Making It

When Roger Sonnabend, a well-heeled young man from Brookline, enrolled in Harvard Business School in the fall of 1947, it was not an obvious career move. Back then, business schools were still something of a novelty. The first school of "commerce and finance," the Wharton School, opened at the University of Pennsylvania in 1881. Harvard started its business school in 1908 with 33 students. While dozens of other business schools were founded in the next few decades, in the late 1940s fewer than 3,000 MBAs were awarded each year.

Many corporate leaders remained skeptical that an advanced degree was any substitute for hands-on experience, and serious scholars looked askance at business-school curriculums. Still, the growing complexity of corporate structures increasingly placed a premium on managerial expertise, and the MBA also earned respect as more business-school graduates shot up through executive ranks. Many of these hotshot MBAs were from Harvard, which by the '40s was undisputed as the world's premier business school.

In Oct. 1947, Sonnabend joined more than 700 other young men matriculating at the business school. As he got to know his classmates that fall, he learned quickly that his own background of privilege and wealth was hardly the norm. For the most part, the entering class of '49 were middle-class Americans whose upbringing reflected the times. And modest times they were. In 1947, the median income of an American family was less than one-sixth of what it is now, adjusted for inflation.

Decades later, many '49ers joked that they were lucky to have applied to Harvard Business School in the '40s, because there's no way they would have made the cut in later years. The school had relatively lax admissions standards in '47; it accepted nearly one-third of the men who applied (and they were all men - HBS didn't admit its first female student until 1963).

And yet the Class of '49 formed a remarkable group. They would go on to become one of the most successful business-school classes of all time, one that Fortune magazine dubbed the "the class the dollars fell on." Nearly one-third rose to the rank of CEO or president, and members of the class are counted among the most pioneering business leaders of the 1970s and '80s.

Over 90 percent of the class of '49 had served in World War II, and military discipline helped them adjust to an academic grind at the business school so intense that it was dubbed "the Ulcer Derby." Much of the workload at Harvard took the form of analyzing case studies, which the faculty joked was a "pedestrian approach" to education because it walked students through corporate decision-making processes. An entirely new feature of Harvard's curriculum in '47 was a required course known as Administrative Practices, or Ad Prac, which taught students "how to get things done through people." Ad Prac promoted the management of human relations as an element of business leadership no less important than finance, production, or marketing. Borrowing from modern psychology, the professors depicted modern corporations as social organisms in which morale and teamwork played vital roles. Students joked that the course title should have been Machiavelli for Beginners. Nearly all the '49ers remembered it as the most important course they took at Harvard.

'49er Conrad Jones, who became a top management consultant, would say later that he went out in the world with "supreme, if unwarranted confidence" in his own abilities, plus "a hell of a lot of practice in making decisions with a limited number of facts, under deadlines." But many of his classmates were unclear about what, exactly, they had learned at Harvard Business School that might be useful in the real world of. Some saw it as nothing more than a training ground for big business, and they resented being shaped in that mold. "In fact, it was a finishing school for GM," complained '49er Ned Dewey, who went on to build a chain of convenience stores.

To reshape American business in the early postwar era meant looking beyond the usual sources of wealth generation and profit-enterprises like manufacturing, petroleum refining, mining, steel, and construction. It meant doing nothing less than imagining a different kind of America, one in which unprecedented wealth would be generated by the consumer demand of the largest middle class in the history of the world; by innovations in technology, and the productivity gains they spawned; and by new kinds of financial services that put the savings of Americans to work in the stock market and leveraged corporate wealth.

Not every graduate of the Class of '49 saw the coming of this new economy. But many of those who did became legends: Marvin Traub went on to turn Bloomingdale's into a fashion trendsetter and the world's most famous department store. James Burke helped transform Johnson & Johnson into one of America's most dynamic companies and then led it safely through the Tylenol poisoning scare. Tom Murphy exploited the new frontier of television to build a media empire, Capital Cities, that eventually took over ABC. John Shad was a leading investment banker on Wall Street in the '60s, and then went on to prosecute Michael Milken and Ivan Boesky as head of the SEC in the '80s.

By contemporary standards, the '49ers did not make serious money. They rose to the executive suite during an era in which the compensation of CEOs was still within the bounds of reason; as a result, few if any of them assembled fortunes in the hundreds of millions. "We were brought up to believe that it was less important to make money than to build a company that you were proud of," recalls Peter McColough, who turned Xerox into a corporate powerhouse in the 1960s and '70s. The irony, of course, is that the presumption of vast riches among so many younger business leaders only exists because earlier generations created an astonishingly wealthy America.

In the twilight of their lives, observing the corporate scandals at Enron, WorldCom, Merrill Lynch, and so many other companies, members of the class of 1949 are disgusted. "There has been a diminution of values, says James Burke. "Greed is a very serious problem in American business." Tom Murphy shakes his head at the rapacious behavior rampant among CEOs. "It's sad," he says. "We were never guilty of what corporate America does today. We were a different generation."