The Golden Passport

by Duff McDonald

  And there are obviously scores more who aren’t the boldfaced names of business getting involved as well. In 2015, Daniel Abbasi (’86) debuted a new Showtime series, Years of Living Dangerously, at HBS to kick off Earth Week. The show, a look at how humans have exacerbated climate change, included appearances by the likes of Harrison Ford and Don Cheadle. “At some level, we have an impoverished debate in this country on this issue,” said Abbasi, one of the coproducers. “One of the goals of this series is to ignite a public conversation.”17 With all due respect to Abbasi, the public conversation about the human exacerbation of climate change has been going on for quite some time. Where that conversation needs to be “ignited” is in corporate boardrooms. That’s where HBS is supposed to come in.

  One shouldn’t expect Harvard Business School to be teaching courses on how to overthrow the capitalist economy. The School is as much a part of it as the New York Stock Exchange. That said, in lieu of wholesale overhaul, one might hope that its professors would be spending their time on the next best thing, which is to develop a workable—and pervasive—theory of the firm that would ultimately inform all the decisions that its graduates (and everyone else who falls under its intellectual influence, whether through the sale of cases or otherwise) make when they walk out the doors of the School armed with their MBA. Instead of telling students that they should search inside for their own authentic self, and filling them with bromides about remembering who they are, they should be encouraging far more of them to step back like Casey Gerald and his classmates did, to ask what it’s really all supposed to be about, and then to do something about it. But they’re not doing that, or at least they’re not doing it well. What are they doing? They’re all pursuing their own personal brands, trying to be mini–Michael Porters, with the portfolio of monetization options finely tuned and running smoothly.

  Another thing they’re clearly not doing enough of: asking their students to contemplate how the central institutions of democratic capitalism were made vulnerable to the hijacking that has occurred in the last thirty-five years or so and how they might be fortified for a different future. Instead, there’s a celebration of individual glory, of the fame machine, and of the supposed moral right to lead.

  Worse yet, if at some point they were in on the joke, they long ago became part of the punch line—they bought the bridge that they were supposed to sell. In its May 2016 issue, HBR promised an interview with celebrated graduate Meg Whitman on the all-important notion of “creating a sense of urgency.” That’s the same Meg Whitman whom Bloomberg named the Most Underachieving CEO in the entire S&P 100 in 2013,18 largely because since becoming CEO of Hewlett-Packard in 2011, she’d been fiddling while the franchise burned. But that’s apparently what urgency means at HBS in 2016. As long as you can hang on to the job, the paycheck, and the microphone, you can take as much time as you’d like.

  61

  Nitin Nohria for President

  In early 2010, as the denizens of HBS anxiously awaited word about the choice of the School’s new dean, its student newspaper, the Harbus, published the results of a student poll on the matter. Their front-runner? Joseph Badaracco, a senior associate dean, chair of the MBA program, and longtime professor of business ethics at the school. It was wishful thinking, but also a little naive. The appointment of Badaracco as dean could be seen by the outside world as an implicit admission that the school needed an ethics professor in that post. And that simply wasn’t going to happen. The School, you see, is fundamentally conservative. When societal change is afoot, they may engage in a lot of arm-waving and a “landmark” survey or two, but in the end they will soothe themselves with false rationales for why they are okay the way they already are. They might even study themselves and talk a lot about how they are changing. But they usually aren’t.

  In a story in March of that year, BusinessWeek suggested that another front-runner was Srikant Datar, a senior associate dean and professor of accounting. It was at that very moment, in fact, that Datar’s book, Rethinking the MBA: Business Education at a Crossroads, was landing on bookstore shelves. Cowritten with HBS colleagues David Garvin and Patrick Cullen, the book tackled head-on a number of criticisms of MBA programs and offered pragmatic prescriptions without downplaying the challenges involved: the outdated yet stubbornly persistent view of the role and responsibility of business in society, the broad-based failure of leadership development efforts, a shocking lack of focus on the limits of markets and models, as well as graduates’ lack of critical and creative thinking abilities. On a final point, the need for students to gain a better global perspective, Datar had his own story: Born in India, he received his MBA from the Indian Institute of Management, Ahmedabad, followed by two masters degrees and a PhD from Stanford. He was global perspective personified.

  In the end, Harvard president Drew Faust went with someone whose prescriptions for what ailed business schools were decidedly less pragmatic than Datar’s. In July, she announced that the tenth dean of HBS would be Nitin Nohria. The head of the School’s Organizational Behavior unit at the time of his appointment, Nohria had garnered student support for latching on to the idea of an MBA Oath, which had bubbled up from the class of 2009. When later asked what Faust had said to him about her decision, Nohria sounded like he was reading out of a course catalog: “All she told me is you are someone that the Faculty trusts, you’re someone who comes from a background of leadership,” he said. “The mission of the school is to educate leaders who will make a difference in the world. . . . I hope that you will stay true to that idea and remain committed to developing the best leaders that the school can.”

