What They Teach You at Harvard Business School

Philip Delves Broughton was born in Bangladesh and grew up in England. He graduated from New College, Oxford, in 1994 and received his MBA from the Harvard Business School in 2006. From 1998–2004 he served, successively, as the New York and Paris bureau chief for the Daily Telegraph of London and reported widely from North and South America, Europe, and Africa. His work has appeared in newspapers and magazines around the world. He lives in Connecticut with his wife and two sons.

Penguin Group (Canada), 90 Eglinton Avenue East, Suite 700, Toronto, Ontario, Canada M4P 2Y3

Penguin Ireland, 25 St Stephen’s Green, Dublin 2, Ireland (a division of Penguin Books Ltd)

Camberwell, Victoria 3124, Australia (a division of Pearson Australia Group Pty Ltd)

First published as Ahead of the Curve in the United States of America by The Penguin Press 2008

Without limiting the rights under copyright reserved above, no part of this publication may be reproduced, stored in or introduced into a retrieval system, or transmitted, in any form or by any means (electronic, mechanical, photocopying, recording or otherwise), without the prior written permission of both the copyright owner and the above publisher of this book

There are two types of education. One should teach us how to make a living and the other how to live.

—JOHN ADAMS

I did not go to Harvard Business School planning to write a book about the experience. In fact, after ten years as a journalist, I went there to recover from writing, to stop looking at the world around me as a source of potential stories. I wanted to learn about business in order to gain control of my own financial fate and, more important, my time. I was tired of living at the end of a cell phone, prey to an employer’s demands. A master’s in business administration, I hoped, would be my path to greater knowledge about the workings of the world and broader choices about the life I might lead.

I say this only to make clear that this book was never intended as an inside raid. In many ways, I loved my two years at Harvard. My classmates were smart and considerate. The faculty was, for the most part, inspiring and committed. The facilities and the speakers who came to spend time with us were quite extraordinary. As a catbird seat for viewing capitalism, there is no better place. For me, and everyone I knew, Harvard changed the view of our futures and the possibilities available to us through business.

But it was an intense time, far more intense than I’d ever imagined. The work load, especially in the first few weeks, was crushing as we struggled to learn the functional areas of business, finance, accounting, operations, marketing, and organizational behavior. As the months passed, the pressure to find jobs, the “right” jobs, became a separate education in itself, beyond what occurred in the classroom.

This book is my attempt to describe my experience and that of my classmates in this cauldron of capitalism. Reading through the diary I kept during my two years there, I was surprised by the emotions the experience drew out of me. I had expected a more neutral time at business school, a period of study and preparation for a different career. Instead, we MBA students spent much of our time discussing our ambitions and the kinds of lives we wanted for ourselves and our families. This debate looms large in the book, alongside accounts of what we learned in class, what the many famous speakers said, and how we went about deciding what to do for work. To have the opportunity to study at Harvard Business School is a great gift. Any gripes, criticisms, or anxieties I express should be taken for what they are: high-class problems.

In 1960, five thousand MBAs graduated from American universities. In 2000, the number had risen to a hundred thousand. The MBA course now comes in all kinds of flavors. There is the classic two-year, full-time residential course, which I took. But you can now study for an MBA part-time, online, at night, or in multiple international locations. Where capitalism goes, the MBA follows. The number of MBA applicants in the Middle East, China, and India is soaring. Survey after survey has shown that MBAs tend to receive higher salaries and better jobs. Those three precious letters have become a calling card, and in some cases a requirement, for success in business.

While I attended Harvard Business School (HBS, as I shall often refer to it), between 2004 and 2006, the school’s alumni included the president of the United States, the secretary of the U.S. Treasury, the president of the World Bank, the mayor of New York City, not to mention the CEOs of General Electric, Goldman Sachs, and Procter and Gamble. HBS alumni filled 20 percent of the top three jobs at the Fortune 500 companies. The newly fashionable private equity and hedge fund industries were stacked with Harvard MBAs, who were received like gods when they returned to campus. It was daunting and thrilling to join such a powerful lineage.

The school believes that the kind of leadership required to succeed in business can also be applied to other spheres—politics, education, health care, the arts. I did not come from a business background and instinctively resisted this notion that businesspeople should be running everything. It was a question that came up repeatedly over the next two years, and it cuts to why a book on the Harvard MBA should be of interest to a broader audience than those who either have an MBA or are considering getting one. The language, practices, and leadership styles taught in the MBA course affect all of us. Business schools no longer produce just business leaders. MBAs determine the lives many of us will lead, the hours we work, the vacations we get, the culture we consume, the health care we receive, and the education provided to our children. Since 2000, the Harvard MBA in the Oval Office has made decisions of global and historical consequence. In short, the MBA, its content, and the network of people who hold it, matter. And it has ambitions to matter even more.

