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It is probably inevitable if you work in Silicon Valley that the entrepreneurial bug will bite sooner or later. For Garth Saloner, that moment came in 2001. Up until that point he had been a professor at Stanford University’s Graduate School of Business for more than a decade.
At the time, the tech bubble that had engulfed the Valley was deflating fast. “My timing was impeccable,” Prof Saloner says now. “Only an academic would decide that the time to take a couple of years [off] was after it had all come down around your ears.”
The line, delivered with a strong undertone of his native South Africa that he left more than three decades ago, is ripe with the self-deprecating charm that surfaces when the conversation turns to anything personal. “I made modest amounts of money – in aggregate. You win some and you lose some,” he says.
An economist by training, Prof Saloner decided to study electronic commerce as the dotcom boom took off, establishing the school’s Center for Electronic Commerce and Business two years before his sortie into the business world. But his plan – to work with a number of start-ups as a boardroom adviser – flopped when he discovered his influence beyond academia was limited. “With early-stage [companies] it’s the people who put in the money who call the shots in the end – probably as it should be.” That made his own role “interesting, but not a long-term career path [and] nowhere near as varied and challenging as being in the university, so I came back”.
Now, Prof Saloner, who became dean of the business school last September, has had another taste of a pronounced financial downturn. A small school that admits only 370-380 MBA students a year, Stanford is far more exposed than most to the vicissitudes of the financial markets. Roughly half its income comes from alumni, either through direct donations or from its endowments funds.
“Our endowment took a hit,” Prof Saloner says. Like Harvard and Yale, Stanford pursued an investment strategy with its endowment, something that has “served us very, very well if you take a long-term view – though in the short term you have a bigger hit than some. The income that comes [from] that is wiped out in a flash.”
However, the new dean has at least had some fortunate timing. It fell to his predecessor, Robert Joss, to deal with the immediate budget shortfall by cutting staff. Significantly, an ambitious construction project that will see the school rehoused in purpose-built facilities – the $350m Knight Center, named after Phil Knight, founder of Nike – was already largely financed before the downturn.
The smaller classrooms and more flexible spaces of this new development complement a curriculum overhaul that the business school embarked upon in 2007, based on a study led by Prof Saloner. The aim, he says, was to move away from the traditional teaching of basic business disciplines and to focus on personal development and leadership training.
Had he foreseen the financial turmoil to come, would the school have taken on such big commitments?
“I’m glad we did – those are big strategic things for us. It would have been harder to do had we known the extent of the financial reality. But having done it, we’re much better for it.”
Asked if the school plans further curriculum adjustments to reflect lessons learnt during the crisis, he adds: “For the most part the changes we had made before the crisis were those we would have made in response to the crisis. I’m going to say we were prescient – probably a bit lucky.”
The new course partly reflects Prof Saloner’s personal emphasis on the value of independent judgment and analytical thought. He believes the absence of these qualities was behind the meltdown on Wall Street.
“As a management educator, you’re disappointed that so many people did not look below the short-term trends or the perceived wisdom.”
That failure, he concedes, is a result of the “group-think” that can permeate business, regardless of how intelligent or well trained the individuals. “It stems from an unwillingness to think for yourself and go below the surface of whatever the conventional wisdom is on the subject.”
Prof Saloner now teaches a class on critical analytical thinking – a subject all students must take. So does he think, when confronted with the reality of business failure, that the job of a school such as his is only to teach students to exercise independent judgment, rather than focus on issues of personal ethics?
“I don’t make that distinction,” he says. “It’s about doing critical thinking through a lens of principles. We can’t teach [students] an ethical position.”
Prof Saloner’s other passion has been to bring a broader international perspective to the school. Under a programme of international study he introduced, students have been on visits to countries mainly in the developing world – several of which he has led himself. Those trips fit a world view that owes something to a life spent largely outside his home country. But he clearly feels most comfortable back at Stanford.
“I’m enormously comfortable in Silicon Valley and California,” he says. Yet even given his time spent in the US, the draw of this year’s Football World Cup will see him heading back to his birthplace. “Part of me is still South African,” he says.