The B-School vs. The Wall Street Journal

The Wall Street Journal began it all innocuously enough with a front-page article last month titled, "To Some at Harvard, Telling Lies Becomes a Matter of Course." The story was about a fall-term Business School class on "Competitive Decision Making" taught by Howard Raiffa, Ramsay Professor of Managerial Economics. William M. Bulkeley, a 28-year-old writer who recently moved to Boston after six years with the Journal, knew someone who had taken Raiffa's course, and thought it might make a good subject for an article. It did.

Like many Harvard-related stories, the article on Raiffa's course intrigued much of the news media, and soon The Boston Globe, Newsweek, the Chicago Sun-Times, The Detroit News, the wire services, and other newspapers and business publications picked up on the story. Why all the fuss? Raiffa's course pairs students off and places them into actual negotiating situations, where they use and analyze real bargaining techniques. One of these techniques--the one emphasized in the Journal article--is known as "strategic misrepresentation," or more simply, lying.

"When we say strategic misrepresentation, we're not talking about a person who, when trying to sell a used car, will set back the odometer," Raiffa wrote in this month's Harvard Business School Bulletin. "That sort of scurrilous behavior would not be condoned by me or by any of my students. We are talking about the grayer area where the seller of the car would be willing to sell at $500 but says he would not be willing to take a cent less than $800."

Although Raiffa puts his students into about 30 bargaining situations, four or five of which may involve strategic misrepresentation, and four or five of which may hurt someone using the technique, Bulkeley's article concentrated on the issue of lying. The article's subheadline read, "Untruths Can Improve Grade in Business-School Class; Peer Pressure and Ethics." Raiffa, past and present students in the course, Lawrence E. Fouraker, dean of the Business School, and other University officials were understandably upset by the way the course was portrayed in the papers.

According to a Boston Globe article, Fouraker "reacted bitterly" to the story and "threatened to cut off a textbook subsidiary of Dow Jones from free use of Harvard Business School cases." (Dow Jones publishes the Wall Street Journal.) The article also stated that Fouraker "asked Harvard General Counsel Daniel Steiner '54 to call Dow Jones's outside attorneys."

Neither Fouraker nor Irvin L. Grimes, president of the Jones subsidiary, would comment on the article. Steiner, however, termed the story "inaccurate." "Dean Fouraker never asked me to contact the Dow Jones outside lawyers," he said, adding, "I knew the lawyers personally and thought of speaking to them strictly in that sense, but I never did actually contact them. And certainly no legal action like a law suit was ever considered."

The bargaining situations or games, as they are called in Raiffa's course, are abstracted and simplified from more complex real-life business situations. One student might play the role of a policeman's union leader, the other a city mayor. The two sit down and negotiate a contract, each attempting to get as favorable an agreement as he can.

Negotiations take place entirely out of the classroom, and are discussed and analyzed back in the class after the settlements are reached. One-third of the final grade is based on how good a contract each person secures, plus how well the student analyzes the game.

"I don't teach [my students] to misrepresent the facts, but I do force them to think hard about such problems," Raiffa said.

Bulkeley's article, however, began with the statement that one student in the class received the highest grade in the bargaining section of the course because he was willing to lie. "That student he mentioned did not get a good grade in the course because he was willing to lie," Raiffa said. "I re-averaged the grades with those games that made lying advantageous, and he still came out ahead. He just did well generally."

"The issue of lying always came up," Bulkeley said. "Whether or not lying was advantageous in a particular game. Just allowing lying and rewarding it makes a lot of people feel the course is, in effect, endorsing it."

However Raiffa contends. There's an innuendo in the article that I'm not concerned with the problems of ethics, and that's a serious character assessment."

Asked whether his course in any way condones lying in business, Raiffa cited an analogy used in a letter to him from two former students and Roger Fisher '43, Williston Professor of Law.

"When, in the 1950s," the letter began, "Robert Hutchins was haled before a congressional committee and asked if it was true that the University of Chicago taught communism, he replied, 'Yes. And in the medical school we teach cancer.'"

"It's a valid analogy," Raiffa said. "To deal with a problem, we have to teach about it."

But Bulkeley, like Journal readers who wrote letters to the paper supporting his account of the class, questions whether or not students need to lie at all in order to identify and learn to cope with deceit they may encounter in business.

Raiffa describes his area of research as "fair mediation"--ways to restructure the rules of bargaining to encourage truth-telling. He designs the games in his course as pedagogical tools that members of the class use to examine the practical options in bargaining situations. Students formulate strategies based on a thorough analysis of these options. The class also discusses ways in which restructuring the fundamental situation might inhibit lying.

