The Golden Passport

by Duff McDonald

  Clark, who had arrived at Harvard as an undergraduate in 1967, only left the university once in the next half century, to serve as a Mormon missionary in Germany. In 2005, he answered the call of his church again, and unexpectedly resigned as the head of the most influential business school in the world to become president of the Mormon-affiliated Brigham Young University–Idaho, in Rexburg. He described the request from the LDS Church’s then president, Gordon Hinckley, regarded as a living prophet, thus: “It was like getting a phone call from Moses.”4

  Clark is by no means the best-known Mormon to have HBS on his resume. That honor belongs to Mitt Romney or Clayton Christensen. “Mormons are such a force at Harvard Business School that people joke about being dominated by the three ‘Ms’ (the other two are McKinsey and the military),”5 observed the Economist in 2012. Professor Steven Wheelwright also got a call from Moses, and resigned to become the ninth president of Brigham Young University–Hawaii, a position he held from 2007 to 2015.

  Under Clark, the faculty of HBS grew by 20 percent. But in doing so, he continued the drift toward looking more and more like other business schools through the hiring of non-HBS-trained people who had been trained in serious theoretical and quantitative research as opposed to the case method. That, in particular, left the old guard wondering what HBS was to become. “It’s a time of our discontent,” professor Jay W. Lorsch told BusinessWeek. “The new dean is going to have to find a way to determine whether we’re creating the kind of education we want to create.”6

  And whether it was one that students wanted created for them—applications fell 16 percent from 2003 to 2004. Near the end of Clark’s tenure, the School was near a nadir in the rankings, placing fifth in BusinessWeek’s 2004 ranking. Recruiters, in particular, were down on the School, giving it the worst marks of any ranked business school for its career placement center.7 And then there was the whole Jeff Skilling thing. “Kim leaves a school that is in really good shape,”8 said Professor Rosabeth Moss Kanter in transparent denial.

  Harvard president Lawrence Summers named Jay Light as Clark’s replacement, surprising oddsmakers who thought he’d make a bolder choice, such as a female or a foreigner. That sort of leadership would have to wait.

  54

  The Men Who Would Be President

  The Harvard Business School network, at least in the United States, really is all it’s cracked up to be. Whether it’s a successful graduate having the inclination to look at new graduates with a favorable eye or an entire company being built on top of a swarm of Harvard MBAs—McKinsey, DLJ, and Enron come to mind—the connections provided by an HBS degree are real, meaningful, and lasting.

  Indeed, the only one of its graduates to have risen to the ultimate position of leadership—the president of the United States, aka the leader of the free world—was almost certainly admitted on the basis of his connections rather than on his comprehension skills, analytical ability, or otherwise. That man is George W. Bush (’75), the nation’s forty-third president. HBS usually can’t stop talking about its graduates who reach the top, but they barely speak of the one who reached the highest top of all, especially during the eight years that he sat in the Oval Office itself. He is one of the few graduates whose success they do not regard as their own.

  The reasons seem obvious enough. One of them is this: In their heart of hearts, everyone involved with HBS believes that MBAs shouldn’t just be running businesses, they should be running everything else as well. Michael Porter and Clayton Christensen, the School’s most famous professors, think they know how to save both the American health care and education systems. While George W. Bush did have a relatively successful governorship of Texas under his belt, even on the eve of his election to the presidency, it seemed obvious that his wasn’t going to be an exercise in HBS-style leadership, but one of raw political power, divisiveness, and, soon enough, all-out war.

  More to the point, despite a resume that reads as if it belongs to a member of the Northeast elite—a Yale legacy, Skull & Bones, HBS—Bush rode to the Oval Office on a groundswell of anti-elitism, and the operating principle of his entire administration seemed to be, as author William Deresiewicz puts it, one of “entitled mediocrity.”1 That’s not what HBS wants you to think of when you think of HBS. And in their defense, George W. Bush didn’t seem to employ much of what HBS teaches while in office. Not to mention the fact that on the rare occasion that he did consult the data, it was deliberately falsified data, and with disastrous effects.

