The Business Case for Closing Penn State Football

I love college football.  Some of my fondest memories involve spending New Year’s Day with my dad watching bowl games until my eyes fell out.  My college days included Saturdays at the Big House.  Like my father, I bleed maize and blue.  So does my son Tyler. I am not one of those faculty who thinks that college athletics are antithetical to academic ideals.  So it saddens me to tell you that if the allegations of abuse and institutional cover-up involving the Sandusky incident are all true, the business case for closing down Penn State football is a strong one.

There are lots of teachable moments in this incident for business students.  There are the human resource management lessons around reporting misconduct, investigating it, protecting the rights of the accused and communication about the disposition of the investigation.  There are the public relations lessons involving protecting the brand in a time of crisis and how the cover-up only magnifies the initial problem.  And there are the leadership lessons in how the governing board sent one message in terminating the President and Coach Paterno, but sent another in accepting a bowl bid.   But these lessons are best addressed in the classroom, not a blog post, and I know some LBS faculty have done so.

I also fear that this post will be seen as “piling on”, but the PSU incident goes to the heart of the debate about the proper role of athletics in academia.  That role is not to make money for the university. Many athletic departments barely break even.  No, the business case for athletics in higher education centers on projecting a positive image of the brand into the community.  It is to be a source of pride that associates the institution with success in life.  When I was young, watching the Wolverines pile up victory after victory made me want to attend that institution.  I saw it as a place that was committed to excellence and produced winners.  

Penn State football no longer sends that message.  Instead, it has become a liability for a great academic institution, a constant reminder of the school’s shortcomings broadcast regularly into living rooms around the country.  Americans have short memories and there will be great temptation for people at Penn State to believe that they can weather the storm, that in a few years this will all be behind them.

I doubt that. These were horrific events. The media will be covering the trials and recalling the offenses for years. And then there is the NCAA and Big Ten to consider.  Again, if the facts are true, I can’t image a situation that defines “lack of institutional control” more than this one.  Ohio State just got a one-year ban from appearing in a bowl because some athletes exchanged their memorabilia for tattoos.  What’s the appropriate penalty for Penn State? The NCAA would be wise to consider the death penalty as a way of showing that higher education puts academics and decency above athletics.  And if the NCAA won’t use the death penalty, the Big Ten should certainly consider kicking PSU out of the conference.  I don’t know all of the provisions of a university’s contract with an athletic conference and whether something like morals clauses are typical.  But the Big Ten doesn’t need Penn State—they are the Big Ten. Penn State got a huge academic boost when it got invited into the Big Ten. If the conference expelled PSU, some other big name school would be willing to join them tomorrow.  If Penn State would want to prolong the story by fighting it out in court, let them. The public would say “Good for the Big Ten.” Their stock would go way up, even more schools would want to join the conference and Big Ten games wouldn’t be used as a vehicle for constantly talking about what went on at Penn State. 

If I’m the President of Penn State, I don’t want the institution to endure this.  The quickest way to limit the damage, redirect the president’s time to more productive endeavors and send the message that the institution is about academics first, is to end the football program (not the entire athletic program—just the football program).

I know this would be a heroic choice for a college president. The decision to close the program would be met with harsh criticism by a legion of boosters. The revenue loss would make it difficult to run the rest of the athletic department and the closure might also harm state appropriations to the university.  But many great universities thrive without great football programs (ask UCLA), the evidence with respect to state budget support based on football prowess shows only modest effects and some renowned private universities don’t have big time football at all (e.g., MIT and Chicago).  It is time for Penn State to focus on its core mission and shut the doors on football.

In Defense of Tenure

Much has been written lately about the luxury of being a tenured faculty member and whether the tenure system has outlived its usefulness.  It has not.  Frankly it is more important than ever.  Let me explain.

One of the most influential concepts of the last twenty years is “social capital.”  The term was popularized by Robert Putnam in a book entitled Bowling Alone which documents and analyzes the general decline in collective activity in the United States.  The title comes from the fact that while bowling is as popular as ever, bowling leagues are not, instead people tend to bowl alone. 

But how does an examination of people’s bowling habits lead to a defense of tenure?  Social capital is about the value that comes from maintaining good social relationships.  When people have such relationships they bowl together, when these relationships atrophy they bowl alone.  One of the most powerful products of a good social relationship is trust. Sustained satisfactory interaction builds trust.  As trust builds, information between people flows more freely. Free information flow is especially valuable in workplace settings for companies that compete through innovation and are required to respond to rapid change.   Employers in these environments have a strong interest in developing systems that promote good social relationships and build trust.  And as any manager can tell you, while trust takes years to build, it takes only seconds to ruin.  It is a very fragile asset.

