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Academics from some of North America’s top-ranked business schools gathered last month on the Harvard Business School campus to discuss the future of management education and explore how their establishments could innovate in order to prosper.
It was fitting that HBS was the venue. As the richest business school in the world, with an endowment of more than $2.8bn (£1.4bn, €1.8bn) in the bank, it has more options than most – and is still the institution that other business schools look to for leadership.
Amid the receptions and dinners of its centennial celebrations, therefore, some of Harvard’s top faculty members have taken the research tactics usually reserved for companies and applied them to a handful of top business schools, writing case studies on Stanford, Yale and Insead, among others. They have even written one about Harvard itself, looking at its links with other schools in the university, such as medicine.
Jay Light, dean of the school, is adamant about Harvard’s role: “Our mission is to develop general managers. That’s what we think developing leaders is all about.” It is a policy that has served the school well over the years and given it unrivalled access to boardrooms through its 70,000 alumni. Jeff Immelt at General Electric, Alan Lafley from Procter & Gamble, James Dimon of JPMorgan Chase, John Thain at Merrill Lynch – all hold Harvard MBAs. (Alumni whom Harvard is less keen to hear mentioned in the same breath include Jeff Skilling, MBA 1979, convicted felon in the Enron affair.)
But Harvard has been seeing increasing competition from the other top US business schools and from schools in Europe. Salary data collected for the Financial Times MBA rankings* over the past decade show that the salary premium Harvard alumni enjoyed a decade ago has been eliminated by those who have graduated from America’s other top schools, such as Stanford, Wharton and Columbia – and top European establishments including London Business School and Insead are catching up fast in the pay stakes.
Prof Light is dismissive. “I would be highly sceptical of that kind of data,” he says. “People have a very hard time recruiting at our school. Students have lots of good opportunities.” For Prof Light, the real measure of success is the school’s continuing ability to attract the top students and the top professors. In 2007, 89 per cent of students offered a place at Harvard took up the opportunity – the highest “yield rate” of any of the leading business schools. The past year has been a bumper one for recruiting faculty, with 39 additions, bringing the headcount to 225.
Top recruiters, such as Goldman Sachs, continue to be drawn to Harvard, according to Jonathan Jones, the investment bank’s global head of recruiting. “When we hire from HBS we are looking for students who are worldly and sophisticated and have top-notch general management and leadership skills. Many of our senior leaders are graduates of the institution and it was the first business school we started hiring from in the 1920s. HBS continues to be one of our top sources of associate hires.”
Apart from closer relationships between HBS and other schools in the university, such as medicine, the school is moving towards enrolling students at a younger age – in their early twenties as opposed to the usual 27-year-old already seasoned manager. Santiago Iniguez, dean of IE Business School in Madrid says: “The case method doesn’t work if you bring in younger students. Experience in business has always been part of the equation. If you drop the experience in class you lose a very important component of case teaching.”
HBS is also making its research and teaching more global. Previously the school had often taken the view that managers would come to Boston, to learn at the knee of Harvard professors, but now an increasing number of those are teaching overseas. This year HBS launched a programme in Hyderabad, India. Prof Light says that in two years, the school will deliver 12 weeks of short courses in China.
Teaching materials also take a more global view, with half the case studies written every year at Harvard (on which the school relies for 80 per cent of its teaching) compiled at its overseas research centres, says Prof Light. Only a few years ago, 75 per cent of HBS’s cases were still US-centric.
Having dominated the past 100 years of management education, the next few years will be critical to Harvard’s future. Still, as one rival dean puts it: “For Harvard to lose its position would require students systematically to decide to go elsewhere.” Few in the discipline would bet against its ability to adjust.
* FT Global MBA 1999-2008
Additional research by Wai Kwen Chan