Stanford Sloan Program at 50

Article originally published in Stanford Business magazine in August 2007.

Just over 50 years ago, leaders of Stanford Graduate School of Business proposed a plan to Alfred P. Sloan, the longtime chairman and CEO of General Motors turned philanthropist. Their pitch, drawn up on the flight to New York, was for an intensive, one-year educational program that would bring together future business leaders and future teachers of business. It had two goals: fill a gap in business education, and shore up the school’s finances.

Business school Acting Dean Carlton “Bud” Pederson and Stanford President J.E. Wallace Sterling succeeded faster than they had hoped. Sloan accepted their proposal, and the Alfred P. Sloan Foundation provided crucial funds for the program’s first years.

The Stanford Program in Executive Management was launched in 1957 with an initial grant of $216,000. The first class, which graduated in 1958, included six PhD candidates — the future teachers — and six corporate managers, rising stars sponsored by their companies.

“It was one of the very early efforts to bring people together with quite diverse experiences,” said Stanford GSB Dean Robert Joss, Sloan ’66, MBA ’67, and PhD ’70.

This experiment in diversity was a prelude to the next 50 years of the program, today called the Stanford MSx Program. It has changed with the requirements of the business world. Today it is a degree program with a strong international focus and accepts students who pay their own way. But the Stanford MSx Program still offers high-performing managers a chance to reassess and broaden their focus at mid-career without the distractions of work — a chance that is available almost nowhere else.

Companies send their most promising managers to the program. “They wanted people whose companies saw them as being a future CEO,” recalled Gary Williams, Sloan ’62 and former administrative director for the program.

Indeed, a recent survey of Sloan alumni found that more than half of those who graduated in the 1980s have been CEO, president, or founder of a company and more than 30 percent manage in firms with revenues of $4 billion or more. Almost 40 percent work in companies with more than 5,000 employees. And they are loyal — almost half have remained with one organization since graduating.

Linda Reiners, Sloan ’03, calls her year in the program “a life-altering experience.” She came to Stanford GSB while climbing the corporate ladder in the finance department at Lockheed Martin Space Systems. But her year as a Sloan made her realize that what she really enjoyed was working with customers and with teams of employees to deliver a company’s products.

When Reiners returned to Lockheed Martin after her year at Stanford, she took a job in business development. “A lot of what you do in finance is tell people no until they prove otherwise,” she said. “In business development, a lot of the job is convincing people to say yes.” Today she is vice president for missile defense systems.

The program has grown from the first class of 12 to 56 students in the Class of 2007. Yet it retains an intimate feel that fosters lasting relationships among its students.

“I can’t think of a program in the world that would create stronger bonds,” said John Steinhart, Sloan director from the late 1970s to mid-1980s. Because the students are in mid-career, many come to Stanford with their families, who also form lasting friendships.

James Porterfield, the James Irvin Miller Professor of Finance, Emeritus, who was director in the late 1960s, said he called Sloan Fellows by their first names, something he never did with MBA students. “We were closer in age, and they had experience and had reached middle management,” he said.

This experience level sets Sloan students apart.

“You can say something in the MBA Program and they write it down,” said James Howell, the Theodore J. Kreps Professor of Economics, emeritus. A room full of Sloan Fellows, he said, might respond: “That’s not how it’s done at my company, or in my country.”

Degree Program

The program evolved to focus on stellar middle managers — those identified as future CEOs — instead of mixing PhD candidates with managers. Perhaps the most significant change in 50 years was its transformation in 1976 from an academic year of study that awarded a certificate to a degree program.

In its early years, “we didn’t have examinations, but we learned an enormous amount,” said Karl Ruppenthal, Sloan ’58, PhD ’59, an airline pilot who was part of the first Sloan class.

By the mid-1970s, then-director George Parker, MBA ’62, PhD ’67, convinced the faculty to award Sloans a master’s degree in management, a change that made the program more attractive, particularly to non-U.S. students. It also made Sloan Fellows take the coursework more seriously, which increased the faculty’s enthusiasm.

Jenifer Renzel, Sloan ’77 and director in the late 1980s and early 1990s, was part of the first class to get the master’s degree. “The faculty wanted to be sure that no degree was given away,” she said. With no track record from the previous years as a gauge — did everyone pass? did half the class flunk? — taking final exams was tense. “It was charting new ground,” Renzel said.

