Robert F. Bruner, Dean

Last week, I announced the results of our community-wide efforts to review the Darden School’s mission statement. Darden is a mission-driven school. The mission statement guides our actions and expresses the distinction and strength of our culture and our commitment to graduate business education and executive development. As Dean of Darden, I use our mission statement virtually every day in tasks such as aligning our community, setting strategy, and communicating what we value. The mission statement is important; it is our North Star, offering direction for us all.

In April 2012, I assembled a Review Team to lead a review of the statement because it is important to periodically examine the statement, which has been in effect since 2008. I told the team that a successful end result would be a mission statement that reflects the best thinking of stakeholders from across the enterprise and that will inspire each of us as we pursue our daily activities.

The Review Team was formed with members representing many areas within Darden. The team solicited extensive feedback from internal and external constituents, including faculty, staff, alumni, trustees, corporate partners and students from all of our degree programs. Based on the input, the team proposed a new statement, which it presented in numerous sessions with the community. The team listened well to suggestions, revised, and returned with a recommendation. Under our school governance, the Faculty approved the final statement.

Here’s our new mission statement:

The Darden School improves the world by developing and inspiring responsible leaders and by advancing knowledge.

Critical to our success are:

• Transformational learning experiences that develop discerning judgment and the ability to act decisively;
• A supportive and diverse community that encourages its members to collaborate and excel;
• Enduring relationships that help individuals and organizations thrive.

I like the attributes of the new statement and highlight four phrases that sprang up in the recent review:

– “The Darden School improves the world” may sound like a lofty aspiration to some, but we see this statement in action each day. Business brings people together to create value.

– Responsible leaders are determined to make business a force for good in the world.

– Emphasizing that “advancing knowledge” is integral to our mission reflects the importance Darden has placed on research and thought leadership in recent years. Darden’s faculty and staff advance knowledge in myriad ways: by developing case studies, innovating academic programs, writing journal articles and books, speaking at conferences and engaging with the media, to name a few.

– Recognizing our “supportive and diverse community that encourages its members to collaborate and excel” is critical. We are a team. Our victories are each other’s victories.

Why spend much energy on a mission statement?

I occasionally meet people who roll their eyes when someone (me) starts talking about mission, vision, and values. “It’s vaporware, motherhood-and-apple-pie,” they say. Perhaps those folks were burned by other communities that talked big and delivered little. In any event, it is true that the proof of a mission statement is in its observance. At Darden, we aim to deliver what we say we’ll deliver—doing so is a norm expressed in another important statement, also found on our intranet: “We act with integrity; we do what we say.” By putting in writing what we believe and expect, we hold ourselves to a high standard. Living up to such a standard is the core of being a community of integrity.

Each year in January, I write to the Darden Community to remind us to: 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 world 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. The Darden mission statement calls us. We share expectations that create a community of trust.  The recent Mission Statement review reaffirms our intentions: to develop and inspire “responsible leaders” and to “advance knowledge.” We can’t advance our mission if we don’t have a community of trust.
4. Darden can’t afford the costs of doing otherwise. 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 2013.  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, 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." The change that Darden aspires to see is expressed in our mission statement. If we want to live in a community of trust and integrity, we must live that vision.

The Cuba Libre is a cocktail that mixes Coca-Cola and Bacardi Rum—popularized in the 1950s, it is part of the romantic appeal of Cuba that includes Ernest Hemingway, the Cha-Cha, Mambo, palm trees, tropical climes, independence uprisings, and revolutions. That you can find neither Coke nor Bacardi in Cuba these days is the springboard for some reflections relevant to business leaders.

I visited Havana over the New Year’s break as part of the people-to-people program and found that Cubans there were warm and welcoming. Hand-rolled cigars are easy to buy. And the Caribbean in January beats the weather prevailing over most of North America. But the cultural romance that might draw visitors to Cuba wilts under the realization that Cuba is not very different from other emerging economies: edifices and infrastructure have grown dilapidated; begging is visible; the government runs everything except for tourist hotels and a few paladares, privately-owned restaurants; artists and intellectuals talk optimistically about a liberalizing trend and yet acknowledge that Fidel Castro’s famous dictum remains the rule: “Within the Revolution, everything; outside the Revolution, nothing”—criticism or social commentary that is outside the Party Line is prohibited. Che Guevara whose charismatic visage can be seen everywhere, has been dead for 46 years. Cuba seems like a country with neither excitement nor prosperity, a country that lost its mojo.

