In 1914, ten years before he became the founding dean of Michigan’s School of Business Administration, Edmund Ezra Day composed several hundred questions for a textbook in economics. One of them asked:
To what extent do the following determine the success of businessmen?
(c) exceptional native ability
(d) mechanical talent
(e)“capital and connection”
Not many executives in Professor Day’s era had much to say for (b) education. Most still put their faith in the traditional school of hard knocks.
But Day was an innovator. In his early years at Harvard, he and a small cadre of like-minded economists were arguing that business leaders needed more than seat-of-the-pants hunches to succeed in a complex industrial economy. A new era demanded advanced tools of scientific analysis, and to serve that need, leading universities should establish graduate programs devoted to business management.
In Ann Arbor, the ground was ready, thanks largely to Henry Carter Adams. During his long tenure as chair of the Economics Department (1887-1921), the faculty introduced many courses to prepare students for business careers. These included “Principles of Industry,” “The Theory and Practice of Manufacturing Costs,” and “Investment,” as well as courses in accounting, finance and marketing.
So many students were jamming these practical courses that traditional economists had to acknowledge the child they had borne was now dwarfing its parent. Outside the university, too, some smart executives were looking for graduates already trained in business basics.
So, with the postwar boom of the “Roaring Twenties” just beginning, plans got underway for Michigan to follow the example of a few elite peers — Dartmouth, Harvard and the University of Pennsylvania — and establish a free-standing School of Business Administration.
And Edmund Day, a veteran of the business programs at both Dartmouth and Harvard, was tapped to lead it.
At first, the school offered a two-year master’s but not a bachelor’s degree, since a consensus still held that businessmen needed the background of four years in the liberal arts — three if completed in U-M’s own College of Literature, Science and the Arts. (A doctoral degree would be introduced in 1935.)
The tie between economics and business administration remained strong, with Day serving as chair of the former and dean of the latter. The original faculty numbered a dozen, including one bona fide star, William A. Paton, the chief architect of the transformation of traditional bookkeeping into the modern science of accounting.
In the fall of 1924, the new school welcomed its first students into classrooms in Tappan Hall.
Dean Day and his colleagues had to face down skeptics inside the university and out. In corporate offices, many still doubted that classroom learning could build a better businessman. On campus, professors in older disciplines wrinkled their noses at the idea that making money deserved scholarly study.
But business professors soon proved you could raise profits by applying the scientific method to commerce. Accounting and statistics formed a foundation on which a whole superstructure of business analysis could be built. At the same time, students were learning where business fit in a larger social web that included law, government and culture. Case studies predominated. The particulars of specific industries were thought to be better learned after graduation. So at Michigan, “the emphasis of instruction is at all times upon such general phases of management as have wide and important applicability.”
The Great Depression and a Growing Reputation
One day during the administration of Franklin D. Roosevelt, Clare Griffin, the marketing expert who had succeeded Ezra Day as dean, remarked in class that he’d heard just about enough of the New Deal’s sentimental praise for “the common man.”
An FDR loyalist leaped from his seat and demanded: “If we don’t revere the common man, who should we revere?”
Griffin fixed him with a stare and replied in his rich baritone: “The uncommon man.”
It was no easy task to build a business school’s reputation during the Great Depression. In the worst year of the slump, 1931-32, enrollment began to slide. But Griffin and his colleagues — including Margaret Elliott Tracy, a Radcliffe PhD who was the school’s first woman professor — soldiered on, recouping the loss of students even as they raised admission standards.
The school mounted an aggressive response to the crisis in spite of campus-wide retrenchment. Through the school’s Bureau of Business Research, they forged close ties with Detroit’s automakers and many other major firms. They brought executives into the classroom and created a curriculum based on real-world problem-solving. Professors provided crucial advice to policymakers mired in a nationwide banking meltdown. In 1935 a Bureau of Industrial Relations was begun— Michigan’s first step toward a thriving program to educate working executives.
