When Adj. Prof. Henry Chesbrough, PhD 97, was researching open innovation in the pharmaceutical industry, he found one pharma that had 7,000 scientists working on tens of thousands of compounds. But the company only licensed out less than one a year, shelving the others.
Although some of those shelved compounds may have succeeded in the marketplace, companies may fear they’ll look bad if a product they passed on thrives externally—a phenomenon he calls “Fear of Looking Foolish” or FOLF. “Our interview subjects admitted to us that FOLF was a major constraint to overcoming this,” Chesbrough writes.
It’s been 16 years since the publication of Chesbrough’s Open Innovation launched a new paradigm for bringing new technologies to market, spurring companies to embrace the power of collaborative business models.
Chesbrough is back to close the loop with his most ambitious work to date. Open Innovation Results: Going Beyond the Hype and Getting Down to Business(Nov. 2019, Oxford University Press) offers a clear-eyed view of the challenges that limit organizations’ ability to create and profit from innovation and practical tools for overcoming those challenges.
The book also provides a roadmap to restore productivity and economic growth for society as a whole—in the U.S. and globally.
David Teece, the Thomas W. Tusher Professor in Global Business, says Open Innovation Results breaks new ground. “It links open innovation not only to enterprise performance but to national economic growth as well,” he says. “There are important insights into the difference between ‘open’ and ‘free’ innovation, along with insightful characterizations of China’s use of open innovation practices and policies.”
Open innovation centers on the idea that companies stand more to gain from making use of external ideas and sharing their own innovations through licensing, sales, partnerships, and spinoffs than from trying to do it all themselves. A famous example: IBM’s development of the PC.
“We wanted to do something small and fast…so it was critical to IBM’s success that we partnered with Intel and Microsoft and created the PC industry together,” said Jim Spohrer, Director of Cognitive OpenTech at IBM and a member of the Berkeley Innovation Forum, a group created by Chesbrough to help corporate managers involved in innovation.
Has the promise of innovation been overhyped?
Chesbrough opens the book with an “exponential paradox” that’s at the heart of our current global economic situation: While new technologies are emerging faster and faster—some say exponentially—economic productivity is slowing. Has the promise of innovation been overhyped?
The real problem, Chesbrough argues, is that promoters of innovation too often chase after “bright and shiny objects,” focusing on the initial stage of development and neglecting the rest of the process. Innovation results depend on what you finish, not on what you start, he says.
“In order to advance prosperity, we must not only create new technologies, but we must also disseminate them broadly and absorb them, which means having the knowledge and skills to put them to work in our business,” Chesbrough says. “Only then do we really see the social benefit of these new technologies, and only then will these measures of economic productivity catch up again.”
Chesbrough shapes these three facets of innovation—generation, dissemination, and absorption—into a new paradigm for managing R&D and bringing new technologies to market. Rooted in two decades of extensive field research, the book is packed with real examples of successes and failures from companies such as Procter & Gamble, IBM, Intel, General Electric, Bayer, and Huawei.
Carlos Moedas, the European Union’s Commissioner for Research, Science, and Innovation, says the book’s complex concepts are easily relatable. “[It’s] a must-read for politicians, policy-makers, and business leaders who want to make a difference by designing the right policies that drive not only the generation of new ideas, but…their broad dissemination and adoption by society,” he says.
About Henry Chesbrough
Henry Chesbrough is widely known as “the father of open innovation”. He has built an international reputation for his insights into the innovation process. The author of six books (translated into 12 languages) and numerous articles, he has received 70,000 citations to his work on Google Scholar. He has appointments at both UC Berkeley’s Haas School of Business and at Esade Business School in Barcelona.
Prof. Chesbrough founded and organizes two external groups of companies that each meet twice a year to discuss challenges in managing innovation: the Berkeley Innovation Forum (32 member companies) and the European Innovation Forum (20 member companies). He has taught at the Haas School of Business for the past 14 years, at Esade Business School for the past 7 years, and taught previously at Harvard Business School for 6 years. He also serves as the Faculty Director of the Garwood Center for Corporate Innovation at Berkeley Haas.
How societal challenges can provide organizations with unexpected growth opportunities will be the theme as innovation leaders gather for the sixth annual World Open Innovation Conference in Rome Dec. 12-13.
Organized by the Garwood Center for Corporate Innovation, the conference, with an expected attendance of more than 200, will for the first time be held at Rome’s Libera Università Internazionale degli Studi Sociali Guido Carli, or LUISS for short. With the theme “Opening Up for Managing Business and Societal Challenges,” the event will include presentations on topics ranging from conceptualizing an open innovation ecosystem to implementing new ideas.
“Useful knowledge has spread so far so fast that no single organization can or should try to do everything on its own,” says Adj. Prof. Henry Chesbrough, conference chair and author of the new book Open Innovation Results: Going Beyond the Hype and Getting Down to Business (available Nov. 28). “The pace of growth in ideas is accelerating, making it even more imperative to open up to participate effectively in these flows of knowledge,” he says.
Francesco Starace, chief executive of Italian energy company Enel Group, will discuss developments in green and renewable energy as the keynote speaker. Other speakers include University of Toronto Professor Anita McGahan and University of Surrey Professor Annabelle Gawer, as well as other leaders in the energy and technology industries.
Conference activities include presentations of 60 papers, 15 posters, and five industry challenges, in which companies test open innovation’s impacts on real-world problems. A panel of a group of energy firms will discuss the companies’ combined activities and resources to invest in energy-related startup firms.
Chesbrough in the early 2000’s coined the term “open innovation,” which centers on the idea that organizations should open themselves to knowledge flows. Companies that pursue open innovation don’t rely on only their own internal expertise, but buy or license technology and business processes from others. This approach speeds up product cycles, spreads risks and rewards with others, and increases product differentiation, Chesbrough says. At the same time, companies that license or sell inventions that they’re not using can generate additional revenue, spread out fixed costs, and validate ideas and technologies that could have been overlooked, he adds.
Chesbrough’s early research concentrated on the technology sector’s pursuit of open innovation. Since then, other industries, including the automotive, chemical, consumer products, and financial services industries have followed. Similarly, some governments and nonprofits have also benefited from open innovation, finding ideas from collaborative partnerships and crowdsourcing to benefit health-care systems and city planning.
“No one organization has a monopoly on great ideas,” says Chesbrough.
In his new book, Chesbrough examines some of the challenges companies face in seeking innovation from others, including cultural resistance to pursuing ideas invented elsewhere and ingrained businesses practices that discourage collaboration. The book also links innovation at companies to national economic growth. All conference attendees will receive a copy of the book.
Nearly 40 years after President Richard Nixon’s historic visit to Beijing, should the U.S. disengage from its deeply entwined economic relationship with China?
That was the topic for a panel of international experts and journalists at “The Great Decoupling and Sino-US Race for Technological Supremacy” held at Berkeley Haas on Oct. 17. Co-hosted by the Financial Times, the Asia Society, and Haas’ Institute for Business Innovation, the event included a panel discussion followed by a spirited Oxford-style debate.
“This is the most important topic of our day. It flows into not just economics, not just technology, but into national security, and into the long-run performance and survival of liberal democracies,” said Prof. David Teece, faculty director Tusher Initiative for Management of Intellectual Capital, in introducing the event. “While the debate tonight is framed as ‘should there be a decoupling?’ it’s already starting to happen. Whether it’s the appropriate course or not is something we’ll need to think about.”
UC Berkeley Chancellor Carol Christ pointed out the important role universities play in this complex landscape.
“The Chinese government has made investment in higher education an essential element of its competitive edge, even as the objective is complicated by state policies aimed at controlling inquiry and expression. Our university, meanwhile, long a proponent of international engagement and with deep, numerous, and varied academic collaborations in China, is now grappling with how we show support for Chinese students, scholars, and institutional partners suddenly cast as objects of suspicion.”
The panelists included:
Robert Atkinson, President, Information Technology and Innovation Foundation
Professor Li Chenjian, Neuroscientist, Peking University
Dan Wang, Tech Analyst, Gavekal
Orville Schell, Director of the Center on U.S.-China Relations at the Asia Society and former dean of the Graduate School of Journalism
“It’s fair to say the world is at an important moment,” Schell said in his introduction. “When the two largest economies are in a state of changed grace, everything that goes on between us—whether it’s business and trade, but also things like scientific research, academic life, and cultural exchange—is under reconsideration, and that’s what’s known as decoupling.”