A typical metric of wealth or prosperity of a country is gross domestic product per capita. Based on the most recent data, Cuba ranks 112 out of 228 countries listed in the CIA Factbook. As the following table shows, Cuba does not particularly stand out in its region.

At $9,900 GDP/capita, Cuba leads eight Central American nations plus Mexico, who average $8,638 GDP/capita. And it leads the average, $8,680, of five other socialist nations who belong, with Cuba, to ALBA, the Bolivarian Alternative for the Americas (consisting of Cuba, Venezuela, Bolivia, Ecuador, Nicaragua, and Dominica). Compared to these benchmarks, Cuba seems to be performing on par with other developing economies in the region. On the other hand, Cuba lags by about half the average of 20 other Caribbean island entities ($18,010). ^[1] Regardless of which benchmark you choose, Cuba is not an exemplar of economic development. In the face of a command economy ostensibly devoted to the welfare of the Cuban people, why cannot Cuba deliver appreciably more prosperity than its neighbors?

In reply, the tourist hears two narratives. The first is on open display in Havana; the second muttered sotto voce.

The first narrative points to the U.S. trade embargo (el bloqueo) imposed in 1962. It is alleged that the inability to order replacement parts, buy new technology, or simply enjoy the benefits of free trade have stifled the growth of the Cuban economy. Cuba gets none of the huge tourism revenue from those massive cruise ships that drop anchor everywhere else in the region. The party line is that the U.S. embargo is to blame for Cuba’s ills. Sad to say, the U.S. does have a longish history of intervention in Cuba; but it is more accurate to say that by choice or circumstances, Cuba has found itself at the mercy not only of the U.S., but also of Spain, Britain, and the Soviet Union—with a history like that, a victim mentality was bound to grow.

The U.S. embargo was motivated by a desire to discipline Cuba for violations of international law and humanitarian norms. Expropriation without compensation, incarceration for civil dissent, and executions of political opponents initially turned the international community against the Revolution. Today, the community of Cuban exiles continues to pursue claims against the Cuban government.

The embargo seriously disrupted the Cuban economy in the early 1960s—until that time, the U.S. had been the major trading partner of the country. The suspension of trade, particularly in sugar, triggered an economic crisis that was partly resolved when the Soviet Union agreed to buy Cuba’s sugar.

It is not clear that the embargo is having much economic impact on Cuba today. Generally, trade embargos are rather crude instruments of government policy. The current embargos against Iran and North Korea are properly motivated by arms proliferation concerns that many countries can stand behind. But Cuba has not been a direct security concern to the U.S. since the Cuban Missile Crisis of 1963 or indirectly since it stopped supporting armed revolution in other countries in the mid-1990s. Apparently, only two countries in the world (U.S. and Israel) openly support the embargo any longer, which leaves some 200 other countries in the world with which Cuba can trade. Sure, you see some 1950s-era Detroit cars on the road in Havana, but I saw vastly more modern Fiats, Toyotas, and Renaults. Americans are few and far between, but my tourist hotel was teeming with Germans, Frenchmen, and Spaniards. Technology (cellphones and WiFi) seemed amply available to tourists (on the government’s terms). The Netherlands and Canada are Cuba’s first and second-largest trade partners. The issue is not whether the U.S. trade embargo is a constraint (it doesn’t seem to be), but whether Cuba can generate enough hard currency to buy what it wants on world markets.

This brings us to the second narrative: Socialism hasn’t worked very well for Cuba. Fidel Castro argued that the Revolution wasn’t about wealth creation or consumerism, but about social justice. Accordingly, he pursued programs of land redistribution, big emphasis on health care and literacy, expropriation of businesses, minimum wage legislation, rule of enterprises by labor unions, suspension of property rights, and imposition of central planning. The evidence is that the social impact was immediate and significant: a higher standard of living for the broad mass of the population, including virtually 100% literacy and universal health care.

But Castro’s Revolution produced a one-party state that suppresses freedom of expression, hates capitalism, runs a centrally-planned economy, and at times has sought to export revolution elsewhere. Notable was Castro’s inflexible devotion to an ideology. While other emerging economies prospered under a mixed-economy model, Castro continued to suppress markets, private incentives, and property rights. Fidel Castro famously said, “I find capitalism repugnant. It is filthy, it is gross, it is alienating… because it causes war, hypocrisy and competition.” Um…with an attitude like that, it’s not hard to understand why Cuba is not swarming with entrepreneurs, investors, and risk capital.

