THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Sunday, November 12, 1995 TAG: 9511110642
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: BY MYLENE MANGALINDAN, STAFF WRITER
DATELINE: CHARLOTTESVILLE LENGTH: Long : 245 lines
Thomas Jefferson was never known for his financial prowess. Indeed, he died in serious debt. But at the university he founded, the study of business is drawing as much attention and money lately as law, architecture or any other subject favored by the nation's third president.
The Colgate Darden Graduate School of Business Administration will open a $36 million business school complex in January, implement a more sophisticated curriculum and improve its corporate ties in hope of cracking the Top 10 of academic business institutions nationwide.
Those behind the three-pronged strategy at Darden are betting that prospective students, faculty and corporations will agree that the changes warrant a prestigious ranking. Though changes to the school's core programs are critical, Darden administrators know that ultimately, the schools' place among the business school elites hinges on its ability to build ``brand equity,'' or name cachet.
As University of Virginia President John Casteen has put it: ``Small clubs are always hard to break into.''
As the Darden school celebrates its 40th anniversary this year, officials there are reflecting upon where it has been, where it is now and where it wants to be.
Where it is today begins with its dean - Leo I. Higdon Jr., a 20-year Wall Street veteran lured from heading Salomon Brothers Inc.'s global investment banking department. As Higdon starts his third year at the helm, the faculty is examining and implementing curriculum changes designed to keep students in step with the demands and needs of a rapidly evolving corporate America. The new business school officially opens for full-time classes in January.
The architectural crown jewel of the new complex - a stately, white columned, red-brick building with a rotunda harkening back to the Lawn, the heart of the University of Virginia - underpins the Darden school's latest hopes.
``We saw the building as an essential piece of the strategy to move Darden to the Top 5 among business schools,'' university President Casteen said. ``I think it'll happen in the next decade.''
Business Week magazine, considered a premier surveyor of business schools, ranked Darden No. 12 in its 1994 biennial survey. Darden captured No. 11 in the magazine's 1992 survey. It's been ranked in the Top 10 before, but falls in and out. In some polls, Darden ranks higher, like U.S. News & World Report's 1995 annual survey of deans and CEOs where it ranked No.9.
``The rankings are a huge deal at every school,'' said Allison Adams, communications director for the Fuqua School of Business at Duke University.
Why are such rankings so important? Though they may seem arbitrary, the ratings inevitably convince the best and brightest students where to go, sway faculty towards the high quality programs, and focus companies' attention on the hottest recruiting grounds.
To some people, Darden's inability to permanently land in the Top 10 of various surveys betrays a long-standing - and some think undeserved - image problem surrounding the institution. Easily acknowledged as a Top 20 business school, Darden has yet to shake the shadow of Harvard University's Graduate School of Business Administration, and the stigma of being a southern school, some say.
Founded by Harvard faculty, Darden often finds itself compared to the Ivy League school with which it shares a history and a general management, case-method teaching approach. This approach tries to prepare students for any type of management career by presenting them daily with business situations and problems that they solve using critical thinking.
``Darden is a place that has a bit of an identity problem,'' said one professor at a Top 10 business school who is very familiar with Darden. ``It is a state school that aspires to be an international school.''
While Darden attracts applicants from more than 50 foreign countries from Switzerland to the Philippines, and has an international student body that makes up 13 percent of enrollment, about 35 percent of each class is composed of Virginia residents.
Even students fiercely loyal to the school acknowledge they've heard the rap on Darden.
``It's still considered a regional school,'' said Steven Berreman, a first-year Darden student from California. Berreman has noticed that most of the companies that come to Charlottesville to recruit Darden graduates hail from the mid-Atlantic states or the Northeast. ``If it wants to break into the Top 10, it needs to attract more West Coast companies,'' he noted.
