Out of the Gobi

by Weijian Shan

  By then I had received a few other offers as well, but I knew my choice would come down to those two schools. I still knew little about either, and even less about the cities of Philadelphia and Boston. But to me, it was more of a decision to choose where to work than where to live. I thought our family would grow to like any American city, as we did San Francisco, Berkeley, and Washington, DC. I was wrong, but I would not know until much later.

  I decided to visit both schools again. I went to Philadelphia on March 15. The weather was beautiful. After visiting the campus, I walked around the city, admiring the rowing crews racing on the Schuylkill River and the museums by the riverside. I found it all quite pleasant.

  Then I went from Philadelphia to Boston, where it was much colder. The next day, March 17, was Saint Patrick’s Day. It was the first time I’d heard of the Irish day of celebrations. I attended a lunch at MIT’s Faculty Club. In keeping with the Saint Patrick’s Day tradition, everything was green: green tablecloths, green napkins, green décor on the walls. If you want to etch a special event into memory, it helps to use a dramatic color scheme. To this day, I still remember how it looked: green everywhere in that sun-filled dining room.

  Among other faculty members, Don also brought me to visit with Professor Franco Modigliani in his office. He won the Nobel Prize in 1985 for his life-cycle theory of savings, among other things. I met with Professor Lester Thurow, Sloan’s incoming dean. I had heard Professor Thurow speak once, back in California, and found him to be an impressive, powerful, and eloquent lecturer. Someone told me that he also had the nickname “Less Thorough,” which I suppose was how academics pulled each other’s legs.

  The Wharton School had its own share of Nobel laureates. Professor Laurence Klein received his Nobel Prize in 1980 for his work creating computer models to forecast economic trends.

  As I was visiting the two universities, the offer packages were also sweetened. Both schools offered me an endowed position, or “term chair.” An assistant professorship came without tenure, and therefore the chair was only for the term of the appointment. But it did come with supplemental pay, which I greatly appreciated.

  In all, I was overwhelmed by how the faculty members of the two schools went out of their way to recruit me. It was humbling, and in fact a little terrifying. I knew I didn’t deserve all this attention, and I was fearful that no matter which institution I picked, I would end up disappointing them and embarrassing myself. I also knew I would feel bad about having to turn either one down.

  I was beginning to appreciate why US institutions of higher learning were able to attract the best talent from all over the world. Many non-Americans had received the Nobel Prize for the work they had done in US institutions. In 1980s, 35 percent of US Nobel laureates were foreign-born. It was not, I realized, because the United States was such a rich country—Japan and Europe were no less rich. It was because of the equality and respect you felt, and the competition for talent in the US system. Later in my career, when I was considering a teaching position in Europe, a few European professors told me that as an Asian I could never hope to make it in European academia. I never felt there was any limit how far a foreigner could go in any profession in America.

  I was keenly aware of the pervasive racial issues in the United States. Perhaps I was not completely in touch with these things, but honestly I don’t remember a single racist incident directed against me in all the years we lived in the United States. By and large, I found Americans to be open, tolerant, and friendly. In almost every top-rated US university, the faculty was made up of a large variety of races, religions, and ethnicities: Jews, Indians, Chinese, and Europeans. Indians and Chinese were particularly disproportionally represented in physical sciences and engineering. The student populations at these schools were the same. It was in the United States where I first felt not only that the man makes the system, but that the system also makes the man. A good system unleashes the potential in people, whereas a bad system suppresses it.

  Years later, I was walking on the street in Beijing with Jamie Gates, an American colleague. It was a Sunday, but at a construction site we passed, the builders were hard at work. He asked me, “Why do the Chinese work so hard?” I think the Chinese have always been an industrious people, but China as a country only began to grow after the system changed.

  Of course, none of this helped me make up my mind between Wharton and MIT. Professor David Teece suggested that I go to Wharton: it was bigger and had more resources, as well as a robust international exchange program that I might find interesting. “Besides,” he said, “it’s an Ivy League university.”

  “Why does that make a difference?” I asked. I did notice that the walls of some buildings at Penn were covered by ivy, whereas MIT’s walls were generally bare. But aside from their vegetation, traditions, and history, I knew that there wasn’t much difference in terms of quality. MIT and Stanford were considered among the best schools in the world, even if they weren’t in the Ivy League.

  Sloan was a smaller school with a couple of dozen faculty members, whereas Wharton had probably about three or four times as many. Wharton was also better off financially, I was told, with its own funding sources and endowments, while Sloan was dependent on MIT’s budget. These resources were important, not only because they allowed the school to give faculty members slightly better pay, but also because they allowed for more research grants. In the “publish or perish” world of academia, the availability of financial resources for research was critically important.

  In 1983, Wharton had made history by becoming the only major US business school to appoint a dean from outside academia. A decade earlier, at age 37, Russell “Russ” Palmer had become the youngest person to lead a “Big Eight” accounting firm when he took over as managing partner of Touche Ross (now known as Deloitte). Dean Palmer did not have an academic background or an advanced degree, but he was an accomplished and successful businessman and a proven leader. Among other achievements during his tenure, he successfully raised tens of millions of dollars in endowment money for Wharton, an accomplishment envied by other leading schools—several of which subsequently also gave their top jobs to business leaders. That kind of practical thinking appealed to me.

  Still, it was a difficult decision. One day in late March I rang up Professor Janet Yellen in Berkeley to ask for her advice but her husband, George Akerlof, picked up the phone. George, who had received his PhD from MIT, was emphatic. “Nobody turns down MIT,” he said.

  Then Professor Yellen came on the line. Her advice was a bit more balanced. She carefully analyzed the pros and cons of both institutions. And I took careful note of what she said. But after the call, weighing all the pros and cons, I still didn’t know what to do.

  Faced with conflicting advice, I decided to put my academic training to work to help me reach a decision. Using a methodology known as decision tree analysis, I decided I would sketch out a chart showing all the possible outcomes of each choice and weigh them according to the probability and benefits of each one.

  By then I’d become good friends with Bruce Kogut, the Wharton professor who took me to lunch on that snowy day when I’d first visited. Bruce had a PhD from MIT so he knew both institutions well, although he’d never pressured me to choose one over the other.

  I told him that I was thinking of creating a decision tree to help make my choice. Bruce laughed and asked if I was familiar with another business professor, a man who had made important contributions to the methodology of decision tree analysis. This success had led to job offers from a number of top institutions. Like me, he could not decide which university to pick so he went to his dean to ask for advice.

  The dean said, “You’re the one who came up with this methodology of decision tree analysis. Why don’t you apply it to your own case?”

  “Come on,” the professor said, exasperated. “This is serious.”

  I laughed. So much for decision tree analysis.

  In the end, on March 20
, 1987, Bin and I decided to toss a coin. It landed on Wharton.

  * * *

  We settled in the town of Cherry Hill, New Jersey, across the Delaware River from Philadelphia. I commuted to work on the days when I had classes to teach. The town was primarily known as the home of the Cherry Hill Shopping Center, said to be the first indoor, air-conditioned shopping mall on the East Coast when it was built in the 1960s. It was still the only big mall for miles around. Other than that, though, Cherry Hill was a typical New Jersey town, filled with suburban houses along tree-lined streets. We bought, for about $160,000, a four-bedroom, two-story house with a two-car garage on Greenvale Road. It seemed a bit pricey, but the real estate agent told us to simply accept the asking price. “The housing prices here have been going up for the last 20 years,” he said. “They will continue to go up.”

  Maybe it was because of us, but home prices in that neighborhood stopped rising as soon as we moved in. Bin sold the place 10 years later, for about two-thirds of what we had paid.

  We quickly became friends with many of our neighbors. Cherry Hill had a sizable Jewish population, and when we were invited to dinner at the homes of our Jewish friends, the food was overabundant, and our hosts would not stop serving until they were assured we were beyond stuffed. This of course is similar to the Chinese way of entertaining, except that a Chinese host would never believe you have had enough. I believe the famine and starvation endured by Jewish and Chinese people throughout their long histories must be imprinted on our DNA, and therefore the highest respect for a guest is to feed him so much he can go for a long time without food.

  We joined the Jewish Community Center on Springdale Road, which had a big indoor swimming pool and other facilities. We went there often with our son to swim. The day I signed up for our membership, the lady in the office stared at me with a puzzled look on her face. I put on my best smile and said gently, “What? You haven’t met a Chinese Jew before?”

  Like many top universities in the United States, Wharton was a research institution first, and an educational institution second. So much emphasis was placed on research, in fact, that only a professor’s publications counted toward his or her academic advancement. As for teaching, one was required only to do enough to get by. Harvard, I found, was a notable exception to this rule; Harvard Business School was the only major institution to produce case studies in a systematic way for teaching purposes, which it then sold to other schools. Professors did write case studies at Wharton, but these did not really count toward their career accomplishments.

  Of course, most professors did take teaching seriously. But the teaching load was quite light: usually one class per semester, never more than two. The rest of the time was devoted to research. If a professor could find grant money from somewhere, he could effectively “buy out” of his classes for a semester and concentrate on research alone. This was the advantage of a well-endowed school with a large body of faculty members.

  Between the teaching and the research, I felt being an assistant professor at Wharton was not too different from being a doctoral student at Berkeley. The difference was that now I had access to far more resources, as well as my own research assistants and a tremendous amount of freedom and flexibility. Other than a relatively light teaching schedule, a Wharton professor had complete control over his own time—not to mention the summer and winter breaks, which added up to four or five months a year. A young professor could be easily distracted without strong self-discipline; there were so many interesting things competing for your attention.

  * * *

  The campus of the University of Pennsylvania was in West Philadelphia, across the Schuylkill River from the city center. The Schuylkill was quite scenic, with trees lining both sides of the river and a long row of boathouses on the east bank leading up to the magnificent Philadelphia Museum of Art. Rowing was a popular sport; when the weather was good, sleek rowing shells slid smoothly along the calm river, propelled by the rhythmic movements of their rowers.

