If Columbia Business School Dean Glenn Hubbard were to advise his McKinsey-bound son on where to get his MBA degree, Hubbard says there are only four or five programs that he would recommend. He declines to mention the schools by name but you can rest assured that Columbia would be on the list along with Harvard, Stanford, and Wharton. That leaves a lot of very good schools off the list.
In a wide-ranging and engaging interview with Poets&Quants, Hubbard explains why anxiety is rising in MBA programs over landing summer internships, why Columbia’s new curriculum will improve the school’s MBA program, and why he felt like Wilie Coyote when the school’s MBA applications plunged 19% last year, vastly exceeding downturns at other elite business schools.
Hubbard, now dean of Columbia’s business school since July of 2004, also surmises how online technology will impact business schools in the future and why his efforts to persuade Columbia alum Warren Buffett to give money to the school’s new $600 million campus have been unsuccessful.
The 54-year-old dean was visiting San Francisco to attend the last graduation of the Executive MBA program that had been a joint venture between Columbia and UC-Berkeley and was in a good mood. His remarks were often humorous and remarkably candid, including an acknowledgement that Uris Hall, long home of the business school, is just plain “ugly” and that Columbia significantly trails rivals Harvard and Wharton when it comes to financial aid for students.
An economist by training, Hubbard joined Columbia Business School in 1988 after beginning his teaching career at Northwestern University. He served as senior vice dean of the business school from 1994 to 1997 and co-director of its entrepreneurial program from 1998 to 2004. He was chairman of the Council of Economic Advisers under President George Bush and a top economic advisor to Mitt Romney during his recent Presidential campaign.
Since becoming dean of Columbia in 2004, he has raised some $610 million, including $350 million toward the construction of a new home for the business school in the Manhattanville section of New York in West Harlem where Columbia University is developing another campus.
Last year, applications to Columbia’s MBA program fell by 19%, more than at any other top business school. How are things looking this year?
We are fortunate that our applications are up 9% year-over-year. What was weird about our drop is that it came along all at once. I told the faculty I felt like Wile Coyote (the cartoon character with Road Runner) where he ran off the cliff and didn’t know it yet. We had a couple of years where applications had plateaued and then all of a sudden crashed. But fortunately we are back up.
Your decline was generally attributed to Wall Street’s troubles and the fact that Columbia’s fortunes are so closely tied to Wall Street. Agree?
Wharton had a similar pattern. And if you were to do a trend line, we are both on that line. Harvard is above it. Harvard is the one school at the top where if you did a trend line pre-crisis and looked at applications it’s above it.
Do you think the decline is related to the belief that the value of the MBA degree has declined?
No. I think the value of the degree is still very high if you can go to a good school. If you go to any top business school, you will gain a skill set and mindset to make you a very good business leader. If you have in mind only an analytical job track, you might want to question the ROI. But if you see yourself as somebody who will swing for the fences and you can go to any of the top business schools, you’ll have a great background for doing that. I think it’s really hard to defend, at least in money terms, the value of an MBA beyond the top business schools.
And when you say top business schools, how many would you put into that category? Twenty or 25 worldwide?
No. Honestly, I won’t name names because that always makes staff nervous. But my own son who is graduating from Columbia College and is going to work for McKinsey, if he asked me in a couple of years which business school to go to I would give him only four or five names and say go to anyone of those. They are all great. They are all different. But go to one of them.
Glenn, how would you characterize the state of graduate business education right now?
I think this is an incredibly exciting time in the business school world. There are a handful of schools at the top that have high price points and a global reach. And there are some lower price point local schools and they are fine. In the middle there are a lot of schools whose costs look exactly like the handful at the top. But they are not delivering.
I think the next 20 years are going to be a sea change in our world. I know universities change glacially but not this time because the opportunity cost of getting an MBA is high. It has been traditionally because you have to give up work plus you have to pay the tuition. And we know now that the advent of online technology is going to be very disruptive. I think it is going to be differently disruptive for a school like Columbia than that group of schools I mentioned.
For us, it will change how we teach in the core that we have coming out this fall. If you look at the tools classes, like stats, microeconomics, or financial accounting, some pieces of those courses will be done online for two reasons. One is to make sure everybody has the same preparation. All our students are smart but they are different by background. And the other is if you take a class on statistics, by the time you sit with the stat professor you are actually talking about a real business problem, not estimating beta in a regression. I can learn that in my bathrobe at home. For top schools, online is going to be very disruptive, not because we are going to offer online degrees but because the way we currently teach will change.
