February 2000, Volume 68, Number 2

Ideas: Dean Cautions Against Complacency Stanford is different, and it's our job to make it different, to make it the best at what we choose to do in the world of management education. BY DEAN ROBERT JOSS Last October at reunion weekend, shortly after beginning his term as dean, Robert Joss made his first State of the School address to Business School alumni/ae. Photo by Robert Holmgren I have only touched the Business School in an intensive way for six weeks. But I've watched it closely over 34 years—as a student, an alumnus, a volunteer, and, for the past six years, as a member of the Advisory Council. So I can tell you a little bit about the state of the School—and I have to tell you the state of the School is great! But my job is to practice what our faculty colleague Andy Grove teaches us all the time, that only the paranoid survive. Therefore, it is important that we sustain and maintain a healthy sense of dissatisfaction with the status quo. Yes, we need to celebrate the fact that we've done a fantastic job over 75 years, but at the same time it's my challenge and yours to make a great school even greater. The world doesn't stand still and the competition doesn't either. There's a vision in the popular media that all business schools are about the same. That's just not so. Stanford is different, and it's our job to make it different, to make it the best at what we choose to do in the world of management education. We have declared ourselves over the past several decades to be the leading academic school of management in the world. I accept that. I think it's a good starting point. It wasn't long ago in our history that stringing together the words "academic" and "management" in the same phrase wouldn't have been logical to people. There was a time when business schools just taught current practice. They had a lot of anecdotes about what worked and what didn't. But about 40 years ago—roughly halfway through this school's life—Ernie Arbuckle and some key people on the faculty, like Jim Howell and Lee Bach, set about to examine what management education could be all about. They set out to build such disciplines as economics, organizational behavior, accounting, and finance, and attracted truly outstanding scholars of world capability. It was important to them, as it is to us today, that it wasn't just current practice that was being talked about or a case of the faculty just harvesting ideas that had been around for a while and presenting them to students to take notes, like putting recipes in a cookbook, and then to go out into the world to get their first jobs. What we needed and what we continue to need is a constant search for lasting concepts, for underlying principles about the behavior of firms, of markets, and of people. This allows students to go away with approaches to problem identification and problem solving and face whatever comes at them. And tremendous change is coming at them, we know that. If you think about what we try to do here, it is incredible. A typical MBA is here 21 months with some time off in the summer and then embarks on a 30-year career. So we need our students to have an experience here that will serve them for a long time. It's a very difficult undertaking. It's not something that any business would necessarily set out to do. I was here in the sixties. Imagine how useless my education would be if all I had learned were the latest and best management practices of the mid-sixties. Instead, for example, we were talking about notions of optimal portfolio construction, about efficient frontiers for the trade-off of risk and return. At that time these were very arcane theoretical notions. We used to joke in class that yes, there was an efficient frontier out there, you just couldn't see it! But those of you in today's investment management industry know this material really is the foundation for virtually all major money management activity in institutional investing. That solid theoretical underpinning is just as good today—35 years later—as it was then. The kind of leap that Ernie and his team made back in the mid-sixties is similar to another sort of leap that we need to make today. If you look at the Stanford University campus today, you'll see that people are studying both arts and sciences. I think if there's an area for us to make breakthroughs, it's in the arts side of management. Management also is both art and science. We've been very productive at probing the boundaries of ideas and knowledge and tools and disciplines around the science part. I think there's a clue for us around the softer side. We know that if our students have a struggle when they go out into the world, it will not be because they're not smart enough or because they don't have enough good ideas, it will be because they struggle over managing themselves and their relationships with other people. That's the first thing I'd say about the making of our future, that the academic foundation will be critical. Second, we will be a school of management. Management is our focus. My personal conviction is that the number one problem in the world today is poor management. Society depends on managed institutions to solve most of our problems and to deliver the goods and services we need. It is those institutions that in many cases are letting us down. Management is something we've been teaching here for a long time. We must see managed institutions perform better as a consequence of what we do here, what we teach here, what we study here, the experiences people have here, and what we research here. Recently CNBC did a live morning broadcast here as part of a week in Silicon Valley. The host of that program, Bill Griffeth, said something interesting: "To start successful companies two things are needed—money and ideas. Silicon Valley has an abundance of both." Well, I think Bill was only partly right. Yes, you need money: Money can change the world. Yes, you need ideas, and we believe in the power of ideas to change the world. Money and ideas may be enough to start companies, but to build companies you need motivated people, and that's the thing we need to focus on just as much as on the financial resources and the ideas. How is it that companies develop and train and manage motivated people? That's the job of a manager. That's what managers do. I've seen the difference that good management makes in companies and countries all over the world, and that is what challenges us and needs to challenge us in terms of our academic mission. Now lastly let me talk for a minute about you. Collectively, you—our alumni/ae—are about 25,000 strong today, and you are a critical part of who we are and where we need to go. We're trying to do something quite special in terms of investing and continuing a program of excellence that is second to none in the world. We need our graduates to be intellectually engaged with the School, socially engaged, and financially engaged. Who should be involved if not the people who have been touched by the Stanford Business School, who have had experiences here that I hope have changed their lives and indeed have helped them make the world a better place? In the spring, we're going to celebrate 75 years of the tremendous impact we've made from such a small place. But if we're going to continue to make the impact that we need to make, then all of us are going to have to pull together to do it. I look forward to getting to know you better and hearing your ideas on what we can do to make a great school even greater.

To continue to make the impact that we need to make, all of us are going to have to pull together to do it.

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