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Revamping the MBA
For years, Yale’s business school has struggled to make its mark. Now the school is trying to leapfrog the competition by giving business education an overhaul.
May/June 2007
by David Leonhardt '94
David Leonhardt '94 writes a weekly economics column for the New York Times. His first job in journalism was as an intern for Business Week’s 1990 ranking of business schools.
If you ask a Yale College graduate from the last quarter-century about the best place to find a decent meal on campus, you’re likely to hear “SOM.” The airy dining hall at the School of Management, officially known as Donaldson Commons, feels more like a take-out lunch shop in a big city than a university cafeteria. It makes salads and sandwiches to order and, at a counter called “Supply and Demand,” serves a rotating menu of stir-fries, omelets, and other daily specials. Even as the dining halls in the residential colleges have gotten better in recent years, Donaldson has remained a destination.
Aside from the food, though, most Yale undergraduates don’t give much thought to SOM. It does not inspire the same fervid dreams of future admission as the Law School or the School of Architecture, and it sits away from central campus, up on Prospect Street. It’s not just undergraduates, either, who tend to overlook SOM. In its 31 years of existence as the university version of a business school, it has never managed to achieve the prominence of Yale’s other graduate schools. SOM rarely cracks the top ten in national rankings. It can compete with Carnegie Mellon and Cornell for incoming students, but doesn’t come close to holding its own with Harvard, Stanford, Chicago, Northwestern, Columbia, MIT, or Penn.
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“It seemed hard to turn down the president of Yale for a sandwich,” Podolny says. |
This was the reality facing President Richard C. Levin and a search committee more than two years ago as they were looking for a new SOM dean. One top candidate—David M. Kreps, a senior associate dean at Stanford Business School—had already turned Yale down, according to faculty members. Another—a former Stanford professor named Joel Podolny, then on the faculty at Harvard—was also telling the committee that he wasn’t interested. The search was starting to drag on.
In the winter of 2005, Levin picked up the phone and invited Podolny, still shy of his 40th birthday at the time, to come down to New Haven and talk casually over a couple of sandwiches. “It seemed hard to turn down the president of Yale for a sandwich,” Podolny says. He made the drive from Cambridge on a snowy day in February and listened to President Levin’s pitch. Four months later, Podolny walked into Evans Hall as the sixth dean of SOM.
The two years since his arrival have been a whirlwind of change, coming at a pace that is rare at any university, let alone one as tradition-bound as Yale. In his first year, Podolny and the faculty ripped up the core curriculum for first-year students, abandoning the traditional subjects of finance, marketing, and the like. Starting last fall, students began taking a new core of interdisciplinary courses, with names like “Employee” and “State & Society,” designed to prepare them for business careers that are rarely confined to one function anymore. “Yale is trying to create leaders in the service of society,” Podolny says. “And the disciplinary silos are about teaching people to play functional roles, not about preparing them to be leaders.” Robert L. Joss, the dean of Stanford Business School, who made Podolny one of his deputies in 2000, calls the overhaul “extremely ambitious.”
After graduating from high school in Cincinnati, Podolny spent his entire pre-SOM career on the Harvard and Stanford campuses: college and graduate school at Harvard, a swift rise through the faculty at Stanford, and then back to Harvard in 2002. Those two universities have the world’s two most prestigious business schools, and they attained their position in large part because of curriculum innovation. In the 1920s, Harvard Business School pioneered the case-study method, which continues to dominate MBA teaching. Stanford helped integrate social sciences—economics, sociology, and psychology—into management education in the 1960s. If Yale were going to close the gap with them, Podolny figured that it would have to do so by re-imagining business education. (Since arriving in New Haven, he has also read up on Yale Law School, another innovator.) As Levin says, “Both Harvard and Stanford, in a way, achieved their permanent reputation through curricular reform, almost curricular revolution.”
Of course, the notion of reinventing SOM will sound familiar to anyone who knows a bit about the school’s history. It has repeatedly attempted to transform itself into an elite place while remaining more or less true to its original mission as the business school with a conscience. Yes, it trains investment bankers, but it also trains future leaders of museums and foundations, some of whom may have first spent some time as investment bankers.
Back in 1996, shortly after the appointment of Podolny’s predecessor, Jeffrey Garten, President Levin said to this magazine: “I believe SOM should be first-rate or it shouldn’t be prolonged, but I’m optimistic we’ll see significant progress in visibility and prominence in the next five years. That’s the target, and I think we’re well positioned to make a run at it.”
