Where Culture Really Matters: Berkeley’s Haas School - Poets&Quants

The school’s defining leadership principles—Question the status quo, Confidence without attitude, Students always, and Beyond yourself—are deeply embedded at Berkeley’s Haas School of Business

For Rich Lyons, the notion that culture could be a powerful tool to shape an organization’s identity, values and principles had to be a contrarian idea. Afterall, the culture of an organization was something that was soft. With his PhD in economics from MIT and a career spent teaching finance and economics at both Columbia Business School and UC-Berkeley’s Haas School of Business, Lyons came from the hard place. His professional life was grounded in data and models.

But during his 20 months as chief learning officer for Goldman Sachs from 2006 to 2008, the dean of Berkeley’s Haas School of Business found himself in front of CEO Lloyd Blankfein and the firm’s management committee leading a presentation on the top five culture shocks experienced by Goldman managing directors who did not come up through the ranks but were recruited from the outside.

Much to his surprise, Lyons discovered that the success rate for senior people hired into Goldman was largely a function of their ability to adapt and connect with the firm’s cultural norms. “It was a massive eye opener,” recalls Lyons. “I discovered that culture is something that makes an enterprise successful. When you are intentional about culture, it makes you stronger. It allows you to compete more effectively in the marketplace. I never appreciated that element of a strong culture.”

THE BIG AHA 

When Lyons returned to Haas as dean in July of 2008, he began surfing the school’s website for core values, principles and culture. He found zilch. “We had never made anything explicit,” says Lyons. “That was the point where I could see there was no intentionality here around the culture. That was the number one big aha.”

Intrigued by his discovery, he led the school through a survey of business school cultures, attempting to see which institutions embraced culture as something integral to their schools or mere window dressing. “Nobody in our industry was being intentional about competing on culture the way Goldman does or the way a lot of great companies do. That felt like a giant opportunity so I began to ask myself what would being truly intentional on culture look like?”

Ten years later, with Lyons about to step away as dean at month’s end, there is no doubt that Haas stands alone among business schools in consciously defining and shaping a strong culture to its competitve advantage. The school’s defining leadership principles—Question the status quo, Confidence without attitude, Students always, and Beyond yourself—are deeply embedded in the school and the mindset of many of its stakeholders.

ONE IN FOUR STUDENTS CITE THE PRINCIPLES AS A STRONG REASON FOR CHOOSING THE SCHOOL

Haas Business School Dean Rich Lyons

Every business school, of course, has a culture. Almost always, however, it is something that has evolved on its own, over time, often by accident. Rarely is a school’s culture cultivated or measured by senior leadership. More often that not, culture is something that happens to an institution. It is not something that is deliberately created, with concrete metrics regularly applied to insure that everyone is living up to the organization’s values.

Lyons didn’t want Haas to be in the same boat. He quickly became a dogged champion of the principles, seizing every opportunity to drive them more deeply into the school’s culture. Today, MBA applicants to Haas are assessed on how well they meet the principles in their applications and interviews. New faculty must discuss a case study written on the cultural initiative as part of their on-boarding process.

Teaching evaluations now grade professors on how well they represent the principles in and outside the classroom. Ten “deputies” have been appointed to give a broad swath of individuals ownership of the ideals. They’ve even been carved into stone at the roofline of the school’s buildings as well as on the tiled walkways of the Haas campus courtyard.

THREE OF EVERY FOUR MBA STUDENTS SAY THE PRINCIPLES SWAYED THEM TO GO TO HAAS

The impact of them is indisputable. A glimpse of the school’s most recent admission stats proves that. Last fall’s incoming class was drawn from a record 4,132 applicants, rising from 252 to 284 students – the school’s largest class ever. The school also boasted an average GMAT of 725 – up eight points from the previous year. Haas  leapfrogged Columbia Business School in terms of GMAT averages, while also distancing itself from such public programs as Michigan Ross and UCLA Anderson.