  Maybe it was because he didn’t really try that hard as an MBA. Most faculty members who were there at the time have almost absolutely no memory of him as a student—although whether that forgetfulness is willful or otherwise is unclear. Some remember him as the guy who chewed tobacco in class. His picture in the class yearbook included him blowing a giant bubble of gum. And he later referred to his HBS experience as “a vocational training exercise in capitalism.” Whatever that means.

  But he did take one thing with him. Just as the majority of HBS case discussions open with, “What would you do?,” George W. Bush saw his role as president of the United States in the very same way as the student who is cold-called in an HBS class. He was “the decider,” and even if he didn’t quite know what he was talking about, he was going to wing it anyway. And wing it he did.

  In some ways, Bush, who even called himself the “CEO president,” was everything the corporate world could have asked for. Consider Enron once more. Starting in December 2000, the lights went out in California, something that happened almost forty times over the next six months. No one suspected that Enron was largely to blame at the time. Instead, overregulation was blamed, and deregulation was put forth as the solution. “If there’s any environmental regulations that’s preventing California from having a 100 percent max output at their plants, as I understand there may be,” said Bush in January 2001, “then we need to relax those regulations.”

  “Stripped down to its essentials, Enron’s is the story of a corporation that used political influence to remove government restrictions on its operations and then exploited its resulting freedom to engage in dubious, though highly profitable practices,”2 writes Joel Balkan in his 2004 book, The Corporation: The Pathological Pursuit of Profit and Power. To those who would suggest that the deregulation that allowed Enron’s rise occurred mainly under President Bill Clinton, the answer is that yes, that is indeed true, although those changes were proposed by Wendy Gramm, George H. W. Bush’s appointee as head of the Commodity Futures Trading Commission, and pushed through in the early days of Clinton, six days after which Gramm resigned from the CFTC; five weeks after that, she joined the board of Enron. The point here is not which political party did what. It is whether George W. Bush was a president who was friendly to corporate interests, including Enron, which was headed by a man he called “Kenny Boy.” And the short answer is that he was.

  If the coal workers of the country had voted for Bush, too, it was the coal mine owners to whom he seemed to feel obliged. In his 2003 budget, he sought a $4.7 million cut in the Mine Safety and Health Administration’s budget. After congressional pushback, some of that funding was restored. But in 2004, he was at it again, this time proposing a $6.3 million cut. “Funding cuts to the agencies responsible for enforcing regulatory laws are increasingly common across the regulatory system,” writes Balkan, “not just in relation to mining. Their effect, if not always their intention, is to deregulate corporate behavior. . . . Laws designed to protect the public interest from corporate misdeeds are being scaled back and are sometimes disappearing altogether.”3

  Bush also threw the weight of the presidency solidly behind what Professor Jerry Davis refers to as “the finance solution [as] the guiding conception of a good society.”4 Bush’s “Ownership Society,” which had the full-throated support of his fellow HBS grad and Washington lifer Grover Norquist (’81), was a sop to the workers of the world, a promise that if they could just stop seeing themselves as workers and re
alize that they were owners—of their home (at least that part not mortgaged), their stock portfolios, and their 401(k)s—then they would realize that they were actually on the same side as the boss who was laying them off. The boss had to do it to make the stock price go up, but the laid-off employee had some stock, didn’t they? Everybody wins.

  Except everybody didn’t. Bush also signed Norquist’s “Taxpayer Protection Pledge,” a promise to never raise taxes, as inane a political document as has ever existed. By the time Bush left office, the stock market had suffered two massive shocks (the dot-com/Enron bust followed by the housing market collapse), the country had squandered trillions on senseless wars, and his leadership was to be remembered less for when it showed than for when it was entirely absent, as was the case in the aftermath of Hurricane Katrina. His appointee as chairman of the SEC during the final, obscene inflating of the housing bubble? None other than Christopher Cox, HBS class of 1976. “The decider” retired to his ranch in Texas to pick up a paintbrush. Fortune did not elect him to the CEO Hall of Fame. And HBS did not give him an Alumni Achievement Award, even though by that point, it was handing them out like Butterfingers on Halloween.

