Harvard breaks down class walls

A new boss tries to transform a place rich in tradition. Sounds like an HBS case study, but this time it’s the institution itself. Dean Nitin Nohria wants change.

Interview by Luke Collins

Within two weeks of Nitin Nohria becoming the 10th dean in the 102-­year history of Harvard Busi­ness School, a documentary premiered chronicling how the complex interrelationships between the worlds of finance, politics and academia ultimately led to the global financial crisis. The movie, “Inside Job”, subse­quently won the 2010 Academy Award for best documen­tary. Whether Nohria can garner his own accolades remains to be seen.

There’s little doubt his ascension to the helm of HBS – where the master’s of business administration was born in 1908 – came with weighty messages. For those placing blame for the GFC at the feet of hordes of MBA­-educated financiers, Nohria could point to a life of research into management ethics and behavior, not to mention his early support of a controversial initiative urging students to adopt the business school equivalent of a Hippocratic oath. For critics claiming the US-­centric business education model was obsolete, Nohria had that covered, too: he was born in India, and promised a global perspective as the first HBS dean who is not a native of North America.

Since formally taking the helm in July 2010, Nohria has barely caught breath. He travels incessantly and confesses he’s still adjusting to his new­found influence. “It’s like my IQ has gone up 20 points and I speak with a megaphone even when I whisper,” he told The New York Times.

He is overseeing the most radical change in decades to the curriculum of the school’s flagship two­-year MBA: the introduction of the field method, which aims to provide real­-world experience to complement the school’s famous class­-based case study program. And he continues his quest for business to be regarded as a profession alongside medi­cine or law, in an atmosphere where business leaders remain decidedly unpopular. “Humility as a component of character takes work,” Nohria told the class of 2011 at its graduation in May this year. “Your challenge is to reclaim humility for yourselves and for your generation of leaders.”

In an interview with Financial Review Boss, Nohria talks about his goals, for the institution, and for rebuilding trust between the business sector and the rest of society.

Let’s take stock of your first year. How has the school fared?

We have been very fortunate that the economic downturn has, rather than diminish the quality of our classes, resulted in healthier enrollments through this entire period. Higher quality students are applying in general. What has been heartening is the fact that we have seen a much stronger pool of people apply from non­-traditional sectors. People from manufacturing, particularly globally, amazingly quali­fied women. We’ve been able to inch up a bit from roughly 36 per cent of our class being women to now 39 per cent.

The same [variety] seems to be true in terms of where our students are going after they graduate. While we con­tinue to place students in sectors where we have historically been strong, such as finance, private equity and consulting, we also now have many students who have chosen careers in health care, social enterprise and entrepreneurship.

What about the perception that it’s harder to get into busi­ness school than graduate from it, which feeds into the idea that business school is simply a resume builder?

Yeah, that is a perception. The greatest mistake business schools could make would be to become trade schools, where students begin to think of us as a place that enables them to get the best next job. I think the real measure of our success is whether we prepare students for a lifetime of leadership. Maybe in the first three or four years, there may be a slight advantage for a Harvard MBA. But the real advantage begins to show when companies start to con­sider who should become a partner, or who should become a senior vice-­president – when you get into real leadership jobs. It would be a shame for the entire field of MBA education if it just got reduced to a golden ticket that you have to punch to get the next promotion.

What’s the advantage of preparing for leadership roles via an MBA, rather than learning on the job?

It’s the compression of learning and the ability to be sur­rounded by remarkable people. It’s cultivating early the meta­-habits: the range of cases and business frameworks, how to analyse those cases, and the fact that while there are a range of answers that are correct, the specific answer will vary depending on who you are as a leader, the people around you and the specific company that you’re in.

You’re introducing what you’re calling the “field method”, which seeks to give students a learning experience that more closely replicates what they would do in a real-­world environment. That implies you felt the existing curriculum, focused on case studies, was somehow deficient.

It’s what we think we need to get better at doing. There’s still a knowing-­doing gap. A lot of that is through real-­world experience: the capacity to get better at translating what you think the right decision is into executing it and work­ing with other people to bring to life what you think that decision is going to yield. It’s a different kind of sensibility. The question you inevitably ask in a case study is, “What would you do if you were in the protagonist’s shoes?” That’s not the same as saying, “You are the protagonist. Do it.”

