What They Teach You at Harvard Business School summary

When he applied for his MBA at Harvard, Philip Delves Broughton was living in Paris with his wife and daughter, and working as a correspondent for The Daily Telegraph. It’s fair to say that business was never his passion. But something about the prestigious Harvard Business School, or HBS, attracted him. The school's website promised to teach students leadership, passion and a “moral compass”. 

Once accepted into the program, Broughton found a sheltered, elite campus far from the rest of Harvard. Much of the campus facility felt like a hotel resort, and Broughton quickly understood what people meant when they referred to the “HBS bubble”. 

Over the next few months, Broughton became acquainted with the subjects taught at HBS. The first year’s curriculum covered finance, marketing, operations, among others. In the second year, students could choose the courses they wanted to focus on. 

HBS makes students work on case studies almost exclusively. For instance, in Broughton’s accounting class, students were asked to crack the case of a feudal landlord who wanted to know which of his peasant farmers was the most successful. The case was meant to show the difficulty of divining economic truth.

Broughton quickly realized that he was one of the few people with no experience whatsoever in business. While many students came from a managerial, accounting or entrepreneurial background, Broughton hadn't even used Excel before. He was convinced this high-pressure Ivy League trial could lead him somewhere entirely new, however, so Broughton joined a study group with students of varying backgrounds to prepare the case studies for his classes. 

In marketing, they analyzed Black & Decker's decline and its unpopular DeWalt tool line. The professor emphasized that companies need to understand the customer's wants, not just their own abilities.

In finance, a lumber company called Butler Lumber kept needing more credit as it grew. Mismanaging cash flow was its big mistake. Broughton realized he'd done exactly this in his own life as an undergrad.

In accounting, the professor promised to help them pursue "economic truth", even when it was extremely hard to determine. The mantra to this was assets = liabilities + equity. 

For Technology and Operations Management, they dissected Benihana's novel restaurant model. The detailed case studies had given him the sense that he could waltz into any business and reengineer it for more profitability. By semester's end, Broughton felt more confident. He learned that the older HBS students called this overconfidence syndrome "Beginnihana".

Broughton found that preparing all of his case studies took much longer than expected – the administration told them they should expect “only” about 60 hours of work a week. He found the hours to be longer still.

Slowly, Broughton began getting the hang of business terms and concepts that had seemed totally nebulous before. 

One of his greatest lessons was understanding the importance of risk. He realized that in business, risk is paramount. Not just the risk of something bad happening, but also the risk of something good not happening. The more advanced MBA students measured everything in opportunity cost – the risk of missing out on something good. 

More than that, Broughton learned that risk was almost impossible to assess definitively. Indeed, many business measures turned out to be more of an art than a science. In accounting, for example, messy rules and biased interpretations obscured economic truth. Companies frequently played the “numbers game”, meaning that they adjusted their earnings to appear more profitable than they actually were.