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State of the School, Fall 2009


Dear Friends,

It is with great enthusiasm that I communicate with you for the first time as the ninth dean of the Graduate School of Business. Having arrived at Stanford at the age of 23, I have spent more of my life at the GSB than anywhere else. I completed a couple of master’s degrees, did my PhD in economics, and then left for eight years to teach at MIT and Harvard. But I couldn’t stay away and returned for a year as a visiting professor. When then Associate Dean John Roberts called me in 1990 with the possibility of an appointment, my wife Marlene and I almost had the tickets booked before the conversation ended. Since then, I’ve had the pleasure of watching my three daughters attend Stanford.

As a member of this community, I’ve been privileged to start programs, create courses, head the Center for Entrepreneurial Studies, and lead the faculty-alumni committee that developed our new MBA curriculum introduced in 2007.

Today, we are at an inflection point in the evolution of management education. Not only has MBA education matured over the past 30 years, but recent events also have provoked important questions about the role of business schools. The stage is set for an enormous amount of innovation—change that we already have led with our new curriculum. 
Never tradition bound, Stanford has always looked forward to invent the future. This is part of our institutional DNA, and we remain committed to the advancement of organizational leadership for both the private and public sectors.

The last few years have shown us that future leaders will deal with incredible complexity: the globalization of the economy, ever-more- sophisticated financial markets, greater sensitivity to environmental issues, cultural diversity, and most important, the profound need for attention to the impact of business on society.

Against this backdrop, our twofold task, set out in the School’s mission statement, is to create ideas that deepen and advance our understanding of management, and with those ideas to develop innovative, principled, and insightful leaders who change the world.

Principled Leadership

In September, promising new students arrive here eager to launch a life of meaning and impact. We need to educate them with both the knowledge and moral reasoning that will allow them to lead in a principled way—by understanding business and the context in which it operates. We must give our students the skills to deal with whatever challenges arise.

How exactly do we do this? Three years ago, ahead of the financial crisis, we had the faculty leadership and strong support from our Advisory Council to develop a new curriculum. Its key features include a required first-year Critical Analytical Thinking seminar, two sections of which I teach in my home; a global experience requirement; and a menu of classes for each of the required foundation courses that challenge every student according to his or her background.

In June, the first class to complete this new curriculum graduated into the most difficult job market since the dot-com bust. Although some had to compromise on an industry or job they had not originally targeted, the real test of their education will come much later when they face tough decisions as a team leader developing operations in Southeast Asia or as a vice president making a crucial hire for a startup. For now, despite the economy, the Class of 2009 has sent us a strong signal of approval. As the first in our history to leave a class gift with 100 percent participation, they also raised more than $1 million in pledges and matching gifts.

Creating Ideas

World-class teaching is delivered best by the originators of the latest ideas in management—ideas that set our institution apart.
 
Defining entire fields, our faculty synthesize and make accessible to practitioners the best management knowledge available, including their own. For example, in 1990 economist David Kreps and sociologist Jim Baron collaborated to see how their respective disciplines, along with social psychology, could be merged into a unified view of human resource management. The frameworks they constructed brought together the best thinking from those areas and became the basis for a required course and a book called Strategic Human Resources. Similarly, David Baron, author of Business and Its Environment, built on the 1960s course pioneered by economist Lee Bach and reframed our nonmarkets course to integrate traditional strategy with political economy, reputation management, ethics, and corporate social responsibility. 

The Aspen Institute, which promotes social responsibility in management education, recognized Baron’s work with a lifetime achievement award in 2008. This fall, operations professor Stefanos Zenios expects to publish Biodesign: The Process of Innovating Medical Technologies, coauthored with Stanford Medical School professors Paul Yock and Josh Makower. It is based on the interdisciplinary course Biodesign Innovation that they teach together.

As these cases illustrate, there is synergy between intellectual development of a field and innovation in the classroom. Another recent example is our Leadership in Focus video case series, championed by Charles O’Reilly, organizational behavior professor and director of the Center for Leadership Development and Research. In less than three years, the collection of 170 leadership video cases is in use at 427 colleges in 41 countries and is now available for corporate training.

It is the people who do the research who are able to script these fields for us, innovate in curriculum, and bring the ideas into the mainstream. They raise unanswered questions and shape the research agenda for management schools broadly. Yes, academics often focus on very narrow questions. But someone has to figure out how the answers fit together. At Stanford, we develop the kind of faculty who are able to fuse this material so that the manager can grasp it without having to go under the hood and get his or her hands dirty.

Looking to the Future

We must continue to recruit the highest-quality faculty to stay at the frontiers of knowledge and to develop great teachers who provide superior classroom experiences. Our small class sizes—the average elective has 35 students—are a hallmark of the Stanford experience, but they are faculty-intensive and costly.

We must continue to open up to the rest of Stanford University. Seven world-class schools—business, law, engineering, medicine, education, earth sciences, and humanities and sciences—share one contiguous campus. I can’t think of another university that has such an advantage. The Business School’s inspiring new campus, the Knight Management Center, will be an intellectual commons of interdisciplinary classes, events, discussion, and social activity that will draw faculty, students, and ideas from across campus.
 
Opening across the street from the Schwab Residential Center in 2010– 2011, we expect the eight buildings set around three quadrangles to achieve the highest-level LEED Platinum certification for environmental sustainability from the U.S. Green Building Council.

Even before the new campus opens, we have seen the rewards of collaborative learning. In the Biodesign Innovation elective last spring, business, engineering, and medical students collaborated on the design of a walker to reduce falls and hip fractures in the elderly. Plans are underway to produce more prototypes for testing as students also learn to navigate FDA approval hurdles. In a course at the Hasso Plattner Institute of Design, two MBAs worked on a project to help Visa develop financial literacy programs for youth. And applications from nonbusiness graduate students for our 2009 four-week Summer Institute in Entrepreneurship were up more than 25 percent over last year.

We must do all this within a new financial reality. In January, we trimmed budgets and laid off 12 percent of our staff, a painful but necessary move in light of an estimated 30 percent drop in the University endowment, shrinking executive education revenues, and expected declines in giving. While alumni contributions are not at the levels of previous years, I thank you for your steadfast support. Some additional funds need to be raised for our new campus, but we’ve been able to cut some of our building expenses considerably, and the project is on schedule. While we are now well positioned for current economic conditions, innovation and growth will require additional investment.

I hope all of you are weathering these difficult times as well as possible. I look forward to working with you on the many exciting plans already in place. It will be a great joy to reconnect with many of you who were my students and to meet those I do not know but with whom I share Stanford’s keen sense of optimism and forward thinking.

With best regards,

Garth Saloner, AM ’81, MS ’82, PhD ’82
Philip H. Knight Professor and Dean
Email: deansaloner@gsb.stanford.edu