|Professor Kit Parker and Dean Youngme Moon Engage NYC Alumni on Innovation|
Walter Isaacson was President Faust’s interviewer and served up a few appropriate puffball questions before fielding sharper questions from the alumni. Each seat included a 4x6 piece of paper and a little stubby pencil. Alumni wrote down a question and then handed the paper to one of a flock of serious people patrolling the stepped aisles of the room, who carried the papers to Mr. Isaacson. The same people later carried radio microphones up and down the steps for the second part of the program, on innovation. But I am getting ahead of my story.
President Faust announced an "80 percent yield" for the entering freshman class of the fall of 2012. This is Admissions lingo for the number of applicants who accepted a place at Harvard College after having been informed of being admitted, divided by the number of people who were offered a place. This 80 percent figure, reported President Faust, is the highest Harvard figure since 1971. My recollection is that Harvard has in the past reported that its yield is the highest of any university. So 80 percent must be some kind of candidate for the Guinness Book of Records. Huzzah! By way of explaining Harvard's high yield rate, President Faust gave examples of the current emphasis on teaching at Harvard. The University is attempting to reward good teachers with the same kinds of recognition that accompany significant research. Good idea!
Isaacson then read out the first alumni question, a brief one on the status of the Science Center at Allston, and the cognoscenti leaned forward to hear her response. President Faust gave a long answer, referring as a point of departure to the impact of the global financial meltdown on the size of the University's endowment.
My Comment: To be specific, the Endowment fell by 30 percent or $11 billion in fiscal 2009, as predicted in Vanity Fair before the numbers were available. In the previous 18 years, the Endowment had grown more than sevenfold. This success was associated with Jack Meyer, former First Deputy Comptroller and investment manager for the New York City Comptroller, who quintupled the Endowment during his tenure. Meyer was reportedly criticized in 2004 for paying himself and key staff eight-figure salaries for their good performance. President Larry Summers, with support from Robert Rubin on the Harvard Corporation, allegedly argued that Meyer was unnecessarily aggressive. Meyer quit in early 2005 and many of his top staff followed him out. Meyer’s private hedge fund did extremely well during the next five years, outperforming its benchmarks by 8 percentage points per year. President Summers resigned in mid-2006 following a well-publicized dispute with women faculty. To maintain its budget in the face of the 30 percent decline in the Endowment in 2009, the University took on $6 billion of debt, with a reported annual service cost of more than $500 million. Some ambitious plans, notably for the Allston Science Center, were shelved. The endowment recovered 21.2 percent of its value in the last two years. It is still $5 billion below where it was in 2008. The University is breathing more easily, but may still feel cornered by fiscal issues.
A new plan for the Center is being refined, reports President Faust. It will encourage both a greater concentration of scientific talent in the science center and will establish designated locations for nearby private businesses to create spaces for commercializing new ideas. In other words, more like Stanford and MIT.
To underscore the message, the rest of the formal program, as I started to say before, was devoted to a discussion of innovation. The Dean of the Harvard Business School in charge of the MBA program, Youngme Moon, began the discussion. She is a short and slender (see photo at top) graduate of Yale (gasps of horror were heard through the crowd when this fact was mentioned) and Stanford, and previously taught at MIT. She was counter-balanced physically by a beefy engineering professor with a background in the U.S. Army, Kit Parker. They engaged aggressively with the audience on where good ideas come from and the culture of competition. Having established that there were innovative companies like Apple and Nike, and not-very-innovative enterprises like the US Postal Service, the two discussion leaders took pains to establish that Harvard was in the former category.
Their underlying thesis is that a university is inherently a fountainhead of innovation. Individuals put out ideas and then through debate they see how their ideas compete with others in a marketplace of ideas. The discussion then circled back to what kind of students Harvard wants to admit and develop. The answer: It wants students that are ready to try new things, and it wants to encourage students in this endeavor. Being ready to try new things means being willing to fail. No more staying in a comfort zone so as to be sure of keeping all the grades at the A level. Harvard likes entering students who have gotten out of their comfort zone and it wants students to graduate having tried new things. Harvard wants to be a place where one can "put out ideas and let them compete and it is okay to have ideas fail and start over, letting the bad ideas go."
My Comment: The idea of a marketplace for ideas is itself, of course, not new. Socrates taught by interrogation and a debate. The idea of a market for ideas was promoted by John Milton, John Stuart Mill and Thomas Jefferson, who are quoted when universities want to defend academic freedom and tenure. But Harvard is saying not just that it wants professors to be free to speak their minds. It wants students and faculty to develop ideas that will be marketable. So Harvard becomes a kind of factory for new ideas, with venture capitalists encouraged to lurk in the shadows to pump money into the best ideas. The idea of encouraging new ideas certainly works for venture capital, which, by the way, was pioneered by a government agency, the Small Business Administration, through its SBIC program. It also works in the nonprofit field as the heart of the social entrepreneurship initiative. Even in government, the idea is applicable to risk-taking to experiment with new measures and new programs to make progress in areas that may not initially be politically popular. But rewards for risk-taking depend on timing. The dot.com investments of the late 1990s soured in 2000. What worked in 2000-2005 was not so profitable in the second half of the decade. Sometimes steadiness and consistency are more important to an institution than taking risks. Universities are properly a marketplace of ideas, but they are not necessarily the best place to commercialize ideas. Bill Gates and Mark Zuckerberg didn’t hang around Harvard after they decided they had a good idea.
After all that we repaired to a post-discussion cocktail party with a parade of servers with small hors-d'oeuvres artistically arranged on elegant glass plates. The biggest risks seem to have been taken by the servers, who had to walk up and down stairs and then face hungry Harvard alumni competing to nab and wolf down the small delicacies. A good innovation for the Allen Room would be a dumb-waiter.
Postscript: After I wrote this I belatedly picked up my April 30, 2012 issue of The New Yorker and read the story by Ken Auletta on Stanford's close ties to business - "Get Rich U." The subtitle is: "There are no walls between Stanford and Silicon Valley. Should there be?" Auletta looks at the other side of the Stanford coin. Stanford faculty who are not in engineering or computer science told him they felt the humanities are neglected. They wonder about the harnessing of Stanford to student and faculty greed. What happened to the contemplative tradition? When the proposal to open up a New York City campus came along, the dissidents were concerned about an excessive focus on applied science in the Stanford proposal. Auletta's story does not note a key fact in the competition among Stanford, Cornell and NYU. Along the way a Cornell alumnus pledged a $250 million gift to the Roosevelt Island campus if Cornell won the bidding. That must have skewed the decision-making, since the campus will be hugely expensive and New York City's contribution is limited to the land and some infrastructure. One person who has seen all three proposals believes that NYU's was the best of all. Once Stanford had withdrawn, the Mayor provided NYU with a substantial consolation prize in the form of space and resources in Brooklyn to help NYU realize its proposal in conjunction with NYU Poly (formerly known as Brooklyn Poly). Although Auletta criticizes the Mayor for giving Stanford a hard time in the final weeks of the competition, the Cornell gift was a game-changer. The Mayor's support of both the Cornell and NYU proposals may turn out to be brilliant. Business Week just came out with a riposte to Auletta, arguing that in the face of competition from China and India, we need more Stanfords. But what is properly a top economic priority for New York City and a valid focus for Cornell and NYU may not necessarily be totally compelling for Harvard. The trade of birthright for soup was a good deal for Isaac's father Jacob, but a bad one for Esau. It's at least worth a little more discussion, which is what alumni reunions are good for besides increasing alumni giving.