The Economist Jul 29th 2010
HENRY KISSINGER, who started his career in the killing fields of Harvard before moving to Washington, DC, is said to have quipped that academic politics are vicious precisely because the stakes are so small. Schumpeter has no idea whether the contest to succeed Jay Light as dean of the Harvard Business School (HBS) was vicious. But he is sure that the stakes were not small.
HBS is hugely influential. The school is a training ground for America’s business elite: a striking number of the top office holders of Fortune 500 companies, including the heads of General Electric and Boeing, sharpened their skills and elbows there. The school is also the apex of the vast global industry devoted to teaching business. It sits on an endowment of $2.1 billion and employs some terrific thinkers, including Michael Porter and Clayton Christensen. It developed the “case method”—using case studies to teach students about real-world business problems. It claims to be the source of four-fifths of the case-study materials used in the world’s leading business schools.
The past decade, however, has not always been glorious for the school. Global business has been rocked by crises, from Enron to the financial meltdown. HBS, alas, played a role. Enron was stuffed with HBS old boys, from the chief executive, Jeff Skilling, downward. The school wrote a sheaf of laudatory case studies about the company. Many of the bankers who recently mugged the world’s taxpayers were HBS men. George Bush learned to be a “decider” at HBS.
On July 1st, a new dean, Nitin Nohria, took charge. His appointment suggests that the school sees the need for a shake-up. Mr Nohria is the first HBS dean who was not born in North America. He is also the first who has come to the job having said that business faces a “crisis of legitimacy” and that business education is at an “inflection point”. Mr Nohria believes that HBS is on the cusp of “a period of extraordinary innovation”. But what does he mean by innovation? Are his ideas sound as well as stirring? And what chance does he have of prodding a lumbering giant such as HBS in the direction that he wants it to go?
Mr Nohria’s first task is to try to restore faith in business in general and in business schools in particular. This means improving two things, he reckons: “competence” and “character”. He wants the faculty to focus more on the risks of clever financial techniques; they will have plenty of case studies to choose from. He also wants HBS to renew its commitment to shaping its students’ characters as well as their intellects. He has long argued that business people should regard themselves as members of a profession. He supports a movement by students to adopt a business equivalent of the Hippocratic oath.
In our cynical age, Mr Nohria’s willingness to talk about shaping character is admirable. But his obsession with “professionalisation” and “Hippocratic oaths” is puzzling. The moral values that business people should adhere to are universal ones, not a professional code. Business progresses through creative destruction, not through the application of rules. The movement for a Hippocratic oath for business is already running out of steam.
Mr Nohria is more persuasive as an evangelist than as a psychopomp. No one will be shocked to hear that the dean of Harvard Business School believes that business is the world’s greatest generator of prosperity and solver of problems. But Mr Nohria sells the idea skilfully. He has written extensively on the history of American business, so he has a wealth of anecdotes about its ability to rebound. That he was born in India lends weight to his argument that business is quite good at tackling poverty. Mr Nohria can also cite copious examples of how fancy management theories that were cooked up in business schools—from microfinance to re-engineering—can boost growth and spread prosperity around the world.
Students get their boots dirty
Mr Nohria’s other great passion is for super-charging innovation at HBS. This will involve making the school even more globally connected than it already is: one of Mr Nohria’s first acts as dean was to embark on a whistle-stop tour of the world’s business hot-spots. More ambitiously, he wants to rethink the school’s hallowed teaching methods. Since the 1920s, HBS students have pored over case studies of business decisions. The new dean wants them to take part in live case studies—to take themselves to the Midwest or Mumbai and spend time working for real companies. This answers one of the most persistent criticisms of business education: that it is too abstract. Mr Nohria wants his students to get their boots dirty.
None of these “innovations” is entirely original. Most European business schools are already much more globalised than HBS. France’s INSEAD has opened a campus in Singapore to put it at the heart of the Asian miracle. Many business schools started experimenting with “live case studies” long ago: the late C.K. Prahalad was particularly successful in finding plum assignments at interesting Indian firms for his University of Michigan students.
Nevertheless, HBS plays a vital role in making good ideas stick. People listen when its star professors speak. Its case studies often become conventional wisdom. It confers ex cathedra legitimacy on anything it touches: Schumpeter was struck by how many Indian entrepreneurs proudly presented him with HBS case studies about their companies. As the ultimate insider-outsider, Mr Nohria is better placed than most to continue with the reforms that have been gathering pace for a while. The 20th century belonged to America. The next one probably won’t, so HBS will find it harder to stay on top. But in choosing an articulate Indian-American for its top job, the school at least gives a sense that it understands how big the task will be.
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