More crucial, among applicants, students, alumni and recruiters, the principles have become a significant symbol of what the school believes and stands for. Surveys of Haas’ MBA and undergraduate business programs have found that three of every four students cite the principles as a strong reason for choosing the school. More than 90% of alums from the past decade are familiar with Haas’ ideals and frequently cite them as beacons in navigating their own professional and personal lives.

“Maybe there was rumbling that this was just fluff, but the results speak for themselves,” says Lucas Davis, an associate professor who connects the principles in his stat class. “The students love it. Students refer to these defining principles in class without irony. Sometimes there is a bit of a chuckle. But they get it and they have bought into it. The staff loves it, too. And I am a true believer in these defining principles. I think they got it just right. They really do differentiate us as a school and that is hard to do.”

‘BE CAREFUL: YOU’RE SOUNDING VERY CORPORATE’

Getting to this point, however, has not been easy. In the early days, many faculty did not share Lyons’ enthusiasm for the ideals. They were skeptical that culture, something that sounded fluffy and irrelevant, could be turned into a  true competitive advantage. Recalls Lyons, “An economist faculty member who is close to me, and not wired to look at culture efforts positively, told me after I came back from Goldman Sachs, ‘be careful because to some faculty, you’re sounding very corporate. Just remember that a lot of us chose to become academics because we didn’t choose that world.’”

Some faculty, in fact, were actively hostile. “The Haas School is known to be heavily domianted by the discipline of economists, and the economists were pretty skeptical,” says Jennifer Chapman, an organizational behavior professor at Haas who has been a Lyons ally in the culture initiative. “They were unfamiliar with it and thought these were lightweight corporate branding notions. The faculty felt that Rich could go on and do his thing but we really weren’t going to be invovled in this. The attitude was how little can we do and get it to stop.

“Many believe that culture is something that simply happens to an organization, and you can’t change it,” adds Chapman. “We believe that you can drive culture based on your strategic objectives. And when you are deliberate about it, you can change it and drive strategic objectives. To some, it seems too soft. not methodical enough, and unrelated to financial performance. Those are all myths at this point because we have evidence that all of those things are possible.”

OB Professor Jennifer Chapman has co-authored with Rich Lyons a case study on the culture initiative at Haas

‘WE ARE IN A WEAK-DEAN SYSTEM’

It has often been said that getting a faculty to support a dean’s initiative is like herding cats. In an academic setting, leadership is by persuasion and consensus–not proclamation. “Shared governance means we have more say over things like hiring, what we teach, how we teach,” explains Andrew Rose, a Haas professor of international business and trade who was associate dean for academic affairs during six years of Lyons’ term as dean. “It also means the dean has less control. We are in a weak-dean system. When you want to get the faculty to do something big, the dean has to get buy-in from faculty.”

Adds John Morgan, a Haas professor of economics, in a case study on the initiative: “There was a lot of pushback because we’re Berkeley; we’re academically rigorous. Maybe that’s what we should be doing. Instead of talking about these defining principles, we should be getting the smartest guys with the perfect GMATs and the 4.0s, the quant jocks. So Rich Lyons had a sense that there would be these resistors and blockers and he was ahead of the faculty in a lot of ways.”

Undaunted, Lyons drove ahead. It helped that he was one of them, but it also mattered that Lyons wasn’t about to order anyone around. It wasn’t his style. With his colleagues, he launched into a two-year strategic planning process that would result in both the four defining principles and a clear vision for the school: “To become the most distinguished-by-culture business school.” Not surprisingly, there was immediate disagreement over how to define Haas’ culture.

Haas Professor John Morgan: “Lyons had a sense that there would be these resistors and blockers and he was ahead of the faculty in a lot of ways.”

