- Historic Sites
Harvard’s Capitalist Experiment
The university struggled to define what a school of business should teach. What is the knowledge required for success?
December 1987 | Volume 38, Issue 8
Slowly, through a process of trial and error, an answer emerged. The school was, after all, a graduate school of business administration. The administrative perspective—the perspective of the general manager, “who is not and cannot be a specialist but who must make use of specialists at all times”—became the thread that provided unity.
At the same time that it strugglec Early courses resembled graduate seminars and encouraged an attitude of excessive detachment. The school’s students, one observer complained, “wouldn’t recognize a problem if they saw one.”
Harvard’s solution was to develop a business version of the “case method” that had worked so well at the Harvard Law School. Through cases that reflect the “infuriating limitations of real situations,” to quote one of the publications Harvard now sends to prospective students, the case method “obliges the students to confront unruly, intractable reality,” and thus “helps convert an aptitude for management to a capacity for management.”
Besides deciding what to teach and how to teach it, the early leaders of the Business School needed to ensure its physical survival—that is, they needed to raise funds. To the rescue came George F. Baker, the eighty-four-year-old chairman of the First National Bank of New York.
A close associate of J. P. Morgan, Baker was known as the “Sphinx of Wall Street,” for reasons that became clear when, in 1923, at eighty-three, he gave the second interview of his life. “Business men of America should reduce their talk twothirds,” he told the reporter. “Everyone should reduce his talk. There is rarely ever a reason good enough for anybody to talk.”
At least once in his life, Baker succeeded in reducing another man to silence. In 1924, when a fund raiser from the Business School met with him in the hope of obtaining a gift of one million dollars, Baker said: “I have lost interest in the idea of giving a million dollars.…And I don’t care to give a half a million, either…but if by giving five million dollars I could have the privilege of building the whole School, I should like to do it.” Harvard let him do it.
During World War II the Business School shut down its M.B.A. program, but the expertise of the faculty did not go unused. Harvard was chosen to organize an Army Air Forces (AAF) Statistical School, responsible for training AAF statistical officers.
Using infuriatingly real situations, Harvard obliges the student to confront unruly, intractable reality.
The AAF statistical control system was widely praised, and statistical control techniques became common inside and outside business after the war, thanks in part to the career of one bright young member of the “Stat School” faculty, Robert S. McNamara, who went on to be the president of the Ford Motor Company and the Secretary of Defense under Presidents Kennedy and Johnson.
A second important initiative in this period was an experimental course in “War Production Training,” sponsored by the War Manpower Commission. The course aimed to train men between the ages of thirty-five and sixty for supervisory positions in war-related industries. Out of this “retreads” program came, after the war, Harvard’s Advanced Man- agement Program for executives in midcareer—the result, Cruikshank notes, of a climate that encouraged the Business School faculty to “think entrepreneurially about its teaching, research, and publishing activities.” Today mid-career executive education exceeds M.B.A. tuition as a source of revenue for the Business School.
Though his history stops in 1945, Cruikshank gives a sketch of the explosive growth that has taken place since then. The number of M.B.A. programs in the country rose from 50 in 1950 to 650 in 1985; the annual number of M.B.A. graduates rose from 4,300 to 70,000. Harvard granted 7,757 graduate business degrees between 1908 and 1945; today it grants about 700 annually.
But the change is not merely a matter of numbers. In the 1950s the typical M.B.A. class at Harvard was “exclusively male and almost entirely white.” Today about a quarter of Harvard’s M.B.A. students are women, and 11 percent represent minorities. “To alumni, to senior faculty members, and to others in longstanding relationships with the School,” Cruikshank writes, “this purposeful adjustment of the student mix constituted the most striking postwar change” at the Business School.
“We are trying a great, but, I think, delicate experiment,” A. Lawrence Lowell wrote before the first class, twentyfour full-time students, arrived to see what Harvard could teach them about business. As Cruikshank tells it, the story of that delicate experiment is the story of a “pragmatic and protean institution” that has developed through a process of “repeated institutional reinvention.” Lavishly and lovingly illustrated, beautifully designed, ably written, A Delicate Experiment offers a clear account of an important subject: the building of a bastion of capitalism.
The book sells, I should add, for $110. Alumni of the Harvard Business School will have no trouble affording it. As for the rest of us—well, if the price invites a bit of M.B.A. bashing, Harvard has only itself to blame.