  When Mitt Romney (’75) ran for president in 2008 and again in 2012, no one at HBS was embarrassed to throw their weight behind him, even if not all of them did. (An October 2012 poll in the Harbus, the campus newspaper, showed Obama supporters at HBS leading Romney supporters 2-to-1.5) Romney’s entire life screamed HBS Grad for President, from his long tenure at Bain Capital to his graduation from business leader to politician, to his charitable giving and the way he and his wife have raised their five sons. He was proof that the method worked. Whether his son Tagg, another Harvard MBA, will serve as similar proof remains to be seen.

  He was, in short, more automaton than human. “One great mystery about Romney has been where his Mormonism comes in and what it explains,” wrote Benjamin Wallace-Wells in New York magazine during Romney’s latest presidential run. “Maybe the clearest answer comes from taking at their word the businessmen with whom he came up, who say they never saw its influence. Romney’s religion constitutes a minority set of beliefs. Poorly understood and widely mocked, it can provoke suspicions about his motives. Perhaps it is not surprising, then, that he has adopted a public persona that contains no detectable motives at all, one that is buried in objectivity, in data, in process. The best evidence of how important Romney’s religion is to him could be how far he has kept it from view. But the character that remains visible is at once uniquely American and a little strange: a perfectly objective efficiency machine.”6

  Already a bit of an outsider due to his Mormonism, Romney was the almost comical example of the junior-capitalist-in-the-making at HBS, carrying around one of his father’s old leather briefcases emblazoned with the initials GWR, and taking things a little more seriously than even the already-serious crowd who were his peers. At the time, George Romney, the former governor of Michigan, was serving in President Richard Nixon’s cabinet after his own failed shot at the presidency. George had wanted his son to go to law school, whereas Mitt wanted HBS. The compromise: Mitt did both, earning both degrees in 1975. “He had a gravitas,” Howard Brownstein, a law school classmate, told Bloomberg Businessweek. “You thought: This guy could be president. And I remember thinking that in 1971.”7

  Invited to HBS to give a presentation to students on balancing work and family a few years after he graduated, Romney advised them to think of themselves as if they were a conglomerate. “You have the same question as General Electric,” said the newly minted management consultant. “Your resources are your time and talent. How are you going to deploy them?” Using the so-called growth-share matrix invented by the Boston Consulting Group, his employer at the time, in which business units are classified as stars, cash cows, dogs, or question marks, he then reduced life itself to a framework. “Your children don’t pay any evidence of achievement for 20 years,” Romney told them. But if they failed to “invest” time and energy in their families, they risked their families becoming “dogs”—the business unit of one’s life that dragged everything else down with it. This was MBA thinking par excellence, where your life is just one big case study, and a measurable one at that. As the New York Times’ Jodi Kantor put it, “Mr. Romney had proved the value of family time based not on emotion but on yield.”8

  But oh what a yield that was. Over the course of a hugely successful career, from management consultant to CEO of private equity firm Bain Capital, Romney has amassed a fortune estimated at $250 million. Bill Bain once told the New York Times that Romney always seemed a decade older than he actually was. But that grown-up knew how to make money. By buying companies and turning them around and making venture investments in others, Bain Capital grew from $37 million under management in 1984 to $500 million in 1994 and $75 billion in 2015. (Romney left in 1999.)

  When it comes to politics, Romney is far more indicative of the typical HBS graduate than George W. Bush. Whether or not you agree with George W. Bush, it’s hard to accuse the man of wavering; he knows what he believes. (Or at least it seems that he does.) Romney, on the other hand, is a pure product of the analytical and purportedly nonideological viewpoint that HBS claims to nurture in its graduates. They are pragmatists, focused on getting the job done above all else. What they believe is largely beside the point.