Li, who lived in the U.S. for 25 years as a neuroscientist at Cornell and Mt. Sinai before taking a post at Peking University, brought a different perspective, pointing out that China is 20% of humanity. “When we talk about decoupling, we are too much into the zero sum game between the U.S. and China…Instead of decoupling, I am more on the side of principled engagement,” he said. “I question the notion that after 40 years engagement has failed. My experience…is I that liberal democracy is winning in Chinese society, quietly, irreversibly, at the grassroots level.”
Are mass power shutdowns the new normal for California, and what does this mean for the state’s businesses and the economy? What is the path forward for the state’s aging grid, and the thousands of miles of power lines strung across fire-prone wildlands?
Professors Severin Borenstein and Catherine Wolfram of the Energy Institute at Haas (See Q&A below) have been fielding a stream of questions from journalists all week after Pacific Gas & Electric determined it could not guarantee the safety of its lines and shut down power to hundreds of thousands of people, including the entire UC Berkeley campus. SoCal Edison also cut power Thursday.
Severin Borenstein
Borenstein on Tuesday banged out a blog post with pro tips for getting through a power shutoff and then spent the day getting ready himself, packing the freezer with ice to add thermal mass. “This is why we live in a modern economy, so we don’t have to spend most of our lives doing these things,” Borenstein, the E.T. Grether Chair in Business Administration and faculty director for the Energy Institute at Haas, told the Los Angeles Times.
Wolfram, whose research centers on energy in the developing world, pointed out that in places with unreliable power such as sub-Saharan Africa, businesses have no choice but to incorporate the cost of backup power into their budgets. Commercial generators can run upwards of $10,000, she told NPR’s Marketplace.
“That becomes essentially like a tax on the economy,” said Wolfram, Cora Jane Flood Professor of Business Administration who also serves as Associate Dean for Academic Affairs and Chair of the Faculty.
Catherine Wolfram
For California’s energy economy, the effects of climate change are throwing things off balance to the point where some things will have to change. Concrete poles may be necessary in windy areas; another possibility is that the state require batteries in new developments that are in high-risk fire areas so power shutoffs to them aren’t so disruptive, Borenstein suggested in another Los Angeles Times story.
Utilities have long sought to balance the cost of preventing wildfires with the need to sell cheap power, said Borenstein, who serves on the board of governors for the California Independent System Operator, which oversees the state grid. “It used to be that balance was viewed as pretty reasonable. With climate change, I think it’s not any more.”
We asked a few more questions of both professors.
Is it possible to gauge the economic impact of this week’s power shutoffs?
Catherine Wolfram: Yes and no. I’ve seen estimates that run all the way from $65M to $2.6B. That’s a pretty wide range, but even the high side is less than 1/1000th of the state’s annual GDP. So, while the outages are troubling, there shouldn’t be any concern that this will set us into a recession. (Update 10/14: Read Wolfram’s blog post estimating economic loss to be about $1B).
I’ve been pointing out, though, that these outages are very unusual because they’re a really long duration—not your typical two-minute to two-hour outage—but they’re not associated with a natural disaster. So, if we try to extrapolate from other multi-day outages, we’re likely conflating the effects of the thing that led to that outage, like Superstorm Sandy, say. With a hurricane, it’s likely that the economic losses reflect both the costs of the natural disaster and the costs of the lost power.
At the same time, there are likely going to be losses that are hard to measure. For instance, I got an email from a colleague who was worried that months of work on an experiment could be lost. Electricity is used for many, many different purposes in modern economies, so it’s really hard to put a precise number on the losses.
People were already angry with PG&E before this shutdown, and now they’re even angrier. Do you think the shutoffs were justified?
CW: It’s really hard to know. The fires last year were devastating, so no one wants to repeat that experience. PG&E has pretty strong incentives right now to be extremely cautious.
Severin Borenstein: Effectively PG&E has a huge financial liability if their equipment starts a fire. On the other hand, the large financial and other costs of shutting off power are not borne by PG&E, but by customers. They do take a reputation hit, but don’t face the same sort of financial downside that would fall on them if their equipment started another fire.
In balance, were they effective?
CW: This involves proving a negative, which is practically impossible. We’ll never really know whether the outages prevented a fire from starting.
As we begin to feel the effects of climate change, what is the path forward for the state’s aging grid?
CW: I’d say that other utilities have been better than PG&E at investing in modern technologies that help prevent fires and give them more visibility into their electricity systems. For example, I’ve heard that San Diego Gas & Electric has technologies that de-energize lines when they sense that they’re falling. Hopefully, PG&E will start investing in things like this.
In honor of Latinx Heritage Month, we’re featuring interviews with members of our Latinx community.
Assoc. Prof. Jose Guajardo (photo: Noah Berger)
Asst. Prof. Jose Guajardo joined the Haas Operations and IT Management Group in 2012 after earning his PhD from the Wharton School. He’s focused his research on business model innovation and business analytics in operations, carving out a niche focused specifically on service business models. He’s delved into the sharing economy and found that peer-to-peer rental services can actually help manufacturers, rather than hurting sales. More recently, he’s found that businesses going solar may be better off leasing rather than buying, and also studied how rent-to-own businesses can best operate in the developing world.
We spoke with Guajardo about his Chilean heritage and how it influences his work.
What are the roots of your heritage?
I was born in Chile. I grew up in the south and went to college in Santiago. I moved to the U.S. together with my wife to do our PhDs at Penn, and stayed in the U.S. since then. This is also how I became the father of three Chilean-Americans, all of them born in Berkeley.
How does your heritage shape your career, your cultural values, or the way that you go about your research and/or teaching?
It has had a significant impact in my research and teaching. Several of my research projects benefit from my connection with Chile (co-authors at the University of Chile, data from companies operating in Chile and Latin America, etc.). Recently, I taught in Spanish at Haas in a management program for executives visiting Berkeley from a wide range of Latin American countries. And frequently in my regular teaching I make reference to the business reality in Latin America.
Video: Fans of Guajardo’s favorite soccer team, Club Universidad de Chile, show their “pasion azul” (passion for blue, or the team’s color) in a game against rivals Universidad Católica.
Is there an aspect of your cultural heritage that you enjoy sharing with others?
Latin America is about passion. Passion with a sense of urgency. Attending a football match or a music event anywhere in Latin America can be an experience. Spending September 18 in Chile can be a good example too, as the whole country celebrates the national independence in quite a unique way. Hard to explain in words, but easy to recognize when you experience it.
Cities are a source of fascination for new Berkeley Haas Asst. Prof. Nick Tsivanidis, and an endless source of data: He’s used satellite images and machine learning to study how Indian slums have changed over time, and cell phone data to look at Syrian refugees’ migration to Amman, Jordan—where they’ve doubled the size of the capitol from 2 million to 4 million.
“By 2050, it’s projected that about 2.5 billion more people will move into cities, mostly in Africa and East Asia,” Tsivanidis says. “There’s a huge opportunity there to get the backbones of these cities right, to get the benefits of urbanization and avoid the demons of density.”
Tsivanidis is the newest member of the Berkeley Haas faculty, joining the Real Estate Group with a joint appointment in the Department of Economics. His focus is using granular data and natural experiments to understand and potentially shape how cities develop. He’ll begin teaching macroeconomics in the MBA program in the spring.
“We’re thrilled to welcome Nick to our real estate faculty,” says Prof. Catherine Wolfram, associate dean for academic affairs and chair of the faculty. “He’s pushing the frontier to deepen our understanding of urbanization in developing economies. These are super important issues, given just how fast these cities are predicted to grow.”
Interest in developing economies
Tsivanidis, who grew up in London, first got interested in development when he taught English at a primary school in Tanzania during a gap year between high school and college. He returned home to study philosophy, politics, and economics at Warwick University as an undergraduate, before heading to Yale University for a master’s in international and development economics.
He got more on-the-ground experience during a year in Rwanda studying the spread of technology among coffee farmers. He then moved to Chicago, spending another year as a researcher before beginning his PhD at the University of Chicago, where he switched his focus to urban economics.
“Having grown up in a city, and seeing the differences between cities and the countryside, it’s clear that cities are the future lands-of-opportunity for these countries,” he says. “That’s what urban economics is all about: Can we measure and understand the benefits of population concentration in cities? How does this trade off with the downsides of density? And how can economic policy help us maximize those benefits and minimize the costs?