You’ve made it clear you believe that while the 20th cen­tury was the American century for business, the 21st will be global. HBS has research centers in Buenos Aires, Hong Kong, Tokyo, Paris – do they play a role in preparing graduates for this new century?

Different people are preparing students for globalization in different ways. INSEAD says, “We have multiple cam­puses, and you can spend a semester in Singapore or some­where else.” We’ve invested in these research centers all over the world, through which faculty members end up writing cases. So we bring the world’s thinking and the most imaginative business practices that evolve anywhere in the world here to our campus. It’s not just that you learn a lot about China, which is where the action is today, but you also learn about Brazil, and you also learn about India, and you also learn about Europe. That’s what our network of research centers allows us to do.

And we are now leveraging them one more way. In Janu­ary, we’re taking all of our students out for a global, emerg­ing [market] experience somewhere in another part of the world. All 900 of our students will spend, as part of their required first­-year experience, some time abroad. We will do this for the first time with this new group. We’re not going to make people experts on India or China or any where else in two weeks. It’s developing the contextual sen­sibility to know that when you go to a different place, you will always have to adapt, revise and be sensitive to how your ideas may emerge. That’s truly valuable to global leaders.

It seems those leaders increasingly will come from outside the US. What does the emergence of China, India and other developing nations mean for the US-­centric Western model of business education?

There’s no doubt that – just as these countries are building, from nothing 30 or 40 years ago, amazing business enter­prises that are capturing the global imagination – we should not be surprised if, 20 or 30 years from now, there are new household names. We’ve seen this happen with INSEAD. It wasn’t a serious competitor in business educa­tion 25 years ago, but today you can’t talk about the land­scape in global business education without taking INSEAD seriously. So there’ll be a different landscape, and I think that will be for the better because we know that these coun­tries have massive local demand for business education.

What about Australia’s role in this new century?

As we think about this globalization of the landscape of business education, Australian business schools have every reason to be a part of this new imagination. There are some pretty remarkable institutions in Australia that are worthy players on this scene. Asia will be an important part of this global century and, to the extent that Australian business schools leverage their presence within one of the most advanced economies in Asia, they’re in a position to have every reason to imagine a bright future.

How did the global financial crisis affect the perception of business and business schools?

They’ve certainly not been easy years. As growth in the United States has slowed and the prospects of business in developed countries looks less exciting, at least in the short to medium term, people aren’t rushing to business schools generally. There has been a flight to quality: the top schools have all seen a slight improvement, but it has been very damaging to those not in the top 10 or 20.

So has that perception of the MBA as the ubiquitous degree to take your career to the next level shifted?

On aggregate, between 1950 and 2000 … one in five peo­ple who got a graduate degree got an MBA. I don’t think it’s going to be the fastest­-growing graduate degree in America or the vast economies any more. It may be the fastest­-growing globally: if you look at global demand, we may see an even greater golden age for the MBA in the next 20 years than in the past 50. As enterprises grow in India, China and all kinds of emerging markets, there is going to be an acute need for trained business leaders. So, I don’t think the bloom is off the MBA degree in general.

Is this flight to quality a response to what happened during the past few years? Business education has endured some slings and arrows in the wake of the financial meltdown.

Everyone in business is confronting that and we’re not any different in business education. How do we restore society’s confidence that business is an engine that creates value not just for the individual but for society more broadly? If you look at what banks are doing, what other firms are doing; if you look at ideas colleagues of mine, such as [HBS professor] Mike Porter are championing about creating value, they’re all ways in which we’re realizing that society’s willingness to give business a broad licence to operate has taken a bit of a beating. That licence will be restored only if business shows more broadly that its success creates prosperity for society as well. We have to make sure we’re educating business leaders who under­stand this win­-win relationship they must have with society.

The student-­driven code of ethics now seems to have gained wider acceptance – students at more than 250 schools around the world have adopted it.

It built upon some ideas that my colleague [HBS professor] Rakesh Khurana and I had advanced, and it was a student­-led initiative that has been converted into the MBA Oath. Each year, the movement seems to be expanding in scope and is really being seen as something that business school students across many institutions are embracing as a way to signal to the world that these are the values they would want to live by and hope to be judged by.

Published by AFR BOSS, December-January 2012.