Not long after the Revolution, the professionals who ran the enterprises left Cuba; untrained revolutionary leaders stepped in. At one point, Cuba’s Central Banker was Che Guevara, an economic neophyte. The result was inefficiency, under-investment, cronyism, growing bureaucracy, food rationing, a dependence on subsidies from the Soviet Union, and periodic waves of corruption. Foreign investors seeking to do business in Cuba have complained about the absence of property rights and sanctity of contracts; doing business there requires numerous government approvals, which breed delay, indecision, and uncertainty.

In the late 1950s, Cuba’s GDP was about equal to Italy and larger than Japan. In the intervening 50 years, a host of reasons might explain the sharp divergence in economic performance between Cuba on one hand and Italy and Japan on the other. An important book, Why Nations Fail, by Acemoglu and Robinson (see my review last month) offers a perspective relevant to Cuba: growth in economic welfare of a country is associated with legal and economic institutions including democratic representation, property rights, independent judiciary, and so on. Two books on Cuba offer some evidence to support the sense that the absence of these institutions significantly explains Cuba’s torpor: Tom Gjelten, Bacardi and the Long Fight for Cuba, and Julia E Sweig, Cuba: What Everyone Needs to Know; I recommend both.

Should the U.S. sustain its current embargo of Cuba? It is not hard to sympathize with the Cuban exiles who lost assets and loved ones in the Revolution—they seek justice, which has been slow in coming. But the embargo warrants careful reconsideration. It certainly hasn’t produced regime change; but it has produced a resentful Cuban population and excuse #1 for the underperformance of the Cuban economy. By some estimates, U.S. producers forego about $2 billion in potential annual trade with Cuba. Clearly, Castro committed numerous sins against people and property in the Revolution of 1959, but these seem more likely to be resolved in world courts than with the blunt instrument of embargo.

The leadership lesson here has to do with how you persuade a population about the efficacy of one economic/political system versus another. Harvard Professor Joseph Nye uses the phrase, “soft power,” by which he means moral suasion, leading by example, and living consistently with your values. Mainstream and social media actively promote soft power. In contrast, “hard power,” refers to military force, financial payments, and embargos. Hard power is coercive; soft power is attractive and co-optive. Having gone down the path of hard power with respect to Cuba, is it possible for the United States to revert to soft power?

Of course, one can direct a similar question to Fidel Castro as well. Is the “hard power” of the command economy the best way to build productivity and economic prosperity? Is coercion, the threat of incarceration, or exile effective in building creativity, work ethic, or high performance? Simply paying people to perform tasks or commanding them to take action (a hard power approach) doesn’t gain high performance results like enlisting them behind a vision, gaining commitment to the values of a team, making meaning out of one’s work (a soft power approach).

Castro said, “They talk about the failure of socialism but where is the success of capitalism in Africa, Asia and Latin America?” The table of GDP/Capita speaks volumes in reply—numerous mixed- and market-economy countries have vaulted ahead of Cuba. Cuba’s economic model has not delivered the prosperity experienced by numerous emerging economies—yet Castro will still point to benighted social conditions in many of these countries.

The challenge for business leaders is to help capitalism serve the interests of wealth creation and social advancement. Darden offers many opportunities for students to explore the possibilities, such as our Initiative for Business in Society (IBiS), research and an innovative course, Markets in Human Hope, clubs and courses in corporate social responsibility, and global business experience programs that build understanding, social awareness, and empathy. Our graduates go on to careers that promote global trade, new product innovation, improved government effectiveness, and social action. And there is always more that can and should be done.

How will the rising generation of business leaders address the joint obligation to create both economic and social value? Ponder that as you sip your next Cuba Libre.

1. If you exclude two tax havens (Cayman Islands and British Virgin Islands) from the sample, the other 18 average $15,439. [↩]

The world is ambiguous; as Calvin said, “once you become informed, you start seeing complexities and shades of grey.” For this reason, curiosity, openness, and critical thinking help to mark great leaders. One’s reading habits are very important to the growth of these qualities. This post is my annual plea for reading—not just any reading, but the right kind.