Finally, this book is just one person’s view. No single MBA could ever be representative of the nine hundred students in the Harvard Business School class of 2006. Everything in this book occurred as I describe it. But I have altered the names and changed details to conceal the identities of some of my fellow students. I did this for two reasons. The first was privacy. The Harvard Business School classroom is a safe learning environment, a place to experiment and make mistakes. My classmates did not know that one day I would write a book about our experiences. While my own embarrassments and humiliations fill this book, theirs are their own concern. The second reason for concealing some identities is that it allows me to describe what we went through with greater honesty than if I had to worry about the reputations of people I like and admire. The professors, since their role as teachers is a public one, appear as they were, as do the speakers who came to campus. My intention in combining these approaches is to give as accurate a picture of my time at HBS as possible.

When my class graduated in June 2006, we received an open letter from the dean of the school, Jay Light. “As you join other HBS alumni around the world,” he wrote, “I hope you’ll stay connected to the School and continue to share your thoughts and perspectives on your years here.” Here are mine.

Chapter One

Well, don’t we all feel like jumping to the end of the world sometimes?

— MICK JAGGER

“I don’t know what you think of Philip, but right now, for you, he’s just Philip.”

The dean of Harvard Business School and ninety of my classmates were looking straight toward me. At that very moment, I was trying to corral a collapsing chicken salad sandwich and looking very “just Philip” indeed. We were a few weeks into the MBA course, and Dean Kim Clark had come to our classroom this lunchtime to introduce himself and take questions. He was a gaunt, devout Mormon in his late fifties who spoke with the authority of the prophets, quiet but commanding.

“When I first came into this classroom as a young professor to teach, there was a guy called Jack sitting there. He’s now Jack Brennan, head of Vanguard. Over there was a former Dartmouth football player, Jeff. Jeff Immelt is now the chief executive of General Electric. Over there was Donna, Donna Dubinsky who became the CEO of Palm.”

A switch seemed to have been flipped in our windowless basement classroom. You could feel the hum of ambition. Ninety students in five rows arranged in a horseshoe facing the blackboard, all of them, even the one now licking mayonnaise and chicken off his pencil, thinking: Will I be the one they mention in twenty-five years? Will a future dean address the class of 2031 saying, “In that seat was Susan. She was shy of speaking in class but now she’s running the largest hedge fund in the world. Tom over there became CEO of Google. And Philip. Well. How many billions should one man have?”

I first set foot on the campus of Harvard Business School one sultry evening in August 2004. My wife, Margret, and our one-year-old son, Augie, were staying in New York until our possessions arrived from France, where we had been living for the previous two and a half years. I knew no one at the school among the students or on the faculty. For the first time in a decade, I had neither an employer nor a job title and no monthly paycheck. Around two hundred students with little or no background in business had been summoned early to the business school for a course formally known as Analytics, less formally as Math Camp. The goal was to bring us up to speed with the remaining seven hundred members of our class who would arrive in three weeks. They, the school assumed, had spent enough time over the past few years handcuffed to their laptops churning out financial models and corporate PowerPoint presentations to know the basics. We, on the other hand, would have to undergo a compressed version of the first-year course known as the RC, the required curriculum. We would be introduced to the HBS case method of teaching and, it was hoped, be less intimidated when the first year proper began.

After registering, I was given a folder containing the case studies for the first week and told to report in fifteen minutes to a conference room in Spangler, the vast neo-Georgian building that forms the heart of the campus, to meet my study group. I went outside into the treacly warmth, found a bench close to the tennis courts, pulled out the first of hundreds of cases I would soon confront, and began to read. The entire HBS curriculum is made of case studies, business situations drawn from real life. The question you are expected to answer in each one is: What would you do? There are no right or wrong answers to these problems. In many cases the actions taken by the case protagonists turn out to be disastrous. The only thing that matters is how you think about the problems, how you deal with the paucity of information, the uncertainty. The hope is that long after the minutiae of accounting or bond pricing have faded to a blur, you will be left with a distinctive way of thinking and making decisions. Cases are written by members of the faculty and can range in length from a couple of pages to more than thirty. They generally include a dramatic narrative that sets up the situation, an analysis of the business under discussion, and several pages of exhibits, charts, tables, pictures, and any additional text required to illustrate the problem. My first case began: “Once upon a time many, many years ago, there lived a feudal landlord in a small province of Western Europe. The landlord, Baron Coburg, lived in a castle high on a hill. He was responsible for the well-being of many peasants who occupied the lands surrounding his castle.”

