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A Question for Summer Interns: Who Are You?

Published on July 18, 2010 in 2010 Archives. 0 Comments

“I think, therefore I am.”  — Descartes

“I yam what I yam.”  — Popeye

The recruiter tried to tell me why the MBA summer intern wasn’t given an offer of permanent employment: “She seemed to be technically proficient as did the other candidate.  She was nice enough as a person.  But we had two interns and were able to hire only one.  The decision came down to “fit.”  It wasn’t that she would have been a bad fit, but we just didn’t know her well enough to say that, in this tight employment environment, she would be a good fit.  We knew what she could do; we just didn’t know who she was. The other candidate got the offer; there was less uncertainty about how well she would fit in.” [1]

Let’s face it: some eight months after the end of the Great Recession, this is still a tough employment market for MBAs.  The MBAs headed into this market—many of whom are smart and ambitious—tend to expect employers to figure out the Millennial Generation for themselves.  But this is a buyer’s market in which employers expect to be sold.  Simply proving that you know the stuff of good business isn’t enough: the intangible “fit” with the company’s culture can become a deciding factor.   In short, to get a job offer, you must not leave your employer guessing about who you are; what you stand for; and the extent to which all this is congruent with the values and culture of the firm.

A year ago, I blogged on the importance of “closing the sale,” of finishing strong, and of asking for an offer in an appropriate way—this message is still highly relevant (if you have not seen it before, read it now).  To that earlier posting, I add the advice here: leave an impression about who you are.  Most summer internships for MBAs will end in a couple of weeks or so.  This is late—but not too late—for you to put this advice to good use.  The careful judgment is not whether, but what to say, and how to do it.

What to say. The average twenty-something MBA candidate is still figuring out the finer points of his or her identity [Note: it is not clear that a sentient being ever stops reflecting on his or her identity]; if you seem to be a work-in-progress, it may feel awkward to say frankly and sincerely something about who you are and what you value.   But if you are already in an MBA program, the odds are that you’ve had some practice at this: most applications to selective MBA programs require some insightful disclosure about yourself in those essays.  Been there, done that.  As a general rule, you should focus on relevance and truth.

Think about your listener and what he or she might be interested to learn about you. The vast catalogue of your attributes may not be very interesting to your prospective employer.  Based on your summer internship, what seems to matter most to this firm and its competitors?  What about who you are would be most relevant to the things that matter?  Whom and what do you serve?  What sense of purpose gets you up in the morning?  Is there anything in the mission statement of your employer with which you especially identify?  If you work for a firm in the health care industry, do you feel a commitment to health and wellness?  Companies in the food industry may express a commitment to wholesome nutrition.  In entertainment, it tends to be delight.  In media, it is informing the public.  And so on.

Tell the truth. It will be tempting to say something about yourself that is gauged to please the listener, but is not wholly accurate.  The less diverse the culture (and the more you want an offer) the greater may be the temptation.  But take it from me: it is a very bad idea to deny who you are, and even worse to represent yourself as something different.  The best corporate cultures embrace diversity.  In fact, the company may be interested in you precisely because you bring a different point of view that in the future might help them.

How to say it. “I am” statements are the blunt instruments of helping someone get to know you.  These are really powerful and tend to draw a line in the sand.  Such statements range from the sublime to the ridiculous so be careful.  Descartes tells us he is a thinker; Popeye tells us to look at him and judge for ourselves.

Alternatively, you can tell some stories.  If “I am” statements are the blunt instruments of impression-making, stories are the stilettos: subtle, and highly effective.  Daniel Willingham, a professor in UVA’s psychology department, has written, “The human mind seems exquisitely tuned to understand and remember stories—so much so that psychologists sometimes refer to stories as “psychologically privileged,” meaning that they are treated differently in memory than other types of material.” [2]  He says that stories are easy to comprehend because the audience helps to interpret the action; and stories are much more interesting, which makes them easy to remember.  Willingham says that stories consist of several elements:

·         Causality. Events in the story have some linkage.  “Both of my parents worked, so I spent a lot of time at home alone.  I became adept at entertaining myself.”

·         Conflict. The main character in the story encounters an obstacle on the way to a goal.  “I invented a new software application, but had no idea how to bring it to the market.  I approached some investors and eventually raised some Angel money from family and friends.”

·         Complications. A good story offers some tension: will the protagonist succeed?  “Then Megacorp threatened to sue me for patent infringement and at the same time gave me a low-ball offer to buy all the rights to my software.”

·         Character. Ultimately, a story says something substantive about one or more people—this is the point of telling the story, to say something memorable about you. “I fought the lawsuit, and won.”  Or “I saw how rapidly the field of applications was changing.  So I sold them the software and used the money to bootstrap the founding of my next company.  We invented—and successfully patented—the second generation of application software.”

Close well. Whatever you decide to say, do not lose the opportunity to link who you are with the company you seek to join.  Why is a job with this company consistent with where you’ve come from and who you are?  It would help if there were some joy and enthusiasm in your closing.  In my experience a strong expression of who you are—in a way that is consistent with what the company needs–helps to clinch a job offer.

  1. I have a conversation of this sort at least annually.  Given here is a pastiche of such conversations.  Any implied reference to a specific person is unintentional. [↩]
  2. Daniel Willingham, Why Don’t Students Like School?  A Cognitive Scientist Answers Questions about How the Mind Works and What it Means for the Classroom” Jossey-Bass, 2009, pages 51-2. [↩]

Reform of the Financial System: The Limits to Limits

Published on July 13, 2010 in 2010 Archives. 0 Comments Tags: , , , , , , , , , , .

Something there is that doesn’t love a wall,…

The gaps I mean,
No one has seen them made or heard them made,
But at spring mending-time we find them there….

Before I built a wall I’d ask to know
What I was walling in or walling out,
And to whom I was like to give offence.
Something there is that doesn’t love a wall,
That wants it down.

