Bruce Rauner (MBA '81) Endows New Professorship
Bruce V. Rauner recently celebrated his 15th HBS Reunion in a big way, establishing a professorship in business administration at HBS that bears his name. At 40, he is one of the youngest alumni in the School's history to create an endowed faculty position.
"I saw no reason to hold off until I was older or retired to share my good fortune," says Rauner, managing principal of Golder, Thoma, Cressey, Rauner, Inc. (GTCR), a Chicago-based private equity firm that specializes in acquiring and consolidating service businesses in highly fragmented industries. "For quality institutions, time matters. Why make them wait to implement their vision? Helping Harvard - to which I feel a deep sense of gratitude in terms of my career and personal development - is especially satisfying and enjoyable for me at this stage of my life."
When Rauner entered Dartmouth College in 1974, he planned to major in biology and chemistry to prepare for a career related to helping the environment. An introductory course in economics changed all that. "I realized that economic issues drove many of the decisions companies made regarding environmentalism and other important matters," Rauner says. "By my junior year, I was eager to go into business, become as successful as I could, and then use my resources as much as I could to help social causes that were important to me, especially those relating to education and the environment."
"I saw no reason to hold off until I was older or retired to share my good fortune."
After college, Rauner wasted little time enrolling at HBS, entering the School at age 23. Midway through the second year of the MBA Program, he was recruited by Stan Golder, a veteran of the First National Bank of Chicago, who was launching his own venture-capital firm with a couple of other colleagues from the bank. After graduating from HBS, Rauner headed back to his hometown of Chicago and became one of the first associates in what was then known as Golder, Thoma, Cressey.
Having put together an initial venture fund of $60 million (at that point the largest private equity fund ever raised), the new firm began doing deals in a wide range of enterprises. But in the early 1980s, as the VC business became more and more competitive, GTCR decided to focus on service companies in basic businesses such as laundry equipment, propane distribution, and funeral homes. "We may, for instance, try to find an existing company with a great management team that needs our resources to buy a competitor," explains Rauner, who became a principal in the firm in 1984 and whose name went on the door in 1987. "Or we may identify exceptional talent in a particular industry," he continues, "set them up with equity in a new operation that's backed by our capital, and then let them go forth, make purchases, and grow."
A pioneer in this long-term strategy (which began with an investment in Paging Network, Inc. [PageNet], now the world's largest wireless messaging company), GTCR now manages some $1.2 billion in five funds, with excellent results. Over the past decade, it has reaped returns of roughly 30 percent on companies it retains in its portfolio for an average of eight years before selling them or taking them public.
As the firm's managing principal, Rauner concentrates not only on investing in companies and helping them develop in conjunction with their top management but on nurturing a corps of young associates - the source of GTCR's next generation of leaders. Rauner expects to focus on GTCR for another decade or so before transferring his talents completely to the nonprofit sector or even politics.
"I care enough about this country and the issues confronting it that I want to get directly and personally involved," he says. "One thing I don't want to do later in my life is look back and say I was awfully good at investing and promoting entrepreneurship, but that's all I did."
by James E. Aisner
Go Team!
January cohort students attempt to swish ten free throws as one of many tasks in a "treasure hunt" that took place in February as part of Technology and Operations Management's Project Management module. The hunt involved student teams in a campus-wide search for clues and answers to TOM-related questions - a challenging yet fun exercise designed to help them develop project management skills.
MBA Program:Rapid Innovation in '96
In its role as a leader in business education, the School has brought dynamic change and innovation to the MBA Program this past year, most notably in admissions, the cohort structure, the Foundations portion of the curriculum, and information technology. The following status report was provided by the MBA Program Office.
Admissions
As part of its ongoing commitment to attract and admit the best candidates to the School, the MBA Program now requires all applicants to take the Graduate Management Admissions Test (GMAT). "The GMAT data provides us with additional information that will help us strengthen the whole class," says Senior Associate Dean and MBA Program Chair Steven C. Wheelwright.
In addition, a team of MBA staff, faculty, and students has begun to expand the program's marketing outreach. The aim, says Wheelwright, is to portray the program more accurately. "Surveys last year revealed striking contrasts between students' perceptions of HBS before and after entering the MBA Program," he explains. "On the whole, they found HBS much less competitive than they'd expected and far more friendly, responsive, and receptive to their input. These are aspects of the MBA Program that we want to convey."
