McCombs on the Road
Faculty Field Trips Facilitate School's
Strategic Goals
by Erica Grieder
The phrase “field trips,” for most people, evokes dim memories of juice boxes and a yellow bus. But for many members of the McCombs faculty, field trips are an integral part of the job. For years, professors have gone on informal junkets to companies across the country to observe current practices and hear about subterranean issues firsthand.
Now, the Corporate Relationship Management team is making an effort to formalize these trips. In January, for example, professors in the Finance Department traveled to New York City to meet with executives at several major banks. And in June, supply chain management faculty went to Detroit to explore the automotive industry. In all cases, faculty came home with insights and connections that will benefit their students, their research, and three of the McCombs School’s strategic goals.
Preparing Students for the Real World
The first initiative identified by the strategic plan is to “change the emphasis of the MBA program to better align its focus with the placement market for MBA graduates.” According to McCombs professor Doug Morrice, director of the school’s Supply Chain Management Consortium, field trips enable faculty to do just that.
In the classroom, Morrice says, supply chain management professors focus on principles that are applicable across industries. “But students, when they go for a career, will actually target a particular industry,” he explains.
Professors are easily able to supplement their lectures with insights into several industries that are prominent in the region, thanks to Austin’s strength in the high-tech sector, Houston’s dominance in the energy industry, and leading consumer packaged-good players like Frito-Lay in Dallas.
When it comes to the automotive industry, however, McCombs professors have fewer opportunities to develop knowledge of its inner workings. The supply chain management faculty realized, Morrice said, that “if we want to know more about it, we really have to go there.” After their trip in June, he reports, they are ready to tie theoretical issues to real examples in this fall’s supply chain management classes.
Laura Starks, chair of the McCombs School’s Department of Finance, agrees that enabling faculty to better prepare students for the job market is one of the primary reasons the finance faculty goes on field trips. “One of the key purposes of these trips is to establish relationships with people in the industry so that we know what their needs are in terms of the students’ education,” she says.
The finance faculty has been going on large-scale field trips for several years, starting when McCombs School Dean George Gau was the chair of the finance department. As a professor, he was particularly attuned to the fact that when it comes to finance, “We’re not in a major business community. ” The faculty has visited AIM Investments and JPMorgan Chase, among other firms.
Most recently, they flew to New York, where they met with executives at Merrill Lynch, Goldman Sachs and Lehman Brothers for presentations about various aspects of each firm’s activities—or at least, that was the plan.
“What would happen is the executives would start to give a presentation, and there’d be so many questions it would turn into a conversation,” Starks says. “We have a very active faculty in terms of asking questions.”
“The experience was quite useful, especially for the examples brought back to the classroom, ” says McCombs finance professor Lorenzo Garlappi, who was part of the group. Upon his return, he said, he felt better able to help students anticipate what future employers would expect from them in terms of abilities.
For Finance Professor Jay Hartzell, one of the primary benefits of the trip is that now, when his students ask him what’s really happening on Wall Street, he’s able to tell them—and some of the issues he noticed in January have not attracted much media attention. “We heard a lot of the banks talk about the tension between the former commercial banks and the investments banks, for example, ” he says.
Professor Paul Tetlock, who joined the McCombs faculty in 2004 directly after earning his Ph.D., agrees that the field trip has benefited his classroom activities.
“In teaching undergraduates, I’ve heard that the models we were looking at were too abstract, ” Tetlock recalls. After seeing executives use the Black-Scholes model for option pricing during the field trip, though, Tetlock returned to the school able to tell his students that such models are not abstract for executives at Goldman Sachs and Lehman Brothers. “That was really nice to be able to point to,” he says.The Black-Scholes model, Finance Professor Andres Almazán adds, is a perfect example of how interaction with industry professionals may spur academic experts to conduct research that, in turn, has a lasting impact on industry.
While securities options are not new, they were not widely traded until the 1970s. Their sudden rise in popularity as investments can be linked directly to the arrival of a reliable model for pricing options. Fischer Black and Martin Scholes, who both held Ph.D.s in finance, developed the model after one of Black’s colleagues devised a model for pricing securities.
Their work, says Almazán, “responded to a need the market had.” He maintains that academic experts in business, particularly in the field of finance, have made great contributions to industry through research.
“It is not uncommon,” says Almazán, “that we have a very positive approach to industry problems.”
Faculty members come away from these field trips with ideas for future research projects; the trips also help them keep in mind that their research will have the most value for industry if it has immediate practical applications.
“It was very exciting to share ideas and see how executives need to make quick decisions,” says Almazán, adding that he wished he could have had more time for observation. “I came from the trip, honestly, thinking I would like to be there for six months.”
Garlappi agrees that this perspective shift helps him see that research is more relevant if its prescriptions are clear. “Sometimes we approach problems and see if we can think forever,” he says, speaking of academics. “But executives face pressure, have less time and have less information.”
Enhancing the school’s research environment is one of the key directives of the strategic plan, and faculty field trips are part of that process.
Building Partnerships with Firms and Industries
Faculty return from field trips not only with new ideas for their teaching and research—but also with contacts at key firms. “Faculty field trips allow executives to meet some faculty who they can call on,” explains Starks.And vice versa. After the finance faculty field trip, McCombs professor Ehud Ronn invited one executive from Merrill Lynch to speak to his corporate finance class via satellite this semester. The lecture — about recent changes to accounting and tax law—added an extra and timely dimension to the scheduled curriculum.
Building such relationships is another key directive of the strategic plan.
Responding to Criticism of Academia
In May 2005, the Harvard Business Review published an article by Warren G. Bennis and James O’Toole, both professors at the University of Southern California, that took a critical look at modern business education. Titled “How Business Schools Lost Their Way,” the paper argues that in the past half-century, MBA programs have become overly focused on theory at the expense of practice. Academics, the authors write, have lost sight of the realities of business, which is “essentially a human activity in which judgments are made with messy, incomplete, and incoherent data.” The result, they conclude, is a “crisis in management education.”
Whether Bennis and O’Toole are right is up for debate. In keeping with their stance that professors rely too heavily on quantitative research, their approach is historical and philosophical—some might say speculative. The only statistic in the paper is an offhand estimate offered by a former provost at the University of Dallas.
In other words, faculty field trips are not just integral to the McCombs School’s strategic plan. As a lagniappe, they anticipate a need in management education that has recently become more prominent—the need for business professors to be in touch with the practical realities of the subjects they study
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