HBS Professors Apply Skills in Corporate America

When Harvard Business School (HBS) announced the creation of HBS Interactive—its corporate education program—last November, HBS attracted lots of national attention.

Devised as a way for large corporations to draw upon the expertise of HBS professors, HBS Interactive (HBSi) gives corporate America the chance to receive customized educational programs (taught by HBS faculty) aimed at solving specific problems companies are facing. But access to HBS’s brightest minds comes with a large price tag. Companies pay up to $10 million dollars for each customized program.

HBS professors and administrators alike say that faculty interaction with corporations in developing these customized educational programs gives them the chance to glean knowledge about some of the most pressing problems faced by businesses.

But while the new HBSi is representative of HBS’ two-pronged approach to education—devoting itself to education programs for non-HBS students nearly as much as it does to for those enrolled.

HBSi Board Chair W. Earl Sasser, Foundation Professor of Service Management, says he spent much of his time last semester developing the curriculum for HBSi.

“As the new head of HBSi, I would devise the curriculum for launching a new business program, putting it to use myself,” Sasser says.

Though Sasser and other HBS professors are increasingly investing more time in activities outside the classroom (like consulting for corporations and serving on their boards of directors), HBS maintains that the school’s two pronged educational philosophy improves—not detracts from—the HBS education, even though HBS faculty can spend up to two weeks more away from the classroom than faculty members at other Harvard schools.

Fuzzy Math:

Counting Time Away

The issue of faculty members splitting time between classes and outside activity is an issue that has been discussed extensively at Harvard.

Regulations, devised last year by the University-wide Faculty Committee on Outside Activity, state that a professor can devote no more than 20% of his or her effort s to outside activity.

But the different Harvard schools are able to interpret and enforce this blanket ruling differently; the Law School counts hours when calculating how much time professors can spend on outside activities, the College counts effort and the Business School counts days.

HBS in effect permits their professors more time away, because it counts faculty members’ days away based on the whole calendar year, not just the academic calendar. The Law School and FAS instead calculate professors’ time spent on outside activity in proportion to the nine-month-long school year.

In other words, while FAS allows professors to spend about 36 days engaged in outside activity during the school year, HBS gives their faculty up to 50 days of outside activity during the school year.

Although faculty and administrators throughout the University say that professors’ outside activity has positive effects in how classes are taught, HBS officials claim that it permits 14 more days away for its faculty because the HBS curriculum is so closely intertwined with real life problems in business.

HBS Dean Kim B. Clark ’71-’74 says the mission of the Business school-educating leaders for corporate America—is dependant upon the insights professors gain from work away from HBS.

“By maintaining contact with the real world and the problems faced by corporate executives, professors develop their research with intuition about leadership that comes alive in the classroom,” Clark says.

So the philosophy about time away assumes that while professors talk about management problems in the classroom, they gain firsthand experience when corporations hire them as personal consultants to solve management crises. And while faculty lecture on executive control and procedure, they update their information when they serve on boards of directors or offer expert witness testimony in legal procedures.

University Professor Sidney Verba, whose field is government, sat on the faculty committee that devised the regulations on outside activity and attributes the greater amount of time that HBS professors devote to outside activities to the practical nature of the professors’ research.

“They have some skills to offer people who want them for consultants because they have special skills in running businesses,” Verba says. “I sit in my office all day long waiting for people to ask me to consult,” he adds jokingly.

And it’s not just HBS who wants, and encourages, their professors to get out of the classroom.

Daniel N. Rudolph, chief operating officer and senior associate dean at the Stanford Graduate School of Business, says that it is common for the best business schools in the county to encourage outside activity.

“It creates relationships that can provide us with case materials,” Rudolph says. “Our main goal is helping us get access to companies where we would want to do research that we can then bring back into classroom.”

Following and Enforcing

the Rules

Though HBS encourages its faculty’s outside activity, their time away is closely monitored.

Because corporations are willing to funnel large sums of money to professors for their help, Clark says he personally monitors all outside faculty activities of professors to ensure that they remain within the designated time limits.

“The activities come under close scrutiny because they are subject to abuse,” Clark says.