The baron had two peasants, Ivan and Frederick, whom he ordered to farm two different plots of land. He gave them seed, fertilizer, and oxen, but told them to lease a plow from Feyador the plow-maker. They returned a year later with different amounts of wheat, their oxen a year older, and their plows in different states of disrepair. The case concluded: “After they had taken their leave, the baron began to contemplate what had happened. ‘Yes,’ he thought, ‘they did well, but I wonder which one did better?’ ”

It was an accounting case, and the challenge was to help the baron answer his question by drawing up income statements and balance sheets for the two farms. Why any medieval baron given the choice between rape and plunder and bookkeeping might choose the latter beat me. But this was Harvard Business School, where even the medieval barons were different. On one of the tennis courts in front of me, two students were just beginning their warm-up. One wore a blue bandanna, the other no shirt. They began to hit, gently at first, each standing a few feet from the net, knocking the ball back and forth. I paused to watch them, hypnotized by their metronomic hitting. Slowly they worked their way deeper into each half of the court, their arms whipping through the air, the ball dropping closer and closer to the baseline. I wondered how many hours had gone into training those perfect forehands, that unerring focus on the ball traveling through the air. Within the rectangle of the court, everything was happening exactly as it should. I tucked my case study back in the folder and made my way to Spangler to meet my study group.

Sitting around a large blue table were two military veterans, a former employee of the New York City mayor’s office, a Taiwanese management consultant, and a very nervous blond woman, freshly sprung from a Boston mutual fund company. The vets seemed too big for the room, their biceps bursting out of skin-tight T-shirts, while the blonde seemed terrified and small. The New Yorker, Justin, it turned out, had grown up a few blocks from my wife. All of them, it became clear as we set to work on the baron, knew far more about business than I. They had flipped open their laptops and were ready to go. Before arriving at Harvard, I had only ever used one of the programs in Microsoft Office. That was Word. I had never opened the spreadsheet program, Excel, or the presentation program, PowerPoint. For the first few days, I decided I would stick with my trusty pencil and paper and focus on what was being said, rather than try to master new software. J. P. Morgan, after all, had never had Excel and he used to run most of the U.S. economy. I looked back at the baron’s problem. It didn’t seem that complicated: a couple of bushels here, a couple there, fertilizer, oxen, plows that undergo some wear and tear, and an exploitative feudal landlord.

“Ivan,” I volunteered after a few moments. Everyone looked up. “Ivan’s the better farmer.” I quickly explained my calculation.

“Did you put the full value of Ivan’s plow under ‘cost of goods sold’?” asked Jake. At this point, I decided to shut up. My entire knowledge of accounting came down to my assigned summer reading. What with having to move from Europe and everything, this reading had been skimpier than I had hoped.

“Is the baron the equity holder or a lender?” inquired Jon. He had just returned from leading combat teams into terrorized areas of Baghdad. He seemed by far the least anxious in the room. “And does anyone get charged for depleting the land with fertilizer?”

For the next hour, I scribbled away while the same handful of numbers chattered in my head like garbled code. “Twenty pounds of fertilizer are worth two bushels of wheat, an ox valued at forty bushels with ten years’ worth of work in him works for a year. Ivan still owes Feyador for the plow…” The numbers kept shifting beneath me. First Ivan was the better farmer, producing two thirds of a bushel more per acre than Frederick. Then Frederick nudged ahead by five sixths. It was like one of those children’s puzzles where you roll balls around a flat surface trying to get them to stay in holes, and just when you think you have all six in, the first one rolls out again.

“I’ve done some ratios,” said the blonde. “Net sales over assets shows Frederick is the better farmer.” The others nodded. But the peasants aren’t selling anything, I thought. They are simply turning their goods over to the feudal landlord. So perhaps feudal tribute over assets might be the better ratio. This wasn’t helpful.

Next up was “The Case of the Unidentified U.S. Industries.” It was our first foray into finance. From the moment I was accepted by Harvard Business School, I had been dreading finance. I was eager to learn about it, but I worried that I would be so far behind the class technically that everything would sail over my head. That first evening did nothing to boost my confidence. We were given a list of twelve industries, from a basic chemical company and a supermarket chain to a major airline and commercial bank, and an unlabeled set of balance sheet percentages and ratios. We were to match the industry to the correct set of numbers.

