Harvard study turns tables on its own MBAs By Oliver Staley (Bloomberg)

HARVARD Business School, stung by criticism that it has not prepared alumni to cope with the economic meltdown, will dissect its performance using a practice it employs to examine corporations in crisis.

 

A taskforce, created in November at the direction of the dean, Jay Light, is writing a case study to scrutinise whether the school is failing to teach students to understand and manage risk in the current environment, said Paul Healy, the co-chairman of the panel.

 

The case study method is the technique Harvard uses to analyse decision-making by executives during times of duress.

 

Harvard Business School‘s 219 professors will tackle the case at a May 27 meeting and may use the discussion to propose curriculum changes. “We’ll put them in the students’ seats,” Healy, a professor of business administration, said.

 

While officials at the business schools of Stanford University and the Massachusetts Institute of Technology say they have developed classes and projects to address the causes of the crisis, Harvard is using the collapse as an opportunity for self-reflection. The professors will ponder how the school’s reputation has been tarnished, and may debate articles critical of the institution and its graduates who helped trigger the financial crisis, Healy said.

 

Harvard’s alumni include Stanley O’Neal and John Thain, the former chief executive officers of Merrill Lynch who presided over the company’s decline; Rick Wagoner, the ousted chief of General Motors; and Christopher Cox, the former chairman of the US Securities and Exchange Commission.

 

“I’m sure the brand is damaged, at some level,” Healy said. “People that I know well tell me to my face, ‘You guys have some culpability,’ and I think that’s fair. It’s a good time for us to reflect and think about what the right things are for us to be doing.”

 

Professors may spend half a day meeting in groups of about 90, said Healy, who added the plans were not final. The last time the school overhauled its curriculum was in 2004, when it introduced a required ethics course after the 2001 Enron accounting fraud.

 

In 2007, even before the financial crisis, Stanford Graduate School of Business introduced a curriculum designed to develop critical thinking about leadership in small classes, replacing lectures.

 

The new series of seminars at the school help “students discover and defend their values”, Dean Robert Joss said in an article for Stanford Business magazine’s next issue. Classes include “Understanding Cheating,” which looks at why people make unethical decisions.

 

At the MIT Sloan School of Management, in Cambridge, Massachusetts, students were taught to weigh the effects of their actions on society, not just on investors, said JoAnne Yates, the deputy dean.

 

“We would like our students, when they graduate, to understand not just quantitative instruments but how they fit into the whole world around finance,” she said. “We don’t want them all to think it is games with numbers.”

 

Schools needed to consider how they teach and whether students could learn decision-making based on intuition and not only numbers, said Louis Lataif, the dean of the Boston University School of Management and a 1964 graduate of Harvard Business School.

 

“There’s a certain self-consciousness now that we may be part of the problem,” Lataif said. “There’s a lot more to education than learning how to read balance sheets. Maybe a piece of what’s missing is not another course in ethics but the ability to think beyond the data and take action based on good instincts.”

 

Harvard business degrees are now “scarlet letters of shame”, wrote Philip Delves Broughton, a 2006 graduate of the school, in a March column in the Sunday Times of London. “Time after time and scandal after scandal, it seems that a school that graduates just 900 students a year finds itself in the thick of it.”

Harvard Business School, founded 101 years ago, has more than 200 faculty members and almost 1800 students seeking master’s degrees in business administration.

 

Under O’Neal, who graduated in 1978, Merrill Lynch lost more than $US30 billion before its takeover by Bank of America. Thain, O’Neal’s successor who graduated in 1979, was ousted after spending $US1.2 million to renovate his office. General Motors has fallen more than 90 per cent in New York trading from its peak during the tenure of Wagoner, a 1977 Harvard Business School graduate who was forced to resign on March 29 under pressure from the President, Barack Obama.

 

Cox headed the SEC from 2005 until January this year, as the agency failed under his watch to investigate Bernard Madoff’s fraud. Cox graduated from Harvard in 1977.

 

While the school may bear a measure of responsibility for the graduates’ decisions, “there’s plenty of blame to spread around”, said Carl Kester, the deputy dean of academic affairs. – ?