  While it seems highly unlikely that it was his “background of leadership” that made the difference, Nohria is in many ways a man for his time. Born in India but a naturalized American, he represents a half-step toward the global perspective that the School hopes to cultivate in the years ahead. As HBS tackles the challenges of maintaining its brand not just domestically but globally as well, the rest of the world cannot help but be pleased by the fact that it’s not going to be another white man telling them what’s what.

  One of the first things that HBS did under Nohria’s deanship was to finally admit that the case method wasn’t enough. In 2010, HBS added “The Field Method” to its first-year curriculum. A yearlong three-part course in the first year of the MBA program, it starts with small student teams in interactive workshops, followed by immersion in an emerging market, and concludes with the design and launch of an actual business. In one stroke, the School responded to the ever-increasing desire of students at all business schools to start their own businesses upon graduation, while also achieving something that institutional arrogance had prevented for decades—the admission that there might, just maybe, be teaching methods beyond the case method that might even be complementary to it.

  If he was able to let go of one cherished myth, though, Nohria has stubbornly clung to another, which is that business can be a profession, and that the business school’s central mission can be to make it so. While the idea is pure nonsense—there is not, and never will be a coherent, systematic, and clearly bounded body of knowledge underlying business, nor is there a governing body with a code of conduct and the power to sanction members—founding myths are powerful things, and ever since the men who hatched HBS more than a century ago managed to sell the idea (to others, and to themselves) that HBS was a noble endeavor, suitable for membership in the Harvard family, the School has insisted that its purpose is the betterment of humanity.

  In late 2008, when the global economy teetered on the brink of collapse in part due to the ethical failings of graduates not just of its program, but of MBAs the world over, Nohria and his colleague Rakesh Khurana thought the time was right to publish “It’s Time to Make Management a True Profession,” in the October issue of HBR. The timing of the piece couldn’t have been more offensive if they’d tried to make it so. In 2008, it was time to figure out just how far the rot had spread, not to talk
of a hopeful future without it.

  Setting aside the fact that he’d rather not talk about the questionable things business (and HBS graduates) had done in favor of the ways that everyone could act more professionally in the future, Nohria has also shown himself to be blind to the ultimate problem in corporate America today. The problem isn’t the morality of managers within firms. The issue eating America from the inside out is one of overall fairness and equity, and whether the basic structure of corporate America, as it is currently defined, is fundamentally flawed. The really important issue isn’t the morality of individual managers, although that certainly matters, but the morality of the firm—and the capitalist economy—itself.

  But maybe it’s asking too much of the dean of HBS to be able to ask these kinds of questions. Why? Because he’s akin to the little fish in David Foster Wallace’s moving graduation speech, “This Is Water.” The one blithely swimming along that, when asked by an older fish, “Morning, boys, how’s the water?” turns to his comrade and says, “What the hell is water?” In this story, water is the huge power wielded by corporate America, which has unshackled itself from the electorate. We’re supposed to fear regulatory capture, when corporate interests end up “capturing” what were intended to be regulatory checks on their power. But what of academic capture? HBS, which might have served as a moral check on both its graduates and of corporate power itself, simply sold itself to that power for the price of a new cafeteria and laptops for everyone. The promise of HBS, comfortably ensconced in the bosom of one of the country’s great universities, was to remain free of undue corporate influence and to engage the fundamental problematic of their subject and of their time, which was how to ensure that power actually be used to make the world a better place.

  Instead, the School threw its lot in with cynics like Michael Jensen, dispensed with its central tenet that judgment is of utmost importance, and walked the country down the path of share price maximization. Everything that’s come since, including Nohria’s supposedly valuable “background” in leadership, pretty much follows. Instead of developing the all-important theory of the firm, and, by extension, of general management, HBS has frittered away the intellectual caliber of a world-class faculty with unrivaled resources in pursuit of such inferior (and arguably empty) concepts as a theory of leadership and a theory of entrepreneurship. Not only that, but that same faculty has engaged in an academic conspiracy of sorts, filling the emptiness of the intellectual space surrounding them with consulting contracts, speaking engagements, and all the gravitas that can be brought to a discussion of how being confident can make you excellent.

  Any self-respecting president of Harvard itself should have looked across the Charles River and asked them, as Derek Bok once did, just what the hell they were doing. Instead, they have looked the other way, or worse. Consider Drew Faust’s inability to see a problem with a Harvard professor advising a ruthless dictator. It’s all so tragic that you’d think Sony’s Michael Lynton would want to make a movie about it.