Robert Frost, “Mending Wall”

Last March, my wife and I took a bicycling trip in southern Arizona.  Staying at an inn near the border with Mexico, we climbed up a hill to see The Fence, the barrier that runs along the border.  This fence is 15 feet high and consists of vertical steel tubes filled with concrete, quite imposing.  But both sides of the fence are littered with empty water bottles, left by immigrants crossing the border.  You see, the fence is surmountable with the help of a ladder.  More importantly, the fence does not run along the border from sea to shining sea.  Some parts of the border aren’t fenced.  When we got to the top of the hill, we saw the end of the fence in the middle of the desert.

U.S. Indian reservations abut the border; the reservations retain just enough autonomy to deny the U.S. government permission to fence their part of the border.  One would think that crossing the border at the Indian reservation would be preferable to surmounting the fence.  And sure enough, from our hilltop vantage point, we saw a file of 20 or so pedestrians a mile distant snaking their way toward the end of the fence.  A momentary transit by a U.S. government helicopter caused the pedestrians to dive under the scrub brush.  But my guess is that they weren’t deterred.  This impression was confirmed later by some officers from the border patrol.  They said that The Fence had slowed, but not stopped, the influx of undocumented aliens.

The Fence is a metaphor for what we are likely to experience after the likely passage of legislation in the U.S. and Europe aimed at tightening regulation of the financial system.  Any day now, the U.S. Senate will likely vote to approve the “Dodd-Frank Wall Street Reform and Consumer Protection Act,” which will

·         allow the Fed to inspect and regulate any institution (bank, hedge fund, insurance company) that is deemed systemically important. 

·          engineer a smoother process for the government to close down insolvent institutions through a process of orderly liquidation. 

·         create the Consumer Financial Protection Agency to fight fraud and abusive financial products and practices.  

·         give shareholders an annual, nonbinding “say on pay” for corporate executives. 

·         regulate the over-the-counter derivatives market.

The influential blog, ft.com/alphaville, opines that the legislation might actually help the hedge fund industry by putting a drag on the proprietary trading operations of large financial institutions.   On the other hand, the swaps and derivatives dealers are unhappy with the uncertainty the bill creates around future rule-making, and who will make them.  Most importantly, no one is ready to declare that this legislation will forestall the next financial crisis.  James Surowiecki, writing in the New Yorker, declares that the legislation is no “panacea.”  And Republicans generally have condemned the legislation as an “empty effort.” 

Doing nothing is not an option: a relatively stable financial system is in the public interest.  The whole debate, in my view, is around the cost of that stability.  Imposing regulation on an industry is like buying an insurance policy.  A savvy consumer should always ask about the price of the insurance and its effectiveness.  Two new books give excellent reviews of the need for regulation and the various proposals.  The Squam Lake Report by Ken French and others condenses the views of leading academic thinkers: it is succinct, dry, abstract, and yet persuasive.  French et alia are careful students of the modern financial system, not wild-eyed Tea Partiers.  The other book is Crisis Economics by Nouriel Roubini and Stephen Mihm, two economists—their outlook is edgier, more critical of one and all, and well informed by research, history, and current events.  Any reader will find at least something to disagree with in each book.  But comparing their discussions to the 2300-page Dodd-Frank Act, one has to conclude that the Act seems to address the important areas of concern. 

But think about The Fence.  Will the legislation prove to be effective at reasonable cost?  We don’t know.  Dodd-Frank gives great discretion to regulators to set rules in several important areas.

1.       Transparency.  In The Panic of 1907, Sean Carr and I argued that systemic instability has at its core an information problem: because of complexity in the system and in individual institutions, it is hard for decision-makers to know what is going on and to take effective action.  As a result, those decision-makers act out of fear rather than rationality.  Thus does a panic begin.  As the authors of The Squam Lake Report write, “Regulators cannot assess the status of the financial system without knowledge of the intersections between firms.  Currently, U.S. regulators do not systematically gather and analyze much of the information outlined above, and the information they do have is often difficult or impossible to aggregate across institutions.  This constrains the government’s ability to foresee, contain, and ideally, prevent disruptions to the overall financial services industry.” [1]     

2.       Adverse incentives.  Dodd-Frank does not resolve the huge moral hazard created by the government interventions of 2007-2009.  Many people supported those interventions on the principle that if your neighbor’s house is on fire, you should help to put it out, lest the fire spread to your house.  But now we must deal with the legacy of those rescues: creditors may now believe that the government will always rescue them—henceforth will they make riskier loans?  “Capitalism without bankruptcy is like Christianity without hell,” said Frank Borman, CEO of Eastern Airlines in the 1980s.  Will market participants devoutly observe sensible practices if there are no consequences?

3.       Global linkages.  The Act considers financial enterprises in the U.S.  But the potential sources of instability extend well beyond our borders.  Nouriel Roubini and others have explored the possibility of establishing a global regulator of financial institutions; but no country seems particularly willing to give up sovereignty to achieve the kind of comprehensive regulation that would be required.  If you want my nomination for the “End of The Fence,” this is it.  Asymmetries in the ways countries regulate the financial services industry will stimulate “regulatory arbitrage.”

4.       Executive compensation.  An annual, nonbinding “say on pay” vote by shareholders may well focus attention on the wrong aspect, the level of executive compensation.  Instead, the recent bubble and financial crisis were rooted in the heads-I-win-tails-you-lose payoffs embedded in the bonus compensation plans of some financial institutions.  The market for talent should dictate the level of compensation.  Let traders and managers be rewarded for excellent performance; but why not let their bonuses be paid in deferred compensation so that they must bear the longer-term consequences of their actions?  It may be that regulators will start to dictate the structure of bonus schemes.