Everywhere we see the intrusion of digital media. Ideas are distilled into sound bites—lost is nuance, countervailing evidence, and the balance of pros and cons. Engagement with ideas can grow idiosyncratic, narrow, and faddish—what MIT Media Lab founder Nicholas Negroponte called the “Daily Me,” a filtered stream of news, opinion, and analysis that generally serves to reinforce what one already knows or believes. Columnist Nicholas Kristof wrote, “As we ignore traditional news media more and more and go online for “news,” we become our own editors. Heaven help us.”

What’s the alternative? I don’t think it’s about hardware: I do more of my reading today by looking at an iPad, Kindle, and MacBook Air and I still read physical books and periodicals. Instead, I think the healthy alternative is about habits and processes:

· Be intentional. Read regularly; set aside a time and place every day.

· Diversify. Get out of your comfort zone. Lots of business professionals focus exclusively on business self-help books and magazines. Big mistake. You’ll boost your resilience, creativity, and repertoire by going farther afield.

· Avoid junk. So many writers, so little time. Focus on the good stuff.

· Drill down. So much of what is served online is superficial. Books and serious periodicals give you much more depth of fact and argument.

· Talk with others about your reading. As Darden’s MBA students readily discover, you really don’t know something until you can tell others about it. You might even be so bold as to start a discussion group in which you can actively debate the writer’s point of view. Such a group worked marvelously for Benjamin Franklin.

Read at least one major daily newspaper per day and your local newspaper. I look into three major dailies:

· New York Times. The leader in general news coverage. Excellent investigative reporting. Very good coverage of politics and culture. Left-of-center editorial stance. The Sunday edition is a particular delight.

· Wall Street Journal. Good coverage of economic and business news. Very good investigative reporting (e.g. on issues such as privacy and regulation.) Right-of-center editorial stance.

· Financial Times. Good coverage of international (especially European) economic and business news. Leftish editorially and nudgy toward Continental Europe and America.

A student once asked me, “Why read more that one newspaper? Don’t they all have the same news?” Well, yes and no. Maybe half the content of these papers overlaps with the others. What is covered in the other half is special value-added. And the opinion columns differ substantially. Finally, even in the seemingly redundant content, it is interesting to see how differently writers and editors treat the same events. I read more than one newspaper to sharpen my own point of view about the news.

Supplement your reading of newspapers with periodicals whose articles are thoughtful, well-researched, and well-written. I read The Economist cover-to-cover usually in one sitting on the day it arrives (Saturday). Time very well spent. I have subscriptions to other periodicals, which I skim and choose maybe one article per edition to read in detail: Foreign Affairs, Harvard Business Review, Atlantic, Wired, Forbes, and New Yorker.

Newspapers and magazines only go so deep. To really master a point of view, you must read book-length presentations of ideas. I read 30-50 books per year. Most frequent question: “Where do you find the time?” Answer: make time every day; turn off the television; don’t surf the Web endlessly; learn to read on a stationary bike; always carry things to read on trips. Here are some of the best books I’ve read over the past 12 months.

1. David Herbert Donald, Lincoln. A lifetime project of mine is to read one or more of the “best” biographies of each of the U.S. Presidents, in chronological order. Many good books out there, so progress through the Presidents is slow. More has been written about Lincoln than any President, for good reason. He was a complex and transformational figure. His life offers a host of leadership lessons. This particular book would be a contender for “very best” biography of Lincoln. Suggestion: read this book, then see the new movie by Steven Spielberg, Lincoln.

2. Garry Wills, Lincoln at Gettysburg: The Words that Remade America. One of the most famous speeches in history, the Gettysburg Address articulated a dramatic pivot-point in social and political thought in the U.S., that “all men are created equal.” Wills tells us how Lincoln achieved this and discusses the context, language, and significance of this speech in a short volume. Read it before the 150^th anniversary of the speech on November 19, 2013.

3. Walter Isaacson, Steve Jobs. An iconic biography of an iconic business leader. Extraordinarily well-written and well-researched. My chief learning was that Jobs wasn’t the modern Newton in the sense of being a genius solo inventor—rather, he was an aggregator of many little inventions into transformational new products. He didn’t practice the kind of leadership we teach at Darden; he could be autocratic, petulant, and interpersonally destructive. The main question begged by the biography is whether one has to be like Jobs to achieve his kind of extraordinary outcomes. I think not. In this sense, the book is an example of how not to lead. Yet it remains a thrilling profile of transformational innovation.

