01 Dec 2008
A Force for Good
John McArthur’s impact extends far beyond his fifteen years as HBS DeanRe: Jeffrey Cruikshank (PMD 51); Lou Gerstner (MBA 1965); Linda Doyle (PMD 49); Jim Wolfensohn (MBA 1959)by Jeffrey L. CruikshankTopics:
My son Joe, then four years old, approached the burlier of our two dinner guests. “Bet you don’t pillow fight.”
This was odd. Joe was shy and didn’t usually approach strangers.
“Bet I do,” John McArthur replied. He arched an eyebrow provocatively.
“Oh, John,” his wife, Natty, sighed, guessing where this might be going. “Let’s not.”
Joe left the room briefly, and then returned with two long gray pillows off the couch in the TV room. He handed one to McArthur, who still had the oversized frame of the football player he had been a half-century earlier. McArthur accepted the pillow with a nod: the duelist receiving his weapon. Then he immediately, decisively, knocked Joe down — making sure, of course, that his tiny adversary landed safely on the living room rug.
Joe, astonished, climbed back onto his feet. Furious but laughing, he picked up his pillow and went after the recently retired Dean of the Harvard Business School.
John Hector McArthur was born in 1934 in Vancouver, British Columbia, and grew up somewhere between the right side of the tracks and the wrong side of the tracks in a suburb called Burnaby, which borders Vancouver on the east. His father was a grain inspector for the government, and his mother raised their three children.
During his years at Burnaby South High School, he didn’t establish himself as a member of any particular clique, instead associating with many different kinds of people. He dated a classmate, Natty Ewasiuk, whom he had known since the eighth grade, and played football. Another classmate, Rich Eustis, later became an Emmy-winning television writer; Eustis confessed to TV Guide that he based the character of Eric Mardian — the leather-jacketed genius in the ABC series Head of the Class — in part on McArthur. “He was the terror of the twelfth grade,” recalls Eustis. “He was a real tough, volatile type of guy. He played football. He was later rumored to be the smartest kid ever to graduate from our high school.”
During those same years, McArthur worked part-time in a sawmill run by the Koerners, a local immigrant family who had done well for themselves and enjoyed sharing their good fortune. Recognizing McArthur’s potential, the Koerners offered to help finance his college education — an unusual next step for members of his high-school class. He and Natty enrolled at the University of British Columbia in the fall of 1953, and he completed his degree in forestry in 1957.
At age 23, he and Natty — who had made it clear that she had no intention of spending her life in the Canadian north woods as the wife of a lumberjack — came to Cambridge in pursuit of an MBA. He had been admitted to both MIT’s Sloan School of Management and HBS. They stood on the Weeks Footbridge and, on the spot, decided on Harvard.
Despite his obvious talents, life at HBS wasn’t necessarily easy for the young Canadian student. He arrived in class the first day wearing a bright pink shirt, only to discover that the dress code was sport coats and ties. The first time he dared to speak in class, he used the Canadian pronunciation of the word “schedule” — SHED-yool — and was none-too-gently mocked by his professor and classmates.
One of the students in the classroom that day was an Australian named James Wolfensohn. “The pink shirt I do not remember,” he says with a laugh. “But I also pronounced ‘schedule’ incorrectly, and I also was corrected in real time. So John and I struck up a friendship — two Commonwealth students with an interest in sports, with no money, and with poor pronunciation.”
McArthur graduated in 1959. He hadn’t contemplated becoming a professor, but was persuaded to stay on at the School. In 1963, he completed his DBA and joined the faculty. Over the next seventeen years, he moved up through the School’s ranks — teaching finance, writing cases, and doing more and more administrative work. During Lawrence Fouraker’s Deanship (1970 to 1980), in particular, McArthur held a range of increasingly important administrative positions.
He also took on a highly unusual outside-world assignment as a Trustee in Bankruptcy of the Penn Central Transportation Company. It was an astoundingly complex legal and administrative challenge. The railroad at the heart of the legal proceedings had been pieced together through more than 7,000 separate acquisitions. The bankruptcy judge told McArthur that the average railroad reorganization up to that point had taken 23 years, that expenses in the case were running at $100 million a year, and that he wanted a speedy resolution.