And there is even the suggestion that some companies turn up their noses at Darden. Second-year Darden students joke about the ``McKinsey snub.'' McKinsey & Co., considered one of the hottest management consultant firms in the world, last year hired approximately 10 percent of Stanford's 360-person graduating class and about 9 percent of Harvard's 850-person class. At the same time, McKinsey hired only one Darden student.
Darden Dean Higdon disagrees that the school has an image problem. But he does acknowledge that it is working to solidify its reputation on a playing field that isn't necessarily level.
``What we're dealing with is mostly private schools that are larger,'' he said. ``They've been in existence longer. They have more capital resources. They have more alums in the business world.
``While our alums have achieved, it just takes time to develop and build a reputation. I would argue this school has done a magnificent job building its reputation given the numbers of our graduates out there.''
Founded in 1955, Darden keeps its class sizes small at 240 students. Harvard recently increased its entering classes from 800 to 900. Wharton has about 750 students, and Stanford averages 360.
``It's going to take greater resources and a greater commitment to take us to the next level,'' Higdon said.
Gaining ``brand equity,'' or name recognition, in a highly charged, competitive environment is tough.
Twenty years ago, 35,000 MBAs were annually awarded in the United States. Now the number is close to 90,000, according to the American Assembly of Collegiate Schools of Business, the primary professional organization and accreditation association for U.S. business schools.
Business schools award a quarter of all masters degrees in this country. In 1974, 389 institutions - among them the College of William & Mary and Old Dominion University locally - awarded MBA degrees, compared with nearly 700 now.
``The cost of playing in the business school big leagues has gone way up,'' said Charles Hickman, director of projects and services at AACSB. ``The competition isn't sleeping, either. The number of schools that want to be in the Top 20 far outnumbers the number of spots available.''
Business school watchers say two schools in the modern era ascended the ranks from being second-string to first-rate schools: Stanford University and Northwestern University.
Stanford climbed the ladder in the '70s by buying its way into the Top 10, some say. It recruited big-name faculty members and paid professors high salaries. Everything grew from that broad-based approach: curriculum, students, reputation.
The J.L. Kellogg School of Management at Northwestern did it by deciding it would be the best school in the country in marketing. It focused more on consumer marketing and built off some relationships with General Mills and other top companies that excel in that area.
``Substance is most important,'' said Wesley Magat, senior associate dean for academic programs at Fuqua. ``You can't just market fluff. You have to have first-rate faculty, students, programs. And people need to know about it. You have to promote that. That means spending time with the school's partners so people know about the quality of the school.''
To rise to the next level, the Darden school has assembled a strategy focusing on three key areas:
A new $36 million business complex: The five-building complex set on a hill next to Darden's current building evokes the same grand architectural style as the rest of the university but includes the most advanced in information technology. It will allow students or companies in New York or Hong Kong to communicate with people on campus through video conference calls or Internet hookups.
The building also underlines changes the school wants to make regarding students' computer skills and technology know-how. First-year students will be required soon to buy a laptop computer when they begin the MBA program. They will be called on to plug in their spreadsheets and problem sets from their laptops while in class so their answers can be projected on a big screen.
More than $1 billion has been spent on new business school buildings in the past five years, according to the AACSB. Emory, Case Western, UCLA, Berkeley all opened schools recently. The University of Chicago, Wisconsin and Kellogg all added wings or renovated existing buildings.
``You need it to compete,'' Hickman said. ``If they didn't have one, they'd be out of the game.''
Curriculum changes: International issues are receiving more emphasis. The Darden faculty is implementing more directed study projects - individual research projects required in a student's second year - that involve global issues or international companies. To expose students to different environments, one professor, for example, is offering a one-week elective course in Mexico.
Companies, like Bacardi, that have already had long-standing relationships with Darden have students and projects set up in Argentina and Chile.
Darden is also exploring the creation of an elective course that teams faculty and students interested in similar areas of expertise. It will launch a pilot course in investments so professors and students can work together on projects. It is also considering courses in manufacturing, marketing and consulting.