For his doctoral thesis, Tsivanidis looked at innovative ways that cities can improve their commuting infrastructure, studying the world’s largest bus rapid transit system in Bogotá, Colombia. Bus rapid transit systems are far cheaper and faster to build than subway systems, and nearly as fast. He analyzed multiple data sources to look at the combined benefits of Bogotá’s system, from more leisure time for commuters to higher land prices along the transit route.
Tsivanidis says he was drawn to Berkeley for the strength of its real estate group, its focus on urban economics and energy economics, and the opportunity to collaborate with exceptional researchers in economics, agricultural economics, the School of Information, and across campus.
He’s also looking forward to exploring the Bay Area’s natural beauty with his wife and one-year-old. “We loved Chicago, but it was very flat, so we’re looking forward to doing a lot of hiking.”
The award, established in 2007, recognizes a strategy scholar who has demonstrated outstanding commitment to PhD and doctoral education, as well as ongoing development of junior colleagues. The awards committee recognized Mowery’s exceptional contributions to the field of strategy through mentoring PhD students, who have excelled to become top scholars of the field.
“In the early 2000s until his retirement, many people (very rightly) regarded David as the top PhD advisor in the econ-based strategy field. Mowery student after Mowery student got top jobs at top schools, and most of us have blossomed,” wrote one former student in the award nomination. ”David did this by carefully reading our papers, giving us very sound advice, and most of all, being someone who didn’t try to influence our direction—unless we were struggling with direction—but instead tried to influence the quality of our work.”
The Irwin Reception included speeches from several of Mowery’s former students, who spoke about the impact he had on their careers. More than (two dozen?) of Mowery’s former students attended.
Mowery, a member of the Haas Business & Public Policy Group, is the William A. & Betty H. Hasler Professor Emeritus. His research contributions are in the areas of economics of innovation and technological change, strategic management of technology and innovation, and international trade policy and technology policy. He has authored or co-authored 19 books and over 100 academic articles in numerous top journals. He has served as assistant to the counselor, Office of the United States Trade Representative, and as a fellow at the Council on Foreign Relations.
Adj. Prof. Henry Chesbrough recognized for leadership in technology management
Adj. Prof. Henry Chesbrough received the Leadership in Technology Management Award from the Portland International Center for Management of Engineering and Technology (PICMET) at a banquet on Aug. 27.
The award honors individual who have provided leadership in managing technology by establishing a vision, providing a strategic direction, and facilitating the implementation of strategies for that vision. It was established in 1991.
Villas-Boas was honored at the INFORMS Marketing Science Conference in Rome, Italy in June.
The Institute for Operations Research and the Management Sciences (INFORMS)
aims to foster the development, dissemination, and implementation of knowledge, basic and applied research, and science and technologies that improve the understanding and practice of marketing.
Villas-Boas has published extensively in competitive strategy, design of marketing organizations, distribution channels, customer relationship management, customer recognition, product line design, and industrial organization. His research has appeared in several journals, including Marketing Science, Management Science, Journal of Economic Theory, RAND Journal of Economics, Journal of Marketing Research, and Journal of Economics and Management Strategy.
Villas-Boas shares the 2019 INFORMS award with Prof. Peter E. Rossi of UCLA.
Prof. Ernesto Dal Bó and Assoc. Prof. Frederico Finan win best paper award
Prof. Ernesto Dal Bó and Prof. Frederico Finan
Prof. Ernesto Dal Bó and Prof. Frederico Finan received the 2019 Williamson Award at the 2019 Society for Institutional and Organizational Economics (SIOE) conference.
The award was given to the best paper of the annual SIOE conference, held June 27-29 in Stockholm, Sweden. The paper, “Economic Losers and Political Winners: Sweden’s Radical Right,” is available here.
The award was named for Nobel Laureate and Berkeley Haas Prof. Emeritus Oliver Williamson.
David Porter, Haas’ first chief diversity, equity, and inclusion officer, started July 15. Photo: Brittany Hosea-Small
David Porter, Berkeley Haas’ new chief diversity, equity, and inclusion officer, believes in questioning the status quo—which happens to be his favorite Defining Leadership Principle.
“I’m not a ‘follow the rules’ kind of guy,” said Porter, who started his job July 15. But before he shakes things up, Porter is getting acclimated with the Haas campus and community, meeting with his team, and setting his priorities.
Porter comes to Haas from the Walter Kaitz Foundation, a media nonprofit, where he served as CEO. He’s also the former director of graduate programs at the Howard University School of Business and was an assistant professor and faculty director at UCLA’s Anderson School.
We sat down to interview him last week.
Tell us a little bit about your background. Where did you grow up?
I grew up in Kansas City, Kansas, although I was born in Nashville. Kansas City was a great place to grow up. It was a large enough city that you had access to all the city stuff, but it wasn’t so big that my parents had to worry about my safety. Of course, it was a different time, so as long as you were in by the time the lights came on, it was all good. My father was a pediatrician. My mother was an assistant dean at the University of Kansas Medical Center, where she ran the medical center’s diversity programs. I have one sister, who’s now a psychiatrist.
When did you first come out to California?
In 1981, I drove cross-country to attend Stanford, where I stayed for eight years. At Stanford, I was very active in the black community. In addition, I was elected president of the student body and later served as the chair of the student senate. These experiences helped shape my understanding of universities and honed my leadership skills. As a student activist, I was the guy who often stood in the middle working to negotiate creative solutions with the administration.
My experience as a leader helped prepare me to serve on Stanford’s University Committee on Minority Issues. This was my first opportunity to think strategically about how one might diversify an organization. The committee was created in response to student protests in the spring of 1987. Its role was to make a comprehensive review of the entire institution. We worked for two years to develop a report which made numerous recommendations, many of which were adopted. That’s where I developed a lot of the skills around exercising influence without authority which I still use to this day.
What drew you to this position at Haas?
What I was really looking for was an organization where I thought the leaders were serious. A lot of diversity roles are what I call “diversity eye candy.” These companies often hire individuals who will come in and make the organization look good, without making real change. When I saw this role, I said to myself, “Let’s go through the process and see.” And as I went through the process, it seemed like Haas was serious with the DEI action plan. The fact that Haas has responded so energetically to the issues raised was impressive. You don’t often see a dean and her senior staff say they’re going to take the next 30 days to dig into a problem and actually take specific actions to address it.
I think it outlined some great first steps. For example, it recognized that the admissions process has some inherent biases which needed to be addressed. It also made some quick changes that were critical to impact the incoming class and it identified additional resources, including the expansion of the DEI team. These efforts helped Haas to yield a critical mass of underrepresented students in the incoming class. It is my hope and expectation that these students will have a great experience which they will be able to share with future prospective students.
What are your first priorities here at Haas?
My first priority is making sure that the students, particularly students of color, have the best experience possible. I don’t want any of them to say, “Hey, this was a bad choice for me.” Part of that will be about meeting with them, being a good mentor, being a good resource. Another part of it will be working with my team to make sure that the environment continues moving in the direction that we’re going: to become more inclusive, to make sure that we put true meaning in the word “equity.”
I’d also like to get a better understanding of all the diversity activities going on at Haas. I’ve been amazed that in almost every conversation I’ve had, I’ve learned of another diversity initiative or an individual who has taken it upon themselves to do something to make this place more inclusive. I want to know what everyone is doing regarding diversity-related efforts and I’d love to create a big flow chart, because I think that we can do a better job of telling that story. I also think that better coordination could take place. All of those people who are doing that diversity work in addition to their regular day jobs—they are instant allies.
What are some of the things that can be done inside of the classroom?
There are lots of ways in which we can make a more inclusive experience in the classroom. For example, including more cases with diverse protagonists or covering diversity-related topics or bringing in more diverse guest speakers. Hopefully, over time as our students see a broader range of individuals who are successful leaders, their view of what a successful leader looks like will change.
Will African American enrollment increase this fall and do you think that will change the campus environment?
We don’t have the final numbers yet, but we’re definitely expecting to have more African American students on campus this fall.
Every class comes in with a different mix. You can never really predict who will step up early on as leaders. But I do think that when you have a more diverse group of folks, there are more ingredients in the mix, and if Haas does a good job of creating an inclusive environment where everyone can come in and feel like they can be who they are and contribute actively, it will be a great experience for everyone.
