Goodbye, Mr. Chips It Ain't

When future generations of Harvard business school students debate the qualities of leadership, what will they make of the rocky, 15-year administration of Dean John H. McArthur?

The introverted, uncharismatic McArthur, 60, announced on Mar. 6 that within six months, he expects to quit his job as head of the world's richest and most powerful B-school. McArthur will leave a mixed legacy: While praised for his adept fund-raising, he has drawn fire for the sluggishness with which Harvard has updated its MBA curriculum--years after rival schools launched major renewal efforts. Harvard's $40 million executive education business also has lost market share, and recent efforts to revamp the school's $60 million publishing operation led to embarrassing management turmoil.

"COMPANY MAN." Last year, Harvard fell two places, to No.5, its lowest finish ever, in BUSINESS WEEK's biennial ranking of the best business schools. "There are a lot of parallels between Harvard and General Motors," says the former dean of a rival B-school. "John is a conservative company man who leaves Harvard in a catch-up mode rather than a leadership mode. That is sad."

Indeed, the timing of McArthur's announcement surprised many faculty and students. In December, after a three-year review, Harvard's faculty finally approved a sweeping reform of the MBA program. Some of the most critical changes, which include reduced class sizes and a 16-month MBA track, won't be implemented in a pilot program until next year. "It's hard to imagine the head of IBM resigning after announcing radical changes and then leaving it up to someone else to implement," says Nicholas A. Grouf, a second-year MBA student.

While supportive of the changes, however, McArthur did not lead the effort nor serve on any of its numerous committees. Instead, he delegated the job to other administrators and faculty, many of whom hold him in great affection despite his mixed record. "We are very sad to see him leave, but on the other hand there is a sense of excitement," says Robert Simons, a Harvard professor. "The commitment to continue the renewal process runs deep."

Who will finish the job now? Although Harvard President Neil L. Rudenstine says the university will seek candidates from inside and outside the school, most observers are placing their bets on a handful of Harvard insiders, such as Kim B. Clark, a popular professor of technology and operations, global business expert Chris Bartlett, or Leonard A. Schlesinger, a senior associate dean who has been a major player in the curriculum review. "I'd be surprised to see a radical departure in the leadership of the school," says Colin Blaydon, a former Harvard professor who is now dean of the Amos Tuck School of Business at Dartmouth College.

Many at HBS are hoping for a substantially more visible leader than the publicity-shy McArthur. When Harvard arranged last year to use America Online for its internal communications network, some MBA candidates asked the dean to establish an E-mail address. "The dean just flat-out refused because he thought he would get too many letters to deal with," complains one student. School officials confirm that McArthur is not online.

Also embarrassing has been the well-publicized troubles behind McArthur's efforts to get more revenues from the school's publishing operations. The school wooed an outsider, former John Wiley & Sons Inc. President Ruth R. McMullin, to head up the operation in 1991, handing her a compensation package of nearly half a million--almost twice as much as the president of Harvard University. She lasted just over two years, going through three editors of Harvard Business Review during her tenure.

MORE PROFS. To be sure, the man who arrived on campus from Vancouver as an MBA student in 1957 and never left has compiled some significant achievements since taking over in 1980. On McArthur's watch, the school's endowment rose nearly sixfold, to $600 million, from $106 million, as annual gifts jumped to $30 million, from $8 million. He also increased endowed professorships to 81, from 50 in 1980.

Yet some argue that McArthur has been more focused on Harvard's bricks and mortar than on its intellectual substance. He invested some $200 million in new buildings and infrastructure and paid meticulous attention to the school's appearance, insisting that the grounds be perfectly manicured. All the while, HBS' reputation has been slipping. "McArthur put the school on a solid financial footing, but now it's time for a new leader with a new vision," says Willy Walker, a second-year MBA student. At the very least, it's probably time for a dean who will agree to use electronic mail.

Before it's here, it's on the Bloomberg Terminal.