Going International

As business went global, so did the Sloan Program. In the early 1980s about one-quarter of the students were international. Today, 60 percent of the Fellows are typically from organizations based outside the United States; the Class of 2007 represented 19 countries. The survey of graduates shows the progression: Overall, 28 percent live outside the United States, but that figure is higher for more recent graduates. About one-third of graduates from the 1990s lives abroad, as do 40 percent from the 2000s.

One hallmark of the program has long been interaction with business leaders who come to campus, and other leaders who spend time with the fellows during annual field trips including New York and Washington. This past year, for example, students met with Federal Reserve Chairman Ben Bernanke and Justice Stephen Breyer of the U.S. Supreme Court, among others. There is also a long tradition of a trip to the Pacific Northwest.

It was on one of these trips, said Hal Louchheim, MBA ’64 and Sloan director in the early and mid-1990s, that students visited Boeing’s headquarters and learned how many parts and components the company was buying from overseas. In response to the increasing globalization of business, Louchheim instituted the first overseas field trip in 1992, to Japan, Hong Kong, China, and Singapore.

“I think the key was an exposure to not just case studies but actually how people were doing business in some of these countries,” Louchheim said. The trips have continued annually, going to Asia, Eastern Europe, or South America.

Globalization helped drive the increased demand for the Sloan Program by foreign students, said Kirk Hanson, MBA ’71 and director in the late 1990s. “Non-U.S. companies were getting serious about the management development needed to prepare their executives to function in global business,” he said. “The perfect solution was to send someone to an American business school.”

Mitsuhiro Kanazawa’s Sloan experience and subsequent career move illustrate the benefits. Kanazawa, Sloan ’03 and senior vice president at Tokyo-based Mizuho Corporate Bank, had been working in Japan when he entered the program and was sent to the bank’s New York branch when he graduated. His classmates expanded his perspective. “The Latin American classmates had a completely different way of thinking than, say, the Europeans.”

An Entrepreneurial Turn

The program had long depended on major companies to recommend their most promising young managers, but since 2003 it has actively encouraged applications from students who would pay their own fees, currently more than $84,000 (living expenses and trip expenses are extra). The survey of Sloan alumni shows that more than one-third since 2000 were self-sponsored compared with 10 percent in the 1970s.

Hanson said that when he was director, it was clear that for U.S. companies, committing such a large amount of money and time to one employee’s management education was becoming a tougher sell. “The concept of how much companies invested in the careers of their employees was changing,” he said.

With the connections between U.S. organizations and their employees loosening, it seemed that more of the benefit was going to the employees, as  opposed to the companies, than in the past, Joss said. He called the move to add self-sponsored Sloan Fellows “a very logical evolution. It mirrors what’s happening out there in the business community.”

The change has allowed the program to enroll some “very interesting candidates,” said Bruce McKern, who will step down in September as Sloan director. Self-sponsored students include executives seeking to branch out from a narrow specialization into broader management roles and entrepreneurs who want to strengthen their management and leadership skills.

One example is Kirk Hawkins, Sloan ’05, who got a master’s degree in engineering from Stanford, then joined the Air Force and spent eight years flying F-16s. He came to the Sloan Program to get the business background he needed to start an aircraft company. He described his Sloan class as “two really cool worlds that complemented each other well”: the international corporate experience and “a strong entrepreneurial pulse”.

Post-Sloan career planning can be more complicated for self-funded fellows than for those who will return to a corporate job. Hawkins, for example, left the program with a well-formed business plan and is now CEO of a funded startup, Icon Aircraft. He said his class held career-planning meetings to help self-sponsored students chart their paths.

For Kanazawa, who was sent by his employer, the addition of self-sponsored fellows allowed him to get to know successful entrepreneurs, “people I would never have met if I hadn’t been in that program.”

Getting the mix of students right — international vs. U.S., self-sponsored vs. company-sponsored — is an ongoing challenge for the program, Joss said. It has come a long way from the days when the mix was between academics and business people, but the goal remains the same: to attract the best possible fellows from candidates who have 10 to 20 years of experience and real leadership potential, he said.

The program continues to work to attract more women; McKern said the Class of 2007 had nine, and the admitted Class of 2008 had 14, a record. He and Hanson, who faced the same issue as director, agreed that part of the reason is that there aren’t as many women in middle management, particularly outside the United States. Relocating for a year also seems to be a bigger hurdle for women than for men, partly because they are more likely to have a working spouse.

“The main product of the program is confidence,” said Tom Steding, Sloan ’81 and chairman and founder of Quadrix Partners. “You have seen the best and mingled with the best, and now you know what they know. You go forth and play in the business management field with confidence that you know what you’re doing.”