DOING A ‘JUDO MOVE’ ON A LONG-STANDING CULTURAL ATTRIBUTE AT BERKELEY

Lyons felt the school’s cultural attributes had to stem from “essential elements of our culture, rather than to create some ideal because that would feel in authentic to people.” In essence, he wanted to make what was implicit, explicit, but also distinctive. “Our faculty wanted things like excellence on the list, but if excellence was the first on the list there would be very little oxygen left in the room,” thought Lyons. It just wasn’t distinctive enough. “Inclusion was another word that came up. When we actually put the strategic plan out in the first quarter of 2010 and distributed it, the first page had a preamble that said something to the effect that at Berkeley there are always words that are important to us, including excellence and inclusion, but the ones that define us are these four.”

That wasn’t an easy sell, even with Chapman, an unabashed advocate of the effort. “We had a big debate,” she says. “Rich had a kitchen cabinet of people who he was trying out ideas on. In the early version of it, my first reaction was, ‘Where is research excellence?’ We had a long debate about why that is a given, but of course that is not a differentaitor so why would you include it? I eventually came around to his way of thinking.”

Some of the principles were obvious given Berkeley’s own backstory. “Question the status quo” was one of them. “That is Berkeley’s history and there was energy in that, but you can’t have as a business school with your first principle encouraging people to challenge authority,” says Lyons. “Someone told me you can ignore that or do a judo move on it, reverse its polarity and make it something people want to hire. So when we said question the status quo, we thought that is a mindset that everyone wants. In the practical world, it says isn’t there a better way to do things. That was the judo move.”

‘THERE WAS TRUTH, VALUE AND DIFFERENCE IN IT’

The idea of producing students who boasted confidence without attitude was something that had surfaced from a corporate recruiter of Haas MBAs in 2005 when Lyons was acting dean.  “Every institution has an inventory of phrases and expressions,” says Lyons. “We loved it and it was in our recruiters’ guide, but it wasn’t until 2010 that we anchored it as one of the four things to double down on. Confidence without attitude worked for us. There was truth, value and difference in it.”

One of the school’s board members, serial entrepreneur Scott Galloway, who earned his MBA from Haas in 1992, came up with “students always” idea.  “Great leaders are able to absorb and distill more insight from a given amount of experience, and we were trying to think about curiosity and openness over a lifetime,” says Lyons. “Scott proposed it and the board and others loved the phrase.”

The last value Lyons covered on was “beyond yourself.” The school was a week away from going to print on its principles when the phrase came up. It immediately resonated with Lyons and students. “People talk about skating where the puck is,” laughs Lyons. “In this sense, the puck was coming right at us.”

FOCUS GROUPS WITH MORE THAN 150, PLUS ONE-ON-ONE SIT-DOWNS WITH TENURE-TRACK FACULTY

To gain the necessary buy-in, Lyons and his team conducted focus groups with more than 150 students, staff, professional faculty and alumni. There also were one-on-one interviews with the school’s tenure-track, or ladder, faculty, board members and recruiters. Drafts were circulated again and again. After an 18-month slog of working on the strategic plan and the defining principles, which took six months, the tenure-track faculty unanimously approved it. Each of the four principles were followed by a descriptive passage that gave more insight into each value.

Question the Status Quo: We lead by championing bold ideas, taking intelligent risks, and accepting sensible failures. This means speaking our minds even when it challenges convention. We thrive at the world’s epicenter of innovation.

Confidence without Attitude: We make decisions based on evidence and analysis, giving us the confidence to acxt without arrogance. We lead through trust and collaboration.

Students Always: We are a community designed for curiosity and lifelong pursuit of personal and intellectual growth. This is not a place for those who feel they have learned all they need to learn.

Beyond Yourself: We shape our world by leading ethically and responsibly. As stewards of our enterprises, we take the longer view in our decisions and actions. This often means putting larger interests above our own.

‘CONTENT WAS 15% OF THE BATTLE. 85% WAS ABOUT THE EXECUTION

While the unanimous vote was clearly a victory, it was meaningless without implementation. “The content was 15% of the battle,” remembers Lyons. “Eighty-five percent of the battle was about the execution. People wonder if this was just another dean chatting away or is it for real?”