I had gotten the gist of ratios during my summer reading. You compared numbers from financial statements to develop insights into the quality of a business. Take inventory. Companies that need to hold inventory are constantly trying to balance the cost of storing inventory with the need to keep up with supply. It’s like any household. You want enough food to feed the family, but you don’t want so much it’s spilling out of your cupboards and going rotten before you get a chance to eat it. But then again, you might want to buy occasionally in bulk, getting things cheaper, rather than running out every day to the overpriced corner store. Or perhaps you’re a real foodie and like to buy fresh food every day. The point is that different households will have different ways of managing inventory. The only crimes are waste and undersupply. To analyze inventory management in a set of financial statements, you might start with the figures for “cost of goods sold” and “inventory.” “Cost of goods sold,” or COGS, is simply the cost to the manufacturer of the goods it has sold in a given period. “Inventory” is the cost to the manufacturer of the goods it is waiting to sell. Divide COGS by inventory and you get a pretty good idea of how fast the company is shifting product. A ratio of one tells you that the company holds exactly as much inventory as it sells in the period covered by the balance sheet. In a fresh foods market, for a balance sheet covering a year, you would expect an extremely high ratio as inventory is replenished on an almost daily basis. But in a high-end jeweler’s, that ratio might be below one, as each item is held for a long time before it finds a buyer.

“The supermarket’s going to have the highest inventory turnover,” said Jon.

“The commercial bank will probably have the most current assets and liabilities for deposits and withdrawals,” said the Taiwanese. I could tell Justin was as baffled as I was, from the way he kept tugging at his hair and chin.

“Wow,” I exclaimed. “I wonder who could make 16.7 percent profit margins. Jewelry stores?” I was just trying to say something.

Everyone kept scanning the numbers, trying to find meaning. We looked at debt over assets. A company with lots of fixed assets, like factories, would most likely have more debt than an advertising agency, whose main assets were human beings. It is one of the least appealing features of company accounts, and perhaps their greatest flaw, that humans appear only as costs on income statements, never as assets on a balance sheet. Unlike a factory, humans, of course, can get up and walk out the door at any time, hence banks’ reluctance to lend to advertising agencies, law firms, or architectural practices. No chemical plant is going to say to hell with it, default on its loan, and go join an ashram.

We squinted at net sales over net assets, trying to figure out which companies were generating the most sales from their assets. Again, the ad agency, with nothing but some rented office space and few assets, should have had a high ratio, indicating lots of sales from few assets, whereas the manufacturer would have had a lower one. After an hour, we thought we had nailed down half of them. After two hours, we were up to eight. As the third hour rolled by, it felt as if we would never get there. Just when we thought we had identified the airline, it started to look like the automaker again. Or could it be the maker of name-brand quality men’s apparel?

I was beginning to feel what would become a familiar set of sensations. The life-sapping effect of fluorescent lighting. The vague stench of Styrofoam and Chinese noodles drifting up from the waste basket. Dehydration and itching skin. The realization that half the people in the room were checking e-mail and surfing the Web, which explained why any question lingered in the air for seconds before stimulating an answer. Through the window, I could see the hulking shadow of Harvard Stadium in the blue-black night. What had begun as a rat-a-tat exchange of thoughts had slowed to dreamlike speed. Words and ideas drifted between us in slow motion. It was nearly midnight when we gave up.

The air was still hot and thick when I walked out to my car. I drove home to our new apartment in West Cambridge, ten minutes from the business school. There was no one on the streets, and for the first time in a decade I wasn’t living in a major city. My dog, Scarlett, greeted me at the door. She had been waiting patiently on the steps in the dark, and the moment I arrived she burst out to pee on the sidewalk. The lock on the front door was broken. It was unsettling sleeping in an empty apartment in a town I barely knew. My life had been reduced to school and this room with an air mattress on the floor and a picnic table from Costco in the corner. I lay there hearing every single noise, a tree branch scratching against my window, the cars passing outside, their lights shining on the ceiling above me. It took me hours to get to sleep that night as a single question churned around my mind: What have I done?

We rejoined the battle the next morning at seven. The Spangler meeting rooms were jammed with Math Campers struggling with the as-yet unidentified industries. Their enthusiasm for the task was staggering. The halls rang with discussions of profit margins and leverage ratios. Banks, I heard someone say authoritatively, tended to have huge short-term liabilities—otherwise known as the money in their customers’ accounts, which could be withdrawn at any time—and similarly huge amounts of receivables, or loans made to its customers. For banks, loans are assets, while the money it holds for its customers is a liability. It took me a while to get this straight. The money they have is a liability, whereas the money they have given away is an asset. But once I had figured it out, I looked at my unidentified industries and there it was, leaping out at me, the bank! Finally I had something to offer my group. I raced into the room with my discovery, but they had already figured this out. It was a relief to go to class.

