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If your idea of a Ph.D. in business conjures up visions of spectacled scholars toiling in solitude in the library's darkest, dustiest corners, think again. At HBS, students in the School's Doctoral Programs are doing much more than theorizing and crunching numbers.

by Julia Hanna and Margie Kelley

Photography by Jared Leeds

"Our students use traditional academic theory to take on problems that have fundamental relevance in today's business world," says Janice McCormick, executive director of the HBS Doctoral Programs. "Many come in with practical business experience and a strong academic background, and they have a good idea of what they want to do with that experience when they get here."

The flexibility and freedom of academia has an entrepreneurial appeal that is extremely rewarding for those who want to set their own agenda, adds McCormick. Students can pursue a doctorate of business administration (DBA) in accounting and control, marketing, policy and management, or technology and operations management. Another option is a joint program with Harvard University's Graduate School of Arts and Sciences that grants a Ph.D. in business economics, health policy (management), information technology and management, or organizational behavior. That broad range of choices, coupled with the satisfaction of conducting research in the field, generates an extraordinary demand for the handful of available places each year. Last fall, 22 students were admitted out of an applicant pool of 732. Once they clear the formidable hurdle of admission, some 89 students in the programs receive a level of backing and resources for field research that sets HBS apart, thanks in large measure to alumni generosity.

"There's an enormous support system at HBS," observes doctoral candidate Boris Groysberg. "The stipend, the budget, the library - there are faculty at other schools who don't get the same level of assistance."That assistance means students can take on the topics that interest them most without worrying about funding for in-the-field interviews and other research expenses.

The School's investment in its doctoral programs creates intellectual capital with widespread effects. After receiving their degrees, most graduates of the DBA and Ph.D. programs go on to influential faculty positions at HBS and other top business schools.What they have learned will have a direct impact on shaping and influencing the way tomorrow's leaders will change the world. The need for management faculty has never been greater; in recent years, a wave of faculty retirements, combined with a shortage of graduates with advanced business degrees, has created an intense competition among top schools seeking to hire new professors.

In the stories that follow, the Bulletin presents four members of the next generation of business education leaders, a group as diverse in their backgrounds and interests as they are committed to what one student calls "the intellectual hunt."

The Big "Aha": Noam Wasserman
Taking the Game to a New Level: Zeynep Ton
Finding Reason in the Irrational: Ulrike Malmendier
Star Search: Boris Groysberg
On the Case: First-Year Professors Develop a Taste for Teaching


The Big Aha

When Noam Wasserman enrolled in the MBA Program in 1997 (from which he graduated in 1999 as a Baker Scholar), he never envisioned a future in academia. It did not take long for his plans to change. "During spring semester of my first year, I reflected on what I had seen in the classroom," says Wasserman, who arrived at HBS with five years of experience at American Management Systems (AMS), an international business and IT consulting firm. "The impact the professors were having on my sectionmates and me made a deep impression." Wasserman recalled that one of the most enjoyable aspects of his work life had been helping new recruits at AMS develop leadership skills. "I realized that my professors were doing what I liked to do, but with all the people in a section, the impact was multiplied eighty times," he observes.

During his second year in the MBA Program, a research project on CEOs with Professor Nitin Nohria confirmed Wasserman's decision to apply to the Ph.D. program in organizational behavior. "I love the intellectual hunt behind research," he says. "It's a process of trying to understand elements that initially don't seem to have any relation to one another. When they come together, it's a big ‘aha.' You want to be able to craft that insight in an understandable way and communicate it to help people comprehend a world that may seem very scattershot."

Now in his third and final year of the program, Wasserman's research interests have broadened to include management dynamics in entrepreneurial and venture capital firms. Despite attention from the media, relatively little hard information exists on these companies; Wasserman is using data collected from two hundred start-ups over the past two years to consider issues such as compensation dynamics, board evolution, entrepreneurial finance, and founder-CEO succession.