Employers took notice. In 1933, despite the worst hiring forecasts in memory, some 75 percent of new Michigan MBAs found good jobs, many with a hand from U-M professors. One grad who came up empty-handed in Detroit returned from New York with four offers.
By 1940, with the economy revving for war, enrollment topped 200.
Wartime and its Aftermath
In the wake of Pearl Harbor, the Business School converted for war work. With roughly half the usual complement of business students departed for service, some professors took war jobs — Robert Briggs, for one, became a top civilian administrator at the Army’s Detroit Ordnance District, otherwise known as America’s “Arsenal of Democracy” — while others trained candidates for the Navy Supply Corps as well as an influx of women bound for business and government posts vacated by men.
All this took place while the school was developing an ambitious expansion — the bachelor’s degree in business administration, launched in 1942, which in time would become the school’s largest component and an essential part of its mission.
But the upheaval of wartime was nothing compared to what came next. Peace brought a horde of veterans courtesy of the G.I. Bill of Rights. The autumn after V-J Day, 366 students crowded into Tappan Hall’s aging classrooms. By the following spring the number hit 628. In the fall of ’47 it topped 1,000. Asked where all these students were taught, one professor recalled: “Wherever we could find a place to put down some benches.”
And yet “I never had better students,” said Professor D. Maynard Phelps.
The right dean was in place for a season of explosive growth. Russell Stevenson, a Michigan BA and PhD, had been appointed in 1944 after building the business enrollment at the University of Minnesota to 1,000, then one of the biggest programs in the field.
Even before the war’s end, Stevenson had begun to beseech U-M’s regents for more space. They endorsed construction of a new home for the Business School, but the state legislature pleaded poverty. So Stevenson asked the school’s alumni and friends to increase the pressure on legislators. Soon he came back from Lansing with enough emergency funding to get the bulldozers moving. In the fall of 1948, professors and students flooded into state-of-the-art quarters at the corner of Tappan and Monroe Streets, a spacious home that looked much like an office building, complete with a nine-story tower.
“This move marks the end of the development period of business education,” Stevenson declared. “It has…reached a state of maturity.”
Business in a Time of Social Upheaval
Hard times had forced Floyd Bond to drop out of U-M in 1932. For a time he helped his father raise potatoes on the family farm in Pontiac, Mich. Finally he saved enough to get back to Ann Arbor, where he worked his way to a hard-won BA in economics, then a PhD.
That training in toughness would serve him well as dean in the 1960s and '70s, when radical students challenged the Business School as a symbol of “the establishment.”
Taking over in 1960, Bond inherited a revamped curriculum. The BBA now provided a general background in economics and business, while the MBA trained specialists. That required a bigger faculty and many more courses, from retail and real estate to investment banking, actuarial science, business history and hospital administration.
But with the Vietnam-era draft looming, even highly trained MBAs faced uncertain job prospects, and the threat of student upheaval, even violence, charged the atmosphere on Monroe Street. “It was a traumatic time,” Bond said later. “We didn’t know if our ‘house’ would be there when we came home.” In the end, the school endured nothing worse than a few smoke bombs.
Bond’s steady stewardship brought expansion at home and away. Executive education courses were extended to cities across the state. Ford Foundation grants allowed the creation of an Institute for International Commerce. When state funding lagged, the dean spearheaded drives to raise private funds for the construction of a new assembly hall and the Paton Accounting Center.
Bond left the deanship in 1978 with the school in sound shape. But it was about to enter a harsh era of limits.
Investments and Returns
It didn’t hurt Michigan’s reputation that the search for a new dean was headed by Professor Paul McCracken, not long past his term as chair of the president’s Council of Economic Advisors. But when McCracken sat down to interview a soft-spoken Oklahoman about the job, he found himself answering more questions than he was asking. Where were the Business School’s weak points? What were its plans for growth? How high was Michigan shooting?
In fact, that was just what Michigan wanted — somebody to shoot high — and Gilbert Whitaker, a business economist, soon had the job.
He had hardly begun when the bottom fell out of Michigan’s auto-dominated economy in the early 1980s, and the state’s universities suddenly faced draconian cuts in funding. U-M slashed budgets across the board.
Whitaker cut where cuts were possible. But mainly he went on offense. In a short memo refined through weeks of conversation with faculty and other constituents, he declared a simple goal: Michigan was going to be one of the top three business schools in the U.S. by 1990.
How about top five? someone said. Wouldn’t that be more realistic?
“Well, if you say top three and miss it,” Whitaker replied, “you might still be in the top five. It’s easy to sell out if you don’t have high aspirations.”
It wasn’t going to happen with public dollars, not in the 1980s. So in two years, Whitaker’s fundraisers doubled private giving to the school. Not bad, the dean said, so let’s raise $15 million more. The final tally was $17 million, enough to pay for a new library and a major expansion of executive education, including a new classroom center and residence.
Beyond bricks and mortar, Whitaker invested heavily in human and intellectual capital. Pioneering professors were hired and encouraged to break new ground in research. Long isolated from other U-M departments, the Business School forged 17 joint-degree programs with units ranging from Public Policy to Natural Resources to Chinese Studies. Enrollment doubled to 600 undergraduates and 1,500 graduate students — the most culturally diverse group of MBA students at any U.S. business school.
By 1990, the Business School was appearing at or near the very top of several national rankings. By then Whitaker had been named U-M’s provost and vice president for academic affairs, in part because he seemed to have propelled the Business School to the top without making a single enemy.
“I don’t yell or shout,” he once said. “I just keep pushing.”
A New Approach to Business Education
One day in the early 1990s, students brought Dean Joseph White a T-shirt they’d just designed. On the front was the Business School’s logo — with a big asterisk next to it. The back said:
* Subject to change without notice
White loved it. Innovation had become the school’s watchword. The Iron Curtain had collapsed. A truly global economy was taking shape, and White was pushing a doctrine of continuous improvement. Reforms in the curriculum could not simply occur and then stop; they had to roll with the changing world.
If Gil Whitaker had provided the human and physical hardware of a great School of Business Administration, White and the faculty now fine-tuned its intellectual software. The centerpiece was the Multidisciplinary Action Projects (MAP) course.
The idea was to put MBA students through their preparatory courses, then send them out to local, regional and multinational companies, where they would apply their new knowledge in seven-week special projects. It started as an experiment with just two of the school’s six MBA sections. But students in the pilot sections talked so much about MAP that the other four sections demanded the MAP curriculum, too. It became the core of the MBA program, and Michigan was soon recognized as the nation’s leader in curricular reform.
The faculty was more determined than ever to instill a global perspective in every course. That emphasis soon fostered the International MAP, or IMAP, which sent Michigan MBAs to help companies around the world. They helped business incubators in Israel. Whirlpool based its central European strategy on recommendations developed in a U-M IMAP.
The school’s increasing sophistication in global business was matched by a growing understanding of the need to tap the broadest possible pool of talent among prospective students and faculty. Under Deans Whitaker and White, with particular help from Judith Goodman, assistant dean for admissions and student services, and Professor Alfred Edwards, U-M recruited the most diverse student body of any accredited MBA-granting school, and in 1993 it was named the best school in the U.S. for black business students. By 2000, nearly half of BBA students were women, as were more than a quarter of MBA students. Michigan and Harvard now led all their peers for the highest number of women faculty.
The school’s vaulting reputation brought new opportunities, often thanks to the generosity of private donors, many of them Michigan alumni.
The school’s global reach was extended by the founding in 1992 of the William Davidson Institute (WDI). It was the brainchild of a 1947 business school alumnus whose success as a Detroit manufacturer — and his frustrating attempts to expand in the former Soviet bloc — led him to envision efforts to help emerging nations embrace free markets. In the decades to come, WDI’s influence would be felt on every continent.
