What Knowledge is Useful? - Companies and Functions
From the very beginnings of HBS, the School's researchers and teachers have attempted to generate useful knowledge about companies, and about functions within companies.
Practically speaking, though, the School's small faculty in its early years couldn't hope to "cover the waterfront" on all business issues. Early on, Dean Edwin Gay concluded that business administration could be divided into two major functions: production and distribution—or, alternatively, manufacturing and marketing. He quickly decided that manufacturing was beyond the School's scope, at least for the short term, and embraced the popular discipline of "scientific management" for the School's production-related courses.
Initially, therefore, the School would have to make its mark by generating useful knowledge about the distribution (or marketing) function The first experiment in this direction came in the summer of 1910, when a recently graduated Harvard economist named Selden Martin toured South America in search of materials for Paul Cherington's Economic Resources and Commercial Organization of Central and South America course. How was distribution carried out in a very different part of the world?
Throughout its history, the HBS faculty has included highly influential scholars and teachers of marketing. Malcolm McNair dominated the retailing field both before and after World War II. Neil H. Borden, author of The Economic Effects of Advertising (1942), played a similar role on the advertising side of marketing. Harry Tosdal focused on the sales function, in books such as Principles of Personal Selling (1925), Introduction to Sales Management (1933), and Salesman's Compensation (1953). Both in their day and in retrospect, they were seen as major figures in their respective fields.
Especially in the postwar years, the once-monolithic realm of "marketing" inevitably began to be subdivided into areas of specialization. Ray Corey developed the field of industrial marketing, Bob Buzzell explored the profit impact of various marketing strategies, and Ted Levitt—author of numerous books and astoundingly popular Harvard Business Review articles, including "Marketing Myopia"—forced companies to consider marketing in the context of strategy. Marketing faculty were expected to become expert in one of these specializations, and also competent in at least one other marketing-related realm.
In the marketing area—as in other areas at the School——the lines between research, teaching, and consulting often became blurred, with each activity guiding and informing the other. When a faculty member gave good marketing advice to a client in the field, for example, that advice often wound up in a teaching program, either at HBS or elsewhere.
In a sense, the School's focus on functions actually predates its founding. William Morse Cole's successful attempts at teaching accounting to Harvard undergraduates in the late 1890s helped persuade President Eliot that business could be taught at a professional level, and accounting has been an integral part of the School's research and teaching ever since. Cole published five influential accounting-related texts and casebooks in his long tenure at HBS, including two of the first practitioner-oriented books ever published by HBS faculty members. In the early 1920s, Thomas Sanders began making his own mark in the accounting field, publishing a 600-page textbook that combined conventional text with a series of accounting "problems," or cases. The productivity of Cole and Sanders was nearly matched by Ross Walker, who worked with his colleague Charles Bliss in the years just before and after World War II to bring together accounting principles and statistical techniques to help create a new business field: management control.
Perhaps the most prolific and influential accounting scholar in the School's history was Robert N. Anthony, author or coauthor of some 50 texts and casebooks, an early advocate of the revolutionary analytical tool of "present value"—with his research assistant Charles Christenson—and winner of the Department of Defense's Medal for Distinguished Public Service for his work in installing resource-management systems in the Pentagon in the mid 1960s. More recently, authors like Richard Vancil and Robert Kaplan (Relevance Lost, The Balanced Scorecard) have carried forward the tradition of influential accounting-based scholarship at HBS.
Meanwhile, the statistics field also developed on its own, under the guidance of unconventional thinkers like Robert Schlaifer and Howard Raiffa, who collaborated on Applied Statistical Decision Theory (1961). The basic question that they addressed—how can quantitative information be made useful in the decision-making process?—remained constant as statistics gradually evolved into the broader field of managerial economics. Raiffa later earned distinction as the intellectual father of the "decision tree," cofounded Harvard's Program on Negotiation, and led the School's inquiries into negotiation strategies for many years.
Once the School's researchers had made some headway in these functional areas, Dean Donham revisited the production field, which his predecessor had mainly "outsourced" to Frederick Taylor and his disciples. In 1920, Industrial Management became a required first-year course, and two recruits—Franklin Folts and Edwin Robbins—began developing a case-based approach to production. Their first book, Introduction to Industrial Management, was published in 1933, won recognition as a classic, and remained in print through the 1960s. The reduced manufacturing output of the Depression years led to a decline in student enrollments in the subject, but the World War II-related industrial mobilization revitalized production and its teaching at HBS.
