"I think the annual ranking of competing managers puts an undue investment pressure on the portfolio for the short run. What I hope to do is find about five partners and say that as far as I'm concerned, ours is a marriage for life," Cabot says.

Harvard will review the companies' performances over a period of about three to five years or from market cycle to market cycle.

In return for the prestige of handling part of Harvard's portfolio, Cabot expects investment advice, economic computers, or whatever help the firms can offer to help increase the overall rate of return on Harvard's portfolio.

"I'm trying to get us all to not only look at our own piece of action, but to look at the whole piece of action--the total portfolio."

Some firms may not wish to divulge secrets of their money management. "Then the trade-off is whether their money management is just so good that I'm going to give up their help and get them into he club because they'll do an outstanding job, or I can find another company with equal or slightly less return willing to have a complementary relationship," Cabot says.

Now Harvard Management is going through the process of selecting the partners with whom Cabot can attempt to set up his experimental "marriage." When Harvard announced its intention to solicit outside managers in the fall, over 160 investment firms from all over the country expressed interest in getting a piece of Harvard's action. At the time, Putnam named George Sigular, James Bailey, and Paul Kuklinski, an outside consultant, to interview and narrow down the list of possible outside managers.

Most of the firms that expressed interest in handling Harvard money started off their letters in the traditional manner of any company seeking anything from Harvard: By listing their Harvard men, stressing their importance to the firm and then stressing the firm's importance to Harvard. So, Putnam and the search committee decided that they would grant an interview to every organization that requested one. They designed a very extensive questionnaire to send to all of the firms, intended partly to deter those not seriously interested and partially to allow the search committee to go into the interview with a reasonable amount of knowledge about each company.

Some firms realized that the scope of the job and relationship that Harvard is asking for just was not within their capability, but nearly 100 firms returned the questionnaire and requested an interview. Now the search committee is busily interviewing two firms a day in an effort to narrow the field down to about 15 as soon as possible. The target time for selecting the eventual firms to manage the $400 million segment of the endowment is July 1.

This massive effort to find four to seven outside firms has already begun to pay off for Cabot and his company because the applicants have shown a surprising variance of interest in the idea of a complementary relationship. Some of the more prestigious, big-name investment houses have not put forth as strong a presentation as the search committee had expected, while some of the lesser-known firms have made very impressive presentations.

Besides looking for firms willing to enter into a complementary relationship with Harvard Management, Cabot's group is looking for a great amount of diversity among the investment styles the firms follow and the type of management they specialize in.

Not all of the firms chosen will be concentrated in Boston and New York; nor will they all be experts in managing, for instance, growth stocks; nor will all be adherents to the Harvard Business School Gospel (amen). Cabot and Putnam still do not really know what style Harvard Management will follow in handling its $1 billion, so they would like to see as much diversity as possible among the firms that will be tapped as information sources for the internal company.

Cabot is also in the process of choosing the eight or ten professional staffers who will work under him. Cabot has already said that he will not allow himself nor any of his employees to sit on the board of directors of "any corporation in which there is any possibility that Harvard might invest," a sharp contrast to the practice of State Street's policy under Bennett.

"I don't care how many safeguards you set up, I see a basic conflict in holding a corporate directorship and maintaining the freedom to act and use information to make investment decisions about that company," Cabot says.

But Cabot also has other new plans for his staff. He insists that because his staff will be a small group, he wants to run it as a team operation. He says now he is considering doing away with all of the titles for each individual and instead having "partners" and "associates" in the firm.

"I don't want anyone thinking he or she is so important around here that we've got to listen to them. With only seven or eight people, we've got to pull together; we can't have a lot of stars. I hope to work on a committee decision-making process and within that have specific individual roles," Cabot says.