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Career Success
MAY 31, 2008

The Stature of Harvard Business School, as Witnessed by an Alumni Association Director

By Yoshito Hori
Copyright GLOBIS

Riding in a taxi along the Charles River in Boston, I could see the green of a park along the river, the vivid blue reflecting off the water’s surface, and the cream-colored dome of MIT on the other side of the river. After a while, the light blue of Harvard University’ yellow-green towers appeared on the right, and then the beautiful brick buildings of the Harvard Business School (HBS) came into view on my left.

I have viewed this scenery, which I used to see as a student everyday, three times a year for the past three years. This was my last visit during my term as a director.

About four years ago, I had lunch with Mr. Thierry Porté, president of Shinsei Bank, and he asked me if I was interested in being a member of the HBS Alumni Association’s Board of Directors. Besides Mr. Porté and Mr. Kenzaburo Mogi, Vice Chairman of Kikkoman Corporation, very few alumni based in Japan have served as directors.

On another occasion, I talked to Ananda Krishnan, former owner of the famous Petronas Twin Towers and a Malaysian manager I greatly admire. He also used to be a director and strongly recommended that I serve as one.

I was then firmly resolved to take the position and immediately obtained the necessary documents, filled them out, and sent them back. A telephone interview followed a few months later, and I became a director in 2005. Directors serve three-year terms and must visit Boston for three days three times a year, all at their own expense. It is a considerable commitment.

I didn’t accept the position of director because of the honor of the post. Of course, I wanted to contribute to HBS, but more than that, I wanted to learn about its management.

I was very curious about such things as how HBS, the top business school in the world, is operated. What is its strategy and organization? What is the secret to its success? Are there any challenges? More than anything, I wanted to learn from best practices. As stated in our advertising, GLOBIS aims to be the No. 1 business school in Asia. I see this as my life’s work. Therefore, I viewed serving as an HBSAA director as a rare opportunity for catching a glimpse of its management.

Visiting the States three times a year seemed like a lot, but since I could also see investors during these occasions and visit our New York partner Mr. Alan Patricof, I didn’t see it as a waste of time.

Given the heavy responsibility, I did consult with GLOBIS Board before taking this position. They decided my visits to America should be considered business trips with GLOBIS picking up the tab. In return, I had to learn as much as possible. This further encouraged me to make contributions to the company.

And so began the three annual trips to my alma mater.

The Alumni Association Board of Directors consists of 45 members. Each year, 12 are selected to serve a three-year term, accounting for 36 directors at any given time. Two of the 12 retiring directors each year are elected to continue as vice chairmen with two-year terms, and a chairman is also selected from retiring directors. The purpose of the Board is “to communicate the interests and concerns of HBS alumni worldwide to the dean, faculty, students, and staff of HBS” and “to encourage communication of the school’s activities, priorities, and educational resources to alumni.” In short, its role is to serve as a bridge between alumni and HBS.

Therefore, although it’s a Board of Directors, it exercises no governance over school management, but contributes to improving HBS as an alumni group.

I was somewhat disappointed. I had expected to observe the governance function of a typical board of directors, but this board essentially offered proposals as delegations of alumni or as a liaison body for further improving HBS. Directors proudly used the expression “Working Board,” and they do work extremely hard. 

Every year, these 45 members are divided into three committees, which are further divided into subcommittees. Just like a consulting group, they consolidate alumni opinions and make proposals. I can’t even count all the times I had to set up teleconferences, most of which took place in the middle of the night. Finally, these committees make presentations at the end of every year. I went through this process for three years.

This is not at all the style of directors imperiously sitting in a meeting receiving reports and delivering their expert opinions. Of course, we sometimes had reports on the current status of HBS from the dean and executive program heads. On those occasions, we could ask questions and offer opinions, but we were not involved in any decision making.

The Alumni Association Board meetings are held at the end of October, January, and May. These are seasons when the leaves are changing color, snow blankets the ground, and fresh green leaves appear. My overall impression from these frequent visits over the last three years can be summed up in one sentence:

What a remarkable graduate school.

