What They Don't Teach You About Harvard Business School

In 1985, a bland, frugal year in America, the going rate for freshly minted Harvard M.B.A.s was around $45,000 per annum. Some 8,000,000 Americans couldn't find a job, and the typical second-year B. School student was being courted by 15 corporate recruiters. So spirited was the bidding for the grads that scouts who had run the salary offers to the limits of their authority resorted to sweeteninig the kitty with such fringes as a $5000 "image bonus" for picking up togs at Brooks Brothers. Banks threw parties for the imminent M.B.A.s, ad agencies took them to tennis matches, investment houses chartered yachts to show them Wall Street from the water. Amid all this wooing of the season's business debutants, everybody was wondering if the much-talked-about record salary offer would be topped: One member of the class of 1985 sashayed out of the B. School into an entry-level slot that paid him a slightly hilarious $140,000.

Now, none of this was particularly logical. By every law of economics and of common sense, demand of new M.B.A.s should have been falling off. By 1985, there were already so many of them glutting the side-walks of America that you couldn't spit in a gentrified neighborhood without hitting one on the leg; more than half a million active M.B.A.s were out there scrapping, and every year a higher proportion of them, for all their grand beginnings, were getting staranded in the backwaters of middle management. Further, ever since the economic downturn of the middle Seventies, serious doubts had been voiced about the value of an M.B.A. degree and the species of competence it presumably conferred. M.B.A.s had been assailed for their obsessive reliance on the numbers, for their lack of institutional loyalty and their salacious eagerness for perrsonal advancement, for their overconcentration on short-term goals and their failure as communicators--in short, for playing no small part in getting the American economy into the pickle it was in.

Yet American corporations went right on falling all over one another to hire M.B.A.s. Maybe they had no choice. Maybe the game of business had become so rarefied, so removed from ordinary reason and from the language used by the rest of us, that it had to be played by specialists. Still, it was a little odd to assume that a larger dose of the medicine that had made you sick was suddenly going to make you well.

It was odd, too, that just when the M.B.A. degree was losing the cachet it had had its herday--the decade or so after World War Two, when the style of modern American management was just beging set and its "scientific" tenets seemed unassailable--M.B.A.s themselves were more in fashion than ever. People weren't just talking business now, they were talking lifestyle. Money and the pursuit of same were sweeping back into vogue, and those whose education had been geared most specifically toward the accumulation of dollars were at the vanguard of the trend.

A 1981 Time cover story titled "The Money Chase" hailed the epic awakening of the baby-boom generation to the hard facts of fiscal adulthood and paid M.B.A.s the dubious compliment of describing them, in comparison with their non-M.B.A. coveals, as "chameleons that have mysteriously evolved into some slighly more agile species of lizard." By 1982, M.B.A. Handbook-- a volume that hit the best-seller lists in spite of its inability to decide if its purpose was to summarize, satirize of glamorize. In 1983, the term Yuppie was coined and, almost overnight, the Yuppie become the most readily identifiable new class in America, everybody's target audience, role models for everyone who didn't hate their guts, as well as for a lot of people who did. Suddently, it was respectable and even hip to work on weekends and to substitute networmking for a social life, to wean the libido from carnal desires and direct it instead toward the wooing of wealth. That was the Yuppie way, and Yuppies were setting the tone.

M.B.A.s from Harvard constituted their aristocracy. Nerds no more, boy M.B.A.s could suddently be proud of their lugubrious suits and undertakes' overcoats; girl M.B.A.s could slip into gabardine suits and floppy bow ties and feel, if not exactly alluring, at least not like total skanks. The neo-eager-beaver ethos had socked in, and it didn't hurt to look the part.

If the hallmark passion of the day was the simple wish to have it all, these recent veterans of Harvard's B.School seemed to be coming about as close as anybody could. With their swollen incomes and financial savvy, they were already able to afford the VCR, the BMW, the IRA and most of the other letters in the alphabet of rooms and routinely traded up on real estate. They had the cowed respect of headwaiters and the envy of their peers. They relished the eminence they were destined to enjoy in an America bouncing back from bleaker economic times, and they took pride in themselves for having turned out, after the wackiness of adolescence, to be just the sort of grownups theirparents had prayed that they would be.

There were only two small cimps in this picture:

Crimp number one was that most evidence indicated that America, sad to tell, wasn't bouncing back; relative to the immense and steady growth of the Fifties and Sixties, the supposed good news of the Reagan years was nothing more than a slight slowing of the nation's economic decadence. Crimp number two was the fact that many of the new M.B.A.s' more sophisticated elders--as represented, for example, by the guys who went to Harvard back when an advanced business degree was really hot and who defined the game that the new H.B.S. grads were so rabid to play--were less impresses with the young hot-shots than the young hot-shots would have liked to think.