5.       Institutions.  The legislation does not address the failures at Fannie Mae and Freddie Mac, institutions that formerly operated with an implicit government guarantee and were taken over by the government in 2008.  Henry Paulson, interviewed in today’s New York Times, said, ““The root causes of all this are housing policies — not just Fannie and Freddie,” he said, referring to the giant mortgage companies. “That hasn’t been dealt with.””  The Act does address the credit rating agencies, though the regulations may be too little, too late.  William Gross, the iconic investment manager and co-founder of PIMCO said that the NRSROs  “’no longer serve a valid purpose for investment companies free of regulatory mandates’ and urged investors to dismiss their judgments.” 

6.       Too big to fail.   The Act takes no position on busting up banks that are so big that their failure would endanger the stability of the financial system.  But the Act implicitly defers to the regulators’ powers to dictate reserve requirements and require the orderly dissolution of insolvent banks.

Any fence has its own limitations.  On many of the items listed above, Dodd-Frank grants significant rule-making discretion to regulators.  In one respect, it is fortunate that Congress chose not to micro-manage an incredibly complex system.   Even Barney Frank told NPR today, “”If you do it too inflexibly, you’re inviting the businesses to get around you. You need to give the regulators discretion. And people said, ‘What’s the guarantee that this discretion bodes well?’ And the answer is: In democracies, there are no guarantees. Elect good people.”

Might those regulators themselves become victims of “regulatory capture,” the co-opting of regulators by those they must regulate?  Much of the mentality of successful entrepreneurs and business people is aimed at surmounting obstacles in order to grow a business and fulfill its mission.  They will accept the laws and regulations as a constraint and then optimize within and around those bounds.  But the bounds are bounded: the regulations cannot anticipate the ingenuity of business people in the future.  I have sounded similar concerns before (see this, this, this, and this.) 

Above all, this legislation will not “fix” the problem of panics, crashes, and financial system instability.  The authors of The Squam Lake Report suggest that there may be no “fix”: “The economic hardships triggered by the World Financial Crisis have caused government officials and citizens around the world to demand regulatory reforms that will prevent financial crises.  There is no reasonable way to accomplish this goal.  Financial crises have recurred throughout modern history.  …We expect that financial crises will continue to happen for centuries into the future.  Our goal is not to prevent such crises but to reduce their frequency and severity.” [2]  Similarly, Roubini and Mihm wrote, “Far from being the exception, crises are the norm, not only in emerging but in advanced industrial economies.  Crises—unsustainable booms followed by calamitous busts—have always been with us, and with us they will always remain.” [3]

It is said that most dieters successfully lose some pounds—and eventually regain them.  For a person to shed weight and keep it off requires not merely the gimmick of the diet, but actually a transformation of one’s lifestyle, an internal discipline, a wall.  Most dieters aren’t willing to give up the way they used to live: too much food, too little exercise.  They circumvent the wall.  Like the overweight dieter, America is carrying too much debt, is running a negative trade balance, has huge fiscal deficits, and hopes that the dollar will continue to be the stable reserve currency of the world.  The Dodd-Frank Act may have some modest impact on our national health.  But in order for us to avoid the kind of financial instability we’ve just lived through, we’ll have to change our lifestyle: save more, consume and import less, retire later, and for a while, endure more unemployment and perhaps pay more taxes.  Whether Americans have the discipline for this is the main question.  Something there is that doesn’t love a wall.

  1. The Squam Lake Report, page 48 [↩]
  2. The Squam Lake Report pages 149-150 [↩]
  3. Roubini and Mihm, Crisis Economics page 4 [↩]

4th of July 2010: Independence From and To

Published on July 4, 2010 in 2010 Archives. 0 Comments Tags: , , , , , .

A few score of immigrants were sworn in today as U.S. citizens at Monticello, the home of Thomas Jefferson (third U.S. President and founder of University of Virginia.)  The new citizens pledged to “absolutely and entirely renounce and adjure all allegiance and fidelity to any foreign prince …potentate, state or sovereignty.”  These words sound quaint in a world where oath-taking has become a rarity.  But the solemnity of the event ensured that none of these new citizens was kidding.  They are buying in to America seriously.  A reasonable question on this Independence Day is “Why?”    

America does have its problems: hostilities in Iraq and Afghanistan, historically high indebtedness, high unemployment, sagging economic confidence, an environmental catastrophe in the Gulf of Mexico, rising distrust of major institutions in society such as government, the media, and business—to name a few.  (One can’t find a developed country in the world that isn’t feeling considerable pain at present.)  But whatever impulse toward triumphalism and exceptionalism that an American might feel today, the current state of the world might warrant some humility.

Still, naturalized citizens tell a bright story: liberty, freedom of speech, and opportunity motivate their move.  They want to make a better life for themselves—this is what used to be called, “the American dream.”  Out of some 210 countries in the world, worldaudit.org ranks the U.S. in the top 10% on the basis of democracy, press freedom, economic freedom, civil liberties, and low corruption.  This is consistent with other rankings, such as those by the Heritage Foundation, Reporters Sans Frontieres, and the World Bank.   The U.S. remains the world’s largest economy.  It is an extraordinarily creative country, judging by the success of industries as varied as entertainment (Hollywood), media (cell phones), information technology (Apple, Google),  transportation (Boeing), medicine (Amgen, Celgene, Genzyme), retailing (Wal-Mart, Target, Best Buy), and so on.  It remains a leader in research.  Each year, it draws a large share of Nobel Prizes and similar recognitions for high achievement.  Its universities are strongly represented in various global rankings.  And it offers one of the most welcoming environments for entrepreneurs and inventors.  Each year, a huge volume of new businesses is started in the U.S.  Though many of these do not survive indefinitely, America offers a culture of second chances.  In short, this country offers the opportunity to take risks toward the goal of making a great life.

One other motive merits some consideration.  Each year, I get to know dozens of international students who enroll in Darden’s MBA programs.  These people are pioneers in the best sense of the term: making a big gamble with financial support from family and friends; surmounting differences in language and culture; working hard; looking forward with optimism; and taking risks.  Many aspire to start and lead a company (research suggests that immigrants are 30% more likely than native-born Americans to start their own business.)  These students tell me in many ways that they have come to Darden and America to prove what they can do in the context of other excellent students. 

Perhaps America is a magnet for talented visitors and immigrants because it is a proving-ground for excellence.  Two other bits of information lend some credence to this:

1.  Why do foreign firms choose to offer their stock for sale in the U.S.?  In a couple of research articles, Susan Chaplinsky, Latha Ramchand, and I looked at initial public offerings of stock in the U.S. by foreign firms.  You might think that distance and unfamiliarity would prompt U.S. investors to demand a higher return from these foreign issuers.   In one article, we reported that there are no discernable differences between U.S. and foreign firms in the cost of issuing stock in the U.S.   And in the other paper, we concluded that even for firms from the riskiest countries (i.e., the so-called “emerging markets”) the costs of issuance were immaterially different.  We found that the markets weren’t necessarily indifferent to the riskiness of the foreign home countries.  But rather, only the best firms actually made it to the U.S. markets.  Thus, to make a successful initial public offering in the U.S. is quite a mark of quality.  This is consistent with anecdotal evidence from CEOs and CFOs that the very demanding securities laws and listing requirements, and the sophisticated investment community in the U.S. hold a high standard relative to many other countries in the world.  To issue stock here is to be world-class.

2.  Why are foreign b-schools setting up shop in the U.S.?  I chair a task force of b-school Deans on the globalization of business education.  (More about this in coming months.)  In that capacity, some journalists called me to invite my comments on the entry of non-U.S.-headquartered b-schools into the U.S.  I said to one journalist, that entry is an interesting choice on the part of these schools: “We have an abundance of schools here and usually the idea is to go where the competition isn’t.  The schools are driven a desire to establish and succeed in the U.S. as a basis for validating their models. Aiming to have a successful business school in the United States is like wanting to see your plays produced on Broadway — the audiences are most discerning.”  To another journalist I said, “”The U.S. is where the MBA was invented and, to some extent to establish a footprint in this market, is an additional means of legitimizing a school’s brand and stature globally.”   Alice Guilhon, Dean of the French b-school, SKEMA, said, “For European students, this is a dream; America is a dream for them.  And it is a dream for us, to be known in the U.S….To be in America is to be close to the headquarters of all the big firms, to be where the story began. …To be well-known in America, it is leverage for the visibility of the school in the world.”  David Bach, dean of programs of Instituo de Impresa, another entrant, said, “… you have very sophisticated customers. … we want to show that we can have success in such a competitive, difficult market.”

All of this has led me to reflect on what all of us are celebrating this day.  Is it independence from?  Or is it independence to?   Much of the focus is on the Declaration of Independence from Great Britain on July 4, 1776.  But I will lift a toast to the notion of independence to –through the Declaration of 1776, our founders created an independent society where it is possible to strive in world-class competition, to prove your personal best, to test yourself against strong competition, and to leave a mark on the world of which you will be proud.

Graduation 2010: Figuring Things Out With Questions

Published on June 11, 2010 in 2010 Archives. 0 Comments Tags: , , .

“The more I know, the less I understand/ And the things I thought I’d figured out, I have to learn again.” — India Arie, The Heart of the Matter

Hearing the words of this popular song inspired my remarks at Darden’s graduation ceremony last month. My experience as a teacher and leader leads me to doubt that one definitively “figures things out,” attains pure understanding. All kinds of things get in the way: we see, but don’t recognize; we listen, but don’t comprehend; insights are garbled in transmission; or there is simply too much noise in the environment. Maybe the best we can aspire for is an approximation of true understanding, like the curve that asymptotically approaches but never touches the ray. If so, India Arie is correct that we have to learn again and again. What matters therefore is the process of questioning by which one tries to figure things out. So it was that on May 24th I offered the following comments:

I have some advice for the Class of 2010. I welcomed you to Darden in August 2008. Over the following months, the world changed profoundly. In a short space of time governments around the world rescued financial institutions, took over industrial companies, and mounted enormous economic stimulus packages. And you know the rest of the story. Your time at Darden has witnessed extraordinary events in markets and the world, which may well mark the end of one era and the beginning of another. At moments like this, the ability to ask good questions becomes a competence of paramount importance.

Darden has quite a lot to say about this competence. Indeed, how we teach is what we teach. The case method classroom is all about inquiry. As a method of teaching, this is quite successful because conversation is transformational.

What makes it so? The quality of the questions one asks. Our alumnus, George David, recently retired as CEO and Chairman of United Technologies Corporation, which is one of the largest firms in the world. He has a process that he calls “fifty questions.” When he visited a manager or a plant, he didn’t settle to listen passively to a set-piece presentation. Instead, he actively engaged his managers in a curiosity-driven process. Darden teaches you not to be shy about questioning. The Chinese have a proverb: “He who asks a question is possibly a fool for a moment; but he who does not ask a question remains a fool forever.”

You can manage by questioning. Engage your people at work the way we engaged you here: question-question-question. Good questions outrank easy answers. Those who question tend to do better than those who give answers. Be a curiosity-driven manager. If you’re not satisfied with the answers you get, ask again and ask differently. Use questions to coach one another. Use questions to set high standards. Most of all, use questions to set a tone of integrity. This is what Thomas Jefferson would have wanted.

I tell you this, because to question well requires an acute level of attention. When I welcomed you to Darden in 2008, I told you that “You must be present to win.” What does it mean to be “present”? It means to be prepared, to participate, and to reach out to others in the community. You’ve probably heard that Woody Allen once said, “showing up is 80% of success in life.’ Well, I disagree. More accurately, being present is 80% of success. Just showing up doesn’t cut it anymore.