Remarkable because HBS differs from other universities in three ways:

1. A thorough, practice-oriented study of business
I decided not to use the expression “practical science.” It is the aim of HBS to utilize a completely practical approach.
2. A philosophy that emphasizes education
There is a philosophy to place the importance on education through the case method. 
3. The graduate school has best practices-oriented management
In short, the school puts what it teaches into practice in the management of the graduate school itself.

Universities tend to be managed with the faculty at the core, so you can often observe a pattern in which professors conduct research in their own fields freely while teaching on the side. In other words, research is a professor’s first responsibility. I have actually heard that this is the case at several leading American business schools.

HBS operates under a different set of principles. The school sticks to the case study method, and research is expected to focus on something that has a real impact on the world of business or directly improves teaching.

An assistant dean told me that instructors in many finance classes today teach students to calculate capital costs up to the last five digits, even though no company in the real world really does this. He observed that the reason for this was too much attention on research, causing the instructor to teach things that are irrelevant in the real business world.

HBS is dedicated to reducing the distance between academia and the real business world. The school only teaches what is necessary for management, believing that research should improve the quality of management education.

This is both common sense and incredible.

There are many odd things about academia when you enter it from the real business world, like I did. There is a gap between what a professor feels is appropriate and what the general public feels is appropriate. In effect, HBS is saying, “Rather than spending time on meaningless research, why don’t we create new theories, case studies, and teaching materials by getting together with alumni and stepping into the workplace?”

A business school is not a place to teach business administration, but an organization for cultivating leaders. This philosophy has become the core of HBS’s DNA.

That’s not all. The school’s endowment is substantial. HBS alone has an endowment fund of 300 billion with rate of return averaging more than 10%. With the returns alone, HBS has almost 30 billion in annual revenue. Amazing!

Furthermore, the quality of HBS alumni is outstanding, and they are very loyal to the school. The strength of the alumni network, and the school’s stance toward maintaining this strength, is tremendous. Staff, too, have a high level of competence and motivation. HBS virtually grants lifetime employment.

In terms of decision making, HBS is structured like a corporation, the dean at the core facilitating swift action. The school’s way of thinking about faculty autonomy is utterly different than typical universities.

The best management practices are utilized in brand marketing, organization, finance, customer relations, and even product lines. In short, the school’s greatness permeates into every detail.

GLOBIS aims to be the No. 1 business school in Asia. I am often asked, why doesn’t GLOBIS aim to be No. 1 in the world? My answer is always that HBS is far too advanced, and GLOBIS could never reach that level during my lifetime. Perhaps it could become No. 1 in the world in the next two or three generations, though.

However, I don’t see any institution in Asia that operates under a philosophy similar to HBS. If GLOBIS continues to steadily move forward, one step at a time, it could definitely be the No. 1 graduate school in Asia.

My three-year term as a director has strengthened my conviction that GLOBIS is moving in the right direction by putting into practice the ideas we value. In fact, I feel strongly that we shouldn’t change our philosophy or operating principles just because GLOBIS is now a formally accredited graduate school and an educational corporation. If we expand our advantages, GLOBIS can one day become as influential as HBS.

In my farewell speech, I shared the following:

“I gained more than I contributed as a director, and I also really experienced the greatness of HBS. I was particularly impressed by the competence and devotion of the staff. The opportunity to meet and establish friendships with other Alumni Association directors has been a major personal asset.”

This year will mark the centennial of HBS. Nearly 2,000 people are expected to attend the celebratory events in October. It will be my honor to attend as a guest speaker.

My flight left Boston’s Logan International Airport bound for Kansai International Airport via Detroit. The day after my arrival in Osaka, Sunday, is the graduation ceremony for the GLOBIS Graduate School of Management, GLOBIS University, Osaka Campus.

I teach “Entrepreneur Leadership,” a required course for second-year students, and I’ve had the opportunity to get to know all the students.

Graduation is also the starting point of a journey as leaders of change and creativity. At GLOBIS, students were given opportunities to think about their own missions. They are expected to have both high ethics and aspirations. As president, I hope to deliver a speech that will really motivate them.