The Golden Passport

by Duff McDonald

  This makes it all the more curious that in 1985, then-dean John McArthur decided it was time for a new editor at HBR. Between 1980 and 1985, the magazine had averaged $2 million a year in net income. Paid circulation was at an all-time high of 240,000, with eleven foreign editions.6 Advertising pages, which had been an afterthought for decades, rose 90 percent between 1975 and 1985, to a total of 433.7 It was not exactly a situation that was screaming for change.

  Except if you consider the fact that both the faculty and administration of HBS are an unusually arrogant lot. As it turns out, even the slight autonomy of the magazine—under Andrews, articles penned by faculty had to compete on the merits with those submitted by outsiders—had begun to grate excessively. “The administration had become very concerned about HBR,” writes longtime HBS insider David Ewing, “not its lack of success but its prodigal success. . . . The magazine was becoming too influential.”

  Or, more likely, Ken Andrews was becoming too influential. There was much speculation that if Andrews hadn’t gotten divorced in 1969 and remarried just a year later he would have been appointed the School’s sixth dean instead of Lawrence Fouraker. And his success with HBR was clearly threatening to Fouraker’s successor, Dean John McArthur, who decided to replace him with Professor Ted Levitt. And just so there was no misunderstanding what was happening, the head of the magazine’s business department, who had long reported to the editor of HBR, would henceforth report to the dean.

  Levitt drove out the rest of Andrews’s regime. Dyer decamped for Monitor and later returned to a company he’d founded before joining HBR, the Winthrop Group. Kantrow bolted for McKinsey & Company, where he served as editor of the McKinsey Quarterly. During his time at its helm, the competing journal took the intellectual high ground away from HBR and never gave it back. Kantrow later worked as chief knowledge officer of Michael Porter’s Monitor Group. It’s hard to think of anyone who has served in as many important roles in translating wonky business ideas for a more mainstream audience; he’s the kind of guy you’d think you’d want to keep around at a publication like HBR. But Ted Levitt apparently didn’t feel that way.

  Ewing goes to great contortions to explain the bloody coup not as the result of political infighting but as something more strategic, “a careful decision of the Administration to put down an organization that was threatening to eclipse the School as a teaching institution. . . . By cutting HBS off at the knees, the Administration has showed the world what its top priorities are: the classroom, teaching, and case development.” It also showed that one of its priorities wasn’t the publication of a quality magazine—paid circulation, renewal rates, reprint orders, and advertising pages all fell off a cliff, almost immediately.

  When he took over editorship of HBR in 1985, Ted Levitt decided that everything had to go. His plan, he later explained, was to be “more readable without being superficial, less intimidating, less predictable, more lively without being pop. At the same time, taking the reader seriously rather than pandering or patronizing.”8 And so he added cartoons.

  To be fair, the magazine’s effort to be serious under Andrews had also left it a bit of a gray battleship, and Levitt injected some much-needed energy. The most published author in the history of the Review,9 Levitt unfortunately showed gaps in his understanding of journalistic ethics, including altering galleys of stories written by outsiders without consulting them. And whereas Andrews was welcoming of editors’ opinions, Levitt ran the magazine top-down, with decisions decided by a committee of one. Bringing in a new team to take a new editorial direction is one thing; driving out the last team by discounting their opinions and compromising their ethics is another.

  Editorial highlights during his tenure included a series of pieces by management thinkers Gary Hamel and C. K. Prahalad, new ideas on marketing from the likes of Regis McKenna and Benson Shapiro, and interviews with nontraditional managers and leaders such as Red Auerbach of the Boston Celtics. “Ted had an extensive network and wide-ranging interests,” recalls former editor Alan Webber, “and he was genuinely fearless in exploring new ideas.”

  Unfortunately, the numbers showed that readers and advertisers might not have been looking for fearlessness. Per former HBR editor David Ewing, paid circulation dropped from nearly 250,000 to just over 200,000; the subscription renewal rate fell to 55 percent; sales of reprints dropped to 1.2 million; and advertising dropped substantially.10 Those subscribers who stuck around had their loyalty rewarded with a doubling of the annual rate, from $28 in 1985 to $55 in 1988. (That the drop-off in subscribers tracked the $27 increase in subscription rates says more about the perceived “value” of HBR than they’d care to admit.) In late 1989, Dean McArthur yanked his handpicked replacement for Andrews and appointed Professor Rosabeth Moss Kanter as the new faculty editor.