And be present for Darden. Recognize that you are the brand. Everything you do will make an impression about what the Darden School is: what we value, how we do things, the quality of our thinking and teaching, and so on. Part of being present for Darden involves speaking up for Darden. Through your actions and words, let the world know who we are. Truly, at Darden, how we teach is what we teach. We wish you well on the life journey that lies before you. Good luck and Godspeed.

Return on the Educational Investment

Published on May 21, 2010 in 2010 Archives. 0 Comments Tags: , , , , , , , , , , , , , , .

Here we are at Darden’s graduation weekend. The Class of 2010 justifiably celebrates the achievement of an MBA degree and various other awards and recognitions. This follows a great deal of hard work, long hours, and the expense of a lot of money. By now, I never hear students question whether it was worth it. They know the answer: yes.

A new piece of research by Robert Barro of Harvard and Jong-Wha Lee of the Asian Development Bank confirms what the students already know. The researchers find that the return from investing in a year of tertiary education (college or graduate school) averages 17.9%. Compare that to the returns from investing in real estate, stocks, bonds, or most other asset classes, and you conclude that investing in your own human capital is about the best investment you can make.

Of course, monetary returns measure only part of the gain. Richard Feynman, the physicist and Nobel Laureate once said that the accolades meant little to him—what mattered was the “joy of finding things out.” Universities are replete with students and scholars who study simply for the joy of finding things out—and joy can’t be measured. Sure, come to a university to qualify for a higher salary. But better yet, come to a university for an education that prepares you to enjoy a life full of nuance, social awareness, and personal impact.

My hope for the graduates in Darden’s Class of 2010 is for educational success defined not merely in ROI, but also in joy.

Choosing an MBA Program–Where Can You Do Your Best Work?

Published on May 6, 2010 in 2010 Archives and Archives. 0 Comments Tags: , , , , , .

Darden is in the talent discovery and development business. We look pretty far and wide for excellent inbound talent with which to fulfill our mission, “to improve society by developing principled leaders for the world of practical affairs.” And then we work very hard to develop that talent to have a transformational impact in the world. At this moment every year, we are well into the talent discovery cycle. Letters of admission have gone out for our MBA Full-Time Program and our MBA for Executives Program. About now, the candidates’ questions focus intensely on parsing out the differences among schools. Deposit deadlines are approaching. The candidates must decide, “Which school should I attend?”

As I told a group of admitted applicants at Darden recently, I have one consideration that dominates most others. Issues such as cost, convenience, geographic location, brand, alumni network, job placement, and others all arise in the candidates’ thinking, and justifiably so—but they are dwarfed in significance by the consideration I will tell. All too often, this consideration is a stealth issue that is overlooked entirely in choosing a school and then later discovered too late and with regret. My point is that it is far better to grapple with it now.

A few years ago, I was counseling a second-year student who had received two job offers and was trying to choose between them. The dilemma was stark: on one hand, high pay at a large, well-known firm in a big city to be part of a three-year leadership development program that would rotate him through many different jobs quickly. On the other hand, there was an offer for frankly low pay, to work for an unknown rapidly-growing small firm located in a dodgy neighborhood where the student would be a general manager from day one. The realities of student loans and economic uncertainty being what they were, the student was leaning toward the high-pay job offer. He seemed to be looking for my blessing on the choice.

Instead, I asked him, “where can you do your best work?” The look of astonishment on the student’s face told me that this was a new way of thinking to him. He offered some blah blah blah about hypothetical career progression. I politely suggested that he go away and think some more about my question. Not long after, he accepted the job with the small company. A few years on, he is successful in every way: happy, well-compensated, a big cheese in a much bigger company, and doing the work he feels ready and able to do. I’m glad that he and I had the conversation when we did. But the end of an MBA program is a little late to start thinking this way.

My advice to admitted applicants is to start wrestling with the question right now. “Where can you do your best work?” It’s deceptively simple and radically challenging. You must define for yourself two words in particular:

  • Work.  What “work” do you need to do or are you ready to do in the near future?  What “work” do you feel some passion for?  Do you hear a calling of some kind?  Students who enroll at the elite business schools aren’t there simply to bash through hundreds of tools, concepts, and buzzwords.  By and large, they are trying to work through a personal transformation of some kind.  A large majority of MBA students are contemplating the possibility of a career switch.  Virtually all of them feel ready for something bigger and want the kind of preparation that will accelerate them forward.  It is safe to say that the work you want to undertake at B-school consists of a complicated agenda that, to be achieved, requires some pretty sophisticated help.  It’s not easy; but that’s why they call it “work.”
  • Best.  Truly transformational experiences almost always arise in engagement with others.  Thus, “best” usually entails some judgment about how you like to engage.  The best learning is active, not passive; creative, not rote; deep, not superficial; challenging, not easy; and collaborative and coached in various ways, not simply competitive—how you accomplish all that requires serious effort on your part and some ingenious design work on a school’s part.

Among the 12,000 schools in the world that award degrees in business, you can find an almost infinite range of choices around the definitions of “best” and “work.”  Where can you do it?  At the end of the day, you must choose. 

From my perch as Dean, I see vast differences among the top schools—differences that seem invisible to rankings and guidebooks.  For instance, at Darden, we focus on the transformation of the student and therefore we design a total learning experience to include plenty of engagement, feedback, and individual choice.  As I have said on many occasions, what distinguishes Darden are “high touch” (a highly interactive, high-engagement learning approach), “high tone” (a focus on leadership development, not just the acquisition of tools and concepts), and “high octane” (a rigorous, transformative experience that is energizing and collaborative.)  We think that there is a great deal of “best work” to be done here.