He's also turning the spotlight on venture capital firms. "VC firms have an interesting organizational structure compared with other organizations - more of an upside-down triangle than a traditional pyramid," notes Wasserman. "They have a lot of senior people at the top and very few junior people below them. Several other industries that started out that way - such as investment banking and consulting - have evolved into big, pyramid-shaped structures. Will VC firms go that route? If so, what will the pattern of transition look like, and what can we learn from it? And how will it affect the career paths of individual venture capitalists?" Analyzing this process has put Wasserman hot on the trail of many more areas of inquiry that promise to expand the general perception of the VC firm as an anonymous, black-box entity linked to a start-up with a dollar sign.

A Los Angeles native, Wasserman, 32, met his wife (now a practicing obstetrician) as an undergraduate at the University of Pennsylvania, where he received joint degrees in management and finance and computer engineering. The couple now live in Brookline with their five children, who range in age from one to nine. When asked about outside interests, Wasserman smiles and gives a one-word response: "Kids." Arriving on campus at 8 a.m. and returning home for dinner at 5:30, his strategy is to complete the day's work between those bookends of time and reserve evenings for family. "I love what I do," Wasserman says modestly. "I just try to keep as many eggs in the air at a time without having them splat on the pavement."


Taking the Game to a New Level

Zeynep Ton just wanted to play volleyball. So the teenager convinced her parents to let her move from Bursa, Turkey, to play in a more competitive volleyball league in Istanbul. There was a trade-off, however: The athletics were great, but her new high school was not.

"I was frustrated that I couldn't get a good academic experience," says Ton, who expects to complete her DBA in technology and operations management this year. "Then I learned that if I went to college in the United States, I could have both academics and athletics."

Ton applied to colleges based on their rankings in Volleyball magazine. In 1993, she enrolled at Penn State on a full athletic scholarship, where she excelled in her chosen major of engineering. "I loved that I had the opportunity to play volleyball and study. I realized, if I love the academic environment so much, why not continue this as a career? When Harvard accepted me, I knew that was it."

"I realized, if I love the academic environment so much, why not continue this as a career?"

Ton credits her faculty advisor, Associate Professor Ananth Raman, with helping her to thrive in the challenging environment at HBS. "Since I came right from college to the DBA Program, I needed guidance in framing my field of interest," she says. "Ananth has been a great friend. It makes me feel so good to know that my advisor is interested in my career and my well-being."

Raman and Ton have been studying retail operation, focusing on an operational execution issue - namely, misplaced products at retail stores - that is costing retailers millions of dollars in lost sales and customer goodwill. Ton is currently working with a nationwide chain to estimate the magnitude of this problem and identify its drivers. "We have found large and systematic variation in performance in 250 stores of this retailer, which is surprising because the stores are owned and operated by the same company, have the same IT systems, and have the same incentives for employees. Much of my research is focused on identifying the sources of this variation." She has found that problems in human-resources management practices, as well as some structural issues, are to blame. Ton's findings contributed to reducing this problem by 22 percent from 1999 to 2000 at her research site.

Determining her research focus was the most challenging aspect of the program, Ton notes, because "your first impulse is to take on very broad issues. It's difficult as a doctoral student to focus on a specific area and understand it completely."

Now that she's nearly finished and looking for a faculty position, Ton says she knows she chose the right path in more than just the professional sense. "I've taken some great classes and had wonderful professors, but the friendships here made it really special for me. I've learned so much from everyone in the program."

Volleyball isn't a big part of her life anymore, but it did lead Ton to one other momentous change. When she first arrived at Soldiers Field, she looked for a game at the HBS Volleyball Club. It was there that she met a player named Carlos Gonzalez (MBA '98). They were married in Turkey in 1999.


