Why Clayton Christensen Is Wrong (And Michael Porter Is Right)

HBS is the richest and most endowed professional school in the world. The school’s endowment is $2.9 billion, nearly three times the size of the next largest endowment at rival Stanford University’s Graduate School of Business. The business school’s endowment is so large it already exceeds the endowments of many of the country’s most prominent universities, including Brown University, Johns Hopkins University, Boston College, and the University of North Carolina at Chapel Hill.

A LUXURY BRAND THAT SHOULD NEVER BE CHEAPENED

The business school also boasts among the most lavishly appointed facilities of any institution of higher learning, with a massive 118,000-square-foot fitness center, a separate chapel for what the school calls “quiet contemplation, and a 10,978-square-foot Georgian Revival-style residence for the dean. HBS recently broke ground on what will be its 35th separate building on the business school campus.

And when Harvard unveiled its new HBS strategy for online education initiative, the school revealed that it had hired 32 full-time staffers to support it. That staff is now 35 strong. No other school in the world would dare hire that many people for online education. As for helping students with their tuition, HBS already hands out more scholarship money than any professional school in the world: $32 million a year to just 1,860 MBA students.

Compared to all its rivals in the U.S. and abroad, Harvard Business School has virtually all the nuclear weapons in its arsenal. The competition has one or two, here and there. In other words, no one can attack HBS in any meaningful way, certainly not to disrupt its business model.

RIVALS, ESPECIALLY THOSE WITHOUT GLOBAL REPUTATIONS, SHOULD FEAR HBS

If anything, everyone else should greatly fear Harvard and what it could do to their financial models that are largely dependent on local and regional geographies. Technology allows Harvard to sweep into those markets and to cherry-pick at will the best applicants and students for any number of executive education courses and programs.

To cannibalize the most successful advanced degree program in the world would do irreparable harm to a true luxury brand. It’s similar to taking a brand like Tiffany’s and selling $100 trinkets at the counter. It cheapens the brand, drives the best customers away, and would likely enrage the most important constituents HBS has—its alumni who are in the midst of ponying up $1 billion in an unprecedented fundraising effort.

HBS Dean Nitin Nohria and others believe that disruptive innovation may indeed spell the demise of second- and third-tier business schools, but that HBS’s brand and network protect it. “I do not believe our MBA program is at risk,” he told the Times, adding that he doesn’t believe that disruption is always all or nothing. “In the music business, all record stores are gone,” he said, while in retailing, “it’s not like Amazon has eliminated everything; after those debates, my feeling was that we’re going to be more in that category.”

He’s right. Christensen is wrong.

DON’T MISS: HARVARD BUSINESS SCHOOL GOES ONLINE or HBX: HOW DISRUPTIVE TO BUSINESS EDUCATION?