The big point is that a life decision such as accepting a job offer or admission to an MBA program shouldn’t hinge just on the obvious criteria (dollars, title, location, etc.)  You must focus importantly on the work you want to do and how this choice can help you do it.  Where can you do your best  work?

Nondiscrimination and Diversity: Where the Darden School Stands

Published on March 17, 2010 in 2010 Archives. 0 Comments Tags: , , , , , , , .

Last week, the Governor of Virginia, Robert F. McDonnell, issued Executive Directive One that declared a strong policy of nondiscrimination, including on the basis of sexual orientation. The Governor said, “The Equal Protection Clause of the United States Constitution prohibits discrimination without a rational basis against any class of persons. Discrimination based on factors such as one’s sexual orientation or parental status violates the Equal Protection Clause of the United States Constitution.”

Commenting on the Governor’s Directive, President John Casteen of the University of Virginia wrote, “Because the public colleges and universities are Executive Branch agencies, this directive applies to the University of Virginia. The Governor’s citation of the 14th Amendment (the Equal Protection Clause) moves this issue to the highest level of law in the United States.”

At the Darden School, we will continue our practice of treating all current and prospective members of our community with fairness and respect regardless of age, race, gender, disability, parental status, or sexual orientation. Governor McDonnell’s Executive Directive One declares a strong policy of nondiscrimination, including on the basis of sexual orientation. Darden commits to welcoming everyone and to avoiding discrimination of all types in the treatment of students, faculty, and staff.

Why do we, as a business school, make such a clear and unequivocal commitment to this practice? As the Governor states, nondiscrimination is the law of the land. But there are at least five additional reasons. First, nondiscrimination is a vital business practice, a feature of meritocratic corporate cultures that underpins all high-performance organizations. Second, by modeling such a culture at Darden, we help to prepare the rising generation of business leaders to be more effective in a world of increasing complexity and diversity. Third, at Darden we teach by the case method, the success of which depends on the open exchange of diverse views—nondiscrimination promotes a vibrant classroom learning experience. Fourth, the business community that Darden serves expects nondiscrimination; it expects to find a diverse community at Darden; and it expects a culture at our school of inclusion and respect. Finally and most important, it is the right thing to do: we should treat others as we would like to be treated.

Let this be crystal clear: the Darden School welcomes candidates for admission or employment regardless of age, race, gender, disability, parental status, or sexual orientation. And we aim to work and learn together consistent with our values and aspirations.

Getting to 'Yes' From an Attitude of 'No'

Published on February 11, 2010 in 2010 Archives. 0 Comments Tags: , , , , , , , , , , , , , , , , , , .

“In his remarks at last year’s commencement, in May, The New York Times reported, University of Connecticut President Michael Hogan addressed the phenomenon of students’ turning down jobs, with no alternatives, because they didn’t feel the jobs were good enough. “My first word of advice is this,” he told the graduates. “Say yes. In fact, say yes as often as you can. Saying yes begins things. Saying yes is how things grow. Saying yes leads to new experiences, and new experiences will lead to knowledge and wisdom. Yes is for young people, and an attitude of yes is how you will be able to go forward in these uncertain times.”

Don Peck recounts this in a recent article in The Atlantic in which he describes the possible long-term effects on American culture of a sustained stretch of high unemployment. One effect is the attitude change required of people with very high employment expectations—or a strong sense of entitlement. If you are highly self-confident, it is easy to say “no” to opportunities as they come along. But I think conditions are far different today than just a few years ago, and likely to remain so for years. Under these circumstances, “yes” should become a stronger part of the career vocabulary.

Exhibit A is this graph from Calculated Risk, a finance blog. Looking at all of the post-World War II recessions, the job losses in the recent recession are the worst. Judging from the slow rate of economic growth and the huge overhang of outstanding debt in the U.S., it seems likely that the growth of employment for the next few years will be slow and high unemployment will linger.

Plainly, this is an extraordinary moment in global economic history. It requires much more flexibility about career goals and job placement than would have prevailed, say, three years ago. Above all, it requires a greater capacity to say “yes” to opportunity.

President Hogan’s message brought to mind the memory of an MBA student who had declined a job offer from the leading management consulting firm in the world. [1] Mind you, this is the kind of offer that legions of MBAs would crave. Was the student afraid of the long hours and travel? No. Was there an issue with the location, say, on account of a spouse or partner who couldn’t re-locate? No, the company had graciously offered to locate him where he wanted to live. Was there a problem of culture or personalities? No, the people at the consulting firm seemed very nice. Was the financial package adequate? Yes, in fact, generous. By this point, the suspense was getting the better of me. So what was the problem?

The student was holding out for an offer in a field that hires few MBAs straight out of school and at a level of seniority consistent with several more years of work experience than the student could claim. He felt that adhering to the path toward his ideals was the courageous course.

It’s not easy to render a Dean speechless. He was courageous, perhaps; but focused to the point of self-absorption. My mind braced itself against the vision, expectations, and audacity of the student, all of them impermeable to the realities of the job market. Did the student remember Shakespeare’s words that discretion is the better part of valor? I thought of the interview slot that this student had taken despite his intentions to head into an entirely different field—what did this imply about the student’s integrity and regard for his peers? I thought of the hours he had spent in career counseling at the school: what had he learned? I reflected on the consulting firm itself: in the pursuit of the brightest, most interesting and charming hires, had they not asked sensible questions or heard the evidence that screamed the student’s disinterest?

Soon enough, I found my voice and conveyed all this to the student. And in my best coaching tones, I told him that he simply needed more seasoning before he could hope to gain the position of his dreams. With the miracle of modern medical advancements, he could look forward to a career of perhaps 50 years. He needed to pace himself and build toward his dream. From this standpoint, the consulting job would be excellent preparation.

His reply, in so many words, was “no.”