In the new MBA curriculum you are launching this fall will you use online to reduce the number of times a class will meet or is it to raise the level of discussion in the class?
It changes the discussion in the class. We are not trying to offload class time online but are rather using online as a complement. In exec ed, we are also experimenting with online to deliver some classes. I think we’re probably the first top school to actually make money doing this. We have been offering classes like Personal Leadership online. You would think that is the quintessential soft course you can’t do without sitting in a class. Actually, people are paying us for it so it suggests you can.
One of the things that faculty is just figuring out about online is that it isn’t an either or. It’s a complement, and frankly it doesn’t scale the way some people think. A lot of people think about online as a way to have a huge market by just putting a guy in front of a camera. The most successful online experiences aren’t like that at all because of the skills required to get it right. If people are looking at online like there is gold in those hills, that part I’m not so sure about. For us, the reason to do it is not because there is gold. It costs us money. It’s because it can make our other teaching more effective.
So how will it affect what goes on in the classroom in a tools’ course?
In the redesign of the core, the faculty knew this was coming. So they need richer applications, more cases and more hands-on stuff because the class sessions devoted to estimating beta and other things aren’t going to be there. So it is requiring substantial faculty investment. And we have had practitioners involved in that exercise, too, recommending exercises and the kinds of problems that can be done. I think it’s going to be a big deal.
Do you have a rough idea of how many classes in the core will be online?
It varies because what the micro-economists are doing are not so much putting sessions online but rather topics. A normal class time for us is 90 minutes. It may not be 90 minutes online. It might be 30 minutes or 120 minutes with an assessment. It doesn’t translate into sessions. But each of those classes would have multiple topics accessed some before the term and some during the class.
So is the primary goal to get people who don’t know the basics up to speed with those who do or to teach the basics across the entire class?
It’s both. Take finance where I still teach. People come in with very different preparation. You have some people who have been bankers for several years and then you have a professional football player with a high IQ who may need a little help. So it does give you a chance to bring everybody up to speed, and it also helps you teach some elements of things that are routine, that you don’t need to take class time for.
I teach an elective called Entrepreneurial Finance, which is a very popular class. When I teach, I always have some evening sessions where I, or one of the TAs, will drill people in problem sets that we don’t do in class. But I also know that students need some time to really understand an evaluation tool and a methodology. I don’t want to take class time to do that because I really want to talk about business when we’re in class. In the new curriculum, some of that can be done online. It doesn’t require that I show up on a Tuesday night with each of them buying a sandwich. We can do that more efficiently online. So I think this is going to be very disruptive.
So you think it would allow for a deeper, more engaged level of teaching?
What will make online successful is assessment. Being able to pause, check and assess and then have contact with the guy or gal on the screen. All of this stuff is really going to change some schools even more. You are going to see the emergence of wraparound shorter programs. For example, why would you go to a third-tier school if you could buy the online curriculum from a handful of top schools and your local school would wrap it’s specialty are around that.
If you think about why do you want to go to business school, it’s about three things. One, the ideas of the faculty. Two, the talent of your fellow students, and three, the alumni network. There are lots of other less important reasons but they kind of boil down to those three. In a world where online is available, I’m not sure a school that doesn’t have those three things really has a two-year product. I don’t see it. A wise consumer wouldn’t do that.
I also could see a time when top schools do some trading. For example, Bruce Greenwald, one of my (highly popular finance) colleagues, is unique. There is just nobody else like him. So I could see the students at one of our peer schools saying, ‘You know, I love it here. I just wish I could take Bruce Greenwald.’ Just as I could see some of my students say, ‘Clay Christensen (of the Harvard Business School) is amazing. We don’t have him.’ Isn’t it possible that even at elite schools we could imagine some trading here that gives students access to the best faculty in the world regardless of which school they are studying at?
This is early days, but this is going to be a big deal. And it really has helped us as we rethought our core curriculum.
What are some of the other important changes that will occur when the new MBA curriculum debuts this fall?
Integration. Two years ago, we introduced an integrated case on General Motors. When I told the faculty I wanted to do General Motors, they looked at me like ‘Huh? This is Columbia. This is New York. You are talking about GM?’
‘Well I’ll tell you why,’ I said. ‘General Motors is a 25-year train wreck. It took that long for General Motors to go off the rails. There were many points at which several boards and CEOs did not connect the dots. Why can’t we take a series of cases and make them go across the core in every core class. And the teaching of the cases would be done by multiple faculty. So it isn’t just about me and my marketing class.’
