Not so long ago, its practitioners were considered a risk-taking breed apart and teaching it was viewed as an academic career-killer. But then entrepreneurship came in from the cold, thanks in large part to a maverick true believer named Howard Stevenson.

Issue Focus: Entrepreneurship

It was one of the first days of his tenure, and already novice HBS Dean John McArthur was facing a group of fired-up students with a bone to pick. Where, the students wanted to know, was the Starting New Ventures course, listed right there in the MBA catalogue? It was a fair question; tellingly, among the faculty, no one wanted to teach a course whose utility and intellectual rigor were considered suspect in the academy, in an area that had no clear track for academic advancement or excellence.

It was 1980, and McArthur knew that for decades the School had struggled with the issue of entrepreneurship, neither really understanding it nor teaching or researching it in a committed fashion. To its credit, from the School’s earliest years on, Deans Gay, Donham, and David had encouraged research on the importance of innovators to business. Interest intensified after World War II with the work of Harvard economist Joseph Schumpeter and HBS professor and Baker Librarian Arthur Cole at the Research Center in Entrepreneurial History at HBS. Professor Myles Mace, back from military service in the Pacific where he found GIs eager to start businesses after the war, had introduced a popular elective, The Management of New Enterprises. This in turn spawned other such course offerings throughout the 1960s and ’70s in the MBA and Executive Education programs. Many students indeed were going on to become entrepreneurs as alumni. But the core faculty was not interested, and entrepreneurship remained an intellectual orphan at HBS.

McArthur knew, and agreed with the students in his office that day, that “there was something different and important out there. It was where the students wanted to go. But there was almost nobody on the HBS faculty — or at any other research and academically oriented school — who had entrepreneurship as a central focus.” Resolving the situation once and for all would become one of the major goals of McArthur’s administration. And he had an idea about who might lead the charge.

Seated in his office decades later in HBS’s Arthur Rock Center for Entrepreneurship, Howard Stevenson is reflecting on the start-up version of himself. Born in 1941, he moved frequently as a child to follow the military postings of his father, a Navy officer, until the family settled in the 1950s in then rural Holladay, Utah. With a brother six years older and a sister six years his junior, young Howard often had to amuse himself. Holladay was a great place for a boy to go hunting jackrabbits and ramble through the starkly beautiful sagebrush country. But as a voracious reader whose natural curiosity was encouraged by his parents (and by a memorable high-school teacher), and as a child who had had glimpses of San Francisco and Washington, D.C., Stevenson recalls, “I was desperate to get to the outside world. I tried to do that by entering every contest ever devised. Junior Achievement, the Model UN, the state math contest — if there was a competition, I would enter it.”

Thus the youthful Howard became an early adventurer, an exchange student in the American Field Service’s first-ever overseas program. Speaking no French, he shipped out for France to live with a family who spoke no English, and enrolled in a French lycée. It was a sign, perhaps, of things to come: a leap (albeit well-considered) into a strange, exciting environment where there was little under his control but no shortage of opportunity. He next won a National Merit Scholarship, which he used to attend Stanford, where he majored in mathematics. Although he confesses he had never heard of Harvard when applying to colleges, Stevenson learned about HBS while in Palo Alto. Upon graduation, he chose Harvard’s MBA Program over Stanford’s in part because the School offered him a larger stipend.

At HBS, he found the case method to be an eye-opener, not only for its analytical training but also for its power to shape an entrepreneurial mindset. “Sometime later,” Stevenson recalls, “I realized that you acquire an entrepreneurial attitude after working through a thousand cases. You learn there’s no expert ‘right’ answer; that you must do something about problems even if you lack information, resources, or power; and that in every situation lies opportunity.”

Earning his MBA in 1965 and a DBA in 1969, Stevenson taught Business Policy at the School during the late 1960s. In 1970, he took a leave of absence to join Matt Simmons’s (MBA 1967) Boston investment bank, then returned to the School the following year to teach courses in real estate. With Bill Poorvu, a real-estate investor who also taught urban planning at Harvard’s Graduate School of Design and who later became an adjunct professor at HBS, he wrote more than sixty cases, created two new courses focusing on real estate, and developed a new conceptual framework for the study of real-estate management. Equally as significant, the two men built respect and legitimacy for an area of study considered difficult to teach and lacking intellectual heft.

In 1978, Stevenson returned to the private sector, this time to become VP of finance and administration at Preco, a pulp and specialty-paper manufacturer in Springfield, Massachusetts, owned by a friend, Joe Torras (MBA 1950). “I learned a lot at Preco,” says Stevenson, who spent four years at the company. “Meeting payrolls, dealing with unions, learning accounting, all in a less-than-glamorous environment — it was a good education.”

As Stevenson toiled in the provinces, back at HBS McArthur was ruminating about entrepreneurship as an opportunity. As young faculty colleagues, he and Stevenson had become friends. “Howard was a curious, interesting, independent kind of guy,” says McArthur. “He preferred to pursue what interested him, regardless of what that might mean in a career path, and that was a different attitude from what most people had. To boost the status of entrepreneurial study, I knew I had to get someone whose credentials, integrity, human qualities, and values were unimpeachable. Howard was known as an extremely smart guy, and he was respected for having established the Real Estate area as a legitimate academic field.”