“Speedy” turned out to be the better part of a decade. For much of the 1970s, McArthur fielded an all-star team (including future Secretary of State Warren Christopher and future IBM CEO Lou Gerstner MBA ’65) to resolve the bankruptcy in a way that best represented and protected the interests of a complex set of stakeholders.
Harvard president Derek Bok’s 1979 annual report, although mostly complimentary to HBS, criticized the School for being too ingrown, and for failing to conduct research at a high enough standard. An uproar ensued, with then-Associate Dean John McArthur serving as an intermediary between the University, Dean Lawrence Fouraker, and the School’s alumni, many of whom were incensed at Bok’s critique of their alma mater.
As the dust from that flap was settling, Fouraker completed his tenth year in office and decided to retire. McArthur was named the School’s seventh dean in 1980, at the age of 46.
The School at that time stood at a crossroads. It was, by any measure, the preeminent business school in the world. Indisputably, it was the largest, in terms of MBA enrollment, size of faculty, endowment, and operating budget. Its research budget alone — some $15 million in 1980 — was larger than the entire operating budgets of most business schools. Each year, schools and businesses around the world purchased millions of copies of HBS’s famous case studies. Something like 6,000 young people applied each year for admission to HBS. Of those, about 1,000 were admitted; and of those, about 80 percent enrolled — one of the highest “yield” rates in higher education. And on the other side of graduation, HBS alumni traditionally enjoyed astonishing success.
It seemed an easy job to walk into.
McArthur, however, knew better. He had spent more than two decades at HBS, and understood its culture intimately. He knew that some of Bok’s criticisms were on target. Better than most, he understood that the School could not simply count on momentum to retain its leadership position into the future. In fact, in August 1979, he had written a fourteen-page letter to Bok summarizing their discussions over the previous few years, which had focused on new directions for the School.
These included rebuilding the self-confidence of the tenured faculty, and creating a shared sense that the School’s mission was still valid and powerful. “The absence of a broad consensus in this very particular sense,” McArthur wrote, “leads to many other matters that should be possible to handle easily becoming intractable.”
For Bok’s benefit, McArthur reviewed problems with the School’s appointment processes. He listed faculty areas that had grown unproductive and suggested “emerging fields” that the School had to tackle: the global economy, ethics, and entrepreneurship among them.
He also knew that the School’s physical plant was aging. Although Fouraker had begun to renovate the campus — most of which had been built in the same eigh-teen-month period in the mid-1920s — 17 of the School’s 26 buildings needed minor or major renovation. And although Fouraker had stopped the School’s runaway growth and shored up its finances, there were no guarantees that times would remain good, especially as the deep recession of 1980 set in. The new Dean would have to keep his eye on the bank account, as well as the horizon.
HBS professor emeritus Tom McCraw, the School’s Pulitzer Prize–winning historian, has made the analogy between McArthur and Dwight Eisenhower — a style of “hidden-hand” leadership that few understand, let alone master. In a book published after McArthur’s retirement in 1996 — The Intellectual Venture Capitalist — McCraw and I (with our coauthor, Linda S. Doyle PMD 49, 1985) summarized that style in eight points:
- Don’t give direct orders. Instead, listen, persuade, and cajole.
- Build consensus on the institutional mission.
- Embrace a strategy and create a short list.
- Define the partnership and facilitate productive teamwork.
- Enhance creativity through more flexible organizational structures.
- Bet on people.
- Think big.
- Say no respectfully.
McArthur liked to say that the faculty was the “whole ball game,” and in fact, he lavished time and attention on his faculty colleagues. He went to great lengths to help them succeed as individuals — but always with an eye toward the larger institutional mission. “Research and course development are the foundation on which this School is built,” he told a graduating AMP class in 1983. “Outstanding programs can only remain responsive to changing times if they are driven by intellectual capital formation.”
The Dean’s hands-on attention embraced not only the HBS faculty, but also friends, staffers, associates, and friends of friends, all up and down the many hierarchies he traveled through. He cultivated warm relationships with an extraordinary range of people: cabdrivers, university presidents, corporate titans, custodians, athletes, motorcycle cops, tree surgeons. He thanked people profusely for their efforts on behalf of the School — his distinctive heavy scrawl jumping across a half-sheet of stationery from the Dean’s Office. He sent cards, flowers, laptops, cases of champagne, and other kinds of recognition to individuals who in some way had distinguished themselves. When a faculty secretary finally made a long-anticipated visit to her ancestral home in Italy, he gave her a camera and asked her to bring back photos to show him. An employee who was seriously injured in a car accident was astonished to receive a visit from McArthur in the hospital even before his frantic wife could get there. It is rumored — but not confirmed — that he welcomed premature babies into the world before their expectant fathers could arrive on the scene.
