Fall is an exciting time on campus. As a new group of students arrive for orientation this week and others return to Vanderbilt, they bring a fresh burst of energy to usher in the new academic year.
One question faculty members often hear from returning students is “what have you been up to all summer?” They may imagine their professors taking long vacations and spending lots of quiet time at Starbucks. The answer students hear — “working on research” — doesn’t always clear things up. Faculty work on research year-round, but for many, summer offers a concentrated period where real progress occurs. Nevertheless, for students and alumni, “research” can sound a little vague, especially in a field like business (as compared to, for example, medicine or the hard sciences).
After all, business can seem very simple. I learned the basics of business as a sales representative, and later as director of sales, for a Corvette parts distributor that marketed a huge line of rare replacement parts and accessories for the iconic cars. Need a 1957 convertible top or a 1963 master cylinder? We had it. My boss founded the firm and grew it to $30M in annual revenue with a simple mantra: “buy low, sell high.” For retail and distribution businesses, that is not bad advice. And you don’t need a lot of research to understand the concept!
But understanding how to build a strategy that boils down to an easy-to-remember concept like “buy low, sell high” is not so easy.
Fifty years ago, in the early days of management education, many business programs resembled little more than vocational training schools. Much of the curriculum was based on stories of success and failure. Want to build a successful manufacturing business? Follow the footsteps of Alfred Sloan at GM. Want to build a technology company? Do what Thomas Watson did at IBM. Of course, there was much to learn from these business pioneers.
Missing from that instruction formula, however, were the underlying principles for their success. Did these business giants get lucky or were there some fundamental business forces at work that enabled their good fortune? Students left MBA programs with a network of colleagues and some good stories, but little generalizable knowledge. There was no research basis for the curriculum.
Today we know that businesses — from distribution to software development — are far more complex than many appreciated 50 years ago. Today’s businesses operate in complex, globally connected markets. Research in economics is helping firms from AT&T to Amazon understand how to price their offerings and enter new geographies. Business organizations themselves are made up of people, and research in psychology and sociology helps firms like Boeing or Hewlett-Packard understand how to manage those people better and achieve organizational goals. Businesses discover new technologies that they commercialize into products. And research on innovation, technology management, and ecosystems helps firms like Apple understand how to create platforms that generate enormous profits.
Browsing the recent research at Owen, you will find fascinating insight on a wide array of business subjects. For example Professor Mumin Kurtulus wants to know how and why a retail concept called “category captainship” is providing value to retailers and manufacturers in the consumer goods industry. Professor Nicolas Bollen is shedding light into the opaque world of hedge funds, uncovering both important new investment strategies as well as potentially catastrophic risks. Professor Ranga Ramanujam is helping hospitals understand how they can use organizational learning processes to improve patient safety. Professor Steve Posavac is examining how celebrity characteristics impact consumer-buying decisions. And a new faculty member, Professor Nicholas Crain, is exploring how the career concerns of private equity fund managers impact their investment decisions.
These discoveries quickly find their way into the Owen classroom. Students taking Professor Bollen’s Financial Economics class or Professor Ramanujam’s course in Health Care Quality Improvement directly benefit from the recent research. Alumni can benefit too by attending a “dust off your MBA” event at reunion, reading the Intellectual Capital section of Vanderbilt Business magazine, or following research briefs posted regularly on Owen’s web site. Stay tuned throughout year as we highlight Owen’s many findings from this and other summers of discovery.