Drew Gilpin Faust, Harvard's 28th president and its first woman president, was in New York City on May 3 to celebrate Harvard's 375th year and reconnect with alumni. It was an interesting location, the Allen Room at Jazz at Lincoln Center, on the 5th and 6th floors of the Time-Warner building at Columbus Circle. The huge room is surreal, with the backdrop of New York City arrayed through two walls of glass squares, an exterior wall that is flat and an interior one that is curved. As the evening rolled on like a play in a Greek amphitheater, the lighting darkened and added to the entertainment value of the event.
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. For those unhip enough not to know the "yield" lingo, the numerator is 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 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, taking up a big piece of the discussion period, referring to the impact of the global financial meltdown, which seriously affected the size of the University's endowment.
My Comment: Some background might be useful. The Endowment fell by 30 percent or $11 billion (as predicted in Vanity Fair that year) in fiscal 2009. In the previous 18 years, the Endowment had grown more than sevenfold. This success was associated with Jack Meyer, former investment manager for the New York City Comptroller. But Meyer was reportedly criticized for paying himself and key staff eight-figure salaries for their good performance. Robert Rubin on the Harvard Corporation and President Summers argued that Meyer was unnecessarily aggressive. Meyer quit in 2005 and many of his staff followed him. (P.S.: Meyer's private fund has done well since then.) President Summers resigned in mid-2006 following a well-known dispute with women faculty. To maintain its budget in the face of the 30 percent decline in the Endowment, the University took on $6 billion of debt, with a reported annual service cost of $517 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, but the University is breathing more easily.
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. 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 graduate of Yale (gasps through the crowd when this 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 U.S. 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. This 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. What may have been appropriate in the 2000-2005 period didn't work so well 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.
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