As this jobless recovery grinds on, job-seekers will need to find good words as opportunities appear: “yes,” or “let’s see how we can make this work,” or “let me consider how this offer can build toward outcomes we both want,” or “this has promising possibilities.” President Hogan was spot on: saying ‘yes’ does begin things. It is as unrealistic to expect to see the path forward with much clarity as it is to get the job of your dreams without seasoning, preparation, and a decent employment environment. Saying ‘yes’ buys you an option on the future: a chance to take a look around; a chance to learn by doing something new; a chance to launch your career. As we know, options are more valuable in times of heightened uncertainty, times like the present.

I applaud great determination and high goals. I hope that the day of abundant employment opportunities returns soon. But until then, the Darwinian grind of the job market will require more of seekers than the single-minded pursuit of a dream with the expectation of quick results.

  1. To preserve confidences, I have disguised the example. Nevertheless, the description reflects the essentials of the case. [↩]

Learning, Leadership, and Lean Thinking

Published on January 10, 2010 in 2010 Archives. 0 Comments Tags: , , , , , , , , , , , , , , , , , , .

Last week, my colleague, Elliott Weiss, took me to a plant operated by Danaher Corporation, where a small group of our students had joined kaizen (continuous improvement) teams among the front-line managers at the plant. What I saw was inspiring about Danaher, Darden, and the future of manufacturing. These teams were rearranging the process flow—literally building new work benches and shifting the production line—all with the aim of ferreting out the unnecessary inventory, floor space, and motion, and all the while enhancing safety and product quality. One team worked through the night to get the line ready for the workers the next day. Kate Ryan (D’11) wrote to me afterward, “Each group reached the goals that they set at the beginning of the week, and I think that the new processes will help the factory. It was a fantastic event that was both a great learning experience and chance to network with Darden alumni. I never expected the event to be as fun as it was.”

Kate and her classmates were doing this without pay and on vacation time. Yet she said it was fun. There is hope for the future of American manufacturing here. I’m inviting Elliott and all these students to lunch—along with part of Darden’s leadership team—to celebrate this and aim to get more of it into Darden’s “high touch” MBA experience.

I believe that at the heart of this is a story about leadership development and the leadership of change. The Washington Post asked a group of panelists including me to reflect on this question: “Last year was a tough one for many organizations, with fewer employees required to do more with less. How can leaders of such organizations motivate their people as they head into 2010?” So my comments in today’s Post argue that doing more with less is significantly a matter of leadership, of framing the possibilities or alternatives for an enterprise. Today, the only way forward for many organizations is to think lean, to use resources more sparingly while achieving equal or better results. But fundamentally, lean thinking isn’t about cutting costs or people. Rather, it is about getting the waste or “stuff” out of our lives and operations: unnecessary meetings; approvals in triplicate; oversized inventories; delays of all kinds; bloated expense accounts; and the notorious three-martini lunches.

Anything that does not add value to customers is waste, and the Japanese have an evocative word for it: muda. Getting the muda out of our lives and work places can actually make for more satisfying work and higher morale: fewer “redo’s,” less bureaucracy, lower frustration, greater identification with those we serve; and a stronger sense of belonging to a high-performance organization. Early January is a wonderful moment, a time of New Year’s resolutions, to get rid of the muda around us.

The evidence is that lean thinking is an effective approach to raising quality and reducing cost and time. The folks at Danaher described to me some very significant improvements in performance achieved through lean thinking. The ascent of Toyota to world-class stature was attributed to its lean manufacturing practices—see the classic book, The Machine that Changed the World. In the service sector, major hospitals (such as Virginia Mason in Seattle and Parke Nicollet Health Services in Minneapolis) are employing lean practices to gain significant improvements in performance. Even in higher education, there are exemplars: the University of St. Andrews says that “Lean strengthens [its] processes, frees staff time & resources and builds a culture of continuous improvement.”

Public universities are at the forefront of the need to do more with less. The University of California system is the poster child of the new conditions: less money available yet the public demands greater access and more services. The attendant riots, sit-ins, and picketing are but symptoms of the larger stress on higher ed. What can we do?

A year ago, I launched a lean thinking initiative at the Darden School—I met with the faculty and staff at three points in the year to discuss the consequences of the economic crisis around us and our need to “reinvent, renew, and re-imagine all that we do.” Our leadership team read and discussed classic books on lean thinking and case studies of successes. I facilitated three focus group meetings with front-line supervisors and employees to discuss ways to “go lean” in travel planning, student services, and external relations. We called on the expertise of some of our alumni and members of our faculty. We invested prudently in new technology and ran a special pilot program with the Amazon Kindle. Our students got into the act with projects around environmental sustainability (yes, that’s lean thinking too.) Our faculty embarked on a deep review of our full-time MBA program.

One year into it, the net effect of our lean initiative has been to generate some five dozen kaizen (continuous improvement) projects. For instance, Randy Smith, Darden’s Chief Technology Officer said that his team is looking to automate the “routine repetitive work so that the staff of our business-owner partners can engage in higher level work.” So far, our kaizen projects have generated some small early wins; more wins are in prospect. More importantly, our lean initiative has generated increased self-reflection about the way we do things. We have a different mindset as we head into this year’s planning and budgeting cycles. In any event, the gains will begin to accumulate, to build on one another and to suggest opportunities for further improvements in quality and cost.

The dire challenge posed by the financial crisis and our experience in responding to it offers at least three lessons.

Leadership. Going lean is not an exercise to be relegated to the time-and-motion experts. Leadership is indispensable. The leader (at the top, middle, or at the front line of the organization) has to set the tone of lean thinking–it can’t just be about cost cutting; it must be about transforming the organization for high performance; it can’t just be thinking about doing with less money, it must be about working differently. If all you want to do is cut costs, then you don’t need a leader; you need a technician. This is the central difference between the lean thinkers and the cost-cutters.

