The “Harvard MBA Indicator” for the Next 100 Years

The Harvard MBA Indicator is a stock market indicator that uses job placement statistics at HBS to predict the stock market. As I listened to Dean Light and President Faust speak at the Business Summit, I decided that it may be time for me to create a new type of indicator more commensurate with our mission to “educate leaders who make a difference in the world.”

I recently did a Google on HBS and came across something called the Harvard MBA Indicator – a stock market indicator that tells investors whether to buy or sell on the stock market based on the percentage of HBS graduates that accept “market sensitive jobs” (e.g., banking, private equity). The idea is that if over 30% of Harvard MBAs take jobs in finance, then the market is oversaturated and soon to collapse. According to Career Services, 44% and 45% of the classes of 2007 and 2008, respectively, went into Financial Services. Last I checked the markets are now doing bad things.

But I digress. In fact, not one of the guests at our Business Summit this weekend mentioned the HBS Indicator and it surely is not an academically sanctioned metric, yet it raises questions. If the decisions we make as HBS graduates are so intricately tied to the world markets, what else might we be tied to? More importantly, as we celebrate our 100 year anniversary, to what do we need to begin to tie ourselves over the next 100 years?

In 1908, when HBS was formed, a business school was not a novel idea and many thought probably not a good idea either. The country was in the midst of a recession, and there was real uncertainty at Harvard about the future. The University had suspended work on the stadium, and another professional school had just been closed. As Dean Light explained in his address, HBS was birthed as a “delicate experiment” – a compromise forged between University magnates who saw leadership training as the future and those who thought it was “foolhardy” to think that business school could be good for anything more than teaching “your slower son to learn accounting or a little inventory control.”

But HBS was something different than the business schools of the time – HBS was to be a leader factory. It was surely innovative, but as Dean Light explained, leadership amongst other things entails: entrepreneurial vision, sense of opportunity, communication skills, integrity, and the courage to act. He asked, “how do you teach that?” In the 1920s, the HBS answer was the case method, which created an environment that was about “learning and not teaching.” We got a new campus on a swamp across the Charles from the pantheon of traditional academia, and the HBS that we know today was born. We have surely come along way from an institution of privileged white men in dark suits.

HBS in 2008 is a different place – a beacon of diversity and (dare I say) an elite place operating in the context of a different world. Indeed our country and her industries face many new competitors. The inventor of the Model T has been unseated by a Japanese company to remain unnamed. Our position as the world industrial capital evolving out of the industrial revolution, the days of the robber barons, and the birth of the modern organization around the turn of the 20th century is now being challenged by China, India, and many others who have a lot to say about who will wear the trade balance crown over the next 100 years.

There is a lot of good news too. We have finally entered the innovative future that I dreamed about after watching Back to the Future II. As I learned during the Business Summit panel on Entrepreneurship in a Global Setting, Donna Dubinsky’s new company, Numenta, is planning to create the next generation of computers that can think like humans. Bill Gates is finding ways to end diseases familiar to generations (e.g., Malaria) as well as diseases that no one had ever heard of in 1908. And everything, from the creation of ideas to the financing of those ideas must be considered in the context of a global economy. HBS professor and Partner at Highland Capital, Robert Higgins (MBA ’70), alluded to this fact in his explanation of the evolution of the Venture Capital industry. In the 1980s, the mantra was “be local,” in the 1990s it was “be bi-coastal,” and today it is “be global.”

But a new global, interconnected world can bring new global problems. Anyone who has ever heard of this thingy called a subprime loan knows that all too well. So that brings us to the question: what will be the role of the HBS graduate in the next 100 years?

As Harvard University President Drew Faust related through metaphor in her address, a person can think about his or her path in one of three ways. In the story she told, three stone cutters working in a town were asked what they were doing. One replied, “earning a living,” the second replied “I am being the best stone cutter in the community,” and the third replied “I am building a castle.”

To me, that is the difference between working in banking to buy a pimped out apartment in Soho, working in banking to be the top Associate in your class, and working in banking because you want to understand how the decisions you make will affect everyone from a home-owner to a hedge-fund owner. The three are not mutually exclusive, but HBS trains us to develop the innovations, frameworks, and organizational mechanisms that make the world work, and not just our checkbooks.

In the end, the onus is on us to build castles, and not simply the stones that support them. In the wake of a financial crisis, an HBS dean once said that there had been an “inability of business and political leadership to rise to new heights required by the unprecedented situation the nation faced.” That dean was Wallace Donham, the second dean of HBS, and the “unprecedented situation” he referred to was the Great Depression. In 1933, like the present day, it is unfair to assume that any HBS graduate should have been able to foresee the events of the financial crisis before they unfolded. But it is fair to assume that the paths on which we choose to send subordinates, teams, groups, divisions, organizations, states, nations and the world are chosen with the greater good at the top of mind.

We will be the leaders that create jobs, stand up for those with smaller voices, inspire confidence in global markets, find solutions for rescuing the environment, find ways to make healthcare a right and not a privilege, and build the organizations that people around the world can be proud to work for. The decisions we make and the visions we create as leaders can easily reverse the outcome of any of those objectives.

In the words of President Faust, “the crisis we have witnesses has not resulted from any widespread breakdown in individual ethics. What we have witnessed is a broader and more systemic crisis that has arisen from a failure of wider vision. A failure to acknowledge our interconnectedness. A failure to recognize how one’s stone-cutting is part of a larger project.”

So as I think about HBS over the next 100 years, I begin to wonder what the next generation of Harvard MBA Indicators will measure, seeing how there may not be any “market sensitive” jobs left by 2009. With that in mind, I plan to invent the Harvard MBA World Impact Indicator (HMBAWII) – which will calculate how successful the HBS community has been at taking the combined experiences of 900 truly gifted and unique people each year and pooling them together to ask the questions the world is begging us to ask.

My Indicator will look at the number of lives that we impact, the courageous paths we pursue, our ability to see the interconnectedness in the world, and how the choices that we make advance global causes surely greater than the bottom line.

At our 125th anniversary, I will let you know how things turn out.

October 20, 2008
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