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When SOM hit its low point, an airplane was almost certainly involved. |
By most accounts, Garten, who came to Yale from the Clinton administration, had a good run as dean. He raised a lot of money and, according to Linda Mason '80MBA, a member of the Yale Corporation (Yale’s board of trustees) from 1998 until 2005, helped persuade the Corporation that SOM deserved a permanent place at the university. He also solved an age-old SOM problem by deciding that the school would finally start awarding a master of business administration degree. Previously, it had handed out a master of public and private management degree, the subject of many an awkward conversation between students and recruiters. But he did not fundamentally alter Yale’s place in the firmament of business schools. In 1996, Business Week ranked SOM 22nd. It bounced into the teens for a while but by 2004, the last ranking of Garten’s tenure, it was right back at No. 22.
“If we’re going to have a business school,” Levin says today, echoing his comments of a decade ago, “it should be one of the best.”
It’s hard to say precisely when SOM hit its low point, but an airplane was almost certainly involved. In 1988, Benno Schmidt '63, '66LLB, appointed Michael E. Levine '65JD, an SOM corporate strategy professor with a history of shaking things up, to be the school’s new dean. As a student at Yale Law School in the 1960s, Levine had written one of the early proposals for airline deregulation, and he later became a top executive of New York Airlines under Frank Lorenzo, the corporate raider. At SOM, Levine made it clear he wanted the school to be more hardheaded. The primary victim was a soft-science field called organizational behavior—in rough terms, the study of group dynamics—which had been at the center of the curriculum. All six untenured professors in the field were asked to leave.
Many alumni were furious, and at the Harvard-Yale football game a few weeks after Levine’s appointment they rented a plane to fly over Harvard Stadium with a banner trailing from the back. “Benno—Save Yale School of Management. Send Levine to HBS,” it read. Two years later, they repeated the stunt at the SOM graduation, this time with a new message: “Boesky. Milken. Lorenzo. Levine. All raiders will fail.”
At the time, Joel Podolny was a young doctoral student in sociology at Harvard. His specialty was organizational behavior. Over the next decade, he would become one of the top researchers in the field, exploring the role of status in a wide range of industries, from investment banks and technology companies to wineries.
So as he sat eating sandwiches in Woodbridge Hall, almost two decades after the purge of organizational behavior, he had an obvious question for Levin. “Why would I, an O.B. scholar, want to come to a school that kicked out its O.B.?”
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Garten’s wife Ina is the author of the Barefoot Contessa cookbooks. |
The question makes Podolny sound brasher than he really is. If anything, he will probably project a more modest public image than some of his predecessors, including Garten, who published two books about chief executives while dean (and whose wife, Ina Garten, is the author of the Barefoot Contessa cookbooks). Podolny’s manner is fairly casual. He can sometimes blend into the background of a room even though he’s the boss. If it weren’t for the graying beard on his round, boyish face, he might be able to pass for an SOM student. His leadership style, to use a relevant analogy, is less Kingman Brewster than Richard Levin.
“There are qualities of Joel’s that remind me of Rick,” says Mason, the former Corporation member, who founded a network of child-care centers in the 1980s and also sat on the search committee that chose Podolny. “There’s not a flash with him. He’s direct and honest.”
Substantively, Podolny knew that he wouldn’t be able to accomplish much as dean if the school were still fighting the hard-versus-soft war. But Levin assured him it was over. “If ever there was an example of a group that lost a battle and won a war, it was O.B.,” Levin said that day, as Podolny remembers. By 2005, the study of human dynamics had once again come to play a central role at SOM. The soft disciplines had even come to infect the hard ones, as evidenced by the school’s impressive faculty in behavioral economics, a field that borrows from psychology to study irrationality. The group includes Robert Shiller, the author of Irrational Exuberance, a history of financial bubbles, as well as younger professors like Nicholas C. Barberis, James Choi, and B. Cade Massey.
Podolny left the lunch meeting with Levin more intrigued by SOM than he had been beforehand. Talking to alumni sealed his interest. “Regardless of the sector, regardless of the career,” Podolny says, “there is a sense among the graduates of a mission.” At the time, three of the 21 Henry Crown Fellows—a program at the Aspen Institute to develop community-minded business leaders—were SOM alumni: Gina Boswell '89MPPM, chief operating officer of Avon North America; Seth Goldman '95MPPM, a founder of Honest Tea; and Ranji Nagaswami '86MBA, the chief investment officer of AllianceBernstein. To Podolny, that number, small but far out of proportion to the number of SOM graduates, was a nice summary of the school’s ethos. “At the end of the day, how do you do good while doing well?” he asks. “How do you make a contribution, rather than just take?”