  Kanter’s tenure was a disaster. Two talented editors, Alan Webber and Bill Taylor, decided it was time to move on and left to found Fast Company magazine, one of the most successful business magazine launches in history. The most “influential” article published under Kanter: Michael Hammer’s July–August 1990 piece, “Re-engineering Work: Don’t Automate, Obliterate.” While the concept made sense—“the fundamental rethinking and radical design of business processes to achieve dramatic improvements in critical measures of performance”—it also heralded “a return to the mechanistic ideas of Frederick Winslow Taylor.”11 Or worse: The stamp of approval bestowed by HBR facilitated the hijacking of the term as a “shallow intellectual justification”12 for widespread downsizing in the early 1990s. Remarkably, Kanter nearly managed to crater HBR, surely one of the least challenging publishing tasks since the Bible. But hey, she’s only written nineteen books on how to manage organizations; what did they expect?

  McArthur replaced her in 1992 with T. George Harris, the founding editor of Psychology Today and a longtime Peter Drucker collaborator. Harris lasted just four months, the highlight of which was the 1992 cancellation of a cover story critical of IBM, “Why IBM Failed.” The author of the piece, a financial analyst named Mark Stahlman, claimed that the decision was “out of fear of offending the giant computer maker.” Stahlman told the New York Times that an editor at HBR had told him that the article had been canceled after the intervention of HBS professor William Sahlman, who was chairman of HBS’s publishing operations at the time. All at HBS denied the accusation, but the editor of the piece resigned immediately after it had been canceled.13

  For his part, Harris learned of his dismissal from newspaper reports. The Boston Globe had run a story in September 1992 headlined, “Is Harvard Ready for T. George Harris?” Answer: no. His replacement, Joel Kurtzman, a former editor of the New York Times’ business section, lasted just over a year.

  Even the business side was in disarray: In 1993, HBS consolidated all of its publishing activities under the umbrella of Harvard Business School Publishing (HBSP) and hired Ruth McMullin as president and CEO, with a reported salary near $500,000.14 McMullin explained Harris’s firing as follows: “George shares with us a vision of what the review is and can be for its readers. . . . But the fit between his talents and experience and our needs just wasn’t right. . . . I regret that we didn’t understand the fit wouldn’t be right.”15 She might have said the same about herself: She was ousted after just two years. For an institution that claimed to know leadership and management so thoroughly that it could transmit it to young whippersnappers in just two years, the display of managerial ineptitude was remarkable.

  If there is a single word to describe what happened to HBR from the early 1990s into the new century, it is this: It became fluffier. That was partly due to the hiring of so many editors from Time Inc., a publishing company whose product is distinguished by its “accessibility” above all else. Under Andrews, staff editors were tasked with serious developmental work; under subsequent editors, they were tasked with spiffing up copy.

  It wasn’t that it lost its sense of seriousness entirely, simply that with the revolving door
in the editor’s office, the magazine was unable to anchor any lasting conception of itself. The first editor who managed to hang around long enough to put a personal stamp on the publication after Andrews was Nan Stone. Handed the top job in 1994, she hung on for five years.

  In 1997, Walter Kiechel, a former editor of Fortune magazine, was named publisher of HBR, with a stated goal of working with Stone to increase the circulation that HBS had purposely squandered a decade earlier. Kiechel had already been working with HBSP as a consultant, launching the newsletter Harvard Management Update, and then-CEO Linda Doyle convinced him to take on the additional role overseeing HBR. “Walter Kiechel understands the culture, and he is experienced,” said former HBR staffer Alan Webber. “His appointment will mean a settling down for Harvard Business Review.”16

  Stone and Kiechel never saw eye to eye, however—she wouldn’t even let him into editorial meetings. In 1999, he engineered Stone’s ouster and handed oversight to a team of editors including Suzy Wetlaufer, Nick Carr, and Sarah Cliffe. A search for a new editor from the outside failed to produce one, and when Wetlaufer raised her hand in October 2000, the job went to her.