Percaps it was a mercy, then, that the Yuppies were so enthralled with their own petty triumphs, so intent on their own next moves. If they weren't, they might have noticed that the golden age of opportunity in America had largely passed them by and that the premises on which they based their efforts and their pride were closer to archaic every Monday morning than they'd been the Friday before.

•

The descending portion of a graph is inherently rather dreary; it's also unenlightening unless you check back to the contours of the curve that had taken you to the peak. In the case of America's recent economic history, the ride to the top was joyously steep but joltingly abrupt. In broadest outline. the dynamic that propelled it can be described in a few sentences: At the begining of World War Two, still at the tail end of a virtual world-wide Deperssion, America was one of, say, half a dozen nations that were roughly economic peers. By the end of the conflict, all the others had been decimated, their factories wrecked, their crops unharvested and their currencies all but worthless. America, on the other hand, had gotten cranked up to full industrial capacity, had sacrificed not a single lathe to enemy fire and had lost only one soldier for every 70 dead Russians. So redical and unnatural was the resulting imbalance among nations that in 1949, America grew, mined or manufactured as much stuff as the rest of the world combined. Almost instantly, the United States was famously rich, and the pattern of its breakneck growth had become established.

That same year, 1949, the first great wave of modern American managers--the first regular, postwar class from Harvard Business School--stro de off campus into a seller's market the likes of which will not be seen again. During the Depression and the war, top-notch people had not gone to business school; on the day the Fortyniners graduated, there were only 50,000 M.B.A.s in the entire nation. As of that day, too, the last of the cyclical postwar recessions was ending, and a quarter century of inexorable burgeoning prosperity was on the launch pad. The class of '49 was the first to feel the full democratizing effects of the GI Bill; hungrier, scrappier, more shamelessly ambitious than any that had gone bafore, that first class of postwar M.B.A.s would clench those fortunate circumstances to its bosom and run with them into business history. According to Fortune, according to Business Week, according to anyone who was paying attention, the Forty-nines would go on to become the richest and most infuential batch of M.B.A.s to emerge from any school at any time.

By 1974, with the dollar worth double what it is today, one Forty-niner in six had become a millionaire. Forty-five percent of the class members who answered the 25th-anniversary survey were chairmen, C.E.O.s or chief operating officers, and they toiled for companies that held 13 places in Fortune's listings of the country's largest outfits in manufacturing, retailing, banking and finacial service. In all, the companies in which the men of '49 held pivotal jobs had annual revenues of more than 50 billion dollars and employed 1,000,000 people. Forty-niner Peter McColough occupied the roommate, James Burke, was the boss at Johnson & Johnson. Forty-niner Marvin Traub was running Bloomingdale's, and his roommate, Sumner L. Feldberg, had helped found Zayre Stores. Forty-niner Harry Figgie, Jr., had founded what is now the modestly titled Figgie International, with current annual sales of $700,000,000; figure comparable to the value of classmate Lester Crown's holdings in General Dynamics. Fellow grad Ernest Henderson had recently sold his family business, Sheraton hotels, to ITT; Thomas Murphy would become the first man ever to buy a television network, when his Capital Cities Communications pulled a David and Goliath and conqueredABC. One Forty-niner, Clarence I. Brown, was in Congress, and another, John Shad, would eventually abdicate the vice-chairmanship of E. F.Hutton to do time as Ronald Reagen's chairman of the Securities and Exchange Commission. One Forty-niner made a small fortune with a pickle factory. Another did it with ironing boards. Yet another, Irving G. "Jack" Davis, took a paint company and turned it into Resorts International. So general was the success (continued from page 132) Harvard Business (continued from page 116) of the M.B.A.s of'49, and with such seeming ease had wealth and eminence come their way, that on the occasion of their 25th reunion, Fortune dubbed them "the class the dollars fell on."

But the job titles and tax returns, sexy as they are, don't quite cut through to the real significance of the M.B.A.s of '49. That significance has to do with the almost unbelievable power they were given to do things their own way, to shape American management in their image.

Today, a mere generation later, it takes a leap of imagination to understand how shiny-new the game was them, how moist and supple was the clay of the nation's possibilities. Professional management in those years was, to the average Joe, only slightly less abstruse than quantum physics but a good deal more important. Management, after all, had just won the war. Sure, the movies always zeroed in on three handsome GIs capturing an island or tunneling out of a prison camp with a spoon, but that was pap for the masses. Anybody who understood the war effort realized that it had been a matter of goods and services, of organizational know-how. America won because it produced more matériel and got it there on schedule.

Faith arrives in a flash; skepticism takes time; and in that postwar flush of victory, faith in Yankee management skill was riding a still-unbroken creast. The abracadabra that made things go was an arcane and persuasive magic, and in 1949, it was suddenly in the hands of a few supremely confident young men from Harvard. The cocky, wide-eyed, pre-eminent America was so much a work in progress that nearly everything those young men did would set a precedent. Their hunches, right or wrong, would echo through company hallways till they'd been amplified into national priorities. Their style, their mannerisms, their very tics would be pondered, admired and mimicked till they had congealed into the standard American way of getting things done. The America of 1986, in which the rest of us are scrabbling out a living and grappling toward a destiny, was already on the drawing boards at Harvard Business School in the years that produced the class of 1949.

•

In 1947, Herbert Shayne, who now presides over a $50,000,000 family business in Tennessee, was 22 years old. Canadian-born and unchastened by the war, he was uncomfortably tall and chronically thin, with bright-red hair, a translucent skin that showed orange and blue underneath and voice that skidded upward through the tenor range and cracked whenever he waxed emphatic. Shayne didn't kid himself that smoking a cigar changed any of that. Still, a cigar seemed to help keep him calm, and he was seldom without one during his first semester at the Business School. He was trying very hard not to show the older and more worldly guyshow atwitter he was to find himself at Harvard.

He'd thought about it all his life. As a Canadian, he'd invested Harvard with the awe that Americans reserve for Oxford. Harvard, believed Sheyne, was where the exchange of thoughts had the profoundest resonance, where intellectual rigor was most sublime. Harvard would be the perfect cask for maturing the raw ideas he'dpicked up as an undergraduate at Montreal's McGill University. Central among those ideas was the conviction that the discipline of economics, while its tools were numbers and equations, was in essence a thing of flesh and blood, of ethics and of soul; economics, in the actual practice of business no less than in theory, could be rightly understood only as branch of moral philosophy. Shayne could hardly wait to share this viewpoint with his B. School roommates.

His roommates found it nove, mystifying, eccentric--and dismissable.

"Moral philosophy, Herb?" they said. "Herb, we're not trying to get rid of you, but does it ever occur to you than maybe you're on the wrong side of the river?"

They had a point. Shayne had made it to Harvard, but he'd landed one trolley stop short of Cambridge, the place where the college of his fantasy was to be found, if it existed at all. The Business School was on the Boston side of the river, the side where pragmatism reigned. The college cogitated through to logical, disinterested insights; the Business School got results. That's why people went there.

Not that the school didn't have its share of the rhetoric of lofty purpose. The official catalog, then as now, fairly oozed it. A course called Human Relations, for example, promised to promote on-the-job good will be addressing the "problems of securing cooperative action ... [regarding] the specialized functions of personnel." The Advertising seminar would probe to the heart of common needs by focusing "especial attention ... [on] the habits and behavior of consumers whom advertising is designed to influence." Then there was an elective whose very name--Public Relations and Responsibilities--bespoke a social awareness and commitment that was the very stuff of an enlightened approach to business.

But those, of course, were the orthodox, approved descriptions, and, as Herb Shayne came to understand, one thing could be described in many ways. Around the dorm, for example, the gist of Human Relations was summarized as "making the contented-cow syndrome work for you." The meat of Advertising lay in "teaching the native to want." And in the classroom, as Shayne would remember decades later, "P.R. and R., when it dealt with anything at all, usually addressed questions like whether you'd generate more business by heading up the United Way or being president of the local Rotary."

What all of this suggests is that two different educations were being offered at the Business School. One was official, the other was real, and the two were held together, more or less, by the pedagogical technique known as case method--a teaching strategy that proceeds by the consideration of real-life business anecdotes rather than precepts, of situational dilemmas rather then philosophy.

Case method, of course, has long been virtually synonymous with the Harvard Business School; without it, for that matter, there might not have been a B. School at all. Its more recent glamor notwithstanding, when H.B.S. limped into existence in 1908, it had no campus of its own and only the puniest of endowments. It also faced two not inconsiderable obstacles in its quest to bring businessmen and academics together: Businessmen hated academics' guts and vice versa. To scholars, handing out honorific titles denoting expertise in such squalid processes as psyching out markets, selling widgets and accumulating wealth was nothing short of abject whoredom. To the day's rugged-individualist businessmen, the thought that any cloistered, wispy-bearded and probably reform-minded professor could (continued on page 137) Harvard Business (continued from page 132) tell them how to run their show was laughable if not grotesque.

Case method was the seductive master stroke that persuaded the captains of industry and the princes of intellect to hop into the sack together. Case method offered something for everyone. By studying cases, the practical-minded types could feel that attention was being properly focused on the nitty-gritty, rather than frittered away on texts and theory; and the academics, far from being abashed that they were teaching in a field that had no texts or theory, could tell themselves that they were helping to build a new intellectual edifice by the time-honored means of deductive reasoning.

The whole idea, then, was to bridge the gap between business in the abstract, which was respectable, and business in practice, which made money. Striking a balance between the two, however turned out to be a problem, since business theory tended to be pallid, pompous and usually self-evident, while business practice was gripping, human-scaled, endlessly compelling in its stakes-on-the-table actuality. So theory, in practice, got short shrift; and practice, in practice, is what the curriculum was all about.