In the 1950s and 1960s, production courses at HBS continued to focus on the nuts and bolts of running a factory. This focus became increasingly unusual in business education, as more and more schools drew upon wartime advances in operations research to develop less hands-on production courses. Once again, it was unclear whether manufacturing (even in an expanded version, called "Production and Operations Management," or POM) was an appropriate subject for would-be executives. But this question was again answered in the affirmative in the 1980s, when the U.S.'s competitive disadvantage in manufacturing—particularly vis a vis the Japanese—became an issue of burning national concern. A second change in the name of the interest group―from POM to TOM, or Technology and Operations Management, in 1990―reflected the growing technological content of the production-area content.
As with the functional focus, a focus on companies also dates back to before the founding of the School. It was New England-based companies, for the most part, that funded the School at the outset, supplied some of its instructors, and provided "walking case studies" in the years preceding World War I. When Dean Donham seized upon the case method as the School's primary pedagogy in the early 1920s, the focus on companies—and problems within companies—only intensified. Some companies, including Owen D. Young's General Electric, subsidized case research within their operations; more commonly, HBS researchers approached companies for permission to study specific topics, and took their chances getting those cases released (either in disguised or undisguised form).
Originally, Donham and his faculty colleagues hoped that the cases they were gathering would serve as a functional equivalent to the cases used in law schools—that is, as a body of knowledge that could be drawn upon by business practitioners, much as lawyers draw on precedents to make their legal arguments. (In the same spirit, the faculty in the early 1920s established a short-lived "Committee on Terminology," which hoped to pin down the language of business once and for all.) In 1922, HBS announced the launching of a publication called the Harvard Business Reports, which would supposedly compile cases and their "solutions" in a systematic and useful way. The experiment was quickly discontinued, because it became clear that cases were generally short-lived, and tended to be far more useful as near-term teaching devices than as long term sources of "solutions."
On the other hand, cases were rich sources of data, useful to students and faculty alike. After being exposed to hundreds or thousands of cases during their HBS careers, students inevitably possessed a rich store of useful knowledge about the way business actually worked, in a broad range of functional and company contexts.
For their part, through their case research, their consulting, and their service on corporate boards, faculty members became thoroughly immersed in specific corporate realities. This rich first-hand experience didn't always inspire the HBS scholar to make the leap to the "grand theory"; but it universally equipped him (and later her) to articulate what came to be called "currently useful generalizations."
In the postwar era, HBS researchers began experimenting with different ways to use case studies to learn about, and teach about, companies. Jack Glover, for example, produced an enormous, multi-case study of the Hilton hotel chain, from which instructors were encouraged to select components that were relevant for their teaching plans. Bruce Scott, under the supervision of Chris Christensen, spent a year studying two small companies in depth in the late 1950s; the resulting case series—Acoustic Research and Midway—not only presented those companies in fine-grained detail, but also placed them in context through extensive industry notes.
Many in the faculty's General Management group explored different levels in the corporate hierarchy, ranging from middle managers to senior executives. In 1972, for example, Hugo Uyterhoeven published "General Managers in the Middle" in the Harvard Business Review, which focused on the challenge of people who must manage up, down, and across the company.
More recently, faculty began taking advantage of multimedia capabilities to generate powerful new kinds of "cases." In 2002, for example, David Garvin asked Paul Levy, incoming CEO of Boston's Beth Israel Deaconness Medical Center, if he would serve as the subject of a multimedia case study. Levy agreed to sit down with an HBS video crew every two weeks for the first six months on the job, reflecting aloud on the evolution of his (substantial) leadership challenge. The resulting teaching materials included not only video clips, but also written case materials, e-mail correspondence, internal memos, and newspaper articles.
In 2005, three HBS faculty members produced a multimedia case entitled "Columbia's Final Mission," about the space shuttle Columbia disaster.
Like its overall mission, the School's efforts to develop intellectual capital in the realm of companies and functions has broadened considerably over the past century. But the core goal―to develop a practical and useful understanding of human organizations, and to prescribe based on that understanding―has remained remarkably consistent.