Former Berkeley Haas Dean Rich Lyons has been named as UC Berkeley’s first-ever Chief Innovation and Entrepreneurship Officer (CIEO).
In this new role, Lyons will work with campus partners to further develop and communicate Berkeley’s rich portfolio of innovation and entrepreneurship activities to benefit students, faculty, staff, and startups. He will also be responsible for developing strategies to raise the visibility of these activities internally and externally and to create high-value partnerships with stakeholders.
“If together we can improve the transformation of Berkeley’s prodigious intellectual product, across the whole campus, into greater societal benefit, then we will have achieved a great deal,” Lyons said in an interview.
Lyons wrapped up his 11 years as Berkeley Haas dean in June 2018, and after a sabbatical year will return to teaching on the finance faculty this fall while transitioning into his new campus role on a part-time basis. He will officially assume the new role in January, 2020.
Berkeley Haas’s academic management journal, California Management Review, has earned a big jump in its impact factor—a measure of how frequently its articles are cited by scholars and a gauge of academic influence among top journals.
The journal’s single-year impact factor is 5.0, and its five-year impact factor is 5.33 in this year’s Thomson Reuters’ Journal Citation Report, a ranking of global research publications. This marks the fourth consecutive year the journal improved its ranking and position among the top business journals. (Last year the journal’s impact factor was 3.3).
A journal’s impact factor is derived from how frequently its articles are cited by scholars in their own research. Citation information is collected and analyzed each year in
“We are very pleased by this increasing recognition of CMR’s editorial mission to publish research that both engages scholars and offers new insights into the practice of management,” said Editor-in-Chief David Vogel, a Berkeley Haas professor emeritus.
One of the most frequently cited recent articles in California Management Review was written by Berkeley Haas Prof. David Teece. “Dynamic Capabilities and Organizational Agility: Risk, Uncertainty, and Strategy in the Innovation Economy” focuses on the concept of agility within established businesses. While organizations are often compelled to transform to remain competitive, Teece asserts that perpetual transformation is not always the best option, and proceeds to draw an important distinction between uncertainty and risk. The article, which has been cited more than 3,000 times, emphasizes the need to respond to the uncertainty of innovation through the development of dynamic capabilities.
Giovanni Compiani just finished his first year as an assistant professor in the Haas Marketing Group, straight from a PhD in economics at Yale University. He’s taught marketing analytics to undergrads and PhD students. And as one on the first-round recipients of a Berkeley Blockchain Initiative research grant, he conducted research quantifying the massive energy consumption by cryptocurrency mining operations,
Compiani says he loves to come to work every day, as he feels comfortable as a gay faculty member here, something he might not have imagined growing up in a Catholic family in Bologna, Italy.
Where did you grow up, and what was it like?
I grew up in Italy, so it’s a Catholic country and I have a Catholic family. Homosexuality was not a topic that was ever discussed. We only had a law that legalizes same-sex unions in Italy about three years ago, and it’s still not called marriage. Growing up, it wasn’t necessarily easy, and I came out fairly late.
When did you first realize you were gay?
I would say it was probably in high school, and even more so in college, but I was a pretty late bloomer. I was very focused on academics, and I don’t look back on that with regret. I am here because I worked really hard. But I really focused on academics partly because I didn’t want to think too much about relationships. It was clearly something that was uncomfortable for me at the time. Then, when I had a little bit more perspective, I was finally ready to take a step back and say, let’s talk about the elephant in the room.
When did you come out?
I waited until I was very comfortable and I was really ready for it, and I ended up having a very positive experience. It wasn’t until grad school at Yale where it felt a little bit easier. I had so many doubts and fears but then I got so much positive support and love from the people around me. My family and my friends have all been super-supportive. Yale is a very liberal place, and my classmates and everyone else were great, but New Haven, Connecticut, is also a small town. Most people end up going to New York to date. That’s where I met my boyfriend, shortly after I came out. He just moved out to Berkeley last week. He’s a doctor, so he was finishing up his residency in Connecticut, and he’ll be starting at Kaiser Oakland in a couple of weeks. It’s my first time actually living with a partner, so it’s all come together.
Compiani and his partner on vacation in Block Island.
What’s has been your experience so far on the faculty at Haas?
I arrived essentially one year ago today, and this is my first job, so I don’t really have a comparison. But I will say it’s been incredibly positive. I’m not part of any kind of organization within Haas, but there are other gay faculty members here and of course many on campus. It definitely helps to have examples right here of people who are successful and well-integrated into the community. Just the fact that there’s a normalcy to being gay here has been the most helpful thing. We’re all colleagues, and some happen to be straight and some happen to be gay, but that doesn’t create two different camps. It feels like a place where I want to go to work in the morning, which is, for me, the mark of a good workplace.
It’s also hard to beat Berkeley and the Bay Area in terms of the environment, and San Francisco with its history. I mean not only because of the queer community, but also things like the Free Speech Movement. This has been the epicenter of a lot of movements that have helped us get us to where we are now, and you have a sense that certain rights are really valued here. Even just getting emails from the dean or from campus, whenever there’s some sort of an incident, makes a difference. Those small things matter because it creates an environment where you feel that you’re taken care of and valued.
Do you feel like Italy has changed a lot since you were growing up, and do you feel comfortable there now?
Compiani with Preston
Yes, as evidenced by the fact that I have a Catholic family, and they were ok with me being gay. They’re actually very happy for me. I’m from Bologna, which is Northeast of Florence. I think of Bologna a little bit as the Berkeley of Italy. It’s very left wing, and there is an accepting kind of culture. I just came back from there and it was a very good experience. But unfortunately, Italy is very similar to the U.S, in terms of what’s happening politically. One of the main parties governing right now is quite right wing and xenophobic. It seems like the goal is to take the country back to the past, which implies all sorts of things for women, for people of color, and for gay people. It’s a past that clearly benefited only a fraction of a population. I do think it’s up to us to stand up and say we’re not okay with that. Right now, I see that more from the outside since I’m not affected by it in the same way as if I were living there, but we have many of the same issues here with Trump. It does feel like a wake-up call. We are so polarized and I think people need to start coming together and find any common ground with those who are perceived as different. But sometimes I feel that the left also seems just as tribal as the right.
Do you feel like being gay gives you a different perspective in the classroom, in terms of how you work with your student and how you run your classes?
I would say so. To a certain extent, when you belong to any minority group, I think it’s easier to relate to people’s concerns and to be sympathetic. There’s always a bit of a hierarchy between students and professors, and I think that being as a member of a minority group helps you relate more to people across hierarchies. I’m hoping it can make my teaching more effective, and also make my interactions with students more welcoming. I haven’t had any specific interactions with students on the topic of being gay, but if there are students who want to reach out and I can help, that’s definitely something I’m open to.
Associate professors Yaniv Konchitchki and Panos Patatoukas have won the 2019 Notable Contributions to Accounting Literature Award from the the American Accounting Association.
The AAA award is given annually to work published within five years that has been evaluated for its uniqueness and potential magnitude of contribution to accounting education, practice and/or future accounting research; breadth of potential interest; originality and innovation, clarity and organization of exposition; and soundness and appropriateness of methodology.
The award, which is sponsored by the American Institute of Certified Public Accountants (AICPA), will be presented at the AAA Annual Meeting in San Francisco on August 14.
Assoc. Prof. Yaniv Konchitchki
Konchitchki is a tenured associate professor Haas Accounting Group. His expertise is in the interdisciplinary links between financial reporting and analysis, capital markets, and macroeconomics. His work focuses on the modeling and resolution of real-world problems aimed at enhancing decision making, dealing with topics such as inflation, economic fluctuations/growth, monetary policy, real estate, inequality, and national accounting. He is a founder of the new research field of Macro-Accounting. Konchitchki has been recognized for his research and teaching as a Bakar Faculty Fellow, a Hellman Fellow, and a Schwabacher Fellow for distinguished research excellence; two Cheit Awards for Distinguished Teaching Excellence; Poets & Quants’ “World’s Top 40 Under 40”; and the American Accounting Association’s Financial Accounting and Reporting Section Best Paper Award.