For example, professors are not permitted to engage in any activities that create a conflict of interest with their teaching responsibilities. This includes limiting the number of board directorships they can accept and ensuring that all outside activities will result in educational benefits, rather than solely personal gain.

Professors are also prohibited from teaching on behalf of any other institution as well as from advertising their affiliation with HBS in any activity that is not approved by Clark.

“All of your educational efforts are supposed to be given to Harvard,” says Dean of the College Harry R. Lewis ’68. “You’re not supposed to go to [Boston University] and give the same lecture at night.”

While many professors engage in some outside activities, only a small percentage approach their maximum time allotment for time away from the classroom, HBS says.

“We have a really strong ethic that the commitment you have to the school and the classes and the students comes first,” Professor of Finance W. Carl Kester says. “In a way, it’s a privilege that we have a broad range of activities that we can engage in, but it’s a privilege we have only if we keep our commitment to our teaching and avoid conflict of commitment.”

Sasser says that in his experience, HBS professors, would never think of canceling a class for an outside engagement.

“Of the 31 years that I’ve been teaching here, I’ve only missed any classes when my father died,” he says. “It’s part of the culture here—you don’t miss classes.”

A Tradition of Outside Activity

While Sasser asserts that HBS “culture” dictates that professors spend the majority of their time in the classroom, HBS tradition also fosters an atmosphere in which an enormous amount of outside educational endeavors are taken on by the institution itself.

The Harvard Business School Press has, since its conception in the 1920s, published materials that are distributed for the sole purpose of educating outside corporations. HBS Press also sells teaching software that companies have installed on desktops by the millions, such as ManageMentor, a program installed on millions of desktop computers to teach business leadership skills.

HBS Press says this emphasis on e-learning is a commitment to educating members of the business world.

But HBS professors can also be rented to train a particular company’s workers in its Executive MBA program. This program is essentially a service to corporations who are willing to pay for professor’s expertise. Time devoted to Executive MBA programs is counted as efforts toward outside activity.

“Virtually every major business school has executive education as part of its overall offering and Stanford and Harvard are no exception to that,” Rudolph says.

However, Clark reaffirms that HBS is selective about which programs it lets its faculty participate in.

Professors are encouraged to only take on those projects that will provide them with interesting case material and possibilities for further research opportunities. Strict guidelines stipulate that these executive education programs only be offered to top executives, as opposed to junior managers, and that the company must be on the cutting edge of its field.

The company also has to sign a form agreeing to the release of all data from the consultation case so that HBS professors can use the information in their research and classes.

“Proper work benefits the development of the faculty and school,” Clark says. “More broadly, we see the development of intellectual capital and capabilities when the faculty stay close to practice.”

Clark says that there have been numerous times when he has rejected offers from companies who want to employ HBS, despite the potential for lucrative compensation.

He says one company recently asked HBS to train 80 executives, four times a year, for a period of two weeks each.

Although the company was willing to pay close to $10 million annually for the service, the offer was rejected because the program would prove to be too repetitive for HBS faculty.

“We turn offers down all the time,” Clark says. “We try to balance the needs of our school and the interests of our faculty.”

Kester adds that many professors engage in pro-bono outside work for charitable organizations, saying that “professors are not ignorant of the compensation price” but that extra wages are not the driving force behind outside activity.

“The number of charitable and non-profit and unpaid activities that professors engage in are enormous,” Kester says. “For some people, it dominates.”

While Clark says that all the outside work professors take on is carefully weighed for its potential educational benefits, Kester says professors do not always expect to glean material they can use in the classroom. But “you never know when that opportunity will arise,” he says.

And in December, HBS added another commitment to its plate full of outside programs intended to educate business leaders.

In December, HBS and Stanford’s Graduate School of Business announced the creation of a joint online business venture that will offer business management courses online. This long-distance alliance, they say, will create the “world’s premier source of online management education.”

—Staff writer Juliet J. Chung can be reached at jchung@fas.harvard.edu.

—Staff writer Sarah A. Dolgonos can be reached at dolgonos@fas.harvard.edu.