To make it real, Jennifer Chizuk, then the school’s chief operating officer, systematically went through every business process at the school, including 12 different sub-processes in full-time MBA admissions, from info sessions and the school’s written communications with candidates to application essays to and admission interviews. “We went through each one of these pieces and asked how do we drive this through? We tried to go micro everywhere. How do you onboard your staff? How do we get this in the classroom and what about the co-curricular stuff. If every recruiter of our students doesn’t know this stuff, we have an opportunity there. I am not saying we got everything done, but we were as purposeful as we could be.”

Ultimately, Lyons staked his deanship on the effort. “He was quite systematic about it,” says Chapman. “Business schools are complicated little organizations. He took on admissions and now we have a very robust admissions process that emphasizes the defining principles. If people don’t pay attention to that when they are writing their applications or the admissions team doesn’t see people resonating with it, that is cause for rejection. The career management side of things is a little less specific though the dean recognized that with career management we had this vast opportunity to not just influence our community but the community more broadly and that kind of influence is ongoing.”

The new $60 million Connie & Kevin Chou Hall on UC-Berkeley’s Haas School of Business

EMPLOYEE INTEVIEWS: ‘I WAS ASKED WHICH PRINCIPLE I MOST RESONATE WITH’

Culture questions have even become a critical part of screening employe candidates at the school. A little over a year ago, when Leslie Schibsted was being interviewed for a Haas job as assistant dean for development and alumni relations, the principles came up during the session. “I was asked which of the four defining principles do you most resonate with? I said question the status quo because as a young woman I didn’t necessarily feel empowered to do that.”

Hired for the assistant deanship at Haas, she ended up on the search panel for the school’s new chief financial officer and is now asking the same question of all the candidates. “The culture provides a framework around which we build our relationships with one and other,” she says. “It informs how we message with external stakeholders. In some ways, it is a softer no asshole stand that we’ve taken which is very refreshing. Everyone here has internalized it so much that we joke about it and make fun of each other. It has really become the touchstone of how we see our work at Haas. i have never experinced anything like it it higher education.”

The school is also using the principles in its fundraising efforts, having established a new culture fund that can be used by Lyons successor to strengthen the culture at Haas. Launched last fall, more than $1.2 million has been raised, largely through major gifts from the school’s board which has stated its unequivocal support for the four defining principles. In fact, the board has made a commitment to do a review one year into the next dean’s term to see how the school is keeping the principles strong.

‘THE PRINCIPLES MANIFEST THEMSELVES IN SMALL THINGS DAY TO DAY’

Haas Business School Dean Rich Lyons

And as Haas’ own surveys have found, the principles are playing a role in allowing the school to win more admitted candidates from rival institutions. When students were recently asked to pick one reason that titled the scale on why they chose Haas over other options, the defining principles were selected three times more than the school’s brand reputation or its Bay Area location near Silicon Valley.

“They were pretty essential in my decision to go to Haas,” says Mark Angel, who graduated from Haas in May and returned to Deloitte as a consultant. “It made me realize this was the place where I wanted to spend two years. They are essential to the Haas experience. They are woven into the classes, but it also manifests itself in small things day to day. People are constantly thinking of others and going beyond oneself. I interviewed for Nike and was the last interview of the day. One of my friends was the first and I woke up to a text from him, and he said, ‘Here are some of the things they asked me about.’ It was unprompted, but it shows how we live these principles all the time. Nothing is perfect. You don’t hear about them in every course, but if they were incorporated into classes more than they already are it might feel artificial.”

Not surprisingly, the most difficult challenge was getting the principles reinforced in the classroom. “When you start telling faculty to teach their class a certain way, you are getting into difficult territory,” concedes Lyons. “It might make no sense to put this in a finance class but we made lists of actions they could engage in and welcomed them to do these things. We introduced a class called Question the Status Quo that encourages students to toss out alternative scenarios. We borrowed from a tool kit used by the Israeli Army called red teaming.”