In part, this was about managing an institution. McArthur saw HBS as essentially a small community — one that a leader could easily get his or her arms around. But equally, it was about McArthur himself: a warm and generous man who makes friends easily, and is intensely loyal to those friends.
A secondary focus was the physical campus, on which he had a huge impact — expanding the Morgan Hall office building from 53,000 to 116,000 square feet, adding the Shad Hall fitness center, and completing the Class of 1959 Chapel. He also effectively banned most traffic from the campus, and directed the planting of literally scores of trees and thousands of flowers where cars and trucks had once dominated. (Tom McCraw has speculated that this was McArthur’s way of doing penance for his years in the Koerners’ sawmill.) As in all of McArthur’s endeavors, he approached the campus strategically. For example: When the fate of the Dean’s House — built in the late 1920s at the insistence of George F. Baker, who had given the funds to build the campus — came on the table, McArthur solemnly told his University superiors that the building was obsolete and crumbling, and should be razed. Harvard, horrified, ruled out any such demolition. With seeming reluctance, McArthur then proposed to invest heavily in the building to create a guest house for visitors to the campus — which, according to friends on the faculty, is what McArthur had in mind in the first place. Natty McArthur oversaw the rehabilitation, and the result was a stunning new campus resource that soon proved its worth to the School.
Meanwhile, McArthur undertook the revitalization of the School’s publishing activity. Although the Harvard Business Review has been published continuously since 1922, and cases have been researched, written, and produced since the years immediately after World War I, the School’s other ventures into publishing had been generally less successful. McArthur believed that publishing was critical to HBS for two reasons: the dissemination of the School’s intellectual capital, and the capturing of a third income stream (in addition to MBA and Executive Education tuitions). With his strong encouragement, the Harvard Business School Press was launched in 1984, and the Harvard Business School Publishing Corporation — a for-profit arm of Harvard University — was established on January 1, 1993.
“John understood that publishing was an absolutely key pillar in the Business School, both in the mission sense — of getting our thoughts out and having an impact in the world — and in a financial sense,” says the School’s current Dean, Jay Light. “He also understood the enormous difficulties involved in pursuing that. Publishing was a very different business from the academic programs, and it had to be managed accordingly. It needed a different organization, different kinds of people, and different governance and compensation structures.
“So what he did, over a long period of time, was to put each of those in place. He moved toward a much more independent entity that could deliver on what is a terribly important part of the School’s mission, in a way that would contribute well to our financial well-being.”
Tom Menino, the longtime mayor of Boston, has known McArthur for almost thirty years, dating back to Menino’s days as a city councilman. Menino was surprised, one day in the early 1980s, to receive an invitation to lunch at Harvard Business School with someone named Dean McArthur, in a building called the Dean’s House. He was also surprised to find himself lunching with a friendly, rumpled, short-sleeved “regular guy,” who seemed to have no particular agenda other than getting to know a city councilman from the other side of town.
That low-key lunch, recalls Menino, marked the beginning of a warm and enduring friendship. “In my business, you need somebody to go to when you have an issue that you can’t figure out,” says Menino. “And John’s my guy. I use him as my sounding board, because there could be nobody better than him to analyze a situation, give you good advice, and follow through on that advice. When the going gets tough, I call John and say, ‘Hey, John, how do I figure this out?’
“Take the merger of Boston City Hospital and University Hospital, a decade ago. He was there to help me. And just this past year, he headed up a search for me for a new president of the Boston Public Library.
“One more thing. He does it professionally. He does it the right way, with no fanfare. He just gets the job done. And everybody who meets him winds up saying, ‘What a great guy he is!’ As I said, in my business, you need people like that.”
Quietly, McArthur steered Harvard energy and resources into Boston, and into the School’s Allston-Brighton neighborhood. The nearby William Howard Taft School, in particular, received steady, low-key infusions of technology and volunteer time — spearheaded by faculty members like Jim Cash, but backed steadfastly by the Dean’s Office. “But John didn’t want the newspaper story,” Menino emphasizes. “In fact, he didn’t want anything. He just did it. For that school and for a lot of other places.”