There are two main classroom buildings at HBS, Aldrich and Hawes, which contain thirty or so almost identical classrooms. Aldrich is named after Senator Nelson Aldrich, a lavishly mustachioed Rhode Islander, whose daughter married John D. Rockefeller, Jr. Rod Hawes graduated from HBS in 1969 and made his fortune in insurance. He built and sold Life Re Corporation of America and has since diverted much of his fortune into philanthropy. In each of the classrooms ninety or so seats ascended in five semicircular rows, divided by two aisles. A few of the rooms had tall windows looking out onto campus, but most had none at all. Sitting in these windowless, temperature-controlled, mercilessly lit rooms was like being in a casino, with no sense of the world outside, immune to time and nature. We were each allotted two laptop widths of space along the curving desks and a swiveling office chair upholstered in purple. When we arrived in class at our assigned seats, we had to slide a white laminated card printed with our names into a slot in front of our place so the professors could identify us. Tucked under each desk were plugs for our computers. To my right was Laurie, an Alaskan with a doctorate in chemistry who previously ran a research center for a biotech company. To my left was Ben, a former employee of the New York City Parks Department. Laurie would spend the two weeks of Math Camp in a state of staring-eyed terror. Despite her obvious brilliance, she dreaded being called on by a professor. Give her a molecule to decompose, she said, she would decompose it, recompose it, and tie it up with a bow. Ask her for an accounting ratio, and she dissolved into a puddle. Ben was much calmer. He wore a beard and sandals and had spent the previous two weeks hiking the Appalachian Trail. Like me, he seemed allergic to his computer and took his notes in longhand. But he evidently had one of those clear, logical minds that would lend itself well to this place. Occupying the lower two thirds of my view was the thick buzz-cut neck of a former marine. For several hours a day, for the next two weeks, his surreal muscles flexed and twitched inches from my face, distracting me from the weighted average cost of capital and decision trees.

The professors stood in the pit, with a desk for their notes and three sets of blackboards and projector screens to play with. The more adventurous ones could play videos or use a polling gizmo. Students could vote on any issue by pressing one of the buttons built into their desks, red or green, and see the results instantly displayed on a screen up front. The professors could stand close to the front or roam up and down the aisles and rows, spurring their students to talk.

Harvard Business School had adopted the case method of teaching from the Harvard Law School. Classes begin with a cold call, in which the professor picks out a student to introduce the case we prepared the night before. This can be a harrowing experience for the student, lasting anywhere between two and fifteen minutes. Once the cold call is over, any student can raise his hand to comment. A comment can be a question, a response to something the professor or another student has said, or an example from one’s own experience that clarifies the current problem. The only requirement is that the comment advance the class’s learning.

Our first professor, David Hawkins, was a bluff Australian who had swum in the Olympics in the early 1950s and still had the broad shoulders and blond hair of a Bondi Beach lifeguard. Arriving in class, he unfolded his newspaper and read out a story from the front page of The Wall Street Journal. It was about a company that had been ordered to restate its earnings because of years of accounting errors. He then rested on the edge of his desk and leaned back, his mouth falling open as he thought. In one hand was a scrunched-up piece of paper, scrawled with his notes for the day’s class. In the other he held a piece of yellow chalk that he would soon be hurling from one blackboard to another to highlight a specific point. “You see,” he said after a moment’s pause, “accounting really does matter. Now, on to this baron.” He hunched his shoulders and began shuffling around the front of the room, dragging one leg, baron-like. “How can it be so hard to tell which of these blasted peasants is the better farmer?” A sense of relief washed over the class. As students were called on to explain their numbers, it became clear that no one had cracked this case. In fact, cracking it was not the point. The purpose of the baron case, Hawkins explained to us, was to demonstrate the difficulty of divining economic truth from even the simplest-seeming situation. In accounting, it was more important to use common sense than to cling to rules.

During Analytics, the teaching was more casual than what we would face in the RC, but the schedule was identical. Classes began at 8:40 A.M. and each one lasted an hour and twenty minutes. There was a twenty-minute break between the first and second class. On Monday, Wednesday, and Friday there was a third class after lunch, at 1:10 P.M. On Tuesdays and Thursdays we were free at 11:40 A.M. We were then expected to spend a minimum of two hours preparing each case. In addition to accounting, Analytics included crash courses in finance and TOM, that is, Technology and Operations Management. The three subjects were the most mathematical we would be obliged to take during the first year, so we needed to get comfortable with them.

After Hawkins’s class came finance with Mihir Desai, a young Indian professor, tall and elegant with long, delicate fingers. He ingratiated himself with us immediately by saying that the ideas in finance were simple. It was only the explanations that got complicated. We were not to spend his class staring into our computers tinkering with spreadsheets. Rather, we were to learn finance in such a way that we could explain it to our mothers. Desai promised to come down hard on any Wall Street mumbo jumbo and encouraged us to strip away any preconceptions we might have. Those of us who thought we knew any finance were to relearn it from the bottom up. Those of us who knew nothing were setting out on a great adventure.

