Monthly Archives: February 2014

HBS as a Business

Question number one -  “Is HBS profitable?” The answer is yes. According to its annual report, HBS generates revenue of around $500 million and profits of $50 million each year. Not a small amount, and in terms of profitability and growth, its performance is comparable to that of well-rounded mid-size listed companies.

HBS Revenue

The second question is, “Is the HBS MBA program profitable?” Surprisingly, the answer is no. The world-renowned HBS MBA program is not making money – in spite of the expensive tuition, the two-year MBA program is actually losing money.

So, how does HBS make money? Looking at the breakdown of HBS’s revenue, you will find the majority (more than 80%) is generated by non-MBA entities.

HBS Revenue Breakdown

The biggest source of revenue is the publishing business. HBS sells its case studies, books, and magazines, such as the Harvard Business Review (HBR), to other institutions as well as individuals. In 2012, HBS sold more than 10 million case studies, 1.5 million books, and three hundred thousand HBR.

The second largest moneymaker is the Executive Education Program. Targeting company executives, HBS provides a highly intensive education program, with approximately 10,000 company executives enrolling in the courses each year. Since the tuition is much higher than that of the MBA program ($14,000 for a week!!), HBS enjoys a huge profit from this business.

Other sources of revenue include donations and other philanthropic gifts.

So, what exactly is the key role of the MBA program when regarded as a business? It is branding. By producing 900 high quality products (students) each year, the HBS MBA program is spreading the school’s brand and its accompanying recognition into the market, thereby attracting new customers to other highly profitable businesses, such as publishing and Executive Education. The MBA program cannot stand alone, but HBS cannot live without the MBA program.

It’s an interesting business model, isn’t it?

HBS Annual Report


Failing health management

Hmm…I’m not feeling well… seems I caught a cold.  Not only me apparently, today our classroom was a cacophony of coughing and sneezing. Seems there is a bad cold is going around. Although the weather is better than it has been, temperatures remain in the 10-20°F range here in Boston. For many people who enjoyed their winter break in warmer climes, this frigid weather cuts to the bone.

Since 50% of our grades are based on class participation, we cannot afford to be absent from class at HBS without risking the consequences. But my shaky health totally destroyed my performance this week. The illness is not terribly bad. The symptoms are the expected – chills, coughing, and sore throat. However minor this may seem, the seemingly minor affliction makes a big impact. No matter how many times I read them, the cases don’t soak into my head. Discussions go much faster than my brain runs. And my concentration breaks intermittently. Usually busy, my hand is now keeping quiet on the desk.

In the comfy confines of an HBS classroom, some may say it matters little -  but what if it was a real business, the discussion was a board meeting, and I was the CEO pressed to make a critical decision? My impaired judgment may cause significant loss to the value of my company, not to mention the repercussions for employees and shareholders.

Impaired Judgment

When I was a consultant, my boss often said, “Health management is one of your jobs.” When one of his team members caught a cold, he didn’t regard the person as a professional. “It doesn’t matter whether the reason is physical, mental, or intellectual. Low performance is low performance”, he said. Not wanting to lose his trust, sometimes I worked hiding the fact that I caught a cold. Since then, I always remember the boss’s face when I obviously didn’t feel well.

Anyway, I may as well take a rest and focus on rehabilitation this weekend. Next week, eight case protagonists are eagerly awaiting my return …


Shad

We are a week into the second semester, and as this term is only sixteen weeks long, the days will undoubtedly fly by. Based on experience gained last semester, I am trying to invest more time in extracurricular activities, such as networking, preparation for my startup, and exercise.

Choosing what I feel is the easiest item on my list; I have started going to the gym regularly. Here at HBS, there is an exceptional, fully appointed fitness center – Shad Hall. For most students, who are not professional athletes, Shad provides more than adequate facilities, to wit, squash courts, gymnasium, running track, weight training room, running machines, exercise studio, and more.

Shad Machine

Shad Squash

Shad Court

Since Shad’s facilities are only available to HBS employees, students and partners, it’s never crowded. I am also delighted with its cleanliness and the service provided by the hard-working staff. And the greatest thing is, since tunnels connect HBS’s main buildings, we can partake of Shad’s facilities without getting chilly, even in the frigid Massachusetts winter! The only fly in the ointment is, sadly, there is no swimming pool. However, there is another gym equipped with a large pool within walking distance of the HBS campus.

The rumor mill has it that Harvard Kennedy School students are complaining that they are not allowed to use this great gym, even though they are just across the Charles River. But there is good reason for this – Shad is funded by the charitable donations of HBS alumni.

My goal is to use 2% of my time for exercise during this second semester. Sound too easy…?