In 1995, another Michigan-based industrialist, Joel D. Tauber, endowed the Tauber Manufacturing Institute, a joint project with the College of Engineering to prepare students for manufacturing careers. A year later came the Erb Environmental Management Institute, a pioneering collaboration with Michigan’s School of Natural Resources and Environment. The Samuel Zell and Robert H. Lurie Institute for Entrepreneurial Studies, established in 1997, fostered risk-takers through the student-run Wolverine Venture Fund, the first of its kind in the world. That fund has since been joined by several other student-run funds, all operated under the auspices of the Zell Lurie Institute.
Those major gifts brought far-reaching benefits. But the next one would be truly transformational.
A Transformational Gift
In 21 years at the Harvard Business School, Robert Dolan had become one of the world’s leading experts in the arcane field of pricing. In December 2003, as Michigan’s new dean of business, he was pondering the trickiest pricing problem of his career.
He was sitting in the Manhattan office of Stephen M. Ross, a Michigan BBA who had built a great fortune in real estate. Ross, Dolan knew, was capable of the largest gift in U-M history. The business school at Ohio State had been named for Ross’s uncle, the Detroit industrialist Max Fisher. Now Ross was asking how much it would cost to put his own name on Michigan’s Business School. Would $50 million be enough?
Dean Dolan had done his homework. He knew that a brand new building, a critical need for the Business School to reach a higher level, would cost far more than that.
“I sat on his couch,” Dolan said later, “and I’m thinking to myself, ‘I can’t believe what I’m about to do.’”
No, the dean told Ross. Naming Michigan’s Business School was worth twice that much.
Ross laughed and called to Steve Blau, another alumnus of the school and president of Ross’ Related Companies: “Hey, Blau, come here! You won’t believe these guys!”
Getting Ross to “yes” took months of talking and a crucial letter from the dean.
“I can’t give you an ‘economic rationale’ for a gift like this,” Dolan wrote to Ross. “I can, however, assure you that a gift of this magnitude will propel the school into a new era of greatness. Truthfully, it comes down to a simple fact: This would be an incredible, inspirational act of generosity on your part.”
The historic gift of $100 million was announced in the fall of 2004. The 270,000-square-foot, LEED-certified building that arose to house the Stephen M. Ross School of Business was not only an architectural masterwork but an ideal facility for business instruction, with tiered and flat classrooms, faculty offices and inviting spaces for group work surrounding a lovely Winter Garden.
At the end of the day when Ross’ gift was announced, the donor and Dolan bumped into a crowd of business students who broke into an impromptu chorus of “The Victors.”
“It was incredible,” Ross said later. “At that moment, if they’d have said, ‘Hey, gimme another hundred!’ I’d have said, ‘OK!’”
Ten years later, he did exactly that, doubling his original gift to remake the remaining buildings on the business campus and thus create a complex for business teaching and research that is arguably unmatched anywhere.
Meanwhile, Dolan continued the expansion of offerings that had been going on for many years. Since 1983, BBA students had been able to add a Master of Accounting degree to their education. Since 1998, the MAcc had undergone substantial growth as a stand-alone program. The flagship Full-Time MBA Program was joined by an Executive MBA, Global MBA, Evening MBA, and, in 2010, a Weekend MBA that allowed students to earn a degree in two years while working full time.
Dolan’s era also saw greater investments in hands-on learning for business students. The MAP course, a signature element of the Full-Time MBA program, expanded to the school’s other MBA offerings, while the action-based philosophy penetrated all the school’s degree programs.
Susan Ashford, associate dean for leadership development and the Executive MBA, led in creating the Ross Leadership Initiative (now the Sanger Leadership Center), which made leadership training a priority of the MBA program. Key elements included the Crisis Challenge, in which students worked through a simulation of a fast-changing business crisis; and, later, the Impact Challenge, in which newly arrived first-year MBA students worked on a project to make a difference in challenged communities in metropolitan Detroit.
Thriving in Turbulent Times
Dean Alison Davis-Blake, the school’s first female dean, arrived at a very turbulent time for business schools. The financial crisis that preceded the Great Recession raised questions about whether business school graduates created value for society. The recession had hit Ross particularly hard financially. Applications to MBA programs were declining worldwide, and the news was filled with articles questioning the relevance of an MBA in a world with many more entrepreneurs and fewer large firms.
To thrive in this environment, the school needed to build on its strength in action-based learning to develop globally adept leaders who could use the power of business to create value for shareholders and society. To develop these kinds of leaders, Davis-Blake introduced important innovations in all of the school’s degree programs. The BBA program began with a new required course entitled “Business and Society: The Positive Difference.” MBA orientation started with the Impact Challenge, in which the students worked with the Detroit community to develop solutions for pressing problems.
Continuing the tradition of Deans White and Dolan, Davis-Blake created new opportunities for students to learn by doing, including the Desai Accelerator, the Zell Founders Fund to support graduating students in launching their own ventures, a venture fund for undergraduates, and a real estate fund. Under her leadership the Center for Social Impact was founded and The Center for Positive Organizations created Magnify, where students worked with companies to develop workplaces practices that brought out the best in their employees.
To provide opportunities for students to become more globally agile, Davis-Blake created 22 new global partnerships, increased the proportion of global MAP projects to 50 percent, and quadrupled the number of BBAs participating in global experiences. She also created the India and China Initiatives to bring together and expand Ross activities in those regions.
The newly created Sanger Leadership Center developed experiential activities to support students in developing the character and skills required to thrive in an increasingly complex and dynamic global business environment.
The school was a rewarded for these efforts by a 32 percent increase in applications during Davis-Blake’s tenure.
Because globally adept leaders must work effectively with many different kinds of people, Davis-Blake placed special emphasis on diversity. She hired the school’s first director of diversity and created the school’s first strategic diversity plan. Enrollments of both women and under-represented minorities increased; the last MBA class recruited under her leadership was 40 percent female, a record for Ross. The Och Initiative for Women in Finance and Women who Launch, an initiative focused on creating gender equal entrepreneurial systems, were founded. Davis-Blake hired 30 percent of the school’s tenure track faculty and Ross once again led all business programs in the proportion of female faculty. In 2015, the school received the Higher Education Excellence in Diversity Award.
The generosity of school’s donors supported many of these initiatives. Davis-Blake collaborated with faculty and staff to raise over $300 million to support critical priorities. Sam Zell and Stephen Sanger made signature gifts to support entrepreneurship and leadership development. Stephen M. Ross provided a second $100 million gift to create technology-enhanced classrooms and new spaces for recruiters, career services, admissions, and student experiences. His generosity, along with the generosity of his colleague Jeff Blau, allowed the school to completely reconstruct Kresge Hall and to build Jeff T. Blau Hall.
Under Davis-Blake’s leadership, the school’s faculty and staff joined together in an extraordinary effort that put the school on a solid financial footing and also created some internal resources to fund innovation.
The school’s next leader would build this foundation and usher in an era of unprecedented creativity, innovation, and global impact.
New Leadership, New Goals
In May 2016, the regents asked Scott DeRue, an expert in private equity and management consulting, to lead the School. DeRue, who had served Ross in multiple roles since 2007 — professor of management, associate dean for Executive Education, director of the Sanger Leadership Center — became Michigan’s ninth dean of business administration.
Holding the titles of Edward J. Frey Dean and Stephen M. Ross Professor of Business, he quickly announced his commitment to three core priorities: the development of big, bold ideas that can change the world; doubling down on Ross’s commitment to experience-driven business education; and enhancing the school’s partnership with its alumni.
DeRue believes that action-based learning, pioneered at Michigan, remains a key factor in differentiating Ross from its competitors in the top tier of business schools. He has vowed to develop ABL’s potential even beyond its substantial accomplishments to date.
A Bright Future
Near the start of her service, Dean Davis-Blake had declared the School’s mission statement in a single sentence:
“At Ross, we develop leaders who make a positive difference in the world.”
As Ross looks forward, that remains its compelling purpose.