I met up with Justin for lunch. He had grown up in New York, where his father ran a successful investment business. After graduating from college, he had taught in Los Angeles as part of Teach for America and then worked in the New York City mayor’s office. He had come to HBS in large part because the people he most admired in public service had come from successful careers in business. An MBA would be useful whatever he chose to do next. I asked him if he knew what that might be.

“Not yet,” he said. “I’m going to be looking. If you find anything, tell me.” All around us we heard the same conversation. Where are you from? What did you do? Why did you come to HBS?

After lunch, we had Technology and Operations Management, taught by Frances Frei, an energetic woman with a boyish thatch of spiky brown hair and a uniform of men’s shirts and dark pants. Our first case with her involved constructing a decision tree, a means of assigning probabilities to the outcomes of certain investment decisions. If I drill for oil in a certain spot, I will have to spend $10 million with two possible outcomes. There is a 30 percent chance I will find nothing and a 70 percent chance I will make a $20-million find. You multiply the percentages by the outcomes to get zero and positive $14 million. So the estimated value of this investment is $14 million minus the $10-million drilling cost, to get $4 million. The usefulness of decision trees depends on the accuracy of your probabilities, but the idea is not to find certainty but to deal more comfortably with uncertainty, to find handholds, however tenuous, in the otherwise sheer rock face of financial decision making.

In the classes that followed, Frei hustled us on to regression analysis, a means of weighing the importance of different factors on a particular outcome. The case we studied dealt with a bank trying to use customer data to decide what to do about its online services. The bank knew all kinds of things about its customers, from their dates of birth and zip codes to their average balance size and use of online banking. Using Excel, we were required to organize and graph this data to establish behavioral patterns among customers. If they lived close to a branch, were they more likely to visit it? Did their age influence their likelihood of using online services? To what extent? Did customers’ behavior vary by zip code? The bank wanted to use this data to help decide on the size of its investment in further online services, which were cheaper to offer than fully staffed branches. As an Excel virgin, it took me hours to organize thousands of cells of data into neat graphs. But even as I flailed about, I could feel my excitement building at the amount I might learn here. Why did banks send me different mailings from those it sent my neighbor? How did you decide how much money to invest in a project with uncertain outcomes? Having spent most of my life interpreting the world through words and language, it was startling to witness the power of numbers, models, and statistical tools. The full range of my ignorance was becoming apparent, and the prospect of spending two years acquiring an entirely fresh perspective invigorated me.

On the final day of Math Camp, study groups were pitted against one another in a mock financial negotiation. The subject was the acquisition of a tractor company, and my side was the potential acquirer. We met into the night, preparing our strategy, trying to decide what we could get away with paying. The next day, some groups dressed up in suits to try to assert themselves over their opponents. In our group, the military guys took charge and turned out to be convincing liars and brutal tacticians. We did very well. By the end of Analytics, I was exhausted. I had been working from 7:00 A.M. to midnight every day just to keep up. When Margret, my wife, and Augie, our one-year-old son, arrived, I was delighted to see them. But I was also tired and testy. I had been warned about the HBS bubble, in which even the most trivial tasks assumed the most absurd proportions, and it was absolutely true. And this was just the dress rehearsal.

The first year of the MBA course at Harvard Business School is called the required curriculum, or RC. It is broken down into ten courses, five each semester, intended to cover the fundamentals of business. The first semester courses are finance 1, accounting, marketing, operations, and organizational behavior. The second semester brings finance 2, negotiations, strategy, leadership and corporate accountability, and a macroeconomics course called Business, Government, and International Economics, known to all as “Biggie.” During the second year, the EC, or elective curriculum, we could choose from a wide variety of courses or pursue independent research.

We would be graded on a forced curve, based on our performance against one another. At the top of the curve would be the academic cream. At the bottom, the stragglers. If everyone gets 95 percent on a test and you get 94 percent, too bad. You will be at the bottom of the curve. In each subject, the top 15 to 25 percent of the class receives a 1, the middle 65 to 75 percent a 2, and the bottom 20 percent a 3. Fifty percent of our grade would be determined by how we participated in class, the quality and frequency of our comments. The remaining 50 percent would be based on our performance in midterms and end-of-term exams. Halfway through each semester, our professors would provide evaluations of our class contributions so we would know how we were doing. After two years, the top 5 percent of the class would be awarded Baker Scholarships, the highest academic honor. The next 15 percent would receive honors. If at any point our academic performance fell below a certain level, we would be warned. Consistently poor performance was known as “hitting the screen,” and would result in suspension or expulsion. If we attended every class, prepared our cases, and spoke in class, this should not be a problem. Except, I wondered, how was I, with no experience of business, supposed to compete academically with students who had studied finance or business at university and then spent several years honing their skills?

