International Division.

  (It wasn’t just American business schools that were planting new flags. American business was, too: American direct investment in Europe, which had been $1.7 billion in 1950, reached $24.5 billion in 1970.13 By the end of the 1960s, in fact, Europe was already in a panic about the economic invasion. French journalist Jean-Jacques Servan-Schreiber’s 1967 book, The American Challenge, argued that American companies’ ability to manage their operations over vast geographies was crushing European competition, and that the secret to their success was in their decentralized organizational structures. This was Scale and Scope all over again, except on a global playing field.)

  Central to the action: John Bayley Fox (’37). A professor of industrial relations at HBS who’d joined the administration as an assistant dean immediately after graduating, Fox was named director of the newly formed Office of Overseas Relations in 1955. Over the next eight years, it hosted 3,000 visitors from 85 countries,14 in addition to being a central point of contact for anyone (say, the Ford Foundation) looking to kick in a little of their own money to the U.S. propaganda machine. That is, when they weren’t skipping the middleman and funneling it right to the CIA itself.15

  When Ford money was the topic at hand, Hansen and Fox, who had consulted for the foundation in 1953, would have been seated across the table from Thomas Carroll, the Ford Foundation’s executive in charge of its business school activities, as well as a graduate of HBS who had been an assistant dean alongside Fox. During his time at Ford, Carroll also served as president of the Harvard Business School Association, which oversaw relations with its 21,000 alumni, for 1955–56. The HBS network was built using ties that bind.

  Over the next decade, grants from the Ford Foundation in support of international outreach came with comforting regularity. In 1954, it funded the relationship with Turkey’s IBA.16 In 1960, the Ford-supported Intercollegiate Case Clearing House (ICH) added an international section, which included both HBS cases translated into one of nine foreign languages as well as those received from foreign institutions around the globe. In 1962, it made a $466,000 grant toward the creation of the Indian Institute of Management in Ahmedabad. In 1966, it put $1.2 million toward the AIM in Manila. In 1971, it sponsored HBS workshops in Europe to train European teachers in case-method research and teaching. It funded INSEAD, which must have pleased foundation trustee Georges Doriot. (HBS began an informal relationship with INSEAD in 1964.)

  It also provided crucial support (along with the U.S. Agency for International Development) for HBS’s 1958 creation of the most ambitious formal mechanism of cooperation between business schools to that point, the International Teachers Program. Ford bolstered the program, which brought foreign teachers to the School for training, by kicking in an additional $1.2 million in 1967. HBS moved the operation to Europe in 1973, invited a consortium of business schools to officially join in the effort, and then suddenly withdrew from it entirely in 1979.

>   Three factors seem likely to have influenced the decision. First, the Ford Foundation had turned off the European money tap. Second, INSEAD had launched a competing teachers program. Third, it was 1979, and domestic issues had returned to the fore, so the missionaries were called back home. All valid reasons, but it was nevertheless another instance in which an effort that had been characterized as the result of the School’s strong educational convictions pretty much vaporized when outside funding dried up.

  It wasn’t until the end of the Cold War loomed that another “transfer of American business ideology” was called for. In 1990, HBS and four other business schools sponsored the Central and Eastern European Teachers Program, with a goal of bringing 120 Eastern Bloc scholars to U.S. executive education programs within two years. (It also conducted its first management program in the USSR that same year.) In 1972, sixty-two Central and Eastern European professors attended a seven-week summer management program at HBS.

  HBS had always been the dominant force in graduate business education at home. Thanks to Ford, in the 1950s and 1960s, it dominated international business education as well. And it kept at it: In 1965, the London and Manchester business schools were founded on the HBS model. In 1973, it helped set up the Jerusalem Institute of Management. From 1972 to 1975, Professor E. Robert Livernash served as the first president of the Iran Center for Management Studies.17

  They didn’t make much progress in two important locales: Germany and Japan. In 1993, management historian Robert Locke noted that “[o]ne . . . searches in vain in West Germany for the development of American-style business schools . . . neither German firms nor German academia approached business studies in the same way as, and hence made different educational demands than their American counterparts.”18 That’s because they approached the concept of the firm differently, too. “Germans tended to view the firm as an organic whole with a life of its own,” writes Locke. “The American proprietary outlook harbored no such illusions concerning the organic long-term survival of a firm entity. For proponents of [this view] the firm was simply a money mill, whose justification could be calculated rationally in terms of return on stockholders’ investment and it could be disposed of as owners pleased.”19

  But it wasn’t just that. According to Locke, in the triumphalism of America’s victory in World War II, managers both at home and abroad made the mistake of confusing American logistical superiority—of which there was abundant evidence—with American operational superiority, proof of which Locke argues has never been established.20 Everyone wants to emulate a winner, in other words, but it’s important to understand what to emulate, and what not to.

  If some countries have proved reluctant to embrace the American model of business education, most have not. By 2014, there were 15,731 institutions offering business degrees around the globe. Nearly a quarter of that total, or 3,902, were in one country—India. It was followed by the United States (1,624), the Philippines (1,259), mainland China (1,082), and Mexico (1,000). Together, the top five countries contained more than half of the world’s total.21

  As far as Japan was concerned, it used its lifetime employment system for developing managers, and therefore had no use for the MBA. There wasn’t a U.S.-style business school established in Japan until the Graduate School of International Management in 1988. By that point, too, the roles of teacher and student had been reversed, with Japan doing the talking and its American counterparts the listening. “During the 1980s the international management scene came to resemble that in Western Europe after the Second World War, only the transfer of management know-how was not sponsored by a massive government program like the Marshall Plan and was more modest in scope,” writes Locke. “And the borrowers were not progressive European or Japanese businessmen, eager to learn about American managerialism, but American and European businessmen, manufacturers and consultants ready to absorb good, effective operation management practice from Japan, particularly in process manufacturing, [just-in-time manufacturing], Kaizen and Total Quality Control.”22

  In more recent years, the School’s colonization efforts have been focused on the establishment of HBS research centers around the globe, including the Asia-Pacific Research Center (Hong Kong, 1999), Latin America Research Center (Buenos Aires, 2000), Japan Research Center (Tokyo, 2002), Europe Research Center (Paris, 2003), India Research Center (Mumbai, 2006), Harvard Center Shanghai (2010), and Istanbul Research Center (2013). The first “global” research center was in Silicon Valley (1997), an unintentional demonstration of the fact that until the turn of the century, California’s entrepreneurial hotbed might as well have been a foreign country as far as HBS was concerned.