  Just northeast of the airport, near the site of the former Philadelphia Navy Yard, the Schuylkill merged into the heavy flowing Delaware River, which separated Pennsylvania from New Jersey. Crossing the Delaware were two bridges named after a pair of the area’s most famous native sons, Benjamin Franklin and Walt Whitman (who was born on the New Jersey side, in Camden). The commute across either of these bridges between my home in Cherry Hill and Penn’s campus only took about 20 minutes, usually without much traffic.

  The campus was quite pretty, with tree-lined paths zigzagging across its green and well-tended quads. I soon realized, though, that the surrounding neighborhood of West Philly was considerably rougher. Just a few blocks from campus, the university buildings gave way to dilapidated row houses. Crime rate was high. Few faculty members chose to live near the school, preferring instead to settle in New Jersey or in the city’s affluent northwest suburbs, an area known as the Main Line. While homes in Cherry Hill were generally modest and similar in style, the Main Line offered homes of many different styles and eras, with big lawns and mature trees. It was also known for its schools, including a number of good colleges such as Bryn Mawr. I preferred Cherry Hill mainly because of the commute: whereas I had a choice of two highways to take me between the town and campus, commuters from the Main Line had to drive through the city, which took considerably longer.

  In comparison with San Francisco and Washington, DC, the greater Philadelphia area offered limited attractions for weekend recreation. Our favorite was the astounding Longwood Gardens, about 30 miles west of the Penn campus. Known also as Du Pont Garden, it was the legacy of Pierre Samuel du Pont, an industrialist and business executive, who in his lifetime served as president of both General Motors and of the chemical company that bore his family’s name. Longwood covered more than 1,000 acres (4 square kilometers) with gardens, woodlands, meadows, water fountains, ponds, outbuildings, and greenhouses, some of which housed exotic plants and horticulture. It was hard to imagine an individual could have accumulated such immense wealth not only to build this spectacular garden, but to also have enough left over for it to be maintained in perpetuity.

  In comparison with UC Berkeley, I found Penn to be somewhat sleepy. There were almost no major campus-wide events at Penn, other than football games, and little interaction between the university departments. At Berkeley, all professors wore casual clothes, even jeans, when teaching classes. At Penn, almost every professor wore a suit and tie. While hardly a week went by without some prominent figure from academia, politics, and culture giving speeches or holding events at Berkeley, I never attended one such event in all my years at Penn. This was probably because Philadelphia was somewhat out of the way for travelers, especially foreigners; a stop on the Amtrak flashing by between New York and Washington. San Francisco was a gateway to the United States and a cultural center of the West Coast; Boston, with its large number of colleges and research institutions, was one of the world’s major centers for academics. New York, of course, was New York. I wondered, had I accepted the offer from MIT, if my family would have enjoyed living in Boston more.

  I taught classes at both the undergraduate and graduate levels. The students came from diverse ethnic backgrounds, and there were also a fair number of foreign students. Penn being an Ivy League university and Wharton being one of the top business schools in the country, just getting in was already a big accomplishment; only the best and the brightest were admitted. Looking at what they had to go through to be accepted, I told my students that I might qualify as a professor, but I was not sure if I would have been able to get in as a student. And I was not kidding.

  Teaching was not hard for me, and I found that my experience as a TA at Berkeley served me well in my new job. Teaching these students was fun but hard work. A lecture might take only an hour to deliver, but it often required hours of preparation to make it a good one. While professors gave grades to students, students also rated professors, at least implicitly, by choosing whether or not t
o sign up for their classes.

  I had learned so much from my students, especially the graduate students who on average had had five to six years of work experience after college. It was humbling to deliver lectures to these students on the topic of management, which was my specialty, even as I had not had a single day of experience in managing a business. The job of a professor was to broaden his or her students’ scope of knowledge and to teach them the tools, methodologies, and ways of thinking that would enable them to make better business decisions. It is like the job of a coach for an athlete. Almost no coach can beat the athletes on his team in their chosen sport. But he can help them excel.

  Nonetheless, in retrospect, lack of real business experience can be a handicap to a business professor. Many years later, after I had left academics for a career in finance, I was invited to speak with a group of MBA students from Columbia University. One of the more successful investments I had led had been turned into a Harvard Business School case study. Some of the students had studied the case and had several questions for me about the deal. They told me the explanation their professor had given them as to why and how the deal had come together. But the explanation made no sense. I knew, because it was my deal. I had to tell the students, “Don’t always believe what your professors tell you.”

  Foreign students typically were not as active as their US peers in participating in class discussions, but they brought perspectives that allowed all to think more broadly about the issues and about how cultural differences mattered when doing business in the international market. In the late 1980s, the rise of the Japanese economy and the Japanese way of doing things were big topics at business schools. The concept of firms having to specialize and build “core competencies” to compete effectively became the established wisdom in management circles. But as American firms specialized and honed their core competencies, the highly diversified Japanese and Korean conglomerates were making significant inroads in the US market. Brands such as Toyota, Hitachi, and Sony became household names, often outcompeting the established US brands. In view of this evidence, should a firm specialize or diversify? To get into a discussion of this question would require more space than I have here, but it is just one of the examples of why it’s so necessary to understand business practices in the context of different markets.