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JUL 9, 2008

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

By Yoshito Hori

I was 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 with 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 the 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), 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 decided to stand as a candidate for director. I immediately obtained the necessary documents, filled them out, and sent them back. A telephone interview followed a few months later, and as it turned out, I would become a director starting in 2005. Directors serve three-year terms and must visit Boston for three days three times a year. Directors must also cover their own travel expenses. 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 most of all 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 about strategy and organization? What is the secret to its success? Are there any challenges?

More than anything, I wanted to learn from the best practices at HBS. 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 as well as Mr. Alan Patricof, a partner in New York, I didn’t see it as a waste of time.

Given the heavy responsibility, at the GLOBIS Board Meeting I asked the Board to discuss the question of my taking this position. They decided my visits to America should be considered as 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 members 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, (8 people) for a total of 44, and a chairman is also selected from retiring directors bringing the total to 45.

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, in short, 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, and most of the time they took place in the middle of the night in Tokyo. 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 were held at the end of October, January, and May every year. 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 the following 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 a 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, therefore, you can often observe a pattern in which professors conduct research in their own fields freely while teaching on the side. In other words, the idea is that research is a professor’s first responsibility. I have actually heard that this trend predominates at some of the leading American business schools.

Obviously, 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 finance classes 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 if too much attention is focused on research, the instructor ends up teaching students things that are irrelevant in the real business world.

HBS is single-mindedly dedicated to reducing the distance between academia and the real business world and only teaching things necessary for management. HBS believes that research should improve the quality of management education. Naturally, young instructors who have just received their PhDs feel uneasy with this approach because in the academic world outside HBS, importance is still placed on how frequently a scholar submits a thesis to academic journals. On the other hand, HBS explicitly states that this is useless.
This thorough philosophical stance is remarkable in itself.

When I think about it, it is incredible, yet I feel it’s just common sense. 
I think there are many odd things about academia when you enter it from the real business world like I did. The philosophy stated above of placing priority on academic papers is typical. There is a gap between what a professor feels is appropriate and what the general public feels is appropriate.

By reducing the distance from the real business world as much as possible, HBS is putting into practice what is appropriate simply as the way it should be done.

In effect, HBS has been 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 work place to learn what is going on in this new world? Thus, why don’t we nurture good leaders in an academic setting?”

A business school is not a place to teach business administration but an organization for cultivating managers. This philosophy has become core of the Harvard Business School’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 the 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. These features were created by sticking to its’ own section system.

I was also impressed with the high level of competence and motivation of the staff. HBS virtually grants lifetime employment. This is “community management,” and the campus is extraordinarily beautiful.

In terms of decision-making mechanism, HBS is structured like corporate management with 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 from brand marketing, organization, finance and customer relations to product lines. In short, the school’s greatness permeates into every detail. I really feel that no other business school can catch up with HBS.

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, I believe it could definitely be the No. 1 graduate school in Asia.

I felt this three-year term of being a director was very significant. It 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. GLOBIS must not lose its position of advantage. If we expand these advantages, I believe that GLOBIS can become as influential as HBS.

In my farewell speech during my last visit, 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. For now, I am looking forward to seeing you at the 100th anniversary this coming October. Let’s continue getting together at HBS alumni conferences.”

This year will mark the centennial of the Harvard Business School. Nearly 2,000 people are expected to attend the events scheduled during October. It is quite an honor for me to be listed as a guest speaker at this celebration. So my next visit to HBS will be in October.

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 am scheduled to appear on stage in academic robes as the president.

Since, as a president, I teach “Entrepreneur Leadership,” which is a required course for second-year students, I’ve had the opportunity to get to know all the students, so I know their faces and personalities.   

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

So that is how I completed my term as an HBS Alumni Association Director. Now is the time to put into practice what I have learned to make GLOBIS the No. 1 business school in Asia.

This April, GLOBIS was incorporated as an educational corporation. With the highly capable Dr. John C. Beck joining GLOBIS as dean, our International MBA Program, with all courses to be taught in English, will start in April 2009.

In the near future, GLOBIS will gain the reputation for being the leading business school in Asia. I can feel that day is definitely moving nearer.

May 31, 2008
On a flight, bound for Kansai International Airport
Yoshito Hori

GLOBIS did have its own Alumni Board. On the occasion of the Graduate School of Management, Globis University’s becoming an educational corporation on April 1, 2008, we dissolved the Alumni Board and developed its functions into a School Council, which will, for the time being, manage alumni affairs. If alumni opinions do not reach management in this way, we will consider re-establishing an Alumni Board.