4. Nassir Ghaemi, A First-Rate Madness: Uncovering the Links between Leadership and Mental Illness. Lincoln and Jobs were outsized successes. And neither was a paragon of emotional well-being. Ghaemi, a psychiatrist, hypothesizes that some kinds of mental illness (depression, bipolar disorder) are the underpinnings of important qualities of transformational leaders: empathy, creativity, courage, and realism. He presents case studies of Churchill, Lincoln, Martin Luther King, and others. I was mildly skeptical when I picked up the book, and by the end, decided that Ghaemi had made a plausible case. Some transformational leaders I have known fit the hypothesis. Whether you ultimately agree, the suggestion of a relationship between leadership genius and mental illness will rock your attitude about “illness.”

5. Sudhir Venkatesh, Gang Leader for a Day: A Rogue Sociologist Takes to the Streets. Social scientists love to work with computers on big data sets. Here’s a stunning book based on field research, the antithesis of the big data research. The author, at the time a doctoral student in sociology, hung out with (observed) a street gang in Chicago. From his book we garner rich insights into leadership, organization, and the morass of deep poverty. This book stimulated my thinking about the methods and risks by which scholars might discover new insights.

6. Sheena Iyengar, The Art of Choosing. Iyengar presents original and provocative research on how and why we make choices. What role do our best interests, context, and background play? Paradoxically, choice is not always a blessing. This book will challenge conventional assumptions—it is highly relevant for leaders, consumer marketers, and strategists.

7. Gary Gallagher, editor, Fighting for the Confederacy: The Personal Recollections of General Edward Porter Alexander. This is a remarkable memoir by a talented subordinate to rebel commanding generals in the American Civil War. Edited by my UVA colleague, Professor Gary Gallagher, this book profiles a middle-to-senior-level leader during the war. Alexander’s memoir shows what organizational anorexia looks like: progressive collapse with episodes of dramatic risk-taking. The author was brutally candid in his evaluation of commanders on both sides of the war. Very well-written and edited, this memoir carries the reader along. It is one of the best memoirs of the Civil War. Any leader or student of organizational distress will learn from the challenges that Alexander confronted.

8. Susan Cain Quiet: The Power of Introverts in a World that Can’t Stop Talking. A great university education is a lot about talking and listening. Introverts and extroverts talk and listen differently. The way I consider it, extroverts talk to think (think out loud) and introverts think and then talk. The composition of a group (the balance between extroverts and introverts) will have big implications for the success of group processes and outcomes. Susan Cain has done a wonderful job of discussing introversion and its implications. This book will be highly relevant to leaders and educators. I also recommend Susan Cain’s TED Talk, “The Power of Introverts.”

9. Julius Caesar, The Conquest of Gaul. This and Grant’s memoirs (see next) are widely regarded to be among the best autobiographies of leaders. Caesar demonstrates incredible initiative in responding to crises, challenges and opportunities. Phrases like “we moved immediately,” “overnight forced march,” “we attacked before the Gauls could assemble,” and so on, pepper the commentary. The memoir also displays Caesar’s strategic thinking and interpersonal skills, particularly in negotiating with adversaries. One only wishes more insights into the means by which he engendered intense loyalty among his subordinates. If you are totally new to Caesar and Roman history, I repeat a recommendation that I made in 2010: Adrian Goldsworthy, Caesar: Life of a Colossus. Any serious consideration of leadership should include an understanding of the practices and life of Julius Caesar. (I thank Chris Duffus, D’00, for sending me a copy of Conquest of Gaul, reintroducing me to a book that I last picked up as a student of Latin in 10^th Grade.)

10. Ulysses S. Grant, Personal Memoirs. I read this as part of my reading of the U.S. Presidents. Grant was the first President to publish formal memoirs (Jefferson began to write segments of an autobiography, but never finished it.) Note that Grant did not cover his years in the White House—this book brings the reader up through the end of the Civil War, in which Grant emerged as a very successful General-in-Chief. Two qualities make this book remarkable: Grant’s story of advancement as a leader and commander through the war and Grant’s audacious philosophy of command. He uses the phrase, “moral courage,” repeatedly through the book to indicate a sense of initiative, willingness to confront problems and crises, propensity to attack, and sheer determination. Grant’s Personal Memoirs inspired me to make “moral courage” the theme of my remarks at Darden’s graduation ceremony last may (see this).