In the new core, we need to think of many more examples for that kind of integration. If I were to offer gentle criticism of most top business schools it is that the students are functionally good. They know their areas. They have high IQ. But when you throw out a business problem, they struggle a little. They struggle to get their arms around it. We could do a much better job with this. And if we really want to create leaders, you have to do it.
The guy who sits at the head of the table is probably not an expert. That’s not why he or she is there. They know how to look at that complicated picture and know which questions to ask and how to get that information. That’s why I want to do more integrated cases. I believe this is a teachable skill with students but not the way we are currently running MBA programs.
That’s probably easier said than done.
The hard part about this is faculty. Once you talk about team teaching and integration, the first response is usually a statement like, ‘Well I can’t give up 60 minutes of class time because the dean has some idea’. It’s not about the dean. Why are students here? I am selling an integrated product that is called an MBA. I am not selling economics, finance, or operations. I am selling an MBA. It’s like a car. When you sell a car you don’t buy the steering wheel and the tires.
When you think about how we are trained, I am trained in a discipline as an economist. And I am trained to believe that the more time I can spend with you on economics, the better your life will be. That’s really not true for an MBA. What an MBA really needs is a skill set and knowledge on how to think about problems. So that requires us as faculty to change as well. I really think the hurdle is us. The students come hungry for this. That’s why they came to business school. They want these big problems. They are frustrated when they feel like they learned finance and operations but never how they fit together.
And in the new curriculum you are also allowing students to take more electives in the first year, in part so that they are better prepared for their summer internships. Explain how that will work.
Exactly. Many students come to us without being 100% sure about what they want to do. The rap on us is that we are all about finance. It’s not true. I think students come wanting to do almost anything. But for many of them, particularly if it’s not something they have done before, they need to take a prominent elective before recruiting. In the new core, they can do that very quickly.
In my discipline of finance to be able to take capital markets very early as opposed to waiting just makes me a heck of a lot more literate in those interviews. So in addition to improving choice, the bigger impact it will have on students is their preparation. I think it will help with satisfaction as well because I do think students are rightly concerned.
Firms are increasingly using the internship as a way to recruit. That is why anxiety is rising in MBA programs. Students know the internship is not a first date. It’s probably a match. So the anxiety around early recruiting rises. My way of thinking about satisfaction is to find the pressure points that you know are causing anxiety and work on those. So things that sound unrelated like the number of available classrooms and this structure of the core are directly related.
Another long-time pressure point for students at Columbia has been Uris Hall. Of course, you’re getting a new campus but that won’t come on line for another four or five years.
We have raised $350 million and the university is going to put in another $100 million for our new campus. But we still have $150 million to go. The thesis I have used when fundraising is that this is about transformation.
My beef with Uris Hall isn’t that it is ugly, although frankly it is. My beef is it’s not designed for learning today. We have put a lot of money into it. As I remind the trustees, ‘I’m repairing the plane while it’s in the air’ because every generation of MBA students only live here two years at a time. The problem with Uris is if you think about how you want to teach, it’s very non-linear where you have students being able to breakout and come back together. You would have lots of informal spaces in a building where ideas happen. That is not Uris. Uris is filled with theater-style classrooms, a cafeteria, a library and faculty way up in the clouds.
The new building offers us a chance to reimagine what a business school should look like. Rarely do you get a chance to do it all over. You’re not just adding a string of pearls. You’re building it all from scratch. It’s about twice as much space as we currently have for the same number of students. So what that means is many more classrooms.
Who cares? Well, one of our problems in satisfaction is that we have to force students through a march from morning through night because of our classroom constraints and it just builds in conflicts with a lot of evening activities. I don’t mean social. I mean McKinsey and shrimp toast over at the faculty house. The goal I gave the architects was I want people out of class by late afternoon and done. We are not going to be teaching past a particular time. How many classrooms do we need to pull that off?
But it is the informal spaces in the building that I am most excited about because they give students the opportunity to have a community. It’s kind of hard to find a space to talk in Uris. It’s a bench or standing in the hall. That’s not a way to get ideas flowing or to make people happy. So I think the building is integral to improve student satisfaction. When I first said that to people who are writing big checks, they said, ‘You think students want a more handsome building?’
I don’t think students care that much about it. But they do want these amenities I’ve described. They want a day that is not so conflicted with recruiting activities. They do want a space where they can sit down and talk to people. And of course, in New York, everything is more expensive than it should be and everything takes longer. With this project, I thought I was going to be on Social Security by the time we would open. It was all legal and regulatory issues when I started. The university was able to assemble 17 acres of land in Manhattan, which is in itself something of a miracle. At Stanford that might be a garden, but not in New York.