Universities ask their faculty to freely share their knowledge with others.  In general, professors do not hold the copyright to their work or receive royalty payments for their ideas.  They give ideas away both to educate students and foster the development of even more powerful ideas as colleagues build on each others work. Professors also train their successors: Ph.D. students who eventually become part of the academy and compete with their mentors in the marketplace for ideas and jobs.  In short, sharing information is the core activity of any university.

This is where tenure comes in: Faculty give up the value of their intellectual property and agree to share their ideas freely with others, in exchange for employment security.  This exchange creates trust by ensuring faculty that they will not be put at a competitive disadvantage by sharing their knowledge with others.  People who fear job loss, don’t share information, they hoard it.   

But it would be folly to grant everyone tenure: It is a prize reserved for those with a sustained record of meaningfully adding to our body of knowledge and passing these new insights on to students.  The competition for tenure is like a tournament: it encourages everyone to work hard for a prize that only some will win. 

Universities are not the only institutions that use this employment strategy to build social capital and trust.   Many organizations that rely on idea generation and information sharing work similarly.  Perhaps the best examples are law and accounting firms.  These organizations also hire people and put them through a process that grants some employees life-time benefits: partnership in the firm.   Like university faculty, it is difficult for lawyers and accountants to capture all of the intellectual property from their intangible assets unless they are in business for themselves and it is important for senior accountants and lawyers to train junior employees to sustain the firm.  These professionals are going to be far less willing to do this, if those junior employees could replace them.  And the promise of partnership gets junior employees to work hard, just like tenure does for faculty.

Do universities make mistakes and tenure people who fail to perform after achieving this milestone?  Of course they do. But law firms and accounting firms also award partner status to some people who fail to live up to expectations.  Mistakes are the cost of doing business, but the benefits of the system far outweigh these isolated costs.

American higher education, especially graduate education is the envy of the world. Students from all over the globe want to study in the United States.  We produce far more Noble Prize winners than any other country and ideas originating in universities help drive an economy that is increasingly based on innovation and intellectual property.  It is no accident that revenue from licenses and patents based on ideas from the U.S. far exceeds those originated in any other country.  A higher education system that encourages the free flow of ideas has been a key contributor to our economic success.  Dismantling that system now would be a very serious mistake.   

My Graduation Speech

When you own your own graduation robe, it means you go to a lot of commencements. I have walked across stages, witnessed my daughters and grandmother receive diplomas and have shaken lots of graduates’ hands.  I have also heard lots of speeches.

It’s a tough crowd.  Graduates have their minds on celebration. They stopped listening last week. Parents want something inspirational and reassuring that will affirm all that money was wisely spent.  The speaker feels an obligation to share some secret of success.  After all, American presidents and celebrities are asked to make graduation speeches, so you want to measure up. If the speech is really good, it might go viral on YouTube or be “retweeted” by your six followers on Twitter. Everyone listening wants it to be short and memorable.  If the attendees can only have one, most will vote for short (The six who find it memorable will appreciate that it’s easy to retweet–everyone wins).

I only remember fragments.  My favorite speech was by a colleague at the University of Iowa who quipped that universities are the storehouses of knowledge and that she could prove it. She noted that each year we take in a group of freshmen who think they know everything and graduate a group of seniors who are pretty sure they don’t know anything at all.  Where does all that knowledge go in four years, she asked?  “Well we keep it!” Knowledge expressed as doubt: It got a good laugh. 

You are the first graduating class from LBS that has been completely in my charge, and since it is my blog and I have never been asked, here goes…

Graduates, you enter a difficult job market during uncertain times. Unemployment and debt are far too high. Housing prices and consumer confidence are far too low. Politicians have sharply different opinions about what to do. Pessimism reigns. Some say America’s best days are behind her; that we are no longer leaders in the world; that our economy, government and society are bankrupt; that you will be the first American generation to have a lower standard of living than your parents; And that we have mortgaged our future to people who live across the sea.

They have said these things before.  They said it during the Great Depression when stocks crashed and unemployment topped 30%. They said it during the dark days of WWII before American built planes ruled the sky, American tanks the battlefield, and American ships the waves. They said it when Sputnik flew over our heads and Neil Armstrong had yet to set foot on the moon.  They said it when OPEC threatened to stall our economy, Japanese cars, steel, and electronics flooded our markets, and the Belgians bought Budweiser (well at least my uncle said it then).  All this before FedEx delivered my iPad so I could check my facts for this blog post on the internet using Google.