11. Elaine Pagels, Revelations: Visions, Prophecy, and Politics in the Book of Revelations. Of all the items in the vast library called The Bible, “Revelations” presents perhaps the greatest challenge for the reader: mystical, allegorical, angry, frightful, and ultimately apocalyptic. What did the author intend to say? What were the church founders thinking when they appointed “Revelations” to be the final book of the Bible? This book has been cited by some religious leaders as prophecy that “the end is nigh.” Is it? Pagels argues that John of Patmos wrote this book as a diatribe against Rome in 66 C.E. in the wake of Rome’s occupation of Judea and that the book was subsequently used by Church leaders to serve as a condemnation of heresies and infidels of all kinds. To understand Revelations, one must get a fix on geopolitics and Church history in the first three centuries, C.E.

12. Eric Hobsbawm,

a. The Age of Revolution: 1789-1848.

b. The Age of Capital: 1848-1875.

c. The Age of Empire: 1875-1914.

d. The Age of Extremes: A History of the World, 1914-1991.

This is an immense work (~2000 pages across the four volumes) that is at once magisterial and troubling. These volumes represent an incomplete history of the modern era in terms of economics and business. The author loathes entrepreneurs and the bourgeoisie and displays little understanding of markets and innovation in products and services. He is Eurocentric and barely conceals his antipathy for America. He was a member of the Communist Party, indeed of Stalinist persuasion—he expresses little criticism of the Soviet gulags, Stalin’s famines of the 1930s, the Soviet alliance with Hitler, or repressions of uprisings in Hungary and Czechoslovakia. In one interview, he said, “the deaths of millions of Soviet citizens under Stalin would have been worth it if a genuine Communist society had been the result”—an attitude that evoked bitter denunciations of him (see this and this). So what is the Dean of a business school doing reading these books? First, they provide an extraordinarily rich perspective into the cultural and sociological aspects of modernization and economic growth. I started reading the first volume out of an interest in learning about the Industrial Revolution, and got hooked. Hobsbawm, like Karl Marx, wasn’t much of an economist, but was a good social historian. I read these books with an interest in learning how social context might influence economic development. Second, it takes a revolutionary to write about revolutions and market crises. Hobsbawm’s discussion of revolutions since 1789 is compelling. Political revolutions have some insights to offer about business and industrial revolutions. Third, Hobsbawm offers a range of helpful insights about the causes and consequences of nationalism, at the heart of headlines today. Finally, in the spirit of getting out of one’s comfort zone, Hobsbawm’s criticisms of liberalism (small-l) are a useful reminder of the challenges facing our assumptions about liberty, equality, democracy, free markets, and global trade, assumptions that have been tested since 2007.

13. Daron Acemoglu and James Robinson, Why Nations Fail: The Origins of Power, Prosperity, and Poverty. A very important book (and useful antidote to Hobsbawm). The authors argue that sound political and economic institutions are the primary underpinning of economic growth. Such institutions include democratic rule; the rule of law; respect for property and civil rights; the suppression of corruption and expropriation. Such institutions create an “inclusive society.” In contrast, an “extractive society” caters to a small elite who appropriate the wealth generated in the country and run the country gradually into the ground. The book discusses numerous countries and examples. And it has drawn debates with proponents of alternative theories of economic development, such as Jeffrey Sachs (see this, the subsequent reply by Acemoglu and Robinson, and Sachs’s rebuttal)—the debate is worth studying on its own.

14. Jo Nesbo The Leopard. A gripping and grisly murder mystery, in the tradition of Steig Larsson. You can read The Leopard on a stand-alone basis (as I did). But it is part of a mystery series; if you first read Nesbo’s The Redbreast you may gain some context and character development that can help with getting into The Leopard.

No doubt, you can add to this list and/or find other books that ignite your thinking. Either way, I wish you the “right kind of reading” that ultimately helps you parse Calvin’s “complexities and shades of grey” and that promotes your growth in curiosity and critical thinking.