Joe O’Donnell (MBA ’71) echoes Menino’s comments. “I was in the restaurant business a while back,” he says modestly. (O’Donnell’s Boston Concessions, a billion-dollar business empire, already extended far beyond restaurants.) “In that context, I’d routinely get calls from the Dean saying, ‘Hey, can you get me 35 seats in the back room? I’ve got the Allston Little League coming in.’ And sure enough, he’d come striding in with the coach, a couple of parents, and 35 Little Leaguers. I mean, he really owned that neighborhood.”
McArthur curtailed his outside activities during his years in the Deanship, but he made a few exceptions. For example, he agreed to join the board of Cabot Corporation in 1990, continuing in the tradition of HBS professors (including C. Roland Christensen) serving as Cabot directors. Sam Bodman, currently U.S. Secretary of Energy, was then chairman of Cabot, and extended the invitation to McArthur. “I was looking for new blood, new ideas,” Bodman recalls, “and he was the first person I turned to. He became one of our most important directors.”
McArthur also involved himself in the health-care sector, which became a lifelong passion. For many years, he served as chair of the Brigham and Women’s Hospital board. He was the moving force behind the 1994 merger of Brigham and Women’s and Massachusetts General Hospital. The combination created a “1,000-pound gorilla” (in the words of one local observer) and sent shock waves through the Boston medical community, but it set the stage for more major hospital mergers in subsequent years. McArthur served as the founding cochair of the merged entity, Partners HealthCare System, Inc., stepping down in 1996.
Jack Connors — cofounder and chairman emeritus of the Boston advertising agency Hill, Holliday, Connors, Cosmopulos, Inc. — had a front-row seat on this series of local health-care earthquakes. In 1991, he was asked to lunch at the Dean’s House on a Friday with McArthur and Dr. Richard Nesson, longtime president of the Brigham, and was invited to join the hospital’s board. He first demurred, saying he knew nothing about health care or hospitals. Yes, said McArthur in his genial way, but you know the community. After thinking about it over the weekend, Connors agreed. “So I became the rookie trustee,” he recalls, “wearing short pants and sitting at the table with John McArthur, Dick Nesson, and all of these legendary chiefs of medical services.”
Connors wound up as the chair of the Brigham and — in 1996 — the chair of Partners. In both cases, he says, McArthur cleared the way, having decided that the institutions involved needed that outcome. “I truly believe that he can see around corners,” Connors adds. “He is a wise man who can see the future — whether it was with the railroads, or whether it was with the hospitals, or whether it was with many companies that he was involved with, or whether it was at the Business School. And he is humble enough to recognize that he’s not required to be part of that future, to lead the future. He just wants to show people the way. He uses power not for the accumulation of wealth, but as a force for good.”
When McArthur stepped down from the Deanship in the fall of 1995, he had no clear idea of what he wanted to do. He and Dick Nesson considered trying to set up a “health-care high school” in Boston, but the educational bureaucracy proved insurmountable. Reflecting his continuing interest in health care, he joined the board of pharmaceutical giant Glaxo Wellcome. When fellow Canadian Ralph Barford (MBA ’52) asked him to become a director of Bell Canada, he accepted that post as well. (McArthur proudly remains a Canadian citizen, and currently chairs the Asia Pacific Foundation of Canada.) He helped a half-dozen start-ups get off the ground, and he became a director of Kç Holding, one of the largest companies in Turkey.
But the world had additional designs on McArthur. By this time, his HBS classmate James Wolfensohn was deeply into the huge challenge of reorganizing the World Bank, and — in need of an ally whom he could trust completely — placed a call to his friend. The result was that for roughly the next ten years, McArthur spent a day or two a week helping Wolfensohn reshape one of the world’s most important financial institutions. McArthur’s role, Wolfensohn recalls, was both amorphous and critical.
“He was my combination of Booz Allen and McKinsey, all in one person,” says Wolfensohn. “He’s incredibly wise and thoroughly experienced. When he knew something, he’d tell me. When he didn’t know something, we’d try to ponder it through together. And when I didn’t agree with him, I’d tell him so.