Harness the network. As the saying goes, there is more knowledge in the network (such as your community or the Internet) than in the heads of the few people immediately around you. The best ideas come from people distant from the CEO (such as the front line). Therefore the leader must learn to listen well. Going lean isn’t simply a matter of a top-down directive. This means that the senior leader has to engage in outreach and facilitation with a cross-section of people. As we teach at Darden, the term, “leader,” isn’t reserved for the supremo at the top of the organization—leaders can be found throughout organizations. You must lead from where you are, wherever you are. From there you must work the network.

Patience and persistence. Lean thinking entails a culture change within an organization, and culture change takes time. Tangible progress may not be immediately visible. The best lean operators are relentless in their pursuit of muda—and over time they show dramatic advantages in quality and cost over their competitors.

Darden has embarked on a process that will take years. The early results are encouraging. A skeptic might say that any significant benefits are uncertain and off in the future. But I don’t think that higher education has any better alternative than to go this way. Public financial support is on a long-term decline; students and other stakeholders demand higher access and performance; the only solution is to think lean. I can’t guarantee that, as Kate Ryan said, this will be fun—but it’s vastly more attractive than the alternatives.

Creating a Community of Integrity

Published on January 1, 2010 in 2010 Archives. 0 Comments Tags: , , , , , , , , , , , .

“We can afford to lose money. We can afford to lose a lot of money. But we cannot afford to lose one shred of our reputation. Make sure everything you do can be reported on the front page of your local newspaper written by an unfriendly, but intelligent reporter.” – Warren Buffett [1]

Last spring, a prospective student—someone who had been offered admission and was considering joining our community–approached me and said, “You talk a lot about ethics and integrity in your speeches, blog postings, and tweets. Does Darden have an ethics problem?” I replied, “No—precisely because we do talk about ethics and integrity pretty regularly. They are not values that we store in a cupboard and only bring out on ceremonial occasions; they are part of our daily life.” The person smiled politely and turned to someone else for conversation, giving no hint as to the kind of impression I had left. A community of integrity is not everybody’s cup of tea; almost certainly, we lose some students who won’t make a commitment to a high community standard. Thus, it was with a bit of surprise and satisfaction that I saw this person enroll last August. Does all our talk about ethics help or hurt us?

A truism in management and family life is “if you can’t talk about it, it won’t get done.” Making progress on anything important is not a matter of giving orders: one must communicate, engage, enlist, and inspire others. So it is with creating a community of integrity. The best leaders get this and use plenty of opportunities to talk about integrity in the workplace. For instance, Warren Buffett annually reminds employees at Berkshire Hathaway how vitally important are ethics and integrity in all they do.

Working with integrity is hard–there are very few “bright red lines” that tell you what is right and wrong; rather, the worlds of business and academia offer blurry lines, and perhaps no lines at all. A core notion in the Darden Community is that we are called to a higher standard of conduct than what passes for “average” in the business world. What others do is no guide for what’s right, a fact that was sadly discovered too late in cases such as Enron, WorldCom, Tyco, and, more recently, in the subprime loan boom, Madoff Securities, and Galleon Fund. What’s right may differ substantially from what’s popular or convenient.

One hears many explanations for dodging the subject of ethics in the workplace: we have no training in business ethics; it is embarrassing to discuss these things; we’re too busy doing our work; it’s a dog-eat-dog world; it’s not in my job description, and so on. If all this is true, why should we pause here at the start of the calendar year, to dwell on ethics?

Let me answer it plainly: manage, study, lead, and work with integrity because

1. We want to create a sustainable legacy for Darden. To incorporate ethics into our workplace mindset is to think about the kind of community that we would like to live in, and that succeeding generations will inherit.

2. Ethical behavior builds trust and dividends of trust are valuable. The foremost dividend is an unimpeachable reputation. Equally important, ethics and trust build strong teams and strong leadership. Stronger teams and leaders result in more agile and creative responses to problems. Ethical behavior contributes to the strength of teams and leadership by aligning employees around shared values, and building confidence and loyalty.

3. UVA and the Darden Mission Statement call us. We share expectations that create a community of trust. Faculty members recently reaffirmed the Darden Mission Statement. It commits us to graduate “principled leaders.” The Board of Visitors of the University endorsed the University Code of Ethics. It states that “We do not condone dishonesty in any form by anyone.”

4. Darden can’t afford the costs of doing otherwise. To echo Warren Buffett, we cannot afford to lose one shred of our reputation; we cannot afford to lose one talented member of our community, applicant, or corporate partner over an ethical lapse; and we cannot afford to lose our self-confidence and self-respect.

These and other reasons should motivate all of us to walk the talk.

Here is what I ask of you in 2010. First, encourage others around you to do what’s right. We are not an “anything goes” community. We have mutual expectations for exemplary behavior. No number of messages from the Dean can top the impact of peer expectations. A community is only as strong as its most vulnerable link. Help those who may be headed in the wrong direction. Speak up for our values.

Second, if you see something, say something. The UVA Honor System provides representatives with whom students and professors can share their concerns on a confidential basis. Similarly, faculty and staff members can share concerns with senior leaders, me, and/or Barbara Deily, Chief Audit Executive of the University (434-924-4110, deily@virginia.edu). The mark of a good organization is not that it never has ethical lapses, but rather what it does about them. At Darden we must get the facts and take appropriate action as fast as possible.

Finally and most importantly, at a personal level, make a commitment to go the extra mile for what’s right. Mahatma Gandhi said, “you must be the change you want to see in the world.” If we want to live in a community of trust and integrity, we must live that behavior.

  1. Russ Banham, “The Warren Buffett School,” Chief Executive, December 2002, downloaded from http://www.robertpmiles.com/BuffettSchool.htm, May 19, 2003 [↩]