“America’s stockmarket has gained more under Democratic than Republican presidents” – “GOP Smacked” The Economist October 9, 2012

“Mitt Romney has forecast that the optimism resulting from his election to the presidency will give a lift to the economy… the claim that he will deserve credit for good things that happen after he wins…. In general, voters have tended to throw out the incumbent party after four-year periods when the Dow rose at a compound rate of less than 5 percent a year, and to keep the incumbents if the market gain exceeded that figure. If that pattern continues, Barack Obama will win re-election.”

– “Presidential Stock Markets” New York Times. October 26, 2012

“…Democratic presidents have been far better for the stock market, despite the GOP’s reputation as the party of business. A study by Barclays going back to 1929 shows that …the market rose 10.8% annually under Democrats and just 2.7% under Republicans. And Barack Obama has been well above average.”

** “Market-Election Gauge Bodes Ill for Stocks” Spencer Jakab, Wall Street Journal October 31, 2012

“Historically, a Democrat without business experience has been extraordinarily better for the economy and the stock market than a Republican who had a career in business. In the past 84 years, GDP has grown 7 percent per year under Democrats without business experience (FDR, JFK, LBJ, Clinton and Obama) and fallen by 0.2 percent per year under Republicans with business experience (Hoover and the two Bushes). The Dow has risen an average of 16.8 percent per year under Democrats without business experience and has fallen by 3.7 percent per year under Republicans with business experience. … There is a saying: “If you want to live like a Republican, vote Democratic.” Perhaps it should be amended to: “If you want to live like a successful Republican businessperson, vote for a Democrat without business experience.”

** “Can a businessman help the economy? For presidents, the answer has been no.”

Robert McElvaine, Washington Post October 19, 2012

These quotations are a small sampling of the punditry in advance of next week’s Presidential election. One can draw many inferences from the intersection of economic and political data. How useful are such inferences as a guide to what’s ahead?

Not much. The simple inferences fail to acknowledge important cautions from the field of data analytics, such as these:

· Association is not causation. Does the party in power really produce the stock market returns? Or does the causality run in the opposite direction? Perhaps the recent stock market returns incline voters toward a certain party: elect Republicans if economic conditions have been buoyant and Democrats if not.

· Omitted variables. Perhaps other forces in the economic environment produce the stock market returns and the voting results. For instance, an ongoing war might favor re-election of the incumbent President; and war spending might stimulate the economy. What else might be going on to explain any particular election outcome and investor return?

· Regression toward the mean. Investor returns tend to oscillate around an average; when returns are high or low, they tend subsequently to move back toward the average. This tendency of regression to the mean is a regularity in the natural sciences and social sciences. Perhaps it has been the Republicans’ dumb luck to gain political control at the top of the economic cycle (or Democrats at the bottom of the cycle), only to see it regress back to the mean. To the extent that regression prevails, investor returns would have less to do with the politics and policies of the party in power. As Spencer Jakab wrote, “Partisan yardsticks of stock-market performance clearly leave a lot to be desired as good runs like Mr. Coolidge’s and Bill Clinton’s occurred during bubbles and bad ones like Mr. Hoover’s were in large part due to rotten timing.”

· Lag effects. Policies that Presidents implement probably have more impact in the long run than the short run. Lyndon Johnson handed to Richard Nixon the Vietnam War and rising inflation, the consequences of which took years to control. Obamacare is projected materially to control growth in health care spending by the Federal Government starting later in this decade and early in the 2020s. The rule-writing under the Dodd-Frank Act is far from complete; its impact on the financial services industry remains to be seen.

· The problem of few observations. Since 1789, U.S. citizens have elected 44 Presidents, each of whom lasted an average of 5 years. Social scientists get worried when the number of observations in a study grows “small,” less than a few hundred—this is because in small samples, a few truly “rogue” observations can skew the results. Then, you should consider that 31 of the 44 Presidents served less that two full terms: in just 13 cases are we able to observe the impact of a President’s policies applied over an extended time.

These and other considerations challenge the validity of inferences drawn from statistical analyses about the relationships between Presidents or political parties and returns to investors.

To be clear, I don’t question the suggestion that politics matters to investors. I just doubt the value of historical statistical analyses that “this kind of President” or “that party” will produce particular investment results.

So, what is an investor supposed to do? Politics matter, but the policies and their implementation matter more. In times like these, careful investors need to be policy analysts. This entails anticipating the political choices made by the President and Congress, and other arms of government—these choices become policies. Ultimately, the investor must assess the economic consequences of the policies. The immediate weeks and months after the election of November 6^th will be a period of intense scrutiny and speculation about the forthcoming policies and implementation.