  She certainly had a resume for the gig. A Harvard MBA (’88) and Baker Scholar, Wetlaufer had worked as a reporter at the Miami Herald and the Associated Press, as well as a consultant at Bain & Company. It seemed, for a time, as if they’d finally landed on a keeper. The magazine increased its frequency to ten times a year, cast a wider net for stories, and made some great hires. One notable piece: In 2000, Clayton Christensen and Michael Overdorf’s article, “Meeting the Challenge of Disruptive Change,” thrust Christensen’s theory of disruption into the national conversation.

  But Wetlaufer’s personal life was unraveling. Married with four children when she joined HBR in 1996, she and her husband divorced in June 2000. After that, it seems, she got lost in the same kind of ethical fog that descends on people involved with HBS all too often. In Wetlaufer’s case, the ethics had to do with romance—specifically, a relationship between the forty-two-year-old editor in chief of a publication and a twenty-two-year-old intern, as well as romantic assignations with someone she was writing about in her capacity as a journalist. In late December 2001, the subject was none other than Jack Welch, the CEO of General Electric. Wetlaufer had interviewed him for the magazine, and the pair had fallen for each other.

  But Welch was still married to his wife of thirteen years. When Jane Welch discovered the affair, she called Wetlaufer on December 26, 2001, and tore a strip out of her. Only then did Wetlaufer alert her superiors to the relationship, suggesting that they might kill the interview, due to run in the February issue. (Kiechel reassigned the story, and kept it on the calendar.)

  The dissembling that accompanied the admission was both unbelievable and also very telling. The romantic relationship, Wetlaufer insisted, hadn’t begun until after she’d filed the interview for publication. It’s a dubious assertion, considering that she and Welch had met several times in the weeks following their initial October 2001 interview, ostensibly to work on the piece. If what she said was true, it would be the most worked-over nonromantic Q&A in the history of journalism. More interesting, though, was the fact that she seemed to think that if everybody bought her alleged sequence of events, then everything would be okay. Even more interesting was the fact that those who ran HBSP seemed to agree.

  Those who worked underneath her, however, weren’t having it. With advice from Welch’s lawyers, Wetlaufer had originally been able to negotiate a reduced role as editor at large with only a modest reduction in her $277,000 salary. But when the staff learned about the deal, two editors, Harris Collingwood and Alden Hayashi, quit on the spot. “Such compromises with reality are typical of HBSP’s senior leadership,”17 said Collingwood. Nick Carr called the arrangement “a masterpiece of editorial fecklessness and an insult to the staffers.”18

  If the adultery was the salacious part, journalist James Bandler’s Wall Street Journal story about the scandal also raised eyebrows regarding the magazine’s ethics. As it turned out, the magazine had a policy of allowing interview subjects not just to see, but to edit, their interviews before publication. While HBR was hardly the first publication to cozy up too close to its subjects, the news that corporate chiefs had such influence over the copy added fuel to the fire. Said media critic Howard Kurtz: “Weren’t they already in bed with their sources?” Other publications weren’t so susceptible to such influence: A call from Welch to Wall Street Journal managing editor Paul Steiger to try to kill Bandler’s story failed.19

  The numerous media outlets that suggested that the scandal might make for a compelling HBS case study missed the point entirely. It wouldn’t have been a compelling case study, as the choices made by most of those involved didn’t even merit debate. Wetlaufer’s sleeping with an interview subject and neglecting to mention it until she was about to be exposed? Ethical fail. HBS negotiating with Wetlaufer about a reduced role once her lapses had come to light? Ethical fail. Resignation of editors in protest over said negotiation? Ethical win. This is not rocket science.

  It wasn’t a good time for Welch, either. Revelations that the legendary cost-cutting chief of GE was enjoying some $2.5 million a year in retirement perks that included free flowers, wine, and even vitamins flew in the face of his reputation, and he relinquished them under the glare of criticism.20 His record as CEO of General Electric was also being dissected, and his once-heralded ability to “manage” earnings decried as financial engineering that skated too close to the edge. His successor at the helm of GE, Jeffrey Immelt (’82), even felt compelled to clarify that “[w]e manage businesses, not earnings.”