When will you open?
The current calendar is late 2017. I also wanted to make sure we didn’t open before other parts of the campus because our fundraising is doing better. I just didn’t want to move into a construction site so I slowed the gears down.
What will the total cost be?
About $600 million, soup to nuts. So we have $150 million to go. I should be able by the end of this academic year to close that gap to $100 million. And then it will take another couple of years to get the rest. Once I get within $100 million, I am comfortable asking their permission to commence. They frankly would give me the permission already. It’s my own sense of risk aversion when the numbers are this big.
One of your most famous alumni also happens to be one of the wealthiest men alive. Have you asked Warren Buffett for money?
You know, Warren is close to the school. He visits and sees our students. And he says amazing things. He says that Columbia Business School changed his life. It’s terrific. But that’s not going to happen.
Is that because Buffett doesn’t see the social value in a business school?
I think what we are doing makes a social difference. I think people who go out and create wealth are a noble thing. I often sit with donors who say they would rather give to the hospitals or the medical school and I talk them out of it–not because I don’t think giving to medicine is not valuable but we are valuable, too. It’s not just minting investment bankers. That’s not what our life is about.
I have made this argument to Warren. I have made so many arguments to Warren. One of his points was, ‘I invest better than you and so I want to hold the money.’ And I said, ‘Well I have a great deal for you, Warren. Just give me stock. I won’t sell it. I will hold it.’ He said, ‘You’re good but you’re not that good.’
Our two biggest gifts, one came from Henry Kravis (founder of the leveraged buyout firm KKR) and the other I haven’t announced yet because we haven’t worked out the public relations. It’s not from an alum but rather a close personal friend. He’s very prominent in the city, believes in the project for New York. Friends like that are definitely worth having.
Henry bought into the thesis that this was for transformation for the school and it really was a transforming moment for the university. If you are on the Columbia campus, you sense that we are out of space. Nobody has space. I give (Columbia University President) Lee Bollinger huge credit for thinking why are we doing incremental things when we can try to change our equation. It is going to cost a lot of money. It’s going to be transformative. I wish it were done. It’s not.
What’s the hardest part of asking people for big money?
I think it’s easier to ask people for big money than small because with big money you know the person has enormous capacity and second it really is about values and dreams. If they share your values, they believe they can make a big difference and they can. When you are very rich, you can make a big difference if you choose to do that. I find it a very rewarding part of my job. You really are selling the story of the school and making friends who can help to do that.
We are more tuition dependent than Harvard or Stanford. It covers maybe two-thirds of our budget. The rest has to come either from endowment income or fundraising. So even if somebody says to me, ‘I paid the cost of my education,’ I say, ‘Oh really? No way. You paid two-thirds. Some alum either wrote a check or we got income on the endowment and that is where the other third came from.’ At Stanford, it’s more like 50-50. And at Harvard, I think the MBA tuition is not even 20% of revenue. They could almost give it away.
One of the biggest conflicts I have in fundraising is that while I know we have to finish this building, we have got to have more financial aid. The schools we compete with most closely on the East Coast are Harvard and Wharton. On financial aid, we are not going to match Harvard in my lifetime. But we have got to match Wharton and it is substantially bigger.
Where is Columbia in comparison to them on financial aid?
We are probably a third under Wharton’s financial aid budget and a fraction of Harvard’s. Harvard is just way in a different league.
Harvard Business School recently disclosed that its average fellowship aid last year essentially discounted tuition for half the student body by 58%.
For us, that number would be 10%. When we are trying to assemble a class, we do want it to look a particular way. So we have in mind the right male/female mix as well as having the best students from different parts of the world. I would be naïve if I didn’t think we were losing people who couldn’t afford it. I want the best people to Columbia. I don’t care if they are rich or poor. So financial aid is extremely important in making that happen.
One of the issues for donors is that it is not always about need. So that can be a harder sell. You hear them say, ‘Wait a minute. You want me to write a check so you can give someone who doesn’t need money a chance to go work for Goldman Sachs?’ It’s a tougher fundraising sell than the building. But we want the best athletes in class. What that does is make our classroom experience better and it makes our alumni network better. So yes, I do want that money. But we do have work to do there.
Do you think business schools are being too generous with their fellowship aid to applicants?
It’s an arms’ race. Harvard has infinite resources. We don’t and our other peers don’t but I do think at these price points we have to think harder about how to bring the cost of our programs down. When I filed our long-term budget with the trustees, I told them I am decelerating our tuition increases because I just don’t think they are sustainable. Which means I am going to have a different model. We will have other revenue streams and work harder at getting our costs down. Law schools are going to see this in spades. They are in trouble.
Let’s switch gears and talk about one of the interesting initiatives you’ve started at Columbia: on innovation and entrepreneurship. Silicon Valley surely has an advantage on you here.
New York has become a very entrepreneurial, startup culture. If you look at fundraising in the venture world, New York is actually number two behind Silicon Valley. People think about Boston and Boston is not even number three. It’s behind Austin, which is number three. Columbia is going to ride that. I think that is going to be a big deal for us.
Entrepreneurship has become extremely popular on a lot of campuses. How come?
I think it’s micro factors and macro factors. With the financial crisis and all the dislocation that has occurred, I think students are taking a harder look at the kinds of industries and occupations. Some of the industries they thought were very secure are actually highly variable so why not think about entrepreneurship. This is a generation that is very into that.
Generally it’s only five percent of MBA graduates who go out and do startups. That’s true at Columbia, right?
Yes. Some of the business people who are on my board have as a goal raising that number. I don’t. Stanford has probably done the best job of studying longitudinal data on its graduates and typically finds they become entrepreneurs after ten years. Sometimes, somebody will have an idea in business school. But mostly what happens is you go to work for McKinsey and you work in this industry and then happen to notice something is being done wrong at each of these firms and maybe you have an idea to do it better. That is really where most entrepreneurship comes from.
I don’t think you can turn someone into an entrepreneur. What is teachable is how to identify opportunity. But it doesn’t mean I can give you an idea while you are in business school or that you are necessarily going to have an idea. I don’t really care about whether it is five percent or whether it is three. I just want to make sure we are giving students the equipment they need so that down the road. So when the ball does come across the plate in their strike zone, they know how to hit it. That, to me, is a more realistic goal. I think the fact that New York is becoming more ingrained in an entrepreneurial culture will really help. Even though our students come from all over the world, New York culture is very much a part of our life and our DNA. So I think that is going to make a big difference for us.
So what are you doing in entrepreneurship that is different from other schools?
What I told the students is that some of the most interesting business ideas at Columbia are not in the business school. They are coming from a junior faculty member in life sciences who has a therapeutic innovation or somebody in engineering who has a computer science knockoff. Those people often need the help of business people. So the thesis of Innovation and Entrepreneurship (IE) is that anybody with a Columbia ID, from President Bollinger to a janitor, can submit a business idea. Anybody who would like to work in a startup can post their interests. We have an electronic sort of marriage machine that brings people together. TWe run a competition and this year’s event took 102 ideas that came in from engineering, medicine, journalism and business. We winnowed them down to 16 using some outside venture capital judges and faculty. And then we worked with those 16 and it’s a way for the whole university to make bigger strides in entrepreneurship.
Is this an incubator model?
I would call it closer to faculty mentorship. If you are accepted into IE, you take some classes we offer. So if you are a asst. professor of medicine, you will be taking some Saturday classes with entrepreneurship faculty, including me for the finance part. The goal is to bring the entrepreneur more up to speed about basic business principles. The other part of the mentorship is then to help match the entrepreneur with others who want to work in startups across the university.
The interest in entrepreneurship is very high. The seat miles in entrepreneurship electives is as big as finance which people find very strange for a business school like Columbia. But not all these people want to start a business. Many of them, though, would like to be part of a startup culture. So while it also provided this access to these good businesses, it’s also an employment issue for our students. We do separately have something we call Columbia Business Lab that we started last year. We rented some space on Varick St. and had a competition for graduating students and 22 of those ventures, again selected by faculty and VC judges, got space for one year in the business lab. We are just now having a competition to replace them.
The graduates who went there got an obvious thing and then they got something less obvious. The obvious thing was a year with no rent. But the thing that they really benefited from was they started to learn from each other. They face similar challenges and may have some common interests. That alone has been big. We’ve had four of the groups already leaving because they got funded and moved to their own space.
All this brings to mind a central question given the decline of Wall Street in recent years: Does Columbia need to reduce its dependence on finance?
I’m not trying to increase it or decrease it. What I want to make sure is that we feel we are training business leaders. To my mind, you can’t be a great school if you are an X school and you can fill in the blank, whether it is marketing or finance. Because of who we are and where we are, finance is always going to be important for us. But we should be investing to make sure we are the best general management program first off. Many of our students actually leave finance once they start. A typical pie chart for us is that half go into finance when they come out. But if you look a decade later, it’s more like 33% so they are going to other things and we need to prepare them for that. And the financial services industry will be smaller in the next ten years.