Address: “Why Is the University of Chicago Great?”

By James E. Schrager

I teach strategy, and we are forced to wrestle with these big questions. Why is one organization a success, another a failure? Answers are hard to come by, often messy, and they always lack the elegant precision of mathematical certainty.

But despite those troublesome limitations, I find myself attracted to strategy as one of the most fascinating of all the great topics in business.

But we are not the only wonderful school. Many other universities have these same things.

So why is Chicago great? What is the essence of our success? What do we stand for?

Of all the unlikely places to find an answer, I’m going to take you to the New York Times. And of all the unlikely folks, to Senator Daniel Patrick Moynihan, Democratic Senator from New York.

In the late sixties, Senator Moynihan hired a brilliant sociologist, Jim Coleman, to do a study, a strategy study, not about business, but about education. Senator Moynihan was interested in how to effect educational outcomes, how to make education great.

Moynihan’s plan was to use the results of Coleman’s study to make schools better by spending more money. Coleman, who believed that spending money would improve educational outcomes, felt he would be proving the obvious, but was happy to put the matter to rest once and for all.

He completed what was then the largest social science project in history and presented his results in an apologetic manner: It’s all family. Per-pupil expenditures, books in the library, teachers’ salaries all had little impact on educational outcomes.

All that mattered was family. “It’s all family.”

In 1995, Senator Moynihan titled his story about this Chicago professor, “Driven by the Data, Not the Doctrine.”

And I would like to submit to you that Chicago is unique because we are driven by the data, not the theory. Time and time again, great Chicago research has shown that the way people thought it was isn’t the way it is.

This isn’t a group of people running around saying nobody knows anything but us. It’s not people saying we’re different just to be different. It’s a group of people asking what do the data tell us? Let’s suspend our disbelief about what the theory says. Tell me about the data.

In the field of strategy we operate with a big handicap. Our data about company failure and success are very messy. There are many things that contribute to company success and failure, organization failure and success. It is very hard to separate them out and make sense of how things became successful.

But a Chicago business school professor, Ed Wrapp, looked at the field of policy (as it was then called) and saw lots of theory and virtually no data. How to be driven by the data, not the doctrine? How to look beyond the theory and find the data? What are the data? How do general managers achieve success? What do they do?

He decided that the field of strategy needed someone to actually observe general managers in action and report on what they did. Although short on numbers, this was a wonderful idea and a radical one at the time. Nobody did it. Nobody watched general managers work.

What you did instead was you listened to them tell the story of what they did, of how it was. Managers patiently told the story, and they did their best to recount it. But we all know there can be a huge bias in what we report as opposed to how we actually do things.

So Ed Wrapp systematically observed real live general managers in action. This formed the basis of his course here in the sixties.

He was coaxed into writing an article, somewhat against his own better judgment, and submitted it to the Harvard Business Review in 1966. It was unlikely that Harvard would publish this, but they did.

It was extremely unlikely that this article would become one of their most popular articles in reprint, which it did. In 1984 it became what’s known as an HBR Classic, which means that the article, believe it or not, still made sense almost twenty years later.

I must admit that is a pretty good trick for some business school research. Twenty years later it still works. Ed Wrapp had that honor.

Ed Wrapp exploded many management myths of the time in that article, myths of the theory that general managers plan, monitor, judge personnel, allocate resources, and control. Of course we all know it’s much more complex than that, it’s much tougher than that. The big issue Ed Wrapp was able to see is how they did these tasks. Previously, all we knew was that these were the goals.

Ed Wrapp’s work spawned a whole series of strategy researchers, all observing the movements of managers, such as Henry Mintzberg, Richard Pascale, John Kotter, James Brian Quinn.

In my work with entrepreneurs, I have taken a page out of Ed Wrapp’s book, and I have a series of observations for you of the things that entrepreneurial managers are doing. Entrepreneurial managers no longer reside in just small companies, but in fact are found dotted throughout all kinds of firms.

Here is my list of four entrepreneurial attitudes I have observed. These observations do not rise to the predictive power of numerical data, but I think they are interesting and important for all of us who wonder how things really work.

1. Search for reality

You must find out what is out there. How well are you really doing? Where does the company need work? What are we missing?

To try and practice this one, when you have a problem in a bad business deal, when you don’t do well in your first assignment or your first job, look first to yourself, to the reality of what you are doing right and wrong. Great general managers aren’t undone by the lack of intelligence or drive, but rather by an inability to see themselves as others do. If they are not searching for reality but making a fantasy world for themselves instead, when their fantasies meet reality, trouble can follow.

2. Respect for people

All of us in strategy were taken aback by the Japanese industrial miracle of the seventies. What’s the real story? How does this work? I was told that it means no special parking places, no executive cafeteria, no real perks of office, and we are very nice to everyone. I must admit I didn’t think that would be enough to make a difference. I later discovered the real meaning.

The real meaning is that everyone had something substantive to contribute to the job. Taken that way, respect for people has a whole new meaning, and I would argue a very powerful one.

3. More is caught than is taught.

As you go out in your first assignments, you’ll be taught and you will teach: how you want your subordinates to be; how you want them to act; what you want them to say; what you want them to do. You’ll go home at night and realize how hard you have worked to teach others what is vital about the job.

But it’s not enough and you are not done. Because more about you will be caught by your staff and your peers than you will ever teach. Everyone is always looking at the boss. They are always trying to answer three questions: Are you for real? Are you sincere? Can I trust you?

They will look at you whether you feel the warm glow of the limelight or not. Your staff will be watching. More will be caught about who and what you are than you will ever teach them.

4. Success equals failure.

In success are sown the seeds of failure. Today, you have a great success behind you. Celebrate that success, enjoy it. Have a great party tonight and tomorrow.

Then prepare yourself for the next challenge, as I assure you it will be just around the corner. The great entrepreneurial managers realize that there is always the next mountain to climb.

It wouldn’t be a class with me if I didn’t have a thought for the day, and today’s comes from Tennessee Williams: “Life is all dreams and memory, except for the instant moment that flies by so quickly, we hardly see it passing.”

To that I would like to add: May your dreams be large, your memories sweet, and you do much good work in between.

Will the University of Chicago remain great?

At some time in the future, that will be up to you. Some day you will be called upon to chart the course of this great university. Given what I know about this Class of 1999, the University will be in good hands.

I wish you good luck and godspeed.

James E. Schrager is Clinical Professor of Entrepreneurship and Strategic Management in the Graduate School of Business.

Back to Front Page
Back to Records Table of Contents
Back to the University of Chicago Main Page
Back to About the University