“So it was an extraordinarily open relationship, which meant that I also learned of John’s very deep personal commitment to social issues. What really came through to me was the heart and soul of this guy. At the risk of embarrassing him, we were both interested in helping an indigenous student from the United States, Canada, Australia, or wherever attend the School, and we’d talk about that. We’d talk about how lucky we were to have had the Harvard experience, and how fortunate we had been in our subsequent careers. So while neither of us was a Rockefeller, we started a little scholarship fund toward that end.”
Other emerging challenges also ensured that McArthur’s retirement would not be uneventful. Dr. Thomas Frist Jr., cofounder and then CEO of the Hospital Corporation of America (now HCA), first met McArthur in the context of a CEO forum at HBS. When Frist was asked in 1997 to return to head the company, which had gotten into deep financial and regulatory trouble, a key task was to rebuild the HCA board of directors. One of his first calls was to John McArthur.
“He was a person of great integrity, he was smart, he was interested in health care, and he had a history of taking on challenges,” recalls Frist. “So I went to him and said, ‘John, the company is under siege, and I’ve got to rebuild it. Are you willing to come on the board?’ And fortunately for us, he agreed. He wanted to do his part to save a fine, large health-care company, and also to make a difference in the health-care delivery system in this country. And in fact, it couldn’t have been done without him.”
McArthur looks back on the HCA experience as part of a bigger picture. “I’ve spent my life working with com-panies that were full of good people but had gotten off the rails,” he says. “HCA was one of those.”
In recent years, McArthur has tried to spend less time on airplanes, and more time with his family. For years, he has been taking his two Boston-based granddaughters, Katerina and Isabella, to breakfast on Sunday mornings. (The tradition started when the girls were toddlers; today, they are teenagers.) He has taken to planning family trips for Natty, their two daughters and sons-in-law, and their four grandchildren. One trip took the family to Europe, including a stop in Switzerland — where younger daughter Susan was born while her father was teaching at a school cosponsored by HBS and Nestlé. “John planned everything,” reports Natty. “Visits to chÃÂ¢teaus, cathedrals, Roman ruins, and, of course, pictures at the hospital where Susan was born.”
McArthur also made a solo trip up the eastern coast of the Italian peninsula in November, tracing the footsteps of a cousin who was killed in action during World War II. “I think that’s interesting,” Natty observes. “That was so many years ago, but John still cared about the fate of his cousin, and wanted to find his grave.”
The family is also looking forward to their next trip together — being planned to the nth degree by the patriarch — which will center on the Winter Olympics in 2010, which happen to be taking place in Vancouver, which of course is not far from the small town of Burnaby.
For many years, Boston entrepreneur Joe O’Donnell has been one of John McArthur’s closest friends. His affection for John and Natty is both obvious and boundless. They have shared good times, and also some very hard times.
“He knew my girls and my son, Joey, from the day they were born,” O’Donnell recalls. McArthur took a special interest in Joey, who suffered from cystic fibrosis. “He taught Joey how to shoot his first spitball,” O’Donnell continues. “And every Christmas Eve, he and Natty would show up, and John would have some ungodly-sized Christmas present for Joey.
“Invariably, the assembly time was brutal. And one time he brought a model steam engine, and — you’re not going to believe this — the damn thing needed diesel for fuel. My Joey got a big frown on his face because the damn thing won’t go. I said to John, ‘Where the hell are we going to get diesel? It’s Christmas Eve, and there’s three feet of snow on the ground!’
“So of course the next thing I know, John and I are in my car, sliding around the streets of Cambridge looking for a gas station that sold diesel on Christmas Eve. We ended up buying a quart of the stuff, and coming back, and firing that little steam engine up. It was a huge success! Absolutely tremendous.”
O’Donnell pauses, then continues. “When Joey died, John was in Paris. And when he heard the news, he got on the next plane and came home, and showed up at my house the next day.
“John just always knew the right thing to do. Never went in through the back door, never took the short cut, never acted out of expedience. Always did it the hard way and the right way.”
— Jeffrey L. Cruikshank (PMD 51, 1986) is the former editor of the HBS Alumni Bulletin and author of numerous management-oriented books. He assures us that the Dean in his murder mystery, Murder at the B-School, bears no resemblance to any real Deans.