In an era “when our current leaders (especially in business, but also in government and other spheres of public life) have lost legitimacy,” Harvard Business School (HBS), as the educator of some of those leaders, faces daunting challenges. Nitin Nohria, Chapman professor of business administration and, as of July 1, HBS’s tenth dean, appears eager to address them. For one thing, that indictment comes not from an outside critic of capitalism, but from an essay Nohria wrote with his colleague and coeditor Rakesh Khurana, Bower professor of leadership development. Moreover, it appears in the introductory chapter to their new Handbook of Leadership Theory and Practice, which aims squarely at both HBS’s mission (“to educate leaders who make a difference in the world”) and its method (melding research with managerial practice). Finally, the very language—the concern for “legitimacy,” situating business among the “spheres of public life,” and the sense of historical perspective—is all very much of a piece with the new dean himself.
“I have always believed in the powerful role business and business leaders can play in contributing to the prosperity of society,” Nohria said in a conversation a couple of weeks after President Drew Faust announced his appointment on May 4. But now, a series of crises—he named the technology bubble, the Enron scandal and collapse, and the 2008 financial-industry failures and resulting severe recession—“have shaken people’s confidence” in business and in the schools that train a third to a half of business leaders. He posed the core question for HBS this way: “Are we educating people who have the competence and character to exercise leadership in business?”
Nohria deliberately emphasized both traits. On the matter of competence, he asked whether the ideas and knowledge emanating from HBS were truly useful for practice: leading a team, a corporation, or a complex, global enterprise. As for character, he said, business educators had to ask, “Are we selecting for and reinforcing a belief [among students] that you’re just in it for yourself?” or is the M.B.A. a way of equipping oneself for “broader value creation for society as a whole?”
Both sorts of queries appear in the education literature, too. In the chapter about HBS in their Rethinking the MBA (2010), HBS professors Srikant M. Datar and David A. Garvin and research associate Patrick G. Cullen cite a concern that some of its cases have devolved into “problem sets, narrowly designed to teach technical skills” rather than place those skills in a “broader company and industry context.” And Khurana’s From Higher Aims to Hired Hands (2007) probes a century of business education and “the unfulfilled promise of management as a profession.”
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This way of framing the context for his deanship traces back to Nohria’s childhood—his father was a prominent CEO in India—and through his professorial career. After earning a chemical engineering bachelor’s degree from the Indian Institute of Technology in 1984, Nohria received his Ph.D. in management from MIT’s Sloan School four years later. While doing his dissertation, he was struck by the way large companies with ample resources, which “should have owned innovation,” in fact fell behind solitary entrepreneurs in Silicon Valley and on Boston’s Route 128 who were much more creative. Two insights followed: the “enormous power of individuals who could mobilize resources through their imagination and networks,” and the degree to which individuals in larger, legacy organizations were stuck, and ultimately could no longer innovate.
In subsequent work, Nohria examined what enabled companies to remain strong performers—and the factors that subsequently eroded their strengths. Changing Fortunes (2002), on the fate of industrial corporations, written with Davis Dyer and Frederick Dalzell, concludes that inexorable trends mandating change collide with “an incredible capacity on the part of executives to deny them.” Nohria’s inquiries into the nature of performance revealed that superiority “was very impermanent.” Despite the efficacy of clear strategy, nimble execution, and rational structure, he said, the “drift in organizational life is not in that direction.”
He has also explored the role of individual leaders and the elemental factors that shape them and their associates (Driven, by Paul Lawrence and Nohria, published in 2001, may be the only business book with a foreword by sociobiologist E.O. Wilson). Nohria and colleagues have made sweeping studies of business successes over time and the importance of executives’ “contextual intelligence”— whether their roles call for entrepreneurial creativity, managerial craft to scale up a business, or leadership in consolidating and restructuring a mature firm. From human nature to human networks, Nohria has drawn on history, psychology, and other disciplines to help him understand “the organization as a social system.” Much of that learning will be pertinent in his new role.
Two autumns ago, speaking at HBS’s centennial global business summit (see “Educating Professionals,” January-February 2009, page 58), President Faust invoked Peter Drucker’s parable of the stonecutters: one simply making a living, a second trying to be the country’s best stonecutter, and the third aspiring to build a cathedral. The vision of the second, a pure individualist, Faust described as “incomplete” and “a kind of blindness.” A commitment to educating leaders for the world, she maintained, compelled HBS to look to “purposes beyond one’s self….Leaders exist to serve followers,” she continued, “and leaders’ success must be measured not simply by their power to move others, but by the directions in which they take those who follow them.”
Nohria, who shares Faust’s devotion to historical perspective, recalled in the interview that HBS was formed in 1908, following the deep financial crisis and recession of the Panic of 1907: an era of robber barons, stock-market corners, and new regulation of industries from railroads to meatpacking.
A century later, in the wake of renewed financial and economic crises, HBS’s first dean from its organizational behavior faculty sees an urgent need for reinvention. “Business education has to be recognized again as an extraordinary force for good in the world,” he said, supporting enterprise as a “vital resource for the prosperity of any society.” Beyond meeting customers’ daily needs and driving innovation, he said business leadership is fundamental to solving society’s collective problems: environmental sustainability, energy, poverty, healthcare.
He therefore envisions an “unleashed period of innovation” in how and what HBS teaches; much greater internationalization of research and teaching, as HBS pursues business globally, consistent with its belief that “practice leads theory”; continued diversification of the faculty and student bodies, in concert with demographic change in the world (the organizational behavior faculty group is among HBS’s most diverse); and more collaboration across disciplines within the school and Harvard-wide. Nohria’s scholarship, and his experience as senior associate dean for faculty development, will inform some of these priorities.
In remarks to the HBS community on May 4, Nohria spoke of business leaders fulfilling “the responsibilities that come with their positions of power and privilege.” In the wake of the apotheosis of the hedge-fund manager and the financial engineer, he told his colleagues, “Now more than ever the world needs business leaders who can build great companies, generate new jobs, produce valued goods and services, stimulate innovation, and tackle common social challenges,” with the aim of “contribut[ing] greatly to humanity’s prosperity in the next hundred years.”