  While its passion for supplying the world with DBAs wasn’t an enduring one, HBS has nevertheless had real influence on the teaching of business at other institutions, starting with the case method. And whatever challenges Harvard-bred faculty have encountered in securing work as professors at other schools, they have had an almost ridiculous amount of success securing work as deans or presidents of those same schools.

  J. Hugh Jackson (’20) joined HBS as an assistant professor of accounting in 1920 and was promoted to full professor in 1923. When Stanford University decided in 1925 to establish its own business school, Wallace Donham spent three weeks in Palo Alto, a trip he described as “an obligation as Dean of the School to help them start their business instruction right.”23 Stanford asked for Jackson’s help, too, and in 1926 he resigned from HBS to take a professorship there. In 1932 he was named the second dean of the school.

  The list of those who have made similar moves is a lengthy one, and the one that follows is incomplete. But it makes the point:

  In 1939, Deane W. Malott (’23), a faculty member, left to become chancellor of the University of Kansas, where he stayed until being named president of Cornell University in 1951.

  In 1942, professors Boyce F. Martin and Everett Needham Case left to become dean of the School of Business Administration at Emory University and president of Colgate University, respectively.

  In 1945, Professors John Calhoun Baker and John Philip Wernette left to become presidents of Ohio University and the University of Mexico, respectively.

  In 1955, Charles C. Abbott left HBS to become the first dean of the new business school at the University of Virginia.

  In 1961, Associate Dean Vernon Alden left to become president of Ohio University.

  In 1963, Baker librarian Donald T. Clark left to build a brand-new university library for the University of California, Santa Cruz.

  In 1966, George Kozmetsky (’47) became dean of the School of Business Administration at the University of Texas.

  In 1967, HBS administrator Richard Chapin left to become president of Emerson College.

  In 1982, Robert Darden (’74, DBA ’82) took a job as assistant professor at the University of Virginia’s Darden School of Business. He served as its dean from 2005 to 2015.

  In 1998, HBS professor Hirotaka Takeuchi founded the Graduate School of International Corporate Strategy in Tokyo, which he led until 2010, when he returned to HBS.

  In 1998, Roger Martin (’81) was named dean of the Rotman School of Management at the University of Toronto, a position he held until 2013.

  In 2000, Professor Leonard Schlesinger left to become president of Babson College. (In 2013, he returned.)

  In 2005, HBS dean Kim Clark left to become president of Brigham Young University–Idaho. When he stepped down, he was replaced by Clark G. Gilbert, who had earned his doctorate and served on the faculty of HBS.

  In 2010, Kenneth Freeman (’76) was named dean of Boston University’s Questrom School of Business.

  In 2011, after twenty-two years at HBS, Peter Tufano (’84) was named dean of Oxford’s Saïd Business School.

  In 2011, after two decades at HBS, Professor David A. Thomas took over as dean of Georgetown University’s McDonough School of Business.

  In 2013, former HBS professor Ashish Nanda, after making a pit stop
at Harvard Law School to design an executive business program for lawyers, took over as director of the Indian Institute of Management–Ahmedabad.

  In 2014, HBS professor Rakesh Khurana was named dean of Harvard College.

  In 2015, HBS professor Clayton Rose was named president of Bowdoin College.

  Also in 2005, Joel Podolny, who had served as director of research while on the faculty of HBS, was named dean of the Yale School of Management. He was later hired by Steve Jobs as dean of Apple’s in-house corporate university, which is surely the best-paying business school deanship on the planet. From that perch, Podolny wrote a devastating critique of his former business school colleagues in the June 2009 issue of the Harvard Business Review, “The Buck Stops (and Starts) at Business School.”

  Even as numerous HBS people have assumed leadership positions at other business schools and universities, the reverse is rare. Since Donald David returned from industry to succeed Wallace Donham in 1942, not a single one of the School’s deans has come from outside its own walls.

  27

  Gentlemen (and a Few Ladies)

  In 1929, the School hired its first female faculty member, Henrietta M. Larson. At the time, Larson, who held master’s and doctoral degrees from Columbia University, was a history professor at Southern Illinois University. Larson had been asked to join HBS as a research assistant and help establish the field of business history, but also to take a demotion and a significant pay cut in the process.1 When she accepted, it marked a significant, if apprehensive, shift in HBS’s attitude toward women.

  Prior to Larson’s arrival, women’s roles at HBS were limited to administrative secretaries, librarians, and female graders.2 The first secretary of the School, Francha Eaton Heard, who had worked for Donham at Old Colony Trust, came as part of the package when he joined HBS. Her “numerous special responsibilities”3 included overseeing day-to-day operations, planning social functions, and furnishing the new campus once it was built. The second secretary of the School, Mary Elizabeth Osgood, had slightly more substantive responsibilities. When she was singled out for praise in a report, credit was given to an “efficient and comprehensive filing system”4 she had partly designed herself. In other words, a secretary of the school was still a secretary.