Like other B-School professors, Raiffa uses the case method system of teaching. However, his practice of casting his students as players actually engaged in arbitration differs from standard B-School technique by forcing the students to adopt the biases inherent in their roles. Thus the students confront the ethical issues in their own behavior and analyze the place of ethics in negotiations.

Fouraker summed up the B-School's point of view on teaching ethics in a column published in the last Harvard Business School Bulletin.

"Courses on ethics are not the principal means by which a professional school of administration can promote the ethical sensitivity of its students," he wrote. "We certainly do not think it would be wise or successful to start courses on ethics in the abstract...we favor incorporating ethical issues into our regular courses."

James L. Heskett, chairman of the Master of Business Administration program, said a recent survey showed that "a considerable proportion" of the required first-year courses include cases that involve moral issues.

"I think the case method is ideal for teaching about ethics," he said, adding "I have confidence in my colleagues and in their ability to put this approach to good use."

One course that directly addresses the issue of ethics is "Ethical Aspects of Corporate Policy," taught by John B. Matthews, Wilson Professor of Business Administration, and Preston N. Williams, Houghton Professor of Theology and Contemporary Change. The second-year elective began as a seminar three years ago, and has since tripled in enrollment.

Discussing his course, Matthews said, "We give the student readings in ethics-as-a-discipline as well as a number of case studies which have ethical, moral, and social responsibility dimensions. The course will not give you answers, but it will sharpen the definition of the problem and one's thinking of the problem."

The definition of the problem is always difficult, even for Bulkeley. "When I was writing the article," he said, "I had trouble seeing how far I'd go in defining lying: is non-disclosure, not volunteering information, lying? Is bluffing lying?"

Much of the later press coverage was based on Bulkeley's article. The Globe originally reprinted the Journal story unchanged, then followed with the story on Fouraker and the Dow Jones subsidiary.

"It's the laziest form of journalism imaginable," Raiffa said. The original story didn't present the course in the proper light. These other papers are willing to repeat it and embellish it without doing their homework and checking out the facts."

The story clearly has been repeated and embellished. Raiffa last week received a telegram from Zurich reading, in part: "Last week, a well known columnist [Mseva Maria Borer] in a mass-circulation newspaper in Zurich wrote an article with the title "Lying Can Be Taught..."In the article she referred to your course on competitive decision making. The course section dealing with the strategy of deception was quoted as an example of the decadence of American society in general and the business world in particular. Teaching the youth and the future manager how to lie most effectively seemed to be the main part of your course..."

"The press has blown this way out of proportion," Steiner, said and Raiffa agrees. Of the many articles written about his course, Raiffa approves of only two: one an interview in last week's Harvard Gazette, and the other a Globe story by Charles L. Whipple. "The Whipple article pointed up errors in the Journal article and said the press, in this case, was wrong," said Raiffa. "That's a very gracious step to take."

Bulkeley, however, said "I stand by my story." "My portrayal of the class was accurate." Although some students quoted in that story claim Bulkeley took their comments out of context, even Raiffa agreed that no one was actually misquoted.

Besides the extensive press coverage, the B-School has received a large volume of letters and phone calls on the issue. Richard Waters, associate dean for external affairs, said that a little over two-thirds of the mail is unfavorable to the B-School and the course. Fund raising, however, has so far been unaffected by the controversy. "We're responding to alumni letters with the information they want," said Waters. "They're still loyal to the school."

Raiffa reports that his colleagues in the B-School and around the country have been "very supportive." So, too, have his students. Raiffa has a file of letters from former students, including some of those quoted in the Journal article, declaring their support for him and for his class, and their disapproval of Bulkeley's article.

"It is apparent that strategic misrepresentation is to be encountered not only in the business world, but also in the world of journalism," one letter begins. Another, addressed to Fouraker, calls Raiffa "a man whose honesty and compassion earn him the admiration and affection of those who, like myself, are lucky enough to know him."

The Wall Street Journal has also been flooded with letters. Only articles on abortion and gun-control have stirred more controversy, according to Bulkeley and an editor in the Journal's New York office.

The one thing that is clear in all of this controversy is that ethics at the Business School is a very big issue. And clearly one that Howard Raiffa takes quite seriously.

Last year, Raiffa closed the course with these words: "When we see we could improve our profit or further maximize our desired result, we might ask, Is this a 'dirty dollar' or a 'clean one' that we could earn here? What would happen if everybody did this? Would we be able to sleep at night if we did this? How would we feel if we had to explain this to our families?'"

"I hope that in answering these questions," Raiffa told the class, "You will favor the course of action embracing a higher moral standard."

On this point at least, Bulkeley and Raiffa are in complete agreement.