Finding Reason in the Irrational

The year before she enrolled in the Ph.D. program in business economics, Ulrike Malmendier was immersed in the history of Roman law, a subject she grants is somewhat atypical for a business school academic. Having already completed undergraduate degrees both in economics and in law at the University of Bonn, she went on to receive her doctorate in law there after two years of practical experience at Deutsche Bank. As it happens, the connections between ancient Rome and today's business world are stronger than one might think. "The topic of my thesis is actually very hot in business economics today. I analyzed the effects of large-scale privatization in the ancient corporate world. Roman society was highly privatized - much more than even the United States today," remarks Malmendier. "During the times of the Republic, the Romans had a very small government, which outsourced all kinds of economic activities. They even took bids for services such as tax collection and street construction. The companies that formed in the process had many elements similar to the modern corporation."

The Cologne, Germany, native says she was drawn to the HBS program for its combination of rigorous training and applied research. "My field of interest is the intersection of behavioral economics and the theory of the firm, incentives, and corporate finance," she says. "It involves taking the biases and irrationalities of people seriously and trying to incorporate them into economic models."

Most recently, that focus has led Malmendier to examine the effect of overconfidence on corporate investment decisions. Corporate investment, she notes, is often more driven by available cash flow than opportunity, which doesn't follow logically - if cash isn't available for a prime investment opportunity, external financing should be obtained for that purpose. Reason,however, doesn't always rule. "If the CEO is overconfident, he will feel undervalued by the equity market, and an equity issue will seem too expensive," she observes. "An overconfident CEO will therefore end up investing less than he would like to - unless internal cash flow is available."

Malmendier tested the theory by constructing a measure of overconfidence, using the indicator of when a CEO exercises his or her stock options. She found a strong connection between executives who habitually hold their options longer and continue to buy stock of their own company - suggesting their belief that the stock has nowhere to go but up - and the CEOs whose investment activity is linked to available cash flow.

With her degree expected in June, Malmendier is in the midst of applying for faculty positions. She hopes to stay in the United States. "At universities in this country, the interaction between students and professors is much more direct. I also really like the fact that my being a foreigner doesn't matter so much. People are more interested in what I'm doing and what kind of person I am."

Malmendier admits missing friends and family in Europe, however, as well as the lifestyle of its cities. "I love the atmosphere of the restaurants and little shops in the historic districts there, but on the bright side, I don't have much time as a doctoral student to sit in cafés," she laughs.


Star Search

Boris Groysberg can tell you how stars develop, what makes them move, and the reasons they fade, without peering through a telescope. That's because his stars aren't heavenly bodies but high-performing investment
bank analysts.

"My dissertation examines how firms can achieve competitive advantage in a knowledge-based industry," says Groysberg, who will receive his DBA in policy and management in June. "I'm specifically interested in ‘star' knowledge workers - in this case, the analysts in investment banks." He and Associate Professor Ashish Nanda have spent three years building a proprietary data set and examining how investment banks leverage their analysts.

The main question that Groysberg studied was whether or not star knowledge workers can move from firm to firm and remain high performers. "It was like being in search of Bigfoot - the professional knowledge worker whose performance does not depend on the firm's capabilities and who can move freely between firms," notes Groysberg.

"HBS is a school full of Michael Jordans. It makes you want to produce because you have been given resources, time, and more than enough attention."

He found that, like Bigfoot, this person probably does not exist. In fact, the performance of star analysts often depends not only on how smart or educated they are, but also on the firms they work for. "My research found that star achievers who switch employers show an immediate decline in performance, which persists for at least five years," states Groysberg. "We tend to discount how much effect a firm has on an individual employee. But firms do have a significant impact on worker performance."

Groysberg concluded that firms that are unable to develop their own stars usually need to hire them away from someplace else and tend to overpay them for the level of performance they get. "So basically, if you want to stay competitive, you have to figure out how to develop your own best and brightest," he explains.

Born and raised in the former Soviet Union, Groysberg emigrated with his family to Brooklyn, New York, at the age of 18 and enrolled at New York University to study accounting. After graduating in 1994, he went to work as a financial analyst with IBM's Latin American division for three years, planning all along to go back to school after gaining some work experience.