The crucial question was how to make SOM better at fulfilling this mission—so much better, indeed, that Yale could become a model for other business schools even if it were a bit different from them. Here, the world beyond SOM seemed to be creating an opportunity.
For decades, the American economy has been moving away from the orderly organization-man model of William Whyte. People have been switching companies, industries, and even careers more often, it appears, than in the past. For much of the 1980s and '90s, the best business schools capitalized on this shift and sold themselves to applicants and recruiters as reservoirs of versatile talent.
But the dot-com craze made this a tougher sell. Students began to see business school as two years in which they would not be getting rich. Many start-up companies put less stock in the MBA degree than did Goldman Sachs and Procter & Gamble. In the last few years, private-equity firms have taken a similar attitude. On top of all this, the recent business scandals—with Enron’s Jeff Skilling, Harvard Business School class of 1979, in a starring role—raised a whole new batch of questions about what business schools were really teaching their students.
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“Most management schools are stuck with curriculums from about 20 years ago.” |
“B-school programs have been plagued by declining applications, a lukewarm market for MBA talent, and an epic bout of soul-searching over the value of the degree,” as Business Week put it last year. “Critics inside and outside the academy have criticized the standard B-school curriculum as at best irrelevant and at worst seriously misguided.” Jonathan S. Feinstein, an economics professor at SOM, makes a similar accusation: “Most management schools are stuck with curriculums from about 20 years ago.”
In the fall of 2005, Podolny’s first year at SOM, he asked small groups of senior faculty and students to begin thinking about overhauling aspects of the school. By January of 2006, after a fair amount of back-and-forth and outside consultation, the group looking at the core curriculum had agreed that the academic disciplines weren’t being taught in a way that related directly to the business world students would find after graduation.
Originally, administrators and professors planned on spending the next 18 months designing an interdisciplinary curriculum. But at a meeting with professors that January in Podolny’s office, on the first floor of a nineteenth-century Hillhouse Avenue mansion, it started becoming obvious that the timetable would leave the school in an awkward holding pattern. The faculty would be presenting a whole new class of students with a curriculum deemed outdated.
“Do you know what I’m thinking?” Podolny asked Stanley Garstka, SOM’s longtime deputy dean, during the meeting, as Garstka recalled recently.
“Yes,” Garstka replied.
That started a mad scramble to redesign the first-year courses for the upcoming fall. Professors put aside other plans they had for the summer. Podolny, whose wife and children will not move from the Boston area to New Haven full-time until this June, continued to “work like a dog,” as Sharon Oster, the Frederic D. Wolfe Professor of Management and Entrepreneurship, says. Spencer Hutchins '07MBA, president of the student body, says he once woke up to find two new e-mails from the dean; the time stamps made clear that Podolny had gone to bed well after Hutchins and woken well before him. The dean, President Levin says, has thrown himself into curriculum reform with “exuberant ambition.”
The new curriculum starts with six weeks of basics in subjects like economics and management, basics that once took up a larger part of the first year. The students then move into 12-week classes, the core of the new system, that are organized around the different constituencies an executive deals with. Some of the classes do bear a strong resemblance to existing disciplines. The Investor class has its roots in finance, and the Customer class has a lot of marketing. Others, like the Competitor class, are more clearly interdisciplinary.
On a recent Wednesday afternoon in a classroom that looks out onto Sachem Street and Kline Biology Tower, James Baron, an organizational behavior professor whom Podolny wooed from Stanford last year, was teaching another of the new core classes: Employee. (Baron co-teaches it with Podolny.) The lecture that day was organized around the famous 1962 experiment by Yale psychologist Stanley Milgram. In the experiment, which was conducted in the basement of Linsly-Chittenden Hall, participants were led to believe that they were administering painful electric shocks to someone in another room. Amazingly, almost two-thirds of participants ended up administering the maximum (imaginary) shock, despite the screams coming from the other room.
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Baron asked his students whether the Milgram experiment said anything important about corporate life in 2007. |
Baron led the first-year students through a spirited discussion about whether the Milgram experiment said anything important about corporate life in 2007. Were people more or less likely to go along with unethical behavior today than in the early 1960s, he asked? One student said more likely, given the passiveness the American public showed during the run-up to the Iraq war. Another said less likely, because challenging authority is more accepted today than a half-century ago. Baron then asked the students to gather in small groups and talk about instances in their own lives in which people induced others to behave unethically—or courageously stood up to such behavior. The analogy to Enron, and the possibility that the SOM students might sometimes find themselves in a similar situation, was plain. “The hope here,” Baron said toward the end of the lecture, “is that by being more attuned to the personal and situational forces, you may be able to stave off being the abuser or the abused.”