  This imbroglio destabilized what at that point had become a $100 million a year arm of the HBS operation.21 But not for long. In July 2002, David Wan joined HBSP as president and CEO. That same month, publisher Penelope Muse Abernathy was given her walking papers. In October, Wan hired Thomas A. Stewart as Wetlaufer’s replacement. Like Kiechel, Stewart was a Fortune veteran. Kiechel’s role was changed from senior vice president and editorial director of HBSP to editor at large, a reduction in responsibility.

  Wan still sat in HBSP’s corner office in 2014, an indication that the operation finally found its footing in the aftermath of the Wetlaufer affair. But with a few notable exceptions, the flagship, HBR, has never really reached the heights of yesteryear. Nick Carr’s 2003 HBR story, “IT Doesn’t Matter,” did what HBR was supposed to do, which was to spark a conversation among corporate managers, and in this case it included outraged responses from technology companies. Carr’s argument that technology’s strategic importance had fallen along with its widespread adoption was on the mark, as was his 2005 prediction (in MIT Sloan Management Review) that companies would soon purchase their computing needs as a utility service instead of keeping it in-house. His 2008 article in the Atlantic, “Is Google Making Us Stupid?,” opened a debate about the detrimental effects of the Internet on concentration and contemplation that continues to this day. Carr would seem to be the kind of editor you’d want to keep around.

  In January 2009, the editorship went to Adi Ignatius, the former deputy managing editor of Time magazine. It seemed the right time for a change, as HBR was failing, at that moment, to properly cover the financial crisis. The best they could come up with? An October 2008 story by Rakesh Khurana and Nitin Nohria, “It’s Time to Make Management a True Profession”—as if an effort that hadn’t worked despite a century’s worth of trying was the solution to what ailed us. “The world was desperate for new approaches,” Ignatius said later. “Business-as-usual was not a credible response.”

  One of those new approaches has been to take a BuzzFeed-style approach to content, with much of HBR’s digital-only product falling into cookie-cutter patterns: “What Entrepreneurs Get Wrong,” “What Economists Get Wrong About Measuring Productivity,” “What Big Companies Get Wrong About Innovation Metrics,” “When Good Teams Go Wrong,” “Why Boards Get C-Suite Success
ion So Wrong,” and so on.

  By 2014, David Ewing’s silly rationalization for the late 1980s turmoil at HBR—that the School didn’t see the magazine as a true outlet for its ideas—was long forgotten. That year, the School sold 12 million cases, 2 million books, and 3.3 million reprints from HBR, the circulation of which had risen by nearly 25 percent over the previous four years, to 293,000. Along with Executive Education, the publishing arm of the School is solidly profitable, and covers the cost of case research and deficits in the MBA program itself. Indeed, the publishing business is the largest at HBS, bringing in $203 million in 2015 revenues, compared to $168 million from Executive Education and $120 million from the MBA program.

  Does HBR really influence practitioners in the way that HBR says it does? Has it ever? In a word, no. But at this point, it hardly matters, because somebody’s buying both it and the books that the School churns out as if from an assembly line. HBR is, without a doubt, a central player in the whole circus that is management “thought leadership”—the conferences, the consulting contracts, and the book publishing deals. And just like Italo Calvino’s circus that stays put while the town itself packs up after the season and moves on, this circus has put down stakes and decided to become a permanent part of the landscape. To do so, it somehow figured out a way to feed on itself, akin to charging the performers for admission to their own show. That the lines remain as long as they do is testament to the power of the brand, even if the ultimate product suffers from the same disconnect from actual management as the rest of HBS does. What they’re actually selling is what they sell in their Executive Education offerings: permission to travel in management thought circles using the same “golden passport” credentials as everybody else connected to HBS, regardless of the fact that evidence of any real, tangible influence of HBR is both infrequent and underwhelming. But maybe that’s missing the point. After all, if you’re selling into an echo chamber, it doesn’t really matter if anyone on the outside can hear what’s being said.