‘SOME OF THE MOST OUTSPOKEN CRITICS HAVE COME AROUND’

When Chapman teaches the case study she and Lyons has written on the initiative, she has found some interesting reactions. “The students saw the lack of faculty support in the case, and they thought Dean Lyons was too easy on the faculty which I agree with. They think he could have done more to encourage us to incorporate these norms into our own interactions among each other and our course priorities.”

Lyons got it. He has taught the case to the school’s adjunct professors, citing a list of seven things they can do in their classes to reinforce the school’s culture. “I said I would appreciate it if you could think about what you could do,” says Lyons. “Make some reference in your syllabus, connect a case in your class to one of these ideas. When you facilitiate a discussion, can you use this phrase or that. The audit we’ve done showed progress, but we still have room for improvement. Having all of our faculty reading that case is part of the change mangement process.”

Little by little, the school’s tenure-protected faculty are embracing the idea. “Some of the most outspoken skeptics have actually come around,” adds Chapman. “Some have spent time in industry and have seen the importance of it. Others have seen the impact on our students, how much they talk about it and identify with it.”

THE ‘COME-TO-JESUS LUNCH’

Some of the hard core MBA courses at Haas now incorporate the principles. In Davis’ stat course, for example, he lectures on Michael Lewis’ Moneyball on the first day of class. “That is the quintessential story about questioning the status quo,” says Davis. “The people in baseball defending the old way of doing things think they are in the club and are outraged when Billy Beane (of the Oakland Athletics) questions the validity of scouts. These defining principles have increased the number of people who want to come to Haas but it has also helped us to get the right MBA students for us. They care about the world beyond themselves.”

The central remaining question: When Lyons leaves the deanship in three weeks, will the defining principles of the Haas culture endure. Is what Lyons has achieved more a matter of sharpening the school’s brand or the genuine manifestation of a strong culture? Oddly, those are still legitimate questions in an academic institution where entrenched faculty have outsized power. In Lyons-Chapman’s case study, Professor Andrew Rose is portrayed as a still skeptical academic. “I think the defining principles will live on for at least a year or two,” he says, matter of factly. “I hope they live on for a long time. But I don’t know. Deans want to do something different. That’s how they leave their imprints. Since we’re not going to build a new building anytime soon, I would imagine the next dean would want to do a new strategic plan. If the defining principles went away, two important constituencies would be less happy (students and alumni) and that’s not a good thing.”

For the past year, however, the dean has been doing everything possible to insure that the principles transcend his leadership transition. “If the defining principles aren’t embedded in the fabric of the school, it would be way too easy for a new dean to put them aside and do something different,” says Chapman. “We had a come-to-Jesus lunch where we recognized that the acid test of how good a job you’ve done is whether you have made a lasting impact. I think Rich has.”

BERKELEY’S NEW CHANCELLOR CITED THE PRINCIPLES AT HER INVESTITURE 

Among other things, Lyons has named multiple culture champions at Haas. The school’s advisory board has stated its allegiance to the principles. They were added to the job specs for Lyons’ successor. The new university chancellor, Carol Christ, gave a very loud shout out to the principles at her investitute in December in front of the entire Berkeley community. And, of course, Lyons made sure that when the new Haas courtyard was completed last year, the principles were carved in stone in the walkways and more recently into the sides of the building.

Even Lyons and Chapman have been surprised at how deeply ingrained the principles have become. “I didn’t think in our wildest dreams that we could do anything here,” admits Chapman. “But he really did focus on the differentating part of it. In this next generation of faculty, there is a real belief that these are valuable aspects of our culture and that it is different and distinctive and characteristic of Berkeley.”

And they have become a critical part of the formidable legacy that Lyons will leave behind when he departs his office for the last time at month’s end.

DON’T MISS: RICH LYONS TO DEPART HAAS DEANSHIP or MEET THE CLASS OF 2019 AT BERKELEY’S HAAS SCHOOL OF BUSINESS

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