Assoc. Prof. Panos Patatoukas
Patatoukas is also a tenured associate professor in the Haas Accounting Group, and the L.H. Penney Chair in Accounting. His work focuses on interdisciplinary capital markets research and informs “micro-to-macro” and “macro-to-micro” questions bridging the gap between academics and practitioners. He was honored with the 2018 Distinguished Teaching Award, which is the highest teaching award bestowed by the University of California, Berkeley; the 2017 AAA/AICPA Notable Contributions to Accounting Literature Award; and the 2011 American Accounting Association Competitive Manuscript Award. He was also selected as a “Top-10 Business School Professor Under 40” by Fortune. He is the founding faculty director of the Berkeley executive education program on Financial Data Analysis.
In honor of Asian Pacific American Heritage Month, we’re featuring profiles and interviews with members of our Haas community.
Prof. Candi Yano‘s family immigration history is one of twists and tragic turns, from Japan to the U.S., and back and forth again.
Yano, who is wrapping up her term next month as the first Asian-American woman to serve as Associate Dean for Academic Affairs and chair of the Berkeley Haas faculty, is an international expert on supply chain management. After three years of helping to win faculty retention battles and countless hours serving colleagues needs big and small, she looks forward to returning to her dual academic role as the Gary & Sherron Kalbach Chair in Business Administration at Haas, and as a professor in the Department of Industrial Engineering & Operations Research.
In between writing her last few memos as faculty chair, Yano took the time to share her family’s fascinating—and heart wrenching—immigration story, as well as the circuitous route she took to discovering the focus of her life’s work via a copy machine at Stanford University.
Prof. Candi Yano
Where did you grow up?
I grew up in a city called Gardena, immediately south of Los Angeles. When I was a kid, about half the population there was Japanese American. My high school was more diverse because of busing in the L.A. school district. There were lots of Hispanic students who were mostly local, and African-American students who were bused in from adjacent communities, as well as Asian and Caucasian students. It was interesting to leave home for the first time and realize the whole world wasn’t like that. I ended up at Stanford, and at that point only about 10% of the students were Asian American. It was eye-opening for me.
What was the history of Gardena, and how did it end up half Japanese American?
When my grandparents immigrated from Japan about a hundred years ago, people weren’t coming in big groups, and so they wanted to go to a place where they felt more comfortable. Many of them were young men and some of them were still in their late teens. It’s really amazing to think about them just getting on ships by themselves. That particular area, even though it’s heavily populated now, was mostly fields—lots of strawberries. My paternal grandfather came from a farming background. He came to California because he felt he had good job opportunities along the lines of what his family had done. My maternal grandfather immigrated a bit later, and I know less about his reasons for coming the the U.S.
When did your grandparents arrive?
It was around the late teens, maybe early 1920’s. Then in 1924, the U.S. government decided to cut off Asian immigration with the Asian Exclusion Act. I believe both of my grandfathers were here in the U.S. and they sent for their wives-to-be from Japan, because they all had arranged marriages back then. They came over and got married and started their families.
Did you know your grandparents growing up?
Yes, except my mother’s father, who was killed by the bomb in Hiroshima during the second World War.
A video on The Chugoku Shimbun newspaper’s Hiroshima Peace Media website tells the story of the paper, which lost 114 employees (one-third of its staff) when the U.S. dropped an atomic bomb on the city on Aug. 6, 1945. Yano’s grandfather was among them.
Wow. How did that happen, if he had immigrated to the U.S. before the war?
After they had been sent to a relocation camp, my grandfather decided he didn’t want his family being locked up. There were two choices: Stay in the camp or go to Japan. So he decided to take them to Japan, which of course my mother probably didn’t like very much because she was born in the U.S. My grandfather had been a newspaper editor in California, and he picked up that line of work there as an editor at the big regional paper in Hiroshima, The Chugoku Shimbun. He was in the wrong place at the wrong time. My mother seems to have survived mostly unscathed because the family was living out in the burbs. Her mother raised the four kids alone after that. They all ended up coming back to the U.S. at different times. My mom came back at the age of 16. She had finished high school there, and then finished out high school again here.
That’s a heartbreaking story.
Yes, it really is. I had a chance to finally go to Hiroshima a couple of years ago. The Chugoku Shimbun newspaper is still in existence. I saw many panoramic pictures showing the buildings as they were after the bomb. It was heart wrenching to see that.
A photo by Satsuo Nakata shows the 7-story Chugoku Shimbun newspaper building gutted by fire after the bombing. The twisted steel framework next to it is the remains of a kimono shop. (Photo: Hiroshima Peace Media)
Did other members of your family who stayed in the U.S. have to go to the relocation camps?
All of them. My dad’s family was sent to a camp in Gila River, Arizona. They stayed there until they were released after the end of the war.
Did you grow up hearing stories about what happened during the war, or did they avoid talking about it?
I think it affected people differently depending on their age. My parents were both school-aged at the time, which meant that their parents were protecting them from the worst of it. It’s interesting that they don’t seem to have very negative feelings about what happened. But if you talk to people who are just 10 years older, who were adults at the time, they feel very differently. I think if my parents had been bitter they would have passed it on to me, but they weren’t. And in a sense, I consider myself lucky. I can be Japanese-American but not live with that sense of bitterness.
Did you learn much about Asian or Asian-American history in school?
Some, of course, but it was not covered very thoroughly. When I was in high school, most of the talk was about Russia and China. I did have a U.S. history class that required a term paper, and I wrote about the connections from Pearl Harbor to the Japanese surrender. I came to understand that one of the reasons why the second bomb was dropped on Nagasaki was because the U.S. didn’t understand that the Japanese were ready to surrender—but they wanted to retain their emperor, even though he was more of a symbol. The U.S. was being too stubborn about the whole emperor issue, because we don’t have emperors, we don’t have kings and queens in the United States. That was a cultural misunderstanding. Not understanding the roles of various people in government really led to some undesirable outcomes.
An especially tragic example of cultural misunderstanding.
Shifting gears, how did you decide on an academic career, and how did you choose operations as your field?
I took a rather circuitous route. I was studying a lot of math in high school but I was becoming disillusioned with it, so I tried psychology. But when I volunteered as a so-called research assistant for a PhD student, my job was babysitting the five-year-old research subjects. I didn’t really like that. I ended up taking courses on the quantitative end of economics, but meanwhile, I had this odd part-time job. The operations research department at Stanford allowed its PhD students to use the photocopy machine, but they charged a per-copy price plus sales tax. My job was to tally up all the copies and calculate the charges including sales tax, and get the bills sent to the PhD students. As a consequence, I got to know the operations research department chair, and he encouraged me to apply to that department. It was entirely random; I could have had a different part-time job. I did get my undergraduate degree in economics but I eventually did a master’s in operations research and then my PhD in industrial engineering.
Yano with her husband and former PhD students at the Epcot Center following an Orlando research conference.
Were you in the minority as a woman in that department at the time?
There were at least 25% women in my class, but I never really felt like a minority. Actually, I never really felt discriminated against as a woman throughout my graduate career. Not within the campus environment. There were fair number of Asian students at the time too.
How did you end up at Berkeley?
My first full-time job was at Bell Labs in New Jersey. I decided to take an industry job because I had no full-time work experience and I thought it would be helpful. But it was the wrong time to be there, because it was during the first break-up of the Bell system, transitioning from a monopoly to a competitive environment. The antitrust judge kept on changing his mind, so we never got to finish anything. I was there for 17 months and I don’t think I finished a single project. I had been thinking about going into academia anyway and I said, “I think it’s time to go.” I ended up on the faculty at the University of Michigan and I stayed for about 10 years. But my husband grew up in Berkeley and he decided to take a job out here, so I had to figure out whether I wanted a long-distance relationship. I was lucky enough to get National Science Foundation grant for women faculty to spend a year at another university, and I came to Berkeley as a visiting faculty member. Then I was then lucky enough to get a visiting position at Stanford for another year and have the time to think about it. And then I decided to come back to Berkeley.
Yano enjoys hiking in her spare time.
You’re wrapping up next month after three years as chair of the Berkeley Haas faculty. How has that been?
Well, first let me tell you about the best part of it. The best part is that I’ve really gotten to know the other faculty in a way that would not have happened otherwise. We have over 80 faculty members and I don’t run into everybody on a regular basis, but I’ve had an opportunity to get to know some really interesting people. I’ve tried to do what I could to help with whatever they they needed. The administrative work has been busy but not very intellectually stimulating.