Americans have always known that we are in a competition to win the future, not the past.  Challenges and uncertainty, like opportunity and change, are endemic to life. Maybe someday the naysayers will be right.  Maybe someday our problems will overwhelm us. But that day is not today.  No, the people who say this do not know these graduates.   They don’t know Chris Madison an MIS student whose slogan is: “The bigger the dream, the smaller the competition.”  If you’ve met Chris, you know he has little competition. They don’t know Paris Bayardo, who is earning his BSBA in marketing, already owns several businesses and is looking to buy a hospice facility.  Or Cynthia Galvan, an MBA student and budding venture capitalist, who with her engineering colleagues is working to find investors for a product called Smell-o-vision, a synchronized aroma system that may revolutionize movie-going.  These are just three of the hundreds of Lee Business School graduates  who leave today ready to compete in a global marketplace.

Stories like these reassure me that college hasn’t stomped all the youthful confidence out of graduates that my Iowa colleague fondly described years ago. In fact, I hope we have lit a fuse: Born to an imagination that dreams big, tempered by the knowledge to choose wisely, forged by the persistence to stay the course, seasoned with the humanity to help others and focused by a desire to get things done right, Chris, Bayardo and Cynthia prove youthful exuberance is pretty powerful stuff.  These are the things that got all of you ready to cross this stage today and they are the qualities we need to ensure that our finest days still lay before us.  Two thousand years ago, The Roman Poet Virgil knew that “fortune favors the bold.”  You are no longer Rebels in training. It is time to curry fortune.  Be bold.

Fourteen Hours a Week!!

Professor John Zimmerman sent me an article from the New York Times the other day.  It reported results from the National Survey of Student Engagement (NSSE) that suggest the average college student taking a full slate of classes studies only about 15 hours per week.  Engineering students reported studying the most (19 hours), business students the least (14 hours).

To put these numbers into perspective, the rule of thumb most professors follow is two hours outside of class for every hour inside of class.  So, if you are taking five classes or fifteen credit hours, you should be putting 30 hours a week into studying.  That standard produces a forty-five hour week: fifteen hours class time and thirty hours studying.  Professor Zimmerman, like faculty everywhere, was dismayed to learn that the average NSSE respondent fell far short of what professors expect. John assured me that his tax accounting students are putting in many more hours than that.  I believe him.

A closer look at the NSSE numbers reveals that business majors spend more hours engaged in productive activity than any other student group (57 per week).  All majors report the same number of hours per week socializing or relaxing (ten to eleven).  But business majors report seven more hours a week working and three more hours caring for dependents than aspiring engineers.  Business students were the only group to report more hours working for pay (16 hours) than studying (14 hours).

Some of the difference in the numbers is the result of contrasting demographics:  business majors are a bit older and more likely to be domestic students than their engineering counterparts.  The first difference means they are more likely to have dependents in their care, both differences help to explain the difference in average hours worked for pay. International students typically cannot work off of campus.

Yet, there is plenty of incentive for business students to hit the books. Many b-schools are selective admission colleges:  They only admit students who have proven themselves academically in their freshmen and sophomore years through prerequisite courses. Many do not make the cut. Some b-schools even limit enrollment, resulting in direct competition among sophomores to gain admission.  And, business faculty have the same expectations for class preparation as faculty in most other areas–six hours a week per course.  Many of us do encourage students to develop a balanced portfolio while in college that includes participation in co-curricular activities that promote leadership skills (e.g., student organizations) and internships that provide realistic job previews as well as deliverables that can impress prospective employers.  Great grades alone are not enough to differentiate students in a competitive job market.  But no one tells students these activities should come at the expense of studying.

Frankly all this angst over the amount of time students study detracts us from the fundamental question: Are we graduating competent business professionals ready for the challenges of today’s global marketplace?  The focus should be on outcomes, not inputs. 

Accreditation bodies have required business schools to put lots of energy into developing learning objectives and assessing outcomes. But I doubt these efforts will get us where we want to go. The results are too easily manipulated by faculty and administrators and lack a sufficient link to the real world.  What we need to do is separate teaching from entry into the profession. Some areas of business already do this:  Accountants have their CPA, financial planners, the CFP.   These tests are developed and administered by practitioners working with faculty to ensure that the exams are valid and assess what students need to know to successfully compete in the marketplace.  The tests are not school specific, but administered profession-wide. Accounting programs, for example, track and compete on their graduates’ passage rates on these exams and students understand the importance of preparing for this challenge. If we require such professional credentialing of people who certify balance sheets and income statements, we sure should require it of people who are put in charge of subordinates or a company’s IT infrastructure.

Nobody asks whether there is a crisis in studying among medical students, would-be lawyers or dentists. They shouldn’t be asking this of business students either.