But if case method was not conductive to balance, it certainly fostered a point of view.The view was bird's-eye, since, in real life, no one except a company's top two or three executives would be faced with the kind of decisions that B.School students were routinely asked to make. "It was great daydream material," Shayne remembers. "The case would open, "You are the chairman of the XYZ Corporation,' and, poof, just like that, you were chairman of the board. We had lots of cases about dealing with subordinates. I don't think we had one about dealing with a boss. The assumption, from the first day on, was that we'd be the boss. The analogy would be studying freshman poli sci from the perspective of a future king."

The approach was not to everybody's taste. It was not, daydreams aside, particularly to Herb Shayne's and as 1947 phased into 1948 and the clenched excitement of the first semester faded into the day routine of the second, he found his earlier enthusiasm turning wry, even selfmocking. Increasingly, as the warm spring days greened the grass of the B. School quad, he'd end up sitting on a bench facing the Charles, smoking a cigar and gazing longingly toward Cambridge.

He must have looked unhappy, because one day a classmate named Conrad Jones asked him what was wrong. Shayne tried to put his finger on it and came around to a voice-cracking complaint about what he saw as the Business School's elitism.

Connie Jones, who was square-built and had been away to war and had an engineering degree from Purdue, would eventually become the senior partner of the New York consulting firm of Booz, Allen & Hamilton. Consulting would fit him like a glove, because he had a gift for telling people things they didn't want to hear and having them thank him for it. It wasn't that Connie Jones was gentle in his delivery or even tactful, exactly; but there was about him a profound neutrality that seemed the very soul of justice. Devoid of malice, sparing in affection, he called them as he saw them, and he proceeded to tell Herb Shayne that he was full of beans.

"No, Herb," he said, "it doesn't bother you at all that we're treated as an elite. What bothers you is that we're not the elite you thought we were going to be. You thought we were going to be the intellectual elite. Well, we're not. We're not the hereditary elite, and we're certainly not the artistic or creative elite. What we're being groomed as is the competent elite. Get used to it, Herb--we're being trained to be the guys who stay sober at the party. We're being handed the tools to get out there and run things."

That, finally, was the crux of the B. School exercise, and of all the tools the class of '49 was handed, the most versatile by far was contained in the course called Administrative Practices. Ad Prac was the center of the B. School universe, the gravity that held the rest of the curriculum together. Other courses taught you a lot of what and at least a little bit of why. The beauty of Ad Prac was that it had a way of making those preoccupations disappear, so pure, unadulterated how came shining through. Ad Prac, like aspiring or dynamite, would work on just about anything.

The catalog described the course's aim as teaching the future manager how "to obtain action by working through people... [by] maintaining harmony between the individuals and groups of which his organization is composed... [and by utilizing] the capacities of the individuals concerned to the greatest advantage." The students were terser. They dubbed the class Machiavelli for Beginners. It was leadership and gamesmanship, politics, negotiation, hardball and the end run. Future conglomerateur Harry Figgie, Jr., summed up its lesson as "how to save the rungs out of someone's ladder without his even knowing it."

So central was Ad Prac to the B. SChool way of doing things that the phrase soon overwhelmed its boundaries as a noun and began being used in various forms as a transitive verb, a past participle and an adjective. You could Ad Prac the mailman into stamping a fraudulent postmark onto a tardily finished report. A fellow who'd been finagled into doing more than his fair share of work on a group project had been Ad Prac'd. Wellesley girls were now and then Ad Prac--able, and even B. School professors could occasionally be cast as Ad Prac--ees. Ad Prac was more than a method, it was a world view; it was the tool you used when, come hell or high water or an inconvenient value system, something just had to get done.

Ad Prac, in fact, was almopst a religion. The Harvard M.B.A.s of 1949, having an apparent inkling that their destiny would be worth keeping tabs on, did a class survey shortly before they graduated. Among other things, the survey was intended as a profile of what these men believed in. Three quarters of them testified to faith in God. Ninety-two-point-five percent proclaimed a faith in the effective wisdom of Administrative Practices.Ad Prac was Gospel, it was Torah, it was Tao. It was the austere, pragmatic and unrelenting creed by which they were setting out to manage America.

•

But again, one thing could be described in many ways and, to another member of the class of 1949, the essence of the B. School could most cogently be defined as the learning of the old sausage game.

"You know what the old sausage game is?" asks Leonard Caust.

He lifts an eyebrow and lets the question dangle; he knows how to work an audience. What he had set out to be as a young man, in fact, was an actor. But after a single postwar season of open auditions and closed producer's doors, he decided to play a shorter shot. It was ironic--a lot of gys were going sleepless and half crazy trying to cop a berth at Harvard Business School, and Caust settled for a spot there because getting in was easier than landing a part as a second banana off-off-Broadway.

SO here's what the sausage game is," he resumes. "You win yourself a market with a nice all-meat sausage, the best sausage you can make. People eat that sausage and they say, 'Mm, mm.' SO now you've established the product, right? Now you can afford to start slipping in some sawdust. Add the sawdust by small enough increments and no one'll even notice. People will still say, 'Mm, mm,' because they're creatures of habit. Of course, five or six increments down the road, you'll end up with a product that bears little or no resemblance to what you started with, but you'll get away with it. For a while, at least. Your market share will hold, your margin will increase and everybody will think you're smart.

"Look," says Caust, who retired in 1980 as manager of the marketing-information-services department at LEver Brothers, (continued on page 186) Harvard Business (continued from page 137) "your average M.B.A. pays lip service to the notion of providing what the customer wants, because that's what he's Supposed to talk about--publicly. But I'll tell you what really gets their juices flowing: It's these arcane statistical formulas that have nothing whatsoever to do with the customer or the product. New, improved! How many times have you heard that one? But come on--the real energy doesn't go into improving anything, it goes into figuring out how to make it cheaper and advetise it better. Take this little piece of hardware, make it thinner, make it lighter. It isn't going to work as well, it isn't going to last as long, but, oh, boy, we're gonna sell a lot of 'em. Is that business? That's bullshit. That's the sausage game. But that's basically what goes on. I'm glad, in a way, that the Japanese have been rubbing our noses in it lately, because at least they've shown that the American consumer isn't quite as stupid as a lot of American businessmen seem to think--that, in the long run, the quality job will still win out."

The quality job, of course, used to be an American specialty. Through the Forties and the Fifties, American products were the world's standard, the nonpareil; anything else was cheap imitation, mimicry that didn't quite come off. Made in U.S.A. meant that it wouldn't shrink in the drier, that it would weite through butter, that it would keep on ticking even when attached to the propeller of an outboard engine.

Then the situation changed. Exactly when it changed is impossible to say, since a great deal of time and money, as well as heroic exertions of the national ego, went into ignoring or obscuring the fact. Certainly by the early Seventies, however, it was unmistakably clear that the shift had come. Foreign competition was applying the squeeze, and not just with cheaper goods--that's what the Japs and the Taiwanese were for, after all--but with better ones. Sony was no baloney, while one of Motorola's plants (before it was taken over by the Japanese) was turning out more defects than televisions--140 goofs per 100 sets. While American suburbs were abuzz with conversations about the reliability of Datsuns and Toyotas, certain Detroit products were shown to have an unfortunate propensity to explode when nudged from behing. Even in the hightech fields, those postindustrial marvels supposed to be America's salvation, American firms were getting aced out; a 1980 study indicated that American computer memory chips were five to six times as likely to fail as their Japanese counterparts.

Embarrassed, baffled, frustrated and terrified, the various constituencies of American enterprise addressed their common problems in the time-honored democratic way: They called one another names. Management, the unions, Congress Federal agencies--suddenly, every-body was either a knave or a fool or both. But in the midst of all the squirming and recriminations, the most basic point of all seemed to be overlooked by almost everyone: They quality of American goods slipped--more precisely, failed to keep pace with the improvements made elsewhere--for the simple reason that once the pattern of American dominance became established, quality ceased to be a high priority in American enterprise, period.

Planned obsolescence--the phrase has itself become a grim joke that summarizes everything shortsighted, cynical and disastrous about a vertain way of moving the goods. For a couple of decades in the recent past, however, all the phrase really meant was business as usual. throughout the Fifties and the Sixties, the American consumer was essentially a captive audience, since production in the rest of the world still lagged. The distance between the check-out line and the garbage can was getting shorter, but people didn't seem to mind, because every year they had more money to spend. So the old sausage game was working fine, and the straight-ahead wisdom of Ad Prac dictated that you didn't fix something if it wasn't broke.

"Think of it as algebra," says Len Caust, gesturing as though slashing chalk onto a blackboard. "Remember when they gave you those long, complicated problems to solve? How'd ya solve 'em? The trick was to line things up in such a way that most of the factors got canceled out, remember? The more factors you could eliminate, the easier the problem got. Well, that's how we learned business.

"Certain factors had to stay--fixed costs, analysis of what the competition was up to--but quality? Look, it could be demonstrated--proved--that you could turn a profit at the top of the market or at the bottom of the market. You could make money at any level of quality--which meant, conveniently enough, that quality could get canceled out."

That is not to say that quality had to get canceled out. American management had a choice in the matter. Even before Pearl Harbor, a former U.S. Census Bureau statistician named W. Edwards Deming had developed a system whereby the costs and value added of quality control could be analyzed numerically and factored into the "scientific" way of running a company. Deming's schema had nothing "soft" or "subjective" about it--it didn't aim at value judgments about the essential validity of a product but dealt only with uniformity, reliability, the maintenance of a set standard. But even this degree of concern with quality seemed to annoy the American executives of the late Fories, whose reaction, according to Fortune, was "Go away, Deming, we're making money."

So Deming did go away. Specifically, he went to Japan, where he was embraced as a prophet. The Deming Prize for qualityu control, awarded annually since 1950, is considered so important in that country that its bestowal is broadcast on national TV, like the Oscars.

But who knew? The chance offered by Deming was just one more opportunity that American business could easily afford to pass up at the time. Strange to tell, throuhout the Fifties, one of America's biggest economic problems was an unwieldy trade surplus that, as in penny poker, threatened to wreck the game by bringing all the pennies to our side of the table. In 1960, imported manufactured goods accounted for a minuscule 1.8 percent of everything Americans bought. A gambling man could have gotten bank-busting odds on the wager that, a quarter century later, that import figure would be approaching 20 percent, and that America would be running a trade deficit as high as 17 billion dollars a month.

"One thing about the way we learned business," says Len Caust, locking his hands around his knee rocking back in his chair, "it was totally free of snobbery. You might have your personal standards, your personal preferences, but it would be made very clear to you that personal preferences were not what business was about. In business, a guy who made a million bucks, in, say, the perfect buttondown shirt or the finest surgical instrument was no higher on the ladder than the guy who made a million bucks selling potato chips without any potatoes in them. It was the same million bucks. We had a saying; maybe you've heard it: 'One man's shit is another man's bread and butter.'"

Ad Prac, that is to say, was above taste, beyond sensibility. Its genius lay in its usefulness in canceling out the shades of gray and reducing the art of business to the efficient manipulation of a number of elegant abstractions. Abstractions such as the market--that totality of customers for America's totality of products. There's only one thing wrong with the market, though: It doesn't exist. What does exist is Mary Smith and Joe Jones and everybody's relatives, and the attitudes and circumstances of those folks consist of nothing but shades of gray.

Starting in the late Sixties and accelerating through the Seventies, a number of things took place that turned those grays increasingly somber, as far as American business was concerned. Real disposable income stopped growing. Froeingn goods and foreign marketing became sophisticated enough to be truly competitive. And the American consumer, like the kid who finally gets it through his head that steak is better food than candy, was growing up. Gradually, the claim that Volvo would last 11 years came to seem a more improtant selling point than the promise that next year's Pontiac would have different configuration of taillights. The Panasonic stereo that sounded good came to be preferable to the Zenith that looked like a continuation of the break front. By the end of the Seventies, as quintessentially American a product as the Harley-Davidson was being outsold ten to one by foreign bikes; chances were 90 percent that your buddy's C.B. radio had ben made in Asia; and it was abundantly clear that American enterprise had made a wrong turn at the intersection of quality and flash.

As the prestige of American products headed south, so did the status and credibility of the American businessman. By the beginning of the current decade, the M.B.A. mentality had come under wide-spread if generally tootheless criticism, and scientific management, that shining beacon of rational modernity, was being credited with about as much intellectual authority as a horoscope.

In 1981, The New York Times Magazine fanned the confidence crisis with a cover story chronicling the fall from grace of the American executive. Meanwhile, it had become all the rage to study Japanese management, on the facile premise that if we were so wrong, they must be right. Amazingly, even the business-education establishment itself was slipping into the hair shirt. Professor H. Edwarde Wrapp, lately of the Business School faculty at Harvard, went on record in Dun's Review, saying, "We have created a monster....The business schools have done more to ensure the success of the Japanese and West German invasion of America than any one thing I can think of."

When that article ran, in 1980, the men of'49 were at a median age of 56 and were, in most cases, at the very height of their professional powers. Throughout their careers, they'd been fawned on by the business press, adulated by their shareholders, voted bonuses by their boards and vindicated by thier boards and vindicated by the angles on the graph. Now, rather suddenly, their alma mater, many of their most cherished axioms and, in fact, their entire generation of business leadership were under attack.

"For better or worse," says Conrad Jones, whom the years seem only to have confirmed in his relentless objectivity and drop-dead bluntness, "I don't think most of us really let the criticisms sink in. If we had--? Well, Jesus, think about the implications of what's being said. Here we are, old guys, who've been in charge of things for a while and for whom it's too late really to undo the things we've done, even if we wanted to We've been rolling along, feeling pretty good--and now someone is telling us not just that we've been screwing up all along, and it just took a while for it to show. I mean, that's a serious charge.

Is it a fair charge?" he continues, ticking off the pros and cons as neatly as if they were jotted down before him in two columns on a yellow pad. "It's dodgeable. I mean, partly it just got to be a bandwagon thing to dump on American management. Or you can answer the charge with other charges that are, I think, equally persuasive--labor costs, tax structures, pressures that come from Wall Street and so forth.