The conference that Darden will gather in two weeks will draw on the insights of an impressive line-up of speakers and topics to jump-start investors’ reassessment of the post-election outlook. More details are available at the conference web site. Join us!

“If you don’t know where you’re going, you’ll end up someplace else.” — Yogi Berra

“Why should someone leave a big city to go to Charlottesville in the foothills of the Blue Ridge Mountains to get an MBA?” asked a broadcast reporter one morning.  In turn, I responded with a question, “When you eat out, what kind of food do you like to eat, and where do you like to eat it?”  She said that some times she eats on the fly at convenience stores or fast-food joints; but most of the time she likes to eat at restaurants with table service, white linen, and food made-to-order.  Then she asked what eating habits had to do with MBA education or with coming to Charlottesville.  My answer is the point of this post, and is the essence of the advice I give to MBA applicants.

At the heart of the reporter’s question is the presumption that MBA education is a commodity, that one program is just like any other. Big mistake. Seeing the field from the inside, as I do, reveals huge differences among MBA programs.

The AACSB tells us that there are more than 13,000 business degree-granting institutions in the world.  People hungry for education in business have enormous choice.  The suppliers of education in management are highly varied: different locations, different resources, different educational approaches, etc.  The field is highly segmented.  Students (and society) benefit from having this enormous range of choice, ranging from pure online MBA programs, to community colleges, to big city-center weekend MBA programs and to schools like Darden.  How should one select those few institutions to apply to?

Choosing a school is not unlike the problem you face in choosing a hospital for medical treatment, or in seeking advice in law, architecture, and engineering—and a kind of restaurant.  The answer depends on what matters most to you:

· Cost?  There is a vast range in tuition expenses across schools.

· Location?  Countries, urban/suburban/ex-urban, and quality of facilities render an enormous difference in the sense of place.

· Convenience?  Maybe you have put down roots and don’t want to travel very far. Or maybe you are flexible and can travel—or better yet, maybe you want to get “out of the box” of recent experience and go to a place that is less familiar and less convenient or conventional.

· Difficulty?  Expectations and standards for graduation vary. You should expect any graduate school program to be more challenging than an undergraduate program. But different schools challenge students in different ways.

· Stature?  Accreditation by international bodies and rankings suggest major differences among schools.

· Educational approach?  Passive versus active learning and teacher-centered versus student-centered are two dimensions of variation.

It is simply not true that MBA education is a commodity. One size does not fit all. Different people will choose to attend different programs. And vive la difference!

I told the reporter that in the broad field of management education, Darden is a “destination” school: because of the unique attributes of the school, many students are willing to make the journey to Thomas Jefferson’s “Academical Village” to obtain the special attributes we offer.

What sets apart “destination experiences” from more transitional or transactional experiences? Consider some examples. Le Bernardin is a destination restaurant in New York City.  There, customers go out of their way for a “total immersion” experience in dining: everything is highly engineered to transform the way you might think about food preparation and presentation, and about service—you leave not merely fed, but enriched by a fresh point of view about the world.  The Cleveland Clinic and Mayo Clinic are destination medical centers—they set the pace for service and results.  Frank Gehry of Gehry Partners is a destination architect producing destination buildings—Gehry’s buildings transform the way you encounter and occupy habitable space.  You would go out of your way to engage with leading firms such as Intel, Apple, Ideo, Boeing, and Schlumberger for solutions to special design and engineering problems.  Formula One, Disney, and the World Cup produce destination experiences that lift the human experience through inspiration and excitement.  Not everyone wants destination experiences, but these examples show that destination enterprises fill very important roles in society.

A destination school is similar.  Darden fits into this category because my colleagues on the faculty and staff are meticulous in their preparation and presentation of the learning experience.  We offer a transformational program, highly engineered not merely to convey knowledge (the “know what” stuff) but also to build practical skills (the “know how” stuff such as negotiating, selling, organizing and leading teams) and attributes of character (the “know why” stuff such as integrity, empathy, work ethic, emotional intelligence, social intelligence).  Our students rate the classroom experiences here very highly.   

I concluded my interview with the broadcaster by saying that how you decide whether to find your way to Darden depends on what you want in an MBA education.  If you want the equivalent of a new lens through which to view the world, you should seek a destination school like Darden.  One size does not fit all.