I first saw the class in its entirety at the end of August, when they arrived for a one-week course called Foundations, intended to ease us into the RC. We gathered in the Burden Auditorium, a cavernous hall half buried in the middle of campus, with seats sloping steeply down toward a stage. As the students poured in, Analytics suddenly seemed very cozy. The director of the RC program, a short, thick-shouldered man called Rick Ruback, took the stage. He spoke in a Boston accent and told us that we should think of him as the plant manager, the man walking the shop floor making sure the employees aren’t bunging up the machines with chewing gum or taking illicit cigarette breaks. He was not to be confused with the chairman of the MBA program, who acted as a kind of company president, offering advice and oversight, nor the chief executive officer, the dean, Kim Clark. He said that our class consisted of 895 students, chosen from 7,100 applications, reflecting a 12.6 percent acceptance rate. We were very fortunate to have gotten in, he said. Thirty-four percent of our class was women and 32 percent international. The average age was twenty-seven, which put me, at thirty-two, on the high end. The course chairman, Carl Kester, followed Ruback and said how happy he was to welcome a diverse class. Within our ranks were Olympians and consultants, gay activists, the former assistant to J. Paul Bremer, the head of the Coalition Provisional Authority in Iraq and a Harvard MBA, and even the “former Paris bureau chief of The Daily Telegraph.” Me.

Next came the dean. I had read his biography on the school’s website. He had arrived at Harvard as an undergraduate and never left, acquiring his doctorate and rising through the ranks of the business school. He had been a scoutmaster and a bishop in the Mormon Church, and had seven children. He wore a pair of half-moon spectacles on a chain around his neck and spoke in a sepulchral whisper. He oozed seriousness of purpose and offered us three pieces of advice: work hard; be humble, or rather “cultivate the habits of humility”; and when you pass the dean on the street or on campus, don’t panic. Apparently some foreign students don’t understand him when he says, “How’s it going?” He said it’s fine just to reply, “Hi,” or “How are you.” He also warned us not to become cynical.

After Clark, we heard from Margie Yang, the CEO of Esquel, a Hong Kong shirt manufacturer. HBS had been reevaluating how it taught business ethics since Enron collapsed under the leadership of one of its most fêted MBAs, Jeff Skilling. Yang’s talk was part of the school’s response. She told us that when doing business in as lawless a place as China, it was more important than ever to have a set of values to anchor you. But any business person operating in China over the past thirty years who told you he hadn’t done ethically dubious things, she said, was lying. Ethical lapses, she said, were sometimes necessary to survive. Her larger point seemed to be that behaving ethically in business was less about following a graven set of principles than about adapting to changing situations in as decent a way as possible. Business ethics were dynamic rather than static, and until you tried to do business in a place like China, there was no use pontificating about the subject.

Finally a second-year student rose to welcome us and to reiterate the importance of values to our future in business. He told us that simply by getting into HBS, “You’ve won.” From now on, it was all about how we decided to govern our lives. There was something creepy about his Kennedyesque cadences and his well-practiced call to arms. But what he said would be repeated throughout my time at Harvard. HBS was a brand as much as a school, and by attending, we were associating ourselves with one of the greatest brands in business. We were now part of an elite, and we should get used to it. I struggled with this idea. It seemed so arrogant on the part of the school, and somehow demeaning to those of us who had just arrived. Regardless of who we were when we arrived, or what we might learn or become over the next two years, simply by being accepted by HBS, we had entered an überclass. It was HBS, not anything that came before it, that conferred the “winner” tag on all of us. At the end of Analytics, Frances Frei had explained that now that we were at Harvard, the professors were at our disposal. They would help us to learn and build businesses. They would even help our children get into HBS, if needed. It was a brutal acknowledgment of the legacy admissions system, whereby the children of alumni are preferred, and it immediately set me thinking: How many in this room were here simply because someone had pulled strings? What kind of capitalism is going to be taught here? The merito-cratic, level-playing-field, competitive version? Or another kind?

From Burden, we walked to our first class of the RC, called Learning to Lead. The case we studied in this class dealt with a small family-owned ice cream company whose chairman was in trouble. His underlings could not agree, and the company’s profits were in free fall. The atmosphere had changed dramatically since Analytics. People were suddenly full of confidence, eager to speak and to make their mark. The battle for classroom air time had begun. Students now talked about “take-aways” rather than lessons, “going forward” instead of the future, and “consensus building” rather than agreeing. I had always been uneasy when talk turned to consensus building, which seemed like the prelude to a dismal group compromise. “Philip, why aren’t you helping us build consensus? Come on, let’s just build some consensus here.” I kept wondering what a young Bill Gates or Rupert Murdoch would have made of this course. Not much, I imagine.