"Still, if the basic complaint is that american managers have gotten too caught up in managing per se and not caught up enough in their products and their customers, then I don't see how I can deny that my generation of guys form the B. school have been part of the problem. I mean, for the real dyed-in-the=wool professional manager, there's nothing illogical about getting promotion from number- three guy at ABC Company, which makes macaroni, to number-two guy at XYZ Company, which makes fan belts. I know guys who are proud of the fact that they've never been inside the plants of companies they run. And attitudes like that are part of the problem."

Connie Jones has worked with more than 500 businesses in his three and a half decades of consulting. He's worked with companies on the way up and companies on the way down, companies whose problems he could solve and companies whose problems he saw as terminal. More than any other forty-niner, he's had an overview of how america runs itself.

"You know," he says, "when we were in school, it was still pretty much the norm that companies were run by families. the archetype still consisted of the tinkerer who comes up with a smart idea, puts it together in his garage, stamps the family name on it and then ends up as the cranky old patriarch whose portrait hangs over the desk that his son, his grandson and his great-grandson will eventually sit at. That's the traditional American business. That's what made American business.

"Now, those kinds of companies were driven by a value system that was an extension of family values. After you make sure that everybody in the family has a roof over his head and enough money to fall back on, what's still important? What's important is reputation, your good name in the community, nationally, even internationally. And what's reputation based on but quality over time? The professionally managed companies don't have anywhere near the same commitment to quality, because they don't have anywhere near the same sense of duration. What's the average executive tenure--five years?

"So make of it what you will," he says, "but I think it's clear that the postwar years were the fulcrum on which the country really turned away from the old kind of company and toward the new. Our class--we were mostly GI bill guys; we had no family businesses to run, even if we wanted to. Most of us, when we got to the Business scholl, had no idea what we wanted to manage; all we knew was that we wanted to manage. And that seemed fine, because the way it was presented to us was that managing was a skill unto itself, like driving rivets, you could drive them into pairs of blue jeans of into Verranzano bridge. the exact application didn't really matter. That's what Ad Prac was about--it was the great leveler, the universal language of managing. And management itself was the keystone. If you managed well, other things would take care of themselves.

"That was the premise we started with," says Connie Jones, "and we worked from it diligently and in some cases brilliantly. We took that promise about as far as it could possibly be taken.

"Only problem was, the premise turned out to be wrong."

•

Right or wrong, premises like that were rolled out to be tested in the grand experiment of postwar America. There is nothing shameful in the fact that certain of those ideas proved to be flawed and, in retrospect, naïve. It was a formative time, and mistakes were allowed, even encouraged, if they were the sort of bold, expansive errors that might point out new directions. The surprising part is that even today, a generation later, in a world less innocent and far more complicated, there are tens of thousands of fresh-scrubbed, ahistoric M.B.A.s who seem convinced that they are going to ride much the same tired brand of expertise to wealth, status and boundless self-esteem. This is a song the men of '49 have heard before.

"You can't kid a kidder," says Forty-niner Edward Dewey, a venture capitalist whose portfolio includes investments in gas-and-oil exploration, an offshore insurance company in Bermuda and a pretzel factory, "and no one is less easily snowed by a Harvard M.B.A. than another Harvard M.B.A. These kids are smart--you've got to give them that. But I'd as soon take a python to bed with me as hire one. He'd suck my brains, memorize my Rolodex and use my telephone to find some other guy who'd pay him twice the money."

"Can you tell me," asks Forty-niner William C. Eiseman, a senior vice-president at Morgan Guaranty Trust, "that the average Business School graduate is worth 15 grand a year more, to start, than someone coming out of, say, Yale without an M.B.A.? That's ridiculous."

"The problem," observes Jim Burke, who has actually been grilled by Harvard about Johnson & Johnson's long-standing aversion to its B. School grads, "begins with the selection process. If you lean heavily on test scores, you necessarily end up with people who are very adept at quantification. Which means that kids are coming out of business school with more and more to unlearn, since the really important decisions don't have anything to do with quantification, as everyone figures out--eventually."

So go the reservations that the first wave of modern M.B.A.s has about what may be the last wave. And these reservations are being voiced in a context in which the expectations of the baby-boom generation are actually on the skids, the Yuppie hype notwithstanding. Between 1979 and 1983, the median real income of Americans between the ages of 25 and 34 declined by 14 percent. True, that statistic includes a lot of poor souls who'd been laid off at shoe factories or textile mills, but even M.B.A.s have their justified anxieties. They've paid out two years of their lives and maybe $25,000 for the privilege of being part of an unprecedented glut. Every June in recent years, roughly 65,000 M.B.A.s have graduated; every year, more of them are bottle-necked at levels where the bird's-eye lessons from the casebook don't apply.

More than ever, it's jungle out there, and at least some of the faults ascribed to recent M.B.A.s can be largely explained in terms of simple Darwinian pressures. If the new M.B.A.s are known for irresponsible job hopping, it's at least partly because advancement within a given company is likely to be sluggish. If they are short on loyalty to their firms, it's largely because most of the firms they deal with can offer them only limited security in return. The widespread perception that the younger M.B.A.s are geared toward nothing but their own success can be seen as largely a response to a justified lack of faith in the over-all economy around them.

Largely, but not entirely. This is still the Me Generation, after all, and as Newsweek observed in "The Year of the Yuppie," the cover story of its final issue of 1984, "a generation once notorious for discovering new ways to make itself feel good [has been finding] the habit hard to break." The endorphins released by a sprint on the fast track, it has been discovered, produce a euphoria not so different from that previously achieved by transcendental meditation, a midnight plunge into the Pacific or a hearty whiff of amyl nitrite. It is still a private euphoria, a solipsistic high. The pursuit of it makes people similar while keeping them separate. Business, like aerobics and like life in general, is seen increasingly as an individual sport.

But why? It wasn't always so.

In 1949, enterprise was thought of as a national crusade, a mission, and even the most crazed go-getter could ground his personal striving in the conviction that his own success would meaningfully contribute to the common weal. Never mind that even then, the notion was probably more convenient than true. What mattered was that it could truly be believed. A common purpose was being righteously pursued. An M.B.A. from Harvard made you a general in that glorious campaign; it didn't put you outside or above the march.

But at some point, that march became a scramble, for reasons as old as Rome that have intimately to do with how people act at different points in the surge and ebb of nations. For the men of 1949, the Depression and the war turned out to be kindnesses. The Depression ended, the war was won and the victory catapulated America into an era that was sweeter and more hopeful than anyone would have dared predict. The baby boomers, on the other hand--those lucky kids who grew up with shiny bikes, with new schools and virgin textbooks whose spines would crackle the first time they were opened--those kids, in addition to the normal anguish of becoming grownups, have had to absorb the realization that things aren't as rich and automatic as they used to be. These are kids who grew up knowing that next year's car would be bigger than this year's, that next year's Christmas tree would be a little taller; like Alice, they inhabited a world where everything was mysteriously but reliably growing. Then, just when they'd gotten used to it, just when they were about to have their turn at running it, things just as surely started threatening to shrink. It was so confusing, so heartbreaking, really, that it was easier not to try to make sense of it but just to change one's posture to fit the new surroundings. The alteration was subtle but decisive. Whereas the postwar striving had consisted of an upward craning of the neck toward the lucent American ideal, the Yuppies' exertions were aimed at just keeping their backsides ahead of the pack.

The Yuppies are the mirror, and what they reflect is unsettling and implicitly reproachful of the men of the postwar era; what they reflect is how people act in a time of diminishing opportunities, how people play the game when the game is winding down. Because the bottom line, explain it as you will, is this: As the postwar M.B.A.s wrap up their glorious careers, the country is in a lot worse shape than it was when those careers began. The men of '49 Ad Prac'd their way to legendary personal accomplishments; perhaps they also Ad Prac'd themselves out of a chance to be stewards of something more important, something more enduring.

This is possibility that nags at deep and primitive nerves, because the Forty-niners aren't just the proffessional precursors of the Yuppies; they're their fathers. The men of '49 have sent an estimated 400 sons and daughters to H.B.S., 300 kids to other top-tier business schools around the country and another 300 to law school. The character of those young men and women and the business and professional milieu in which they operate represent the convergence of the Forty-niners' private and public lives, their successes and their failures in both the grandest and the most intimate arenas.

"I worry about these kids," says Connie Jones, leaving it open as to whether he's talking about his own four children or the dozens to whom he's been mentor or about the whole genreation now clawing at the gates of America's promise. "These seem to be constantly wrestling with a conflict that I'm not even sure they're aware of: Obviously, they're part of the system; yet they seem to feel that making it means beating the system. I don't think we saw it that way. If anything, we erred on the other side--we were going to tie our star to the system and let the system carry us along.

"Maybe that wasn't the best attitude, either," he continues, "but I think it made life easier. Sure, we were ambitious as hell. We wanted the big office and the fancy title, just like these kids do. But it wasn't like we had to have it or we couldn't face ourselves shaving in the morning. It was OK just to have a responsible position with a respected firm, doing something you could feel was other than trivial. It was OK to be a part of something. The young comers today--it's not that they're cynical, exactly. That's the easy answer, but I don't think it's anything that conscious. They're lonely, is what I think it comes down to. And if you're lonely to begin with, you feel like you may as well be lonely at the top.

"As long as these kids are on the move, they're fine. But I'm concerned about what'll happen to them when they stall in their meteoric rises--as, of course, the great majority of them will. As the great majority of every class does, including ours. When the newness wcars off and they have to sit still long enough to look inside themselves, I'm not sure what they'll make of what they find."

"Two different educations were being offered at the Business School. One was official, the other was real."

"Three quarters of them testified to faith in God; 92.5 percent proclaimed a faith in Ad Prac."

" 'You could make money at any level of quality--which meant that quality could get canceled out.' "