Do you think this experience will influence your work going forward?
I think there are people I’ve met who I may be interested in collaborating with, but I haven’t had much time to think about it. Right now, I would just like to finish my last 10 memos (this job entails writing a lot of memos) and get back to being a normal person again. I need to do research for my own sanity.
What do you like best about research?
From when I was very young, I got intellectually bored easily, and I need to have something that keeps my mind going. I like finding new things, working on problems that other people have not tried to tackle before. I also like teaching, and I’ve only taught one class in the last four years, so I’m really looking forward to that.
What do you love about teaching?
I really like imparting knowledge and skills to students to allow them to be better professionals when they graduate. I especially like the undergrads. They’re more like sponges. The MBA students are more focused on what it is they want. I have a funny story about an MBA student in my supply chain management class. He took a job at what was SanDisk, now merged into Western Digital. He told me after his interview that virtually every topic I taught in the class helped him to answer their interview questions. He said it was so easy for him to get the job. That feels good. I get little notes from students saying they were able to get their job at this consulting firm or that company because of something I taught them.
Do you feel like being Asian American gives you a different perspective in the classroom?
Obviously I bring the heritage with me, but I have also spent a fair amount of time in Asia, so I think I have a better understanding of the culture and values that the Asian students bring with them. It’s not unusual for Asian students, especially those whose parents are immigrants, to be caught between two cultures. A lot of times I can help them work through the challenge of finding their own career trajectory that might not have been what their parents had planned for them. Also, in my classes I try to help the students who are quieter. In some Asian cultures you don’t speak unless you’re spoken to. I try to draw them out. Because I’m Asian, they can look at me and they say, “She does understand.”
Do you wish there was better understanding of Asian culture in the U.S.?
We are in an environment nationally that is not helping people to be more inclusive. It feels like a divisive time in our world. But let me say something positive: I think here on campus it’s better than in most places. We can talk openly, and I think that helps. But in many industry sectors, the percentages of women and of minorities of all types are far lower than they should be. I really hope that people start to understand each other a little bit better and try to bridge those gaps.
In honor of Asian Pacific American Heritage Month, we’re featuring profiles and interviews with members of our Haas community.
Prof. Xiao-Jun Zhang moved to the U.S. for love, and stayed because he built a family and a career here.
Prof. Xiao-Jun Zhang holding a “Berkeley Haas Culture Champion” pin, worn by those to help to advance the school’s culture.
Since he joined the Haas Accounting Group in 1998, Zhang has become a much-loved professor, opening the minds of generations of students to accounting—even those who start out thinking it’s boring. He twice won the Cheit Award for Excellence in Teaching in the Evening & Weekend MBA program, and last year he made Poets & Quants’ list of the favorite professors of executive MBA students.
Zhang shared how his his life has been a “fate-guided series of decisions,” and how his cultural perspective influences the way he runs his classes in a very intentional way.
Where were you born and where did you grow up?
I was born and raised in Beijing, China. I went to primary school, high school, and college all in Beijing.
When did you move to the U.S., and why?
I moved to the U.S. in 1992 and the reason was simple: My wife—who was then my girlfriend—transferred to Mount Holyoke College in Massachusetts, so I decided to follow her to the U.S.
Did you think you’d stay here?
I was young then and didn’t think too much about my long-term plans, including whether to stay in the U.S. or not after graduation. The end result of staying here was more of a fate-guided series of decisions, driven by family more than a deliberate career path.
How did you come to Berkeley?
At the time, I was choosing between several schools—including Berkeley, Chicago, Yale, and Duke. What made Berkeley stand out was my research area of financial statement analysis. My advisor, James Ohlson, had worked here, and my frequent co-author, Steve Penman, was here at that time. From the research collaboration perspective, Berkeley was a natural fit. Also, my wife really wanted to live in the Bay Area.
Was there anything about Berkeley’s culture that attracted you?
If you look around the country, I would characterize Berkeley as of one of the most open-minded places. There’s a strong emphasis on equality, on judging people based on what he or she can contribute, rather than more superficial aspects. For people of Asian origin, feeling that sense of fairness is important. I would choose to work among colleagues who share that same sense of equality and fairness.
Having grown up in China, do you feel like you have a different perspective—as an academic and a teacher—than your American-born colleagues?
I would say so. The way you grew up shapes you consciously and unconsciously in so many ways. I’ll give you an example. In the classroom, I find it easier to understand certain student behaviors, especially with students from Asian countries. In the classroom in China, all we were supposed to do was take notes and memorize what we were told. You’re not supposed to ask questions. I suppose there’s similar cultures in Japan, Korea, and other Asian countries. When you teach graduate classes at Berkeley, you notice students from those cultures tend to be more reserved. I tend to be understanding, and when I design my class, I try to create a very relaxing environment without a lot of pressure to participate. It’s really rewarding when you see these students gradually warm up, and at the end of the semester they are as active as the others.
So do you put less emphasis on participation in their grades?
I put as much emphasis on participation, but I redefine it. I don’t count the number of questions they ask. To me, whether a student has been following the class is the most important thing. I tell the students that, after so many years of teaching, I know just by looking at your eyes whether you’re following the class. Once you take that pressure off, students start to participate in a natural way, rather than trying to think of a question just to ask a question.
That’s so interesting. There’s a lot of discussion around Haas and at business schools about inclusion. People have noticed that men often dominate classroom conversations and are working on changing that culture. Do you find that women tend to speak up more in your classes because of the atmosphere you create?
I don’t pay attention to whether it’s a man versus a woman, but I do tell students, “You may notice sometimes you raise your hand but you don’t get called on. Don’t take it personally, but I want to give priority to whoever hasn’t spoken so far.” Most of the students have no problem with that. Once you tell them, “Your role is just keep raising your hand,” they are likely to continue doing it but they can relax.
You’re a well-loved teacher—you’ve won the Cheit Award twice, and last year you were on Poets & Quants list of favorite exec MBA students. What do you like about teaching accounting?
I like helping them realize that accounting is not just a bunch of rules. Accounting is a way of thinking, in the sense that it’s looking at a business from the financial perspective. You can have all these fancy business plans, but in the end, you’re going to be measured by how the financial aspect works out. When students realize they need to learn this to operate in real life they get excited. Most rewarding is when you see the light bulb go on, and they see that accounting is not boring and it can actually be exciting. Then you just leave the rest to them. They will learn it all by themselves. At the end of the day, they give you credit for what they’ve learned, and they start liking you.
So from that perspective, you don’t have to teach them much beyond the first week?
In some sense yes. Once you help them realize what accounting really is, they will do all the work and teach themselves.
Can you share an example of your recent research?
In finance and accounting there is the book-to-market ratio phenomenon. Basically, people find that the book value (or accounting value) divided by the market capitalization somehow correlates with future stock returns. People got very excited about this idea because it seems they could make money off it. From the academic perspective, the question is why? I think part of the reason has to do with accounting, in the sense that the book value tends to reflect a stock’s downside risk due to the conservatism-bias in accounting. As a result, the book-to-market ratio reflects a stock’s upside potential relative to its downside risk. Another ingredient to this phenomenon is investors’ preference for “positive skewness” in stock returns: In other words, when you make an investment and receive huge return from it, you get a disproportionately high degree of satisfaction. Now you can brag about it at dinner parties, for instance. Maybe the other nine of your ten stocks don’t do well, but that doesn’t seem matter as much. Putting these two ingredients together, we start to see why investors like stocks with a low probability of huge upside potential, which leads them to prefer the so-called growth stocks.
That sounds like almost like a behavioral finance perspective. Is it rational to put faith in a low probability of a high return over a more certain, smaller return?
I would say yes, because these investors get significant happiness from this one big return. The same reasoning underlies people’s preference for gambling. Going after things that make you happy is rational. Trying to understand human behavior and what really gives humans happiness—or what they call in economics “utility”—is quite complicated and quite fascinating to dive into.
Do ever think you’d move back to China?
I don’t see any reason why I’d want to go somewhere else. I couldn’t ask for a better academic environment than Berkeley, in terms of freedom of thinking. Also my family loves living here. Your home is where your family is. I go to Beijing from time to time, but the Beijing of today is completely different from the city I grew up in. The hometown I grew up in will just be in my memory forever.
