The following article entitled "The Founding of the Harvard Business School" is reprinted from the address of Professor Edwin F. Gay on the occasion of the dedication of the George F. Baker Foundation, the School of Business Administration, June 4, 1927.
Twenty years ago, on June 1, 1907, President Eliot announced at the Detroit meeting of the Associated Harvard Clubs that the university proposed to establish a graduate school for training in business. With a grant of $12,500 a year for five years from the Rockefeller Foundation and with an equal annual sum secured by Professor Taussig from friends of the cause, the Corporation was enabled on March 30, 1908, to establish the Graduate School of Business Administration. It opened its doors to students in September, 1908.
President Eliot believed that, by the end of the five-year period for which the modest but adequate sum had been raised, the school would have so clearly demonstrated its usefulness that its future permanent support would be ensured. When asked if he meant to apply both quantitative and qualitative tests to such a measure of success, he answered firmly: "Both." I demurred, insisting that at least fifteen years, rather than five years, would be required to settle the foundations of such an enterprise, and that after the first experimental period much larger financial support would be required. Making light of difficulties he declared his confidence without reservations. "It will fill a great need, he said, "and we may trust, therefore, that it will be amply provided for."
The growth of the school was some-what slower than President Eliot had expected, but he was satisfied with its progress, and President Lowell, who from the beginning had been deeply interested, declared an end to the period of experiment by his act in establishing it as an independent faculty, with an organization like that of the other professional schools of the university. But the steady increase in numbers of students brought new and pressing problems, which, when Dean Donham took over the leadership, had become formidable. The growth of the institution demanded urgently a great expansion in physical and personnel equipment. These serious difficulties have been overcome with remarkable skill and with daring energy. The planning vision of Dean Donham and the magnificent generosity of Mr. Baker have raised an edifice surpassing the dreams of those who assisted in its modest beginning. Indeed, to an outside observer, it seems to be an Aladdin-like creation--these stately buildings arising overnight from a swamp, this provision of every imaginable facility. And truly there has been a magic at work, a creative imagination embodying in material forms a spiritual force. The first donors, backing an un- formulated project, the many early helpers among business men, led by Major Higginson, who in those initial years gave unflaggingly of time and counsel, would, we may imagine, look with amazement upon this splendid scene. But they would also look with pride, and their pride would be justified, for they, too, share in this great achievement. A great seat of learning gave her best endeavors to meet the need for the trained men they craved for business; it gave its full recognition to the profession they held in honor; here and now in return is a concrete symbol of what American business is prepared to give and be.
To the teachers who were called upon to find the answer to the demand of business, to give classroom expression to vague aspirations, the first and, indeed, the abiding question was. What is essential to be taught, and how can it be taught? Among the confusing array of business activities which must somehow be constrained within courses of instruction, where should emphasis be laid? If business itself answers "Marketing," or "Factory Production," or, if more inclusively, it answers "Management," and there should be no academic equipment in these fields, what should be done? What shifts and devices, what combinations of planning and improvisation what watchful anxiety and what adventure, lay on this frontier of the unknown! If there were no teachers anywhere to be found, then let young pioneers train themselves as teachers. If there was no teaching material in print, then it must be quarried out of the mine of current business practice and a Bureau of Business Research must be created. If no case books had yet been collected, business men could be induced by the persuasion of Mr. A. W. Shaw to exhibit themselves and their troubles as clinical material--walking cases. In the meantime, teaching of the established type could go on in the subjects that already had some academic traditions, pending alterations. And in other subjects, the matter of the course could be dissected and outside specialists brought in to handle the severed members. But suppose these eminent business practitioners from whom you asked a talk on Revelations insisted on filling their allotted time with a discourse on Genesis? Then here was simply another kink to be straightened out.