Marketing efforts will include creating new publications targeted at specific audiences, as well as sending HBS representatives to colleges and universities to discuss business-education options with undergraduates. "Many undergraduates wait to apply to HBS because they think we require three or four years of work experience," says Wheelwright. "In fact, we don't. We're interested in having more students consider coming to HBS directly from college; many of our alumni who did so say the experience helped them form a stronger bond with the School."
HBS is also seeking to expand its pool of women, minority, and international applicants. Toward that end, the Women's Student Association, for example, is helping MBA Admissions identify women who might not otherwise consider HBS in their career plans.
Multiple Entry Dates
The introduction of multiple entry dates - with seven sections of eighty students entering in September and four sections entering in January (the "January cohort") - has been highly successful. Having students enter HBS twice a year and in smaller groups has helped the program increase its rate of innovation.
In a recent survey, students from the first January cohort (who entered in January 1996 and proceeded straight through the program without a summer job) said they enjoyed the greater sense of community made possible by being part of a smaller group, while receiving the same high-quality education as their classmates who entered in September.
January cohort students have also benefited from new initiatives by MBA Career Services, such as industry panels and career fairs held during the summer, designed to help them prepare for recruiting. "By all accounts, January cohort students have not been at a loss because of the lack of a summer work experience," says Wheelwright. "They've had the same opportunity as their September classmates to find a great position, and they've expressed great satisfaction with this opportunity."
Foundations
Wheelwright notes that the smaller size of each entering cohort has allowed for greater experimentation in the required curriculum (RC). One aspect of the MBA Program that has been refined in the process is Foundations, a set of brief courses ("modules") in the initial weeks of each term in the RC. An introduction to the basic concepts, tools, and skills used throughout the MBA Program, Foundations is organized to build community by allowing each student to meet virtually every other student in the cohort.
Foundations begins with a simulation in which students inherit a failing business and must turn it around using teamwork, analysis, and continuous improvement programs. Modules follow on topics such as business history; leadership, values, and ethics; society and enterprise; quantitative methods; and economics of markets. "By having two iterations of Foundations each year," says Wheelwright, "we've been able to improve upon the program for each entering cohort, rather than having to wait a full year to implement changes."
Information Technology
Information technology has quickly become an integral part of the MBA Program. All course information (schedules, assignments, etc.) is personalized and delivered online, and students regularly participate in online course discussions and faculty polls. Students may also access a comprehensive Career Services database of job listings (searchable by company, industry, and other categories). Other efforts to enhance the educational process through technology include online video and electronic cases and an electronic registration process for the elective curriculum.
Entertainment Moguls Ponder the Future at HBS Conference
Just as radio revolutionized the entertainment world at the turn of the century, satellite broadcasting, the Internet, VCRs, and new communications technologies are transforming the entertainment industry, said Universal Studios chairman Frank J. Biondi, Jr. (MBA '68), the keynote speaker at a recent HBS conference on the media and entertainment industries. Sponsored by the HBS Entertainment and Media Club and Price Waterhouse, the March event - "A View from the Top" - brought together senior executives from several leading media and entertainment companies to share their views on the future with an audience of some 350 people.
Biondi said that future success in the entertainment industry will depend on senior executives' ability to predict trends from new technology. He reminded participants that TV executives, for example, missed their cue and did not foresee the tremendous commercial implications of the VCR - one of the "most powerful" innovations in the industry.
Biondi was joined by a panel that included Richard J. Bressler, CFO, Time Warner Inc.; Bruce Paisner, president, Hearst Entertainment; Arnold Rifkin, executive vice president, William Morris Agency; Harold L. Vogel, managing director, Cowen & Co., and author of the influential book Entertainment Industry Economics; and Strauss Zelnick (MBA/JD '83), president and CEO, BMG Entertainment North America.
Harold Vogel observed that while new technologies have created opportunities, stiff competition within the United States and from international markets and skyrocketing production costs pose huge challenges to the movie industry. Film- production costs alone, Vogel pointed out, have risen 9.5 percent annually since 1980. Strauss Zelnick agreed, noting that as recently as a few years ago, the average Hollywood blockbuster cost $40 million. At the time, many industry leaders considered that an outrageous sum but today, the average megapicture requires about $100 million.