Kellie McElhaney teaches students to be “equity fluent leaders.”
Kellie McElhaney, distinguished teaching fellow and founding executive director of the Center for Equity, Gender, & Leadership at Berkeley Haas, has been named among the “Most Influential Women in Bay Area Business” by the San Francisco Business Times.
McElhaney was featured among more than 100 Bay Area women leaders in real estate, law, tech, finance, health care, and education, among other industries. The women chosen all share a passion for what they do and are leaders in their organizations and their communities, according to the SF Business Times.
Over the years, McElhaney has been interviewed as an expert on gender equity and inclusiveness, women in business leadership, the gender pay gap, and #MeToo by media outlets ranging from Bloomberg and The Washington Post to NPR and Forbes.
McElhaney, who earned a PhD from the University of Michigan, told the SF Business Times that her biggest professional accomplishment was being dubbed “chief inspiration officer” by her MBA students. She said she’s also proud of teaching more than 1,000 Berkeley students a year to be “equity fluent leaders,” a term she uses to describe leaders who understand inclusiveness and how to lead people from all gender and ethnic backgrounds. McElhaney is currently teaching “The Value of Equity Fluent Leadership” across all degree programs.
She said the biggest challenge of her career was finding her voice to stand up to gender discrimination and harassment. “I’ve learned that I need to practice what I teach, and that by speaking up, I help countless women, not just myself.”
Her sister, Mary Lynne, is her personal hero, she said. A triathlete who weathered difficult professional and personal circumstances after she came out, her sister was able to reclaim “her authentic self,” McElhaney said.
“She’s a fearless big sis crusader for me and always has my back,” she said.
McElhaney, the mother of two college-age daughters, serves on the board of Sierra Global Management LLC and is involved in the community as a board member of the national nonprofit Empower Her Network. She also serves on the gender equity committee for the California Athletics Board.
For hundreds of years, a tiny group of négociants or wine brokers have determined the price that distributors, importers, and eventually consumers will pay for France’s top wines. These prices are based on the barrel scores of elite tasters, along with the brokers’ own expertise—and a generous splash of guesswork about the market.
That tradition-bound system is getting a data-driven shakeup this month with the debut of a new pricing algorithm on London’s Liv-ex fine wine market.
Visiting Prof. Burak Kazaz
The algorithm was developed by Burak Kazaz, a Berkeley Haas visiting professor (and the Steven R. Becker professor at Syracuse University’s Whitman School of Management), and Hakan Hekimoğlu of Rensselaer Polytechnic Institute. They established “realistic prices” for the 2018 en primeur (or wine futures) campaign—wines from last year’s vintage that are aging in the barrel and will hit shops and restaurants next year.
“This is the most important progression in making a transparent market for wine futures since the négociant system was established more than 300 years ago,” says Kazaz, who pioneered the field of wine analytics. “The realistic pricing will tell buyers and consumers whether a wine is underpriced or overpriced, leading to more effective and transparent purchase decisions. It will also tell winemakers how they can determine their own selling price to négociants.”
The algorithm incorporates temperatures, precipitation, market conditions based on the Liv-ex 100 index of top wines, and price trends based on barrel scores for wines from Bordeaux’s leading chateaus determined by tasting experts Lisa Perrotti-Brown (of The Wine Advocate) and James Suckling (formerly of The Wine Spectator). These influential tasters sample young wines a year after they are barreled, and one year before they are released to the market, scoring them on a 100-point scale.
The “realistic pricing” algorithm allows distributors and consumers to translate a Bordeaux’s score into a dollar amount, getting a clear idea of whether they’re getting a good deal or overpaying. For the 2018 vintage, the algorithm predicts a 3% price increase per additional point compared with the 2017 vintage.
The algorithmic pricing system is expected to shake up the wine futures market, but also to make it less risky, since investors will have a data-driven price for the first time and winemakers will know what price to set for their young wines. Kazaz and Hekimoğlu’s study was recently featured in Robert Parker’s influential Wine Advocate.
While the wine futures market doesn’t exist in the U.S., where individual wineries tend to set their prices, Kazaz is exploring the idea of bringing data driven-pricing to the U.S. market.
Kazaz teaches operations and supply chain management in the Berkeley Haas MBA program.
The list, now in its seventh year, aims “to identify the world’s best young business school professors in terms of research prowess, teaching chops, and impact they have on current students, former students, colleagues, business education research, and society and the world in general.” Competition for the list was especially fierce this year, with nominations submitted by 2,643 people for 188 qualified professors. Schroeder received nearly 80 nominations from students and members of the Haas community.
Asst. Prof. Juliana Schroeder, Management of Organizations
Schroeder, who has been at Berkeley Haas since 2015, is a rising star in psychology for her work on how we make sense of other people’s minds, and a rockstar to her students for her dedication to their success.
Over and over again in teaching evaluations, students describe Schroeder as passionate, accessible, incredibly organized, and inclusive of students with diverse backgrounds (international students and under-represented minority students) and different personality types (extroverts as well as introverts). More than a few describe her negotiations course among their faves at Berkeley Haas.
“Juliana is a source of powerful positive energy—enough to keep a large class awake in the session that starts at 8am and goes for three hours! She is great at artfully engaging the audience during the class discussion and spreading the dynamics of the conversation uniformly across the class,” wrote one student.
Though she’s near the beginning of her career, Schroeder has already racked up almost 30 awards and honors, including the Association for Psychological Science’s Rising Star Award and the International Social Cognition Network’s 2018 Early Career Award. She was named as a 2018 Schwabacher Fellow, the school’s highest honor for assistant professors, and last year students in the full-time MBA program honored her with a Cheit Award for Excellence in Teaching.
“I really care about my students and I try to get to know each one of them. Since I teach negotiations, I try to understand how each student’s negotiation skills fit into the broader context of his or her personality and life,” Schroeder says. “I stay in touch with a lot of my students and continue to coach them as they recruit for post-MBA jobs.”
To compile the “Best 40 Under 40” list, Poets & Quants judged professors on their teaching (70%), based on the number and thoughtfulness of nominations received, and their research (30%), based on Google scholar citations, awards and grants, and media appearances.
Asst. Prof. Drew Jacoby-Senghor, Management of Organizations
Asst. Prof. Drew Jacoby-Senghor (Photo: Copyright Noah Berger, 2019)
Jacoby-Senghor was mentioned by Bosun Adebaki, MBA 19, as a favorite professor. Adebaki noted that Jacoby-Senghor, who teaches Negotiations and Conflict Resolution, knows how to connect with students and breathes life into mantras like “Focus on interests and not positions.”
Prof. Laura Tyson will study how U.S. businesses and policy makers can better respond to the coming labor market disruptions caused by artificial intelligence and automation—and what we can learn from the German system—as a Berlin Prize Fellow this fall.
Tyson, a distinguished professor of the graduate school, former dean of the Haas School, and faculty director of the Institute for Business and Social Impact (IBSI), will spend the fall semester at the American Academy in Berlin. She is one of 20 scholars, writers, and artists to be awarded the prestigious semester-long Berlin Prize for the 2019-20 academic year.
As a Berlin Fellow, Tyson will continue her research on how AI and automation are affecting the future of work. Like other technological advances, AI and automation will fuel displacement of labor and change the nature of work, but they will also contribute to gains in productivity, income growth, and the demand for skilled human labor, she says. This transition will be costly, however, and is likely to fuel growing income inequality. New policies, training, and innovation will be needed to address these challenges, she says.
Tyson see Germany as particularly well-positioned to handle the economic trials ahead, and plans to investigate the German system of training and apprenticeships, various sectors of German industry, and unique features of German business governance such as works councils, employers’ associations, and supervisory boards. The German case shows that the future is not technologically predetermined and can be shaped by thoughtful policies and actions by business leaders, policymakers, workers and citizens, she says.
“Ultimately, these effects depend not on the design of smart machines and technologies, but on the design of smart practices and policies appropriate for a new machine age,” Tyson said in a press release.
Raymond Miles, a former Berkeley Haas dean and professor emeritus whose leadership has had a deep and lasting impact on the Haas campus and community, passed away on May 13 in Albany, California. He was 86.
Former Dean and Prof. Emeritus Raymond Miles
Miles is credited with growing the school’s thriving alumni network, securing a campus that invites community, and hiring prestigious faculty members who have included two Nobel Laureates. As a scholar, he was a trailblazer in strategic management, defining human resource management styles commonly taught today.
