Harvard Business School Dean Nitin Nohria took the unsual step of pushing back on a newly published book that represents a scathing critique on the school as well as its impact on business practice. Nohria said the book’s claims that HBS hasn’t lived up to its values and is responsible for corporate greed and a series of business’ misdeeds are unfair and overstated.
“In many ways I think the book doesn’t give justice to the many ways in which Harvard Business School is trying — and not just today, but has always tried since the beginning of its history — to remind its graduates that as business leaders they have a deep and important relationship with society, and that the health of society is something that is their responsibility,” Nohria told The Harvard Crimson.
He acknowledged that he hadn’t yet read the 659-page, fault-finding tome, authored by Duff McDonald and published yesterday (April 25) by HarperBusiness. The dean said he is basing his views on an excerpt of the book in Newsweek magazine as well as early reviews in The New York Times and The Wall Street Journal. The book’s main thesis is that Harvard Business School has failed to live up to expectations in producing an enlightened managerial elite. “They are doing nothing of the sort,” McDonald maintains.
RESERVED CRITICISM FROM THE DEAN, A CONTRAST TO THE AUTHOR’S ATTACK
Nohria’s criticism of the book was highly reserved, his words carefully chosen. His attack stands in contrast to the author’s claims that Harvard Business School has “proven an enormous failure” and its success has made it positively “dangerous.” McDonald says the school is at least partly responsible for income inequality in the U.S., the economic implosion of 2008, short-term thinking, corporate malfeasance, and Wall Street greed. In an interview released with the book, McDonald asserts, “They have chosen to suck up to big business and Wall Street, take the money to build new buildings and tell their students endless stories about heroic CEOs who did it all themselves because they are America’s ‘leaders.’ It’s a profound failure, in my opinion.”
The dean asserted that the book overlooks the positive contributions to society and business made by HBS alumni over the years. He cited an impact study done last year by the school to quantify the economic and social contributions of the university’s graduates. The study found that HBS alumni have created 43,500 ventures and 10.6 million jobs with $2.4 trillion in revenues.
“We have people who are social entrepreneurs, we have people who serve society in myriad ways, we have people who are soldiers, bankers, activists, CEOs,” Nohria insisted. “There are lots and lots of ways in which our alumni provide goods, services, employment and various other things to society. So I think that to argue that all the evils of society can be blamed on HBS seems to me a little overstated.”
DEAN DOES NOT DEFEND HBS RETIRED PROFESSOR MICHAEL JENSEN
The book has been especially harsh in its criticism of now retired professor Michael Jensen and the dean, John McArthur, who hired Jensen in 1985 from the University of Rochester’s Simon School of Business. At the time, the University of Chicago-educated Jensen was a full professor at Simon and an economist of some repute. “He has had a destructive influence on our society and is an embarrassment to an institution of higher learning,” McDonald has said. “I can’t believe he hasn’t retired out of decency.”
Jensen, however, retired from the active faculty 17 years ago in 2000 and merely retains the honorary title of emeritus professor at HBS. Nonetheless, McDonald accuses Jensen and Harvard Business School of making popular the shareholder model of capitalism in which companies should be run for and responsible to only its investors—not employees, customers or the greater society. “His ideologically driven hijacking of the study of finance served as a cynical repudiation of everything that had come before him at the school,” writes McDonald.
To counter that criticism, Nohria challenged the book’s assertions that the school’s professors preach a theory of business to maximize shareholder gains. Without defending Jensen or his views, the dean maintained that several HBS professors have challenged the idea of shareholder capitalism over the years, and he noted that a number of the school’s most popular courses, including “Reimagining Capitalism” and “Leadership and Corporate Accountability,” encourage MBA students to equally consider ethical and legal dimensions as well as economic ones.
‘NOTHING COULD BE FURTHER FROM THE TRUTH’
“For twenty years they have been talking about how shareholder value maximization is not the best way of thinking about what management needs to do. So our own faculty are writing those articles and they’re not just writing them now. This is an idea that has been a part of HBS for a long time,” he told the Crimson. “Nothing could be further from the truth,” Nohria added about McDonald’s charges.
Nohria’s decision to publicly slam the book occurs after the publication in recent days of two significant reviews from the New York Times and The Wall Street Journal. The Journal has called the book “a deliciously iconoclastic history of Harvard Business School,” while The Times has criticized the book for its lack of “a greater sense of balance.”
The Journal review, under the headline “The Business-School Boondoggle,” was written by Matthew Stewart, a philosophical brother in arms and alter ego with McDonald who happens to be a significant source in The Golden Passport. Stewart’s book credits include a severe critique of management philosophy called “The Management Myth.” In that book, he debunks everyone from Frederick Taylor to Tom Peters. Asking him to review The Golden Passport was nearly equal to inviting Mcdonald to pen his own review.
‘IT DOESN’T SEEM FAIR TO BLAME HARVARD FOR THE RECENT FINANCIAL CRISIS’
The Times assessment, written by another Stewart, veteran business journalist James B. Stewart, raises the issue of author bias and judgment, reinforcing Nohria’s criticism. “It doesn’t seem fair, to take one major example, to blame Harvard for the recent financial crisis,” writes Stewart. “While their actions remain a subject of spirited debate, the H.B.S. graduates assembled by McDonald — starting with former President George W. Bush, former Treasury Secretary Hank Paulson and former S.E.C. Chairman Christopher Cox — are credited by many with mitigating the damage and saving the country from an even worse catastrophe.”
Nohria told the student newspaper that, at least to some degree, the book’s message is consistent with what the business school teaches. “To the extent that the author wants to say that when things go wrong in society, it is the responsibility of leaders to be attentive to that and think about how they might address some of the problems in society,” Nohria said. “We, as the Harvard Business School, should be always vigilant for that too. And we try to do that in every way we know how.”
McDonald, though somewhat less critical of Nohria’s deanship, nonetheless has little positive to say about him. In the book, he mocks the dean’s belief that HBS has solved its gender bias challenges, calls many of the changes he has put through as superficial, and accuses Nohria of buying into “more of the BS that comes out of the school.” Writes McDonald, “The Harvard Business School remains in its inward-facing huddle, repeating empty mantras of enlightenment that fly in the face of simple, undeniable facts. The result: At this point, they are relevant only onto themselves and the catalyzed careers of their graduates.“
DON’T MISS: THE BARBARIAN AT HARVARD BUSINESS SCHOOL’S GATE