  But a lack of conviction in politics can be lethal. Romney showed himself capable of changing positions on a dime—in other words, doing whatever he thought it would take to win. That works in corporate America, where a new direction can always be explained away as a change in corporate strategy. But voters like at least a modicum of consistency from their politicians. For all his cold-blooded analytical victories, when Romney looked deep inside his own heart, he found not conviction but simply that unquenchable desire to win.

  That’s why Mitt Romney was so successful at private equity. He was part of the new generation of HBS graduates who no longer felt allegiance to any one company, and had instead become a mercenary army of what New York magazine called “pure meritocrats—well-educated, well-compensated, moving frequently between jobs and industries, trained to look ruthlessly for efficiency everywhere.”9 Even in the stock market—when one Bain Capital holding, Texas retailer Stage Stores, released an optimistic forecast, the stock skyrocketed, and Bain unloaded most of its shares. But then those projections were dialed back, and the stock fell 58 percent in a single day. Whatever the case, they know how to use the numbers to their advantage. That’s why Romney’s team reportedly flagged potential running mate Marco Rubio’s seeming inability to manage his finances as an issue when he ran for office in 2012. Not that the vice president manages anyone’s finances, but still. It wouldn’t look good on the ballot to have an HBS grad consorting with the financially profligate. (In 2015, Romney denied that had been the case.10)

  When Romney’s remarks to $50,000-a-plate donors at a Florida fundraiser in 2012 were secretly recorded and subsequently released by the magazine Mother Jones, it doomed his second attempt at the presidency. In the video, Romney says, “There are forty-seven percent of people who are with [Obama], who are dependent on government, who believe that they are victims, who believe the government has to care for them, who believe that they are entitled to health care, to food, to housing, you-name-it.” What’s more, Romney said his “job is not to worry about those people.” The videotape didn’t just sink Romney’s second presidential run; it seemed to serve as proof that the never-that-believable claims of the HBS crowd that they desire to change the world above all else were really just part of their collective stump speech. When behind closed doors, he’d told his people what he really thought about the half of the country that hadn’t been born with a silver spoon in their mouths. (His people, it should be noted, include corporations. At the Iowa State Fair in 2011, Romney told an angry protester, “Corporations are people, my friend.”11 With verbal misfires such as this, it’s no wonder he couldn’t get ele
cted.)

  Back on his heels, Romney could only do what every other politician in that situation has done, and insist he’d been lying to his most valued supporters, not to everyone else. “It’s not what I meant. I didn’t express myself as I wished I would have,” he told Fox News. “It was very harmful. What I said is not what I believe. Obviously, my whole campaign—my whole life has been devoted to helping people, all of the people. I care about all the people of the country.” Chastened, Romney couldn’t stop himself from uttering further inane percentages: “Ninety-five percent of life is set up for you if you’re born in this country,” he later said, implying that he (and his sons) had only a marginal advantage in life over, say, a child born to a Mexican busboy and his wife in the Bronx.

  In the end, one of the most careful and cautious HBS grads came undone by speaking too freely. But it was probably inevitable. Even his highly lauded overhaul of the Massachusetts health care system didn’t derive from some deeply held philosophical belief but from a suggestion by his fellow HBS grad Thomas Stemberg. One former staffer told New York that even on issues like abortion, Romney would simply consider hypothetical cases and try to build his political viewpoint on top of the one that seemed most likely to succeed. “It is arresting to imagine a Romney White House,” writes Wallace-Wells, “inevitably filled with as many former Bain colleagues as each of his other public ventures have been: The PowerPoints, the 80–20 jargon, the clinical separation of decision-making from ideology, the detachment of those decisions from moral consequence, a persistent blind spot for people as people.”12