  Instead, we are left with the dean of HBS proposing a Hippocratic Oath for managers. When the class of 2009 came up with a better name for the idea—the MBA Oath—Nohria became its champion. (Hilariously, on the website for the effort, mbaoath.org, the organizers regretfully inform the interested reader that they are restricting the oath to MBAs. Even in self-reform, they somehow manage to be elitist.) While the oath was the subject of widespread media coverage at first, it soon petered out, and not much has been heard about it since. It didn’t help that a meaningful portion of the student body responded to it with the horror of someone who had ordered a Milton Friedman on the rocks but had accidentally been given one mixed with common sense. Said one: “What first seems like the innocuous language and progressive thinking is really the failed ideologies of history masquerading as enlightenment. . . . All popular prescriptions for ‘social and environmental progress’ are inevitably the same: socialism.”1

  There’s a reason that the new dean of HBS decided to focus on pie-in-the-sky forward-looking idealism: The alternative was to speak, specifically, about the decidedly less than ideal behavior of MBAs in the recent past. When he was asked by BusinessWeek what he thought of Goldman Sachs having been hauled in front of Congress in 2010, he whiffed. “The events in the financial sector are something that have been watched closely at Harvard Business School,” said Nohria. “We teach by the case method, and one of the things we’ll do through this experience is study these cases deeply as information is revealed over time so we can understand what happened at all these financial firms. I’m sure that at some point we’ll write cases about Goldman Sachs because that’s how we learn.”2

  All of this prompted Philip Delves Broughton to retort in the Economist: “He could have stood up for Goldman or criticized it. . . . Instead he punted on one of the singular business issues of our time. It is indicative of the cringing attitude of business schools before the business world they purport to study.”3 Broughton was echoing a sentiment made almost a decade earlier, when HBS was promising to learn the lessons of Enron. “[Too] many of us view ourselves simply as bystanders,” said Penn State management professor Dennis Gioia. “What’s happened around us in the last year provides us with good stories and great examples for use in our classrooms, but it doesn’t seem to go much further than that. Critical commentary is easy in the safety of the classroom. We need to assume, however, that we have a hand to play in trying to right the wrongs perpetrated on so many innocent people.”4

  But Nohria is clearly a master of the nonanswer. In 2012, when an executive at Apple disclaimed any responsibility as a corporate citizen of the United States—“We sell iPhones in over a hundred countries. . . . We don’t have an obligation to solve America’s problems. Our only obligation is making the best product possible”5—Nohria deftly avoided a question from Time about whether that executive was right or wrong. “Companies are also becoming aware that if everyone feels the way Apple does, there will be a tragedy of the commons. We do rely on the health of our home markets, and multinational firms can’t turn their back on them.”6 It’s all so theoretical that it’s both harmless and meaningless, all at once.

  Nohria also decided to wrestle down an issue that has bedeviled the School for almost as long as the teaching of ethics, and that was its treatment of women, both on the faculty and in the student body. It was about time: In 2013, the School celebrated the fiftieth anniversary of its belated admission of women to the program. While many of its female graduates had gone on to have great careers, when the School took a close look at how women performed in the program itself, they found that while females represented about 30 percent of each year’s class, they only represented about 15 percent of Baker Scholars. Not only that, but female faculty tended not to stick around; from 2006 to 2007, a full third of the female junior faculty had left. Tenured male professors outnumbered tenured female professors, 76-to-19, and the pipeline of untenured faculty was just as unbalanced.

  Nohria started by appointing Professor Youngme Moon to chair of the School’s MBA program. Moon, who doesn’t have an MBA but a PhD from Stanford, was the first woman to ever hold the post. The message came out from the dean’s office that the fratlike behavior of some sections would no longer be tolerated, and that the grade differential had to be solved. “We have to lead the way, and then lead the world in doing it,” HBS professor Frances Frei, the chair of the first-year curriculum, told the New York Times, somehow confusing catching up to the rest of society with leading it boldly into the future. Almost in the blink of an eye, the grade gap disappeared, partly the result of new grading software that helped professors avoid any gender-based differences in their patterns of calling on and evaluating the class participation of women. Concurrent efforts to help female faculty improve their teaching skills showed similar gains.

  By mid-2013, the School was so confident that it had solved its gender issues that it opened itself up to the Times’ Jodi Kantor for an expansive story
that it presumed would echo its own sense of self-congratulation. And so they were stunned when the September 2013 piece, “Harvard Business School Case Study: Gender Equity,” questioned the depth and substance of the claimed improvements. What’s more, they were also shocked that a female reporter from the Times somehow found richer gender-related veins to mine than the superficial statistics the School had apparently thought she’d agreed to reprint without doing any reporting of her own. Kantor’s piece also had the bonus side story of HBS’s “Section X,” a secret society of ultrawealthy students known for its decadent ways. It was Skull & Bones for the wing-tipped crowd, and it lit up the Internet in a way few stories about HBS have ever done.

  Having failed to sell the Times on the merits of its quick gender fixes, the School showed the thinness of its skin by effectively shutting out any and all media in the wake of Kantor’s piece, including the author of this book. By 2015, however, Nohria was back on the offensive, and in an interview with Charlie Rose offered up what can only be described as a bizarre explanation of its efforts to close the grading gap.

  First, Nohria said they suspected sexism by male professors. But they found that females underperformed in classes taught by females, too, so . . . it wasn’t that the male professors were sexist. (A more obvious conclusion: Both male and female professors were so.) Then, after claiming that gender discrimination was more a societal problem than an HBS one, and a deep-rooted one at that, Nohria bragged that the School had nevertheless solved it in just three years. And then he beseeched the rest of us to confess our sins of collective sexism and then follow the School’s lead in bold and corrective intervention: