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The Golden Passport: Harvard Business School, the Limits of Capitalism, and the Moral Failure of the MBA Elite

It took me longer than expected to read The Golden Passport: Harvard Business School, the Limits of Capitalism, and the Moral Failure of the MBA Elite – and not just because the book is so dang thick. It mostly took me longer because I found it so engaging and wanted to make sure I understood what he was saying.

This book is terrific but – sadly in my view – it may not have much influence. Here’s why…

• Duff is harsh
• The book has been neutralized
• HBS is concerned about protecting its brand

Duff’s account of Harvard Business School, it’s founding and place in the world is wonderfully told, well-researched and compelling. His writing is strong and calls HBS, it’s faculty, students, alumni and its related institutions to repent and truly live out their mission – to educate leaders who make a difference in the world. In the tradition of the prophet Amos or Jeremiah, he is relentless and plain old harsh at times.

It’s not surprising, therefore, that The Golden Passport went over, as one faculty member told me, “like a lead balloon.” But another observed some weeks ago that the reaction on campus had been “surprisingly small.” Perhaps the Dean’s comments recorded in many places, including the Harvard Crimson, were just enough to neutralize the author’s substantial critiques before they could be heard and engaged.

Besides declaring that HBS isn’t what Duff claims it is, I’ve heard and read little from the school that addresses the substance of his writing – his take on the history, his claims about the case method, the paucity of independent research, the illegal activity of some of high-flying alumni, and the propagation of dangerous ideas that contributed to bad behavior and economic collapse. The Golden Passport isn’t perfect but it could catalyze a conversation on campus that might be truly transformational.

Circling the wagons in order to protect a brand is a strong impulse, but Duff McDonald is more than a “barbarian at the gate” so why not:

• Bring him to campus to speak?
• Offer him a fellowship for the year?
• Invite him to teach a course on the theory of the firm in the EC curriculum?

Generous gestures like these might actually help us to engage his ideas substantially rather than just declare for the thousandth time that we are the leaders and move on.

Duff writes a sweeping history of HBS with names, dates and lots of stories that were completely new to me. The whole tale is amazing AND it isn’t all pretty. But that’s how it goes, right? Every institution needs to own it’s, uh…, story – both the good and the bad – if it’s going to move forward well. To this end he describes the men like Edwin Gay (first Dean and the force behind the Case Method), Marvin Bower (McKinsey & Co. managing director), Michael Jensen (professor and propagator of “principal-agent theory” and “shareholder primacy” as the fundamental – if flawed – narrative for management purpose) and a host of others I would have recognized only because so many buildings on campus bear their names. Duff writes about their role in the HBS story and their ongoing influence today.

Duff articulates a mission that – even 100+ years into its existence – the school could embrace. The second Dean, Wallace Donham, suggested that HBS could have a strong moral role in society:

…the traditional professions were falling down on the job of providing moral authority at a time of rapid and dislocating social change… The wellbeing of society itself demanded that business be taken more seriously by the Ivory Tower. As the trustee of society’s material resources, the businessman had greater responsibilities than to his own bottom line. And as a trustee of society’s educational system, Harvard had responsibilities to teach that to him. The study of business, they argued, could produce graduates capable of solving the human problems that had arisen because of the rise of modern business itself. (pp. 24-25)

Few outside the school – except perhaps certain alumni – would argue that the school has thoroughly engaged this mission. But Duff points a way forward, asking the school to:

• rethink the risks inherent in shareholder capitalism
• debunk the pursuit of short-term share price maximization,
• understand inequality
• reconsider the role of the CEO
• articulate a comprehensive and workable “theory of the firm.

Duff wrote compellingly about the contribution that HBS made during WWII when they suspended the MBA program and took a role as center for logistics and statistics. The school stepped up in service of the country. Robert McNamara, then a professor at the school, was a key figure during that effort:

McNamara was later credited with helping the air force get 30 percent more flying hours out of its B-29 bombers by scheduling them more efficiently. About this there is no debate: Robert McNamara and his colleagues at HBS played an important role in helping the United States win World War II. (p. 265)

It made me wonder whether the school would be prepared to take such a step today in a similar crisis – or maybe a different one calling for living wages, clean water, safe communities and a sustainable economy for the United States or the Americas.

Duff calls it like he sees it when he says plainly that the motivation for much if not all of what goes on at HBS can be explained by money: Cases, Publishing of the HBR, Executive Ed and HBX (HBS online learning). Of course each of these parts of the HBS project can be justified at least in part as self-supporting.

Duff completely disparages the notion embraced by many at HBS – that business might be recognized as a profession:

…that business can be a profession, and that the business school’s central mission can be to make it so. While the idea is pure nonsense — there is not, and never will be a coherent systematic, and clearly bounded body of knowledge underlying business, nor is there a governing body with a code of conduct and the power to sanction members… (p. 566)

But if you take law or medicine as examples, why couldn’t business people establish national or state associations, establish testing of common core knowledge, write codes of professional ethics, and enforce behavior through licensing? If lawyers can be disbarred for unethical behavior and doctors can lose their licenses to practice through malfeasance, why couldn’t business personal embrace a similar way of ordering their work? And I’m not the only one who wonders about this, c.f Dean Nitin Nohria and Rakesh Khurana’s, It’s Time to Make Management a True Profession. (HBR Oct. 2008)

The Golden Passport has some sections that seem to me needlessly harsh and personal. He sometimes crossed over from witty critique to outright disrespect in his comments. He takes aim at senior faculty like Rosabeth Moss Kanter, Bill George, Michael Porter, Nancy Khoen and Dean Nohria. He uses language that feels mean when he talks about the motives of students. In all these places, I get his point but it doesn’t help him make his case. For my part, both as a Harvard Chaplain and as a graduate student who crossed the river over 20 years ago to take classes at HBS, I’ve experienced profound generosity, kindness and sincere friendship from members of the HBS community. And this from those who disagreed with my theological, political, social and economic viewpoint. Describing the behavior of the faculty and students, pointing to the outcomes, and letting the reader contemplate their motives might elicit less defensiveness.

• I still don’t understand the roll of the righteous manager if his morality and ethical behavior are – as Duff claims – largely beside the point:

The problem isn’t the morality of managers within firms. The issue eating America from the inside out is one of overall fairness and equity, and whether the basic structure of corporate America, as it is currently defined, is fundamentally flawed.. The really important issue isn’t the morality of individual managers, although that certainly matters, but the morality of the firm — and the capitalist economy itself. (p. 566)

To me this feels like a rather despairing comment. To discount the leadership role of managers sets aside their behavior in addressing the role of the firm in the economy. Maybe I’m biased, but managers who understood their role as leading organizations capable of addressing what Ron Heifetz at the Kennedy School calls “adaptive challenges” might be just what is needed to address the challenges of inequality. If the school is going to become the sort of place and the future MBA’s the sort of people that Duff is looking for, we must surely need a new sort of leader.

Duff comments on this problem:

…professors Piper and Paine were focused squarely on the challenge that has bedeviled the teaching of ethics at HBS from its very start, and that is the winner is rarely inclined to question the system underlying the game which they have won.” (p. 457)

Duff included this additional contention from Piper and Paine:

A focus on maximizing along only one objective function [shareholder return] can lead to a deadened imagination and a foreshortened measure of empathy. And this , in turn, is a poor basis for strategic calculation in business. (p. 457)


• It is possible that Duff McDonald’s book will become a dog-eared reference for incoming MBAs for many years to come – the text is filled with references that students might find useful in “cracking cases” and might even alter the course of discussion in classrooms. But I’m mostly hoping that a few more people will read it and that doing so will give us all courage to push out the boundaries of the conversation on campus at Harvard.

• A few weeks ago 2017 Class Day Student Speaker Andrew Cone told his graduating friends and the rest of those assembled on the lawn in front of Baker Library, “It is better to engage imperfectly than abstain indefinitely.” And this is my humble attempt – I’m hoping that others who know more and can say more will jump in – especially my student friends, faculty, and alumni from HBS. It’s not too late! And let’s get into the weeds and talk about the details. That’s what we’re here for.


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