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Power Trip
So much of what business schools teach is focused on making the right managerial decisions at a particular moment in time,” notes HBS lecturer Tony Mayo, executive director of the School’s Leadership Initiative. But there’s another way to assess business success, as found in the pages of Paths to Power: How Insiders and Outsiders Shaped American Business Leadership. Mayo (MBA ’88) is the book’s coauthor, with HBS professor Nitin Nohria and former HBS research associate Laura Singleton (MBA ’88). The trio look at what can be learned by stepping back and taking a longer term view of how some of the greatest business leaders of the last century built successful careers.
The book draws on information from the Great American Business Leaders database that Mayo and Nohria developed as a resource for understanding and learning from business leadership legacies. “The whole process of building a canon of business leadership has been fascinating,” observes Mayo. “There are some obvious similarities in the backgrounds of business leaders past and present, but there are other factors in how people gain access to power that have changed in ways that reflect how the country as a whole is evolving.”
How did you develop the data that Paths to Power is based on?
If you study art, music, or writing, there is a list of people whom most scholars would recognize as masters in that field. Business really didn’t have anything like that. So as part of our work for the Leadership Initiative, Nitin and I compiled a list of 1,000 founders or CEOs who led U.S.-based companies for at least five years between 1900 and 2000. To make the list, these leaders also had to have demonstrated at least four consecutive years of top financial performance or have led a business or service that changed the way people live and work.
Our previous book, In Their Time: The Greatest Business Leaders of the Twentieth Century, shows that most 20th-century business legends rose to power through entrepreneurial innovation, savvy management, or transformational leadership. For Paths to Power, we dug deeper into the wealth of demographic information in the database to determine how factors such as social class, education, religion, race, and geographical origin corresponded with elite status in U.S. business over the course of the last century.
Have those factors changed over time?
On the surface, you could say that since it was predominantly white men who made up the business elite in the last century, and most CEOs are still white men, things haven’t changed much. But when you look a little closer, you’ll see that the characteristics of CEOs really have changed. And many of the factors that determine access to power also have changed.
Is the importance of higher education one example?
If you think about what was important for access to power and opportunity in the early decades of the 20th century, who your parents were, whom you knew, and the community you belonged to were key factors. For business leaders, being part of the right society might also mean being either Episcopalian or Presbyterian. Regardless of the depth of one’s spiritual convictions, those religions were social status markers.
Religion as a social marker was supplanted by education after World War II. The GI Bill expanded access to higher education to a much more diverse social class. Until midcentury, a college degree wasn’t considered necessary in business. But in the latter decades of the century, 90 percent of the CEOs we studied had undergraduate degrees, and from the 1970s on, the MBA became a necessary credential to pursue the inside track to power.
Does that mean that social class has become less important in paving the way to success?
If you accept education as a key factor, then you really have to say that social and/or economic class is still important. Part of the widening gap in America between rich and poor relates to access to education. There are communities where 95 percent of the kids go to college and others where they’re lucky if 20 percent go.
Has Title IX or affirmative action legislation helped to level the playing field in the same way as the GI Bill?
The top CEOs in business are usually between 45 and 65 years old, so it takes a couple of generations to see the impact of legislative acts aimed at addressing inequality. It’s been apparent for some time that the GI Bill opened doors for men from many different backgrounds, but we’re just beginning to see the results of Title IX and the civil rights movement of the 1960s.
In 2000, 40 percent of the graduates of MBA programs nationwide were women, and that was a 15 to 20 percent rise over two decades. There has also been a widening of opportunity for African-Americans and other minorities, but the recent backlash against affirmative action has had a negative impact. Progress has been slow: There are now fewer than ten women among Fortune 500 CEOs and only three African-American men, but as the cohort of managers who benefited from laws such as Title IX become senior managers, we may be on the cusp of more change.
What about people who became successful despite their lack of access to traditional paths to power?
We found four ways that people who were considered outsiders made it to the top echelons of business. The first had to do with relocation. In the early 20th century, if you were Catholic, Jewish, or from the South, which didn’t have much of an industrial base, you would probably look for opportunities out west, where social status and standing were less structured and rigid.
Earning professional credentials was another path. A lot of the outsiders on our list, especially those who were foreign-born, were more highly educated than those who traveled the inside track. Personal networking was a third factor. You could create your own advantage if you found a mentor or benefactor or put yourself in a social situation that placed you closer to those already in power. And finally, perseverance was key. Many of the ultimate outsiders on our list founded their own businesses when other doors were shut. They were willing to take risks, start small in their own communities, and create successful businesses through long hours and hard work.
Why is it important to take a look back?
One thing we can try to do in uncovering this information is to help business leaders in the 21st century figure out what’s important in terms of managing their own careers. In addition to this research, Nitin and I are involved in teaching a second-year elective called Great Business Leaders, which draws on cases developed from our database. We talk a lot in class about legacies and how business leaders should be judged — whether purely on their managerial accomplishments or on the sum of their lives. Many students hold these leaders accountable far beyond their business successes or failures. Can you be a great leader and not a great human being? What defines a legacy? These are questions people in business rarely address, but they are particularly poignant for students who are about to launch their own careers.
— Deborah Blagg
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