In all this arduous but joyful experimentation, no one of us. I think, had any idea that what we were doing was only an ephemeral experiment. The act of faith in founding the school was being transformed into permanence. We knew that in reality the business world had summoned the school into being, and as we worked we were conscious of an increasingly favorable environment. The old training for business, formal or informal apprenticeship, was breaking down; the rule of thumb was giving way to instruments of precision and the intelligence to handle them. The majority of college graduates, even without any specialized education, were seeking business careers, where only a generation ago they were entering the older professions. There was dawning for business--and those who stood highest saw it--the day of systematized teaching of business principles and practice, just as earlier the same experience had come to accounting, the first business profession, to engineers, lawyers, doctors and clergymen. And if knowledge is to be systematized and taught, it must be made open and accessible. This logical corollary, not at first fully perceived by business men, with their jealous traditions of secrecy, was of necessity emphasized, though with caution, by the new collegiate business schools. But business men themselves were beginning to realize that their individual interest coincided with that of larger social groups and were gradually becoming more willing to share their knowledge. Trade associations were proliferating and they were busy in formulating codes of ethics. Business men were enjoying in the United States the esteem and respect paid to a high social class. These are the signs of an emerging profession, and the professional school, at once a result and a cause of the transformation had reason to believe itself a stable institution and to set its standards high.
Yet there still remained many skeptics among business men. There were some few who voiced their belief that the only training for business was acquired at a tender age with a broom on an office or factory floor. There were some others who liked to employ college men but only after someone else had "broken them in." A number conceded that a collegiate business school might impart some useful knowledge but it could not train executives. Business executives we were told, like Michel Angelos and Shakespeares, are born, not made. I remember well a question put to me, in the first year of the school, by one of these skeptical visitors. He was as it happened, a firm believer in West Point methods. "What, apart from mere technical knowledge, readily acquired and honesty, much more common than is sometimes thought are the qualities requisite for success in business?" I told him: "Judgment, courage, and that combining and balancing quality which may be called resourcefulness." Perhaps I might better have used the good old Yankee word "gumption." He smiled at me indulgently. "Well," he said, "you can't teach those." The response was obvious: "Does West Point training aid in developing successful Army officers, and what apart from technical knowledge and honesty, makes for success in that profession?" He meditated a moment, and then replied: "I see your point." And he agreed with me that while a good military school or staff college cannot guarantee the quantity production of Napoleons and Lees, it can and does produce competent officers of high professional spirit. I went on to say that even what he called "mere technical knowledge" goes a long way in forming successful character. It is basic for judgment; it enhances courage by dispelling baseless fears. If you will define and analyze "gumption," you will find that knowledge and training play their part in it. Indeed, the honest search for knowledge is a cardinal virtue and a builder of character. One of the most constructive minds I know in business calls it the First Commandment.
From the outset, therefore, we had no doubts as to the purpose and possibility of this professional school. It should seek to train business executives and be satisfied with nothing less. Otherwise it forfeits its right to stand on the same level with the older professional schools. Its graduates must of course, start in the lower ranks and many may never reach the highest commands. Over their heads will often pass, though perhaps less frequently in the future, gritty, gifted men from the lowest ranks. A progressive society must follow Napoleon's maxim of "careers open to talent." But accumulating experience confirms the policy of the school. There flows thence a stream of young men who carry from the school into the business world professional standards, a genuine respect for the intellectual and moral requirements of modern business and a continuing thirst and capacity for knowledge. These are the subalterns whom experience fashions into commanders. These are the men who have made themselves fit to learn and improve the art and science of business management.
The art and science of management: here is the real center of business. This is the thing which business men of the older fashion meant when they said executives could not be trained outside of business. Now they are realizing how little business itself knows of this delicate and difficult matter. It applies not only to the factory but to all activities of business; it deals not merely with machines and methods, but with all the ordered work of human beings. It has still to develop its wider applications; it has yet to make of the factory nomerely a mechanizing evil necessary to society but itself a civilizing agency. And the far-sighted leaders among business men, both here and in Europe are coming to see what it implies in the ever nicer adjustment of economic means to social ends, which is the meaning of management. "Human engineering" now is demanding the cooperation of highly diverse scientific specialists--economists, statisticians, political scientists, historians, psychologists, biologists, physiologists, as well as men of the medical, legal, and engineering professions and always at the center the business planners and coordinators.
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