So McArthur made his pitch: “I went to talk with Howard and told him, ‘This entrepreneurship area is never going anywhere unless people think it’s up to our highest standards of academic and human values. I think you’re the one. If you come back, I’ll back you with all I have.’ ”

McArthur was as good as his word. Through his efforts, and thanks to a chair endowed in 1981 by HBS roommates and Silicon Valley pioneers, Arthur Rock and Fayez Sarofim (both MBA 1951), Stevenson became the first Sarofim-Rock Professor of Business Administration. The chair was important, Stevenson says, because it was “the first time the School had committed itself to the idea that this would be a long-term, supported area, under the auspices of someone with tenure, and with the assurance of the most important kind of support — research.

“I returned to HBS in 1982,” Stevenson continues, “without a really clear idea of what I was going to do.” He knew that research and integration with more well-established areas — through cases on entrepreneurship across a variety of disciplines and businesses — would be key factors in establishing entrepreneurship as a legitimate field of study. “The idea was to help students believe that entrepreneurial activity was possible for them. So we wrote cases on women, on African Americans, on people just out of school, on older people, and so on. We wanted students to see themselves in the characters, to see that it was feasible.” Stevenson wrote over 100 cases and notes focusing on entrepreneurship as an ongoing process, not one limited to start-ups. Elsewhere in the curriculum, he revamped the existing Starting New Ventures course and turned it into Entrepreneurial Management. Bill Sahlman came over from HBS’s Finance area to launch his key course, Entrepreneurial Finance. Over time, the Entrepreneurship faculty would grow from 4 in 1985 to 35 today.

Stevenson’s experience with the Real Estate area had been especially instructive. “Your typical real-estate firm takes other people’s resources and assembles them,” he explains. Drawing on lessons from the practice of real-estate deal-making, Stevenson came up with his now famous definition of entrepreneurship as “the pursuit of opportunity beyond resources currently controlled.”

That insight in turn led to two major breakthroughs. First, Stevenson worked to dispel the notion that all entrepreneurs were born geniuses genetically predisposed to be creative, even reckless, visionaries. He insisted that it was more perspiration than inspiration: find an existing need that demands a product or service solution, conduct research and due diligence, minimize risk and exposure to the extent possible by leveraging existing assets...and then go for it. In other words, much of the process — recognizing opportunity and marshaling ways to respond to it — could be taught to anyone. “Practicing with a coach won’t turn me into a world-class athlete,” says Stevenson, “but I will play a much better game. It’s no different with entrepreneurship.”

A second breakthrough was establishing that entrepreneurial activity is not limited to start-ups but can take place in existing organizations, old or young, big or small, and by teams as well as individuals.

In 1983, a third development, especially significant for HBS, were the data from a survey of 14,000 alumni led by Paula Barker Duffy (MBA 1977), then administrative director of External Relations. Nearly a third of the survey’s respondents said they were self-employed, while almost half described themselves as “entrepreneurs.” (This cohort also reported greater personal and career satisfaction than the rest of those surveyed.) “Apparently HBS wasn’t the West Point of Capitalism,” Stevenson says, “we were actually the incubator of entrepreneurship. Entrepreneurship was a much more likely career than being a Fortune 500 CEO.” (Concurrently, important research by MIT’s David Birch MBA 1962, DBA 1966 was revealing that small businesses — entrepreneurial ventures almost by definition — were America’s principal job creators, not big companies.)

Entrepreneurship at HBS, what McArthur calls “the house that Howard built,” was soon standing on a firm foundation. And its message was spreading beyond Soldiers Field. Some 80 percent of cases used at business schools worldwide are written at HBS — including more than 1,200 on entrepreneurship in the last ten years. This dissemination from the School of cases on entrepreneurship has helped create a broader and deeper understanding of the subject globally. Furthermore, because of the School’s leadership position, the new courses and curricular innovations around entrepreneurship were duly noted and often emulated at other schools of business and management, where HBS alumni and faculty were frequently hired to start up, bolster, or teach entrepreneurial studies. “When others saw what we were doing,” McArthur recalls, “many decided to make it part of their mainstream. That happened all over the world.” Meanwhile, in the business realm, HBS alumni entrepreneurs continued to have an outsized, arguably unparalleled, impact on American enterprise.

Thanks in large part to this cumulative “HBS effect,” entrepreneurship became understood nationally as essential to the U.S. economy, an inspiration for managers in large corporations, and a breeding ground for new jobs. Entrepreneurship was embraced by the academy and the world of business practice, and perhaps more than any other individual, Howard Stevenson shaped the construct and climate that made that happen.

Best known for his academic entrepreneurship, Stevenson is proud to have been a founder (in 1982) of The Baupost Group, serving as the investment company’s first president and, for nine years, as a general partner. He now cochairs the $21 billion firm’s advisory board. He has also served Harvard University, as a vice provost and senior associate provost from 2004 to 2006, and as chair of the Latin American Faculty Advisory Group. At HBS, Stevenson was the point man for HBS’s capital campaign from 2001 to 2005 and chaired Executive Education’s OPM Program and the Publications Review Board for Harvard Business Review Press. Outside academia, he has served on numerous for-profit and nonprofit boards.

Stevenson will “retire” this summer, although he will continue in his trademark overdrive with board work and the writing of a new book (he has authored, coauthored, or edited eleven others). Says Stevenson, “After you lose your fastball, you shouldn’t be pitching. I’ve had a great run. I can’t imagine a better career.” Yes, the scorecard may say he’s reached the later innings. But be it top of the first or top of the ninth, whatever the enterprise, count on Howard Stevenson to bring his A-game.

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