Across the core, professors are trying to base their teaching more on the world beyond Yale and less on academic research. In many ways, this is the same idea behind Harvard’s case-study method. A typical case study describes a real-world business problem and asks students to consider whether a manager made the right call. But, Podolny says, the problem is usually presented through the lens of a single academic discipline. The new SOM curriculum tries to go further. It gives students primary sources—messier but also potentially more true to the actual experience—and challenges them to apply knowledge from different disciplines.
The Harvard Business School case study on former New York City police commissioner William Bratton, for instance, takes his success at reducing crime as a given and looks at how he managed to effect change. At SOM this year, students plunged into the statistics and discussed the fact that crime had already started falling before Bratton arrived. “When you’re out in the world,” Oster says, “no one is going to give you an HBS case study.”
Which isn’t to say that SOM never uses case studies anymore. In fact, Podolny has started a small in-house operation to write (and eventually, perhaps, sell) case studies tied to the new interdisciplinary curriculum. If it succeeds in capturing even a small share of the case-study business, it would bring both revenue and cachet.
The sheer amount of change has at times made life at SOM feel a bit frenzied. With every course on its first go-round, students have occasionally had a number of big assignments land on them all at once. And the new mandatory two-week trips overseas during winter break brought an unwelcome $3,200 addition to the tuition bill.
The school’s biggest worry is that its refashioned core will leave students with a weaker foundation in skills like finance and economics. To assess whether there’s any problem, SOM tested the fall 2005 first-year class on the basics and will repeat the test with this year’s class. “We don’t want them to do better in the deep dive,” Podolny says, referring to mastery of the core disciplines, “but we don’t want them to do worse.” If the students do notably worse, the faculty will tweak the new curriculum.
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Can a student body as diverse as SOM’s handle the new approach to the basics? |
One big question is whether a student body as diverse as SOM’s can handle the new approach to the basics. Stanford has also overhauled its curriculum lately, and it has chosen a different route. Its faculty created a program that is more personalized: a student who majored in philosophy and then spent two years at Teach For America, says Dean Robert Joss, will not take the same introductory finance class as someone who went to college at Wharton (Penn’s business school) and then worked at Morgan Stanley. “Our worry is, ‘Do we get it coordinated enough?’” Joss says. “I think the worry for Yale is, ‘Are you getting enough functional skills?’”
It’s clear that one of the main goals of SOM’s new program is to produce more-talented and better-prepared graduates than the school now does. Faculty members are a little sheepish about discussing the subject, because it implies an obvious criticism of current students. And professors are quick to say that better teaching—teaching that allows students to draw connections across disciplines and see problems in their entirety—can make a difference. But so would making the school more attractive to the top applicants. The best SOM students today are as good as the best students anywhere, professors say, but the student body is not as deep as it might be.
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Yale plans to build a new four-and-a-half-acre campus for SOM. |
“We’ve put out great people over the years,” Oster says. “We'd like to put out more such great people.” Podolny estimates that of the 900 MBA students at Harvard at any given time, for instance, 100 of them might be better suited for SOM’s mission, and he hopes to attract some of those 100 in future years. Yale plans to build a new four-and-a-half-acre campus for the school, on Whitney Avenue across from the Peabody Museum, which will give SOM the ability to expand its student body from the current class size of about 200.
To the extent there are early returns on the new curriculum, they are good. After SOM announced the changes last year, the school’s yield—the percentage of accepted students who decided to enroll—rose more than 6 percentage points, to 43 percent. A preliminary count of applications this spring suggests they have risen by more than 25 percent.
That said, it would still be a surprise if SOM were able to vault itself into Harvard’s and Stanford’s league, or even the league below theirs, anytime soon. And perhaps that’s OK. Yale is playing a different game, and Yale’s game is unlikely to be as appealing to most aspiring MBAs. “To out-Wharton Wharton or to out-Columbia Columbia—Yale should have no interest in it,” Podolny says. “Wharton is a fine institution; Columbia is a fine institution. But the world does not need another.”
What the world needs, he argues, is a more muscular version of SOM, a school that unabashedly aims to “educate leaders for business and society”—the school’s mission—while still influencing its more traditional rivals. So even if the school never quite achieves the prestige or ranking—the number, as Podolny puts it—of the top tier, it might still, at long last, be able to get comfortable in its own skin. “One of the things that is very concrete from my time at Stanford and Harvard is what it means to be a role model,” Podolny says. “I don’t know how you manage to a number. I do know how you manage to be a role model.”  |
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