"Harvard expects you to do research that has certain managerial implications. That was attractive to me - being able to contribute not only to theory but to practice," says Groysberg, who seems well on his way in this regard. He was recently honored by the Strategic Management Society (SMS) with the Booz-Allen & Hamilton/SMS Best Ph.D. Conference Paper Fellowship for his paper on star knowledge workers.

Looking back on his experience at Harvard, Groysberg sees a correlation between his doctoral research subject and the way HBS supports its students.

"I truly believe that if you placed us in a different environment, we would be less successful," he remarks. "HBS has the best faculty in the world - it's a school full of Michael Jordans. It makes you want to produce because you have been given resources, time, and more than enough attention. My dissertation committee spent countless hours with me on my research. I'm very grateful to be here."

On the Case: First-Year Professors Develop a Taste for Teaching

"I've found my lugar en el mundo - my place in the world," remarks Instructor Francisco de Asís Martínez- Jerez (MBA '91). The native of Spain expects to finish his Ph.D. in business economics this spring and has taught the first-year MBA course Financial Reporting and Control.

"It's my dream job," he says. "Harvard offers the best combination of teaching and research, and you couldn't ask for a better group of students." Martínez-Jerez worked as a McKinsey consultant after earning his MBA, returning to Harvard for his doctoral studies in 1996. His early research, which focused on mergers and acquisitions, analyzed the impact of accounting information. The stock market, he found, reacts positively to an open disclosure of a merger, coupled with independent corporate governance. His current research concentrates on Internet stock bulletin boards and their impact on stock market behavior.

This research is the basis for at least one case that Martínez-Jerez used in his class. "Teaching with the case method is extremely challenging," he comments. "I've learned to listen to my students a lot more. They surprise me all the time with new ways to face problems."

Clark Gilbert (DBA '01) agrees. "With the case method, you have to feel the pulse of the classroom. You facilitate rather than control the exchange. I'm convinced it's the best way to learn." This month, the newly minted assistant professor will begin teaching a section of The Entrepreneurial Manager course to first-year MBAs.

To prepare, Gilbert has been refining teaching plans, writing cases, and getting advice from the eight faculty members in his teaching support group. Gilbert says that support is critical, since the case method requires intense preparation. "I spend more than fifteen hours on each case, and then we walk through the analytics
of each teaching plan collectively as a group. The attention to detail is tremendous."

It was this environment and the School's extensive resources that attracted Gilbert to HBS. Formerly a consultant with the Monitor Group, Gilbert now advises companies in the media and technology industries. His doctoral research assessed the newspaper industry's response to the Internet by looking at the new-media ventures of one hundred U.S. newspapers. He found that many newspapers perceived the Internet as a threat and managed it defensively, instead of harnessing its power as an independent vehicle of growth.

Gilbert has won several awards for his work and credits the unparalleled training the School offers. "A lot of business schools train you rigorously, but only within specific disciplines," says Gilbert. "There isn't an equally vested interest in fitting that rigor around actual managerial challenges. At HBS, you pursue problems that matter to real managers."

The appeal of practical research also enticed HBS assistant professor Robert Huckman, who received his Ph.D. in business economics last year. A former principal with Stamos Associates and associate with Booz-Allen & Hamilton, Huckman had consulted to clients in the health-care industry. But the fast pace of project-to-project consulting left him little time for a deeper exploration of the management issues he was addressing. He came to HBS for the background required to tackle in detail the issues he found so fascinating.

"I wanted to combine my work experience with additional exposure to economics and research methods. HBS provided me with an ideal setting in which to do that," he notes.

Huckman's research continues to be focused on the health-care industry - in particular, how an organization's history and structure can affect its adoption of new technologies. Over time, certain technologies can become entrenched, he found, making it difficult for an organization to innovate.

If the intellectual challenges of research initially drew Huckman to the Ph.D. program, teaching the course in Technology and Operations Management has proven to be equally rewarding. "The classroom has been an amazing experience," he says. "When we discuss a case, someone can always offer an analogy from an entirely different sector. It makes the preparation a real challenge, but the ultimate reward comes in hearing what eighty students have to say."

- Margie Kelley

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