How are Hollywood studios coping with these rising costs? They are producing more of these same, high-priced spectaculars, films that are frequently criticized as mindless thrillers. In defense of the film industry, Bruce Paisner pointed the finger at "a very cynical, superficial" society that is willing to support these mass-appeal productions. "A lot of things you don't like about what we do has to do with what you don't like about our society," he said.
Arnold Rifkin argued that offsetting this blockbuster mania are numerous examples of high-quality television programming and filmmaking. He cited recent independent films such as Sling Blade and The English Patient, each of which cost less than $30 million to make. Success in the movie business is unpredictable, Vogel asserted. "If you made all the movies you turned down, and turned down all the movies you made, you would still come out the same," he said.
On balance, the panelists agreed that the entertainment industry is in a state of flux and that much of its uncertainty is due to the megamergers of the past fifteen years when, Frank Biondi noted, all the major networks and film studios were sold. As Harold Vogel put it: "There are hardly any more multimillion-dollar deals to be made - the big wave is over. Now we have to make corrections."
On a more expansive note, looking to the future, the panelists agreed that lucrative opportunities will likely be found in emerging overseas markets, particularly in Asia.
HBS Cyberposium Brings Online Future into Focus
"The Internet is an explosion like nothing we've ever seen before," declared Bob Davis, CEO of Lycos, the Internet search engine company, to an overflow crowd at the fourth annual Harvard Business School Cyberposium held last February at HBS. "In terms of the rate of growth and the numbers of people who are gaining access everyday," Davis noted, "it's making the personal computer revolution in the early 1980s look tame."
Titled "The Digital Field of Dreams," Cyberposium '97 was cochaired by Mike Dodd and Thomas Hoegh (both Class of 1997). They provided leadership for the more than seventy student volunteers from the Communications, Media, and Computing Ventures Club who organized seven provocative panel discussions and a number of leading-edge product demonstrations and entrepreneurial workshops. The two-day event attracted more than nine hundred attendees, twice as many as last year. Said Dodd of the conference's goals: "We wanted to ignite aspirations and implant some ideas for people to think about pursuing in the future."
The Cyberposium (http://wasat.hbs.edu/cmc/cyberposium) offered a comprehensive look at an emerging industry that is fast becoming a dominant presence and an attractive career path for many HBS students. Students fall into two camps, Hoegh explained, with regard to the Internet. "The first group is interested out of fear," he said. "Employers expect them to be up-to-date on technology simply because they are young and attend a business school that touts its Internet compatibility." For a second group of more online-savvy students, the Internet is viewed as a tremendous opportunity. "We're entering a new age," Hoegh asserted, "where you can build something worthwhile and gain worldwide brand recognition in as little as eighteen months."
Keynote speaker John Sculley, a self-described "venture catalyst" and the CEO of Live Picture, Inc., gave a demonstration of new technologies created by his company that make possible services such as Internet-based cybertours of remote locations around the world. Sculley said that a virtual walk-through of real-estate properties for sale at distant locations can be developed and offered by an online service for as little as $20,000.
In another look at the Net's commercial capabilities, a group of online entrepreneurs were panelists for a discussion, moderated by HBS professor David Bell, titled "The Future of Retailing." Participants reported success in leveraging advanced technology to reach more customers and provide better service. Tuck Rickards (MBA '91), CEO of Virtual Emporium, an online shopping company, predicted that "in the next five years, we'll see a gradual transformation of the Web from an information resource to a transaction platform in most content areas."
The panelists agreed that while secure transactions can now be guaranteed, the Internet will need more compelling sites if it is to capture the imagination and spending habits of consumers. That goal, they noted, will depend to a large extent on the availability of increased bandwidth and compression technologies, which speed access to information and facilitate navigation within a site.
At a session titled "Far Future," panelist Bill Taylor, founder and editor of Fast Company magazine, asked, "Has all this new technology improved our lives or made us more productive?" Steve McGeady, an Intel group vice president and director, quickly responded, "Would you give it up?" McGeady also offered some amusing conjecture about an emerging class of "cybernomads" who will be judged by the number of battery-powered devices they routinely carry on their person.
With special events such as the Cyberposium complementing a curriculum whose content and presentation are increasingly online and interactive, HBS students seem well-positioned to help contribute to the development of cyberspace. As HBS associate professor John Deighton, who moderated a panel titled "Online Media," observed at the Cyberposium's conclusion: "HBS is dedicated to preparing students for the information economy. Technology is being presented, and truly understood, in terms of its integral relationship to business."
by Meg Gardner