“Ray Miles was an outstanding scholar and a visionary leader. He helped build the fields of organizational strategy and innovation at Berkeley Haas and around the world,” said Former Dean Laura Tyson, distinguished professor of the graduate school. “He represented all of the stakeholders at Haas—the students, the faculty, the alumni, and the business community, and he began the planning and fundraising process that enabled the move of the Haas School to its new complex. He dedicated his professional life to our community and we will miss him.”
Crash course in management
Born in Cleburne, Texas in 1932, Miles got a crash course in business management when he was just 22. Attending the University of North Texas (UNT), he paid for his BA in journalism by working nights for the Gulf, Colorado & Santa Fe Railroad. There, he said, he learned hard lessons about how managers should best supervise their employees—and how they shouldn’t. Those musings led to a lifetime of inquiry into strategic management, making Miles an early pioneer in thinking about how companies could align their strategies with the goals they were trying to accomplish.
After marrying Lucile Marie Dustin in 1952, and training and serving as an Air Force pilot, he earned an MBA at UNT and then a PhD at Stanford on a scholarship. Eventually, he landed in Berkeley, where he embarked upon a 50-year career in research that helped to crystalize the concept of strategic management. He put his leadership teachings into practice as dean in the 1980s.
The emergence of human resources
When Miles first arrived at Berkeley as a new professor in the Organizational Behavior and Industrial Relations group in the fall of 1963, the concept of strategic management was in its infancy. His 1965 Harvard Business Review article, “Human Relations or Human Resources?” led managers to think differently about how to utilize people in their organizations.
“Ray was one of the early contributors to the idea of human resources as a strategic function,” said James Lincoln, the Haas Mitsubishi Chair in International Business and Finance Emeritus, who worked with Miles at Berkeley’s Institute of Industrial Relations. “Instead of thinking about employees as personnel, he put forth the notion that human assets are as important as the financial and physical assets of a company and need to be managed in a strategic way. Of course everyone thinks that now, but back then, it was new.”
In the next decade, Miles studied how organizations could improve, eventually developing his breakthrough 1978 book, Organizational Strategy, Structure, and Process, written with his former student Charles Snow, PhD 72. They argued there were three distinct types of successful companies, each with its own management style: prospectors, defenders, and analyzers (and one unsuccessful type, reactors). Once a company figured out which class it belonged to, it could design its management structure and processes accordingly. Furthermore, the authors wrote, companies could change over time in response to their environments.
The book has become a classic in the management strategy field and is still regularly cited.
In later research, Miles continued to explore new concepts in the field of management strategy, creating the notion of “fit” that would help companies determine the best company strategy and how to create their structure and process accordingly. “That underlying idea of having the right strategy and structure for the market environment is still front and center of what every business school teaches in MBA courses on strategy and organizational design,” said Glenn Carroll, a former Haas professor who now teaches at Stanford.
Building campus and community
Raymond Miles, second from right, shows off progress on the new campus to Haas alum Steve Herrick, BS 60, and other supporters who were active in the building campaign.
Miles proved the validity of his management strategies as dean of Haas between 1983 and 1990. His tenure started at a time of crisis for higher education, with both federal and state funding slashed. At the same time, the business school was bursting at the seams, cramped into Barrows Hall with several other departments. Berkeley’s chancellor, however, was reluctant to include a new building for the school in its capital campaign.
To manage the crisis, Miles expanded the school’s advisory board with dozens of business people who urged the school to raise money for a new building by itself. Miles commissioned former Berkeley architecture chair Charles Moore to design a new building on the site of the old campus hospital that could create community and serve as a bridge to the rest of the university. Moore’s elegant model, with interconnected buildings around a central courtyard and arches connecting it to campus, helped sway the administration. With the help of former dean Earl “Budd” Cheit, Miles secured what was then the largest gift in UC Berkeley’s history to build it.
At the same time, Miles helped grow the Cal Business Alumni Association (now known as the Berkeley Haas Alumni Network) into an active, thriving community and hired the school’s first full-time development director to increase outreach to alumni and bring the vision of a new building to fruition. By the time Miles stepped down in 1990, plans were well underway for the building, which broke ground in 1992 and opened in 1995.
Miles with daughter-in-law Amy Miles at the 2012 Haas Gala
During his time as dean, Miles also boosted the school’s academic potential and prestige by helping to expand the faculty. He doubled the number of endowed chairs to 24—then about a fifth of the Berkeley campus total—recruiting such luminaries as Nobel Laureate Oliver Williamson.
Miles also advanced the field of business education by supporting new programs to build on the school’s unique interdisciplinary heritage and blending of research and application, which he described as “theory-based professional practice”. The Program in Organizational Strategy focused several disciplines’ research on strategic decisions facing organizational managers. The Program in Entrepreneurship and Innovation focused on the process of developing a business plan and the broader issues of how technological and economic innovation is stimulated or stunted. And the Program in International Competitiveness focused on the need for new strategies in a rapidly changing global economy.
Miles also believed that the business school should not be an island, isolated from the community around it. In 1989, he started the Boost@BerkeleyHaas program—formerly known as the East Bay Outreach Program and then Young Entrepreneurs at Haas (YEAH)—to bring local high school students from families who traditionally hadn’t gone to college to Haas to learn about business and entrepreneurship and get comfortable on campus. The program just celebrated its 30th anniversary. It serves about 140 young people annually, and the overwhelming majority go on to college.
A “powerful people-developer”
Miles with Ann Hsu, MBA 98, the 2012 Raymond E. Miles Alumni Service Award winner, at the Haas Gala
Former Dean Rich Lyons, the William & Janet Cronk Chair in Innovative Leadership, credits Miles with having a huge influence on him and other Haas leaders.
“Ray was an important mentor to me, and a powerful people-developer more generally. You always had the sense that he had your best interest—and the school’s best interest—at heart. It’s hard to get more ‘beyond yourself’ than Ray,” Lyons said, referencing one of the school’s four Defining Leadership Principles.
Prof. Candi Yano, associate dean for academic affairs and chair of the faculty, noted that until quite recently, Miles continued to come into the office nearly every day and was continuing to publish research articles on organizational strategy and innovation. “He leaves a remarkable legacy,” she said.
In honor of the significant impact Miles has had on Berkeley Haas, the Cal Business Association created the Raymond E. Miles Alumni Service Award in 1990. This award is presented each year to an alumnus who exemplifies superior volunteer leadership.
Miles is survived by his daughter Laura (Jim), sons Grant (Patti) and Ken (Amy), brother Don (Jodi), and seven grandchildren: Justin, Michael, Nathaniel, Anthony, Sarah, Courtney and Brooke. He was predeceased by his wife Lucile in 2014.
A memorial service will be held at the Unitarian Universalist Church of Berkeley on Saturday, June 15, 2019 at 2:00 p.m.
Mark Rubinstein, a finance professor emeritus whose work had a profound impact on Wall Street by forever changing how financial assets are created and priced, died May 9 in Tiburon, California. He was 74.
Rubinstein, who retired in 2012 after nearly 40 years on the University of California, Berkeley’s Haas School of Business faculty, was a pioneer in applying mathematical tools to financial markets. He was best known for his contributions in options pricing, as well as the development of the first Exchange Traded Fund (ETF).
Prof. Mark Rubinstein surrounded by his beloved Shakespeare in his home library in 2002 (Photo by Jim Block)
Rubinstein was intellectually fearless and known by his students as a sincere mentor who had extraordinary passion. He was also a quintessential Renaissance man whose curiosity and love of learning led him to acquire an impressive knowledge of Shakespeare, Ancient Greek, and Roman history.
“Mark was unusually honest and open-minded,” said Prof. Terry Odean, a colleague in the Haas Finance Group. “He was one of the few people I’ve known who would actually change his opinion when confronted with new facts or a better argument.”
Simplified options pricing
Rubinstein grew up in Seattle, the son of Sam and Gladys Rubinstein. After earning a bachelor’s degree at Harvard, an MBA at Stanford, and a PhD at UCLA, Rubinstein joined the Haas faculty in 1972.
His research efforts soon focused on options markets, which had just begun trading in Chicago. In 1979, working with John Cox and Stephen Ross of MIT, he developed the Cox-Ross-Rