They were certainly an impressive lot. They include Peter McCulough, CEO of Xerox Corporation during its glory days of the 70s, Jack Davis, founder of the casino empire Resorts International, Tom Murphy, creator of capital Cities/ABC, Jim Burke, CEO of Johnson and Johnson, and many other names that were famous in their 70s/80s heyday. Fortune referred to them in 1974 as "the class the money fell on" (though by today's standards, most were not then all that rich) and 45 percent of the class became chief executive officers of one company or another. The book looks at their careers as a cohort; they make for fascinating reading.
Like any cohort group, the class had a number of characteristics in common, most of which favored its members. Most of the class was made up of World War II veterans, so those that survived had undergone experiences and often displayed courage that were alien to the life histories of a later generation. The class graduated in 1949, just as the brief postwar recession ended, and the long 50s boom began. More important, the managerial ranks of U.S. business had been thinned in the previous 20 years by depression and war, so for the young and able, promotion was quick.
The class differed from HBS classes of the 60s and later in having no women, and only one African-American (who dropped out.) It also had one important difference from the HBS classes that preceded it: it contained a relatively high percentage of students from humble social-economic backgrounds. The G.I. Bill of Rights enabled such students to fund an M.B.A. in a way that had not been possible for their pre-war predecessors, and would only become possible again with the advent of readily available student loan funding in the 1960s. It would have been interesting to look at the differences in business style (and indeed ethics) that were produced by this social change, for which the '49 cohort was a pioneer.
The combination of wartime experience and (in many cases) having come up the hard way helped the class in the long run. Immediately on graduation, almost all the class joined large corporations, as was normal for the "gray flannel suit" generation. However, as entrepreneurial opportunities appeared, later on, a number of them were prepared to abandon the safe corporate world and branch out either into entrepreneurship or, more frequently, into small company top management. Nevertheless, the lack of entrepreneurship, compared to a modern HBS class, is notable -- but then the first modern venture capital company, American Research and Development, had been founded by HBS professor George Doriot only in 1946.
Callahan, and indeed Fortune 1974 somewhat overstates the case for the importance of this class. Only one, Lester Crown, whose family controlled General Dynamics, became a billionaire, or close to it, and none were at the top of General Motors or IBM, surely the titans of the postwar era. McColough, indeed, is a classic case of a reputation that appears overblown on closer examination -- his main contribution at Xerox was to set up the famous Xerox PARC laboratory in California, responsible for much of the hardware and software of the PC revolution of the 1980's and 1990's, and then totally fail to capitalize on the innovations that PARC produced. The true progenitor of Xerox was his predecessor, Joseph Wilson, who spent a decade making losses at the obscure Haloid Corporation before finally producing the Xerox 914, which, when combined with the almost equally innovative step of leasing rather than selling the machine, and charging a royalty per copy, led the company to success. Wilson was an HBS graduate too, but class of 1934, a non-vintage year, about which nobody wrote books.
As for ethics, I don't see much of a difference from today's graduates, given the same environment (clearly if today's graduates emerged into an environment in which gray flannel suits and conformism were mandatory, their behavior patterns would be affected thereby.) Vince Gregory made a name for himself around campus with his cute story of how he'd cut up his Air Force parachute to make a wedding dress; as a result, he was unable to bail out when his C-64 Norseman hit a storm, and his co-pilot's life was accordingly endangered. Davis' success at Resorts International started with a Bahamian casino managed by a partner of mafia boss Meyer Lansky. Crown barely avoided indictment in the 1970's in a bribery case, and in the 1980's for overcharging the Pentagon by General Dynamics (in both cases, associates were jailed.)
Figgie was investigated by the SEC for lying about assets in an Initial Public Offering prospectus, sued by various business partners and stockholder groups, fined by the government for non-disclosure of stock deals, and eventually got his own back by publishing "Bankruptcy" in 1995, which claimed that the Clinton administration was sending the government bankrupt, just as the federal budget moved decisively into surplus. There are only a few cases of proven malfeasance -- but there are also not that many cases of conspicuous success.
"We didn't care about money in the same way" said Marvin Traub, HBS '49, later Chairman and CEO of Bloomingdales. From a man who created in the 1970s the temple par excellence of vulgar conspicuous consumption, this is a fairly breathtaking statement. Figgie, too, claimed in 1969 not to be money motivated. In reality, it's clear that the Class of '49 cared about money just as much as any other group of aggressive young MBA's, no more, no less. It's simply that, in their generation, unlike 50 years later or indeed earlier, it was considered un-cool to say so.
John Shad, MBA'49, had a conspicuously successful career at the brokerage E.F. Hutton (pioneering the junk bond market fifteen years before Drexel's Mike Milken), then a notably aggressive period as Chairman of the Securities and Exchange Commission, during which it prosecuted the big insider trading cases of the 80s. On retirement, he endowed a Chair at Harvard Business School -- in corporate ethics.
If Callahan's thesis is to be believed, Shad's bequest was wholly counterproductive. Fortunately, such a verdict would appear to be unduly harsh. The level of ethics displayed by business is far more dependent on the prevailing business climate (encouraging conservatism in 1949 and piracy in 1999) than on any generational moral virtue or decline.
Martin Hutchinson has an MBA from the Harvard Business School.
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