The Golden Passport | Duff McDonald

Summary of: The Golden Passport: Harvard Business School, the Limits of Capitalism, and the Moral Failure of the MBA Elite
By: Duff McDonald

Introduction

In ‘The Golden Passport’, Duff McDonald takes a critical look at the history, influence, and evolution of the Harvard Business School (HBS). He scrutinizes HBS’s role in shaping modern capitalism, its adoption of scientific management principles, and its case method approach to teaching. We learn about HBS’s early focus on business management as a professional practice and the school’s moral purpose under the leadership of its second dean, Wallace Donham. The summary further delves into how HBS moved away from that moral purpose and how it continues to contribute to the dysfunctional aspects of capitalism.

Science and Efficiency in Business Education

The founding concept of Harvard Business School was to teach business management as a science based profession. The first dean, Edwin Gay, recruited Frederick Taylor, the “father of scientific management,” to develop a scientific curriculum. Taylor conducted time-and-motion studies to determine maximum worker productivity, which resulted in the implementation of the Taylor “system” at the Bethlehem Steel Company. However, his methods were unverifiable and focused on efficiency, which overlooked other important aspects of business activity. The use of the case method is Harvard Business School’s signature contribution to the field of business education.

Case Studies: More Than Just Learning What Happened

Harvard Business School’s (HBS) case method goes beyond teaching what happened; it teaches how to handle issues. While some criticize the method for being less rigorous, HBS finds value in its approach. The case studies are big business for HBS, as most business schools use them. However, HBS acknowledges the risk of companies altering or blocking coverage, leading to an overemphasis on managers’ successes. Despite this, the case method remains a valuable tool for students to learn from real-life business situations.

Harvard’s Moral Purpose

Wallace Donham, Harvard Business School’s second dean, emphasized the moral purpose of businesses, aligning with the school’s scientific approach to management. He aimed to create graduates who were generalists equipped with administration skills to run any organization, including government. Under his leadership, HBS’s curriculum shifted from industry-specific to business-function focused while also introducing executive education programs, alumni organizations, and government administration courses. When HBS addresses inequality, it is within the belief that businesses can solve it themselves. Donham’s legacy still thrives in Harvard’s teachings today.

GSIA and HBS: Shaping Business Education

The Graduate School of Industrial Administration (GSIA) and the Harvard Business School (HBS) took different approaches to business education. GSIA specialized in management and engineering, treating management as a “quasi-mathematical science,” while HBS focused more on case studies. However, the Ford Foundation sought to improve business education by supporting quantitative problem solving, and gave HBS $5.2 million in funding to expand its doctorate program. This helped HBS incorporate more instruction in mathematics and statistics into its curriculum, which had previously surprised its administrators. The Foundation also desired an increase in the number of business school instructors with doctorate degrees. The funding stopped, and HBS returned to its traditional teaching methods. The management consulting industry became closely tied to the business school complex, primarily HBS. The business elite in the US retreated from their social and cultural prominence, with the Foundation seeking to bring a more scientific and behavioral approach to business education.

McNamara’s Misguided Beliefs

McNamara, a Harvard Business School graduate, made significant contributions to the US’s success in World War II by improving the efficiency of B-29 bombers. Later, he played a key role in Ford Motor Company’s resurgence through strict financial management. However, his belief in numerical abstractions of reality overlooked immeasurable factors, such as morale and courage, leading to failure in the Vietnam War. McNamara’s system relied on falsified data and ignored the complexities of the conflict. The belief that quantitative data can replace reality proved to be simplistic and unsuccessful.

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