At HBS, Doing Good—Not Just Well

With the financial crisis leaving many Wall Street job opportunities in limbo, Harvard Business School’s prospective masters of the universe may find that they’d rather be champions of their community—and they’d be in luck.

Professors V. Kasturi “Kash” Rangan and Allen S. Grossman have been leading the Business School’s increased focus on social entrepreneurship, applying their extensive experience in the field to help HBS students use their business acumen to serve their communities and the world.

ENGINEERING AN ENLIGHTENED ENTERPRISE

Rangan, one of the two faculty co-chairs of the HBS Social Enterprise Initiative and a professor of marketing at the Business School, was trained as an engineer. But after he graduated from the renowned Indian Institute of Technology Madras in 1971, he found that he was unsatisfied with the cold emphasis on numbers.

“I worked for a structural engineering firm for a short time after graduating from IIT,” Rangan said, “I enjoyed what I did, but it was all analytical, consisting of technical drawings and calculations. Meanwhile, I had always been interested in the human side. How do people behave with each other, and how can you get people to work in a cohesive unit?”

Rangan said that the application process to the prestigious Indian Institute of Management in Ahmedabad also helped to alter his thinking.

“I found the questions in the interview intriguing, as there were no technical questions,” Rangan said. “Instead, the questions focused more on judgment: ‘What do you think about the Vietnam War?’ ‘What do you think about a certain firm’s business decision?’”

Rangan found himself drawn to the field of marketing, and pursued the subject at IIM Ahmedabad and then at the Kellogg School of Management at Northwestern.

“The main thing that intrigued me was the discussion of cases rather than lectures from a textbook,” Rangan said. “That appealed to me after going through the rigorous engineering program at IIT. In IIM, instead of taking more Operations Research courses, such as technology and mathematics, I really enjoyed organizational behavior and marketing.”

During his time at Kellogg, Rangan found that he was also interested in another field.

“I slowly developed a love for the social enterprise part of business,” Rangan said. “If you were born in India and grew up there, you cannot avoid being connected to poverty. It’s not as if the wealthy class and the poor class are segregated. They coexist together, and you see everything that happens around you. Given that environment, I always had a social streak in my heart.”

Rangan credited HBS with allowing him to develop his interest in social marketing through writing up cases to present to his classes.

“One of my first cases was on a family planning program in Bangladesh that I decided to bring to the classroom, and the students loved it,” Rangan said.

After Rangan was promoted to a full professor, former Business School Dean John MacArthur asked him to consider working on an HBS project to promote social entrepreneurship. The HBS Social Enterprise Initiative was formed in 1993.

OUTWARD BOUND

Grossman, a professor of management practice at the Business School, got his first exposure to business as a child sitting at the family dinner table.

“My father was an entrepreneur,” Grossman said, “and the topics around the dinner table were on business, including successes and disappointments. As a result, I found business intriguing from a very early age.”

These discussions included the question of how to balance the pursuit of profit with maintaining one’s integrity.

“I remember talking with my father about the intersection of making money and the preservation of your reputation,” Grossman said. “He taught me that it was possible not only to be proud of your bottom line but to also be proud of the name you made for yourself through a reputation in the business community for integrity.”

That lesson stayed with Grossman even after his father, who owned a packaging distribution company, died early in Grossman’s business career.

“I slowly began to realize that I could stay in my business or potentially see my skills transferred to achieving a different bottom line,” Grossman said. “And I began to wonder if I could use my managerial and organizational leadership skills to build social value in addition to economic value.”

Grossman decided to sell the company he had inherited from his father and enter the nonprofit sector. He volunteered for a few years and did pro bono consulting for the Rockefeller Foundation.

But Grossman said he found his calling when he was selected in 1991 to be the chief executive of Outward Bound USA.

“It truly was a phenomenal experience, and during my time at Outward Bound, I learned how to apply many of the skills that I learned in the for-profit world towards the nonprofit world,” Grossman said.

“Building a good organization helps nonprofits in the task of assisting their clients in a better way,” Grossman said, “and working at Outward Bound unleashed in me a desire to make nonprofits more effective and to create a model for the kind of leadership that will deliver the best possible service to clients.”

It was this desire that led Grossman to the Business School, where he joined the faculty in 1998 before being appointed as a full professor in 2000.

“I teach the first-year course ‘Leadership and Corporate Accountability,’ a class that has at its core the tension between financial successes and being ethical at the same time,” Grossman said. “Balancing this tension is a concept that has been with me for a long time, and is what I think about often.”

THE BOTTOM LINE

The study of social enterprise has continued to gain prominence in recent years at the Business School and other academic institutions as more students have become interested in making a profit while helping their communities.

Part of this study has involved how to create high-performing nonprofit organizations, which Grossman defined as firms that “achieve their mission in a cost-efficient manner and in a reasonable amount of time.”

Grossman said that the architecture of a successful nonprofit is in many ways the same as a for-profit company. In both realms, executives need to identify their mission, develop a focused strategy, and build an efficient organizational structure.

“Ending world hunger is a noble pursuit, but results can be difficult to measure unless you have a definite plan,” Grossman said. “Having been a CEO in both the nonprofit and the for-profit world, I think that it is harder to construct good nonprofit organizations than for-profit organizations.”

Rangan described two major changes—globalization and a new focus on communities—that were helping make social enterprise more popular.

“Business leaders have come to realize the potential of this new, interconnected world,” Rangan said. “Developing countries provide opportunities for either markets or supply chains, and unless you work with these potential sources of value production, then there isn’t much prospect for growth going forward.”

Rangan also pointed to a new sense that businesses are not just accountable to their shareholders and customers.

“This notion has undergone a dramatic shift,” Rangan said. “There is a much larger constituency that businesses have to deal with, including their own employees and the communities in which they operate. Businesses have learned that these are important stakeholders as well.”

—Staff writer Prateek Kumar can be reached at kumar@fas.harvard.edu.