``It's a way of focusing the student's learning experience on a special area, whether it be career-related or educationally interesting,'' said Robert Landel, associate dean for MBA education.
Improving corporate ties: Darden's dean renewed serious efforts to improve the school's corporate ties when he took over in 1993. Having worked on Wall Street, Higdon reinforced Darden's ``practitioner'' bent. He called on companies and encouraged them to recruit at and visit Darden or work with them on specialized projects.
But interaction with managers, chief executives and other top management may not be enough without knowing how to use it. The challenge for Darden is to create a strategy for these corporate contacts and build off that, some say. Kellogg, for example, had a goal toward which it focused its interaction with companies like AT&T, Microsoft and Hewlett-Packard. Duke's Fuqua School is another example of a business school that rose from obscurity to the Top 10 based on its partnership with companies.
Several trends show that Darden has already formed a solid foundation from which to build, a fact that faculty and the administration are the first to point out.
While there is a decreasing number of people taking the Graduate Management Admission Test, which helps determine entrance into business school, applications at Darden have increased over the years. In 1995, it received 2,297 applications, a 10 percent rise from the previous year. Darden accepts one student for every nine applicants. (Harvard, by comparison, accepts one of every 13 applicants.)
And for those who do gain acceptance to Darden and graduate with an MBA, job prospects are bright: 99 percent have jobs when they graduate. The average salary, excluding guaranteed bonuses, for graduates is $64,000, and starting salaries have never gone down, even in tough times, said C. Ray Smith, associate dean for executive education at Darden.
Added to this rising competition for admission and reputation for placing graduates, Darden's teaching is world-renowned.
``Virginia has one of the finest teaching faculties in the world,'' said John Byrne, a Business Week reporter who covers business schools and compiles the magazine's biennial survey. On surveys, students continually praise the teaching at the school. Several Darden professors top Business Week's best teachers list.
``This is a school that (has) a very strong culture, a real sense of itself,'' Higdon said. ``From my standpoint, it's a situation of building on strengths and considerable competencies.''
While many Darden students gripe about the heavy workload, most are very happy with the program and the school. Recruiters like Bain & Company Inc. director David Bechhofer have come to recognize the quality of that education.
``We came to Darden because it does have a very, very good reputation and the only thing that matters to us is the quality of the students. That is the bottom line and all we worry about,'' Bechhofer said.
Though some people downplay the importance of rankings, such scrutiny and the resulting publicity do help institutions re-examine themselves.
``The polls do change, which I think is good,'' said Donald Jacobs, Kellogg's dean. ``They do create some competition for quality.''
Mindful of where they want to take the school, Higdon and the faculty are adjusting the curriculum and improving facilities, yet striving to retain a strong sense of their core values and mission - providing a superior business education.
``The acid test of management education doesn't have to do with rankings or the starting salaries of graduates,'' said Hickman of the American Assembly of Collegiate Schools of Business. ``If a school doesn't make it into the Top 5 or Top 10, it's tended to be looked on as a failure. Creating equal opportunity, better managers, building market economies and emerging democracies, understanding the relationship between economic growth goals and environmental concerns - that's what matters,'' he said.
``To think our main business these days is to focus on rankings is to mistake what we exist for.'' MEMO: Related article about Thomas A. Saunders III on page D1.
ILLUSTRATION: Color photos by Lawrence Jackson, The Virginian-Pilot
Associate professor Robert Carraway...
Leo I. Higdon Jr. is beginning his third year in charge of U.Va.'s
business school...
Class in Darden Graduate School...
Photo by Lawrence Jackson, The Virginian-Pilot
The Colgate Darden School of Business Administration will open $36
million complex in January...
KEYWORDS: UNIVERSITY OF VIRGINIA COLGATE DARDEN GRADUATE SCHOOL OF BUSINESS
ADMINISTRATION by CNB