The following day we played “Crimson Greetings,” described to us as “a game to bring fun to all kinds of learning.” The entire class was divided into separate “universes,” in which six or seven teams of around ten students competed in building and running a greeting card business. The goal was to run the most profitable business. We would have to purchase supplies, manage inventory, design and manufacture the cards, decide on a price, and then sell the cards in a series of timed sessions over the next two days. After each session, each universe gathered with a professor to measure, evaluate, and discuss its performance. The academic content of the exercise, however, was secondary to the larger purpose, which was for the students to get to know one another.

We began in a classroom on campus watching a video of a stilted Englishman. “Your assignment will be to develop the operations of a greeting card company and to make it profitable,” he said. He spoke with the robotic menace of a Bond villain and could easily have been dispatching us to drive poisoned umbrella tips into enemy agents. We then made our way over to a gymnasium across the road from the business school. A room packed with 895 type-A personalities engaged in a business game sounds roughly like the African jungle. The lions roar, the birds squawk, the apes pound their chests, and the alligator snaps his jaws. My group contained three management consultants, from Austria, Indonesia, and Canada; a Korean banker from Los Angeles; a Chinese shoe marketer from Texas; an Argentine central banker; an Argentine engineer; a Lebanese American investment banker; a biotech executive from Boston; and Linda, a small, angry New Yorker who had been a management consultant and managed a software company but who said her real passion was racial and sexual equality.

Our first task was assigning roles. Linda quickly seized control. She was an expert negotiator, she said, so she would purchase supplies. She would also help with sales. Gunther, the Austrian, rallied to her side. The rest of us were left to divide up the production and distribution roles. One person had to check for quality. Another had to make sure we delivered our cards on time. I volunteered for the four-man production team, alongside the Argentines and the Lebanese American, cutting up paper, applying glue and glitter, and writing festive greetings.

First, we had to design a Christmas card. We gathered as a team to decide on a simple yet elegant drawing that could be produced at speed. We settled on a tree, drawn as a triangle and flecked with silvery glitter. Inside the card would be the nondenominational “Season’s Greetings.” Linda scampered off to buy supplies while production huddled to lay out our table. I stood at one end with scissors to cut the cards. The Argentines stood poised to dispense glitter and write the message. And the Lebanese American banker picked out a green pen to draw trees. Around us were the rest of the team braced to deliver supplies and finished product, keep tabs on inventory, accounts, and the clock and to check for quality. A horn sounded, and we were off. I cut as fast as I could, and the Argentines glittered like demons. For the next half hour, we churned out cards until the horn sounded again. Then we moved to the side of the gym to debrief and recover, while the organizers inspected our tables and gathered up the records of our performance.

Linda sat down cross-legged and scowled. Her disappointment was obvious. “The group next to us delivered way more cards,” she began. “And we wasted a lot of supplies. We need to do a deep dive on production to improve our metrics.” The Argentines looked at me, and I could see they were about to burst out laughing. But we nodded seriously.

“The quality wasn’t good enough,” Linda said, running down the list on the clipboard she had procured with our supplies money. “And we missed out on delivering a batch of cards just before the end. We need to drill down on that.” She had strict ideas about the colors for our cards, the kind of decorations we would use, and the negotiations she, naturally, would need to perform to get our supplies at a good price and dig us out of the hole we production losers had dug. The Argentines, Raphael and Ernesto, were now whispering to each other. Linda raised a single tiny digit.

Gunther then rose to his feet. “We need to start thinking about the presentation we’re going to have to make at the end of this, right,” he began. “I think that at the least, you know, we need to build a chart that shows time on the x axis and financial performance on the y, so we can show how we improve performance.”

The Indonesian woman nudged me in the ribs. “What did he say he was putting on the y axis?”

“Hey, guys, would you like to share?” said Gunther, wheeling round to stare at us. “If you’re gonna talk, you should share.” Linda beamed in approval.

The second round of the game involved making a Halloween card. We were struggling to come up with an inscription when I had my first HBS brain wave.

“How about Boo!?” It would be both appropriate and easy to write. The idea was taken up. Production was far slicker the second time around, but Linda circled the table scowling. When we had finished our first batch of cards, she picked them up, flicked through them, and tossed them angrily to the table, shouting, “What are these?!” She then screwed up the supply negotiations, bringing us the wrong cards and markers. A Canadian woman, who up to now had been silent, began cursing under her breath.

During our next break, Gunther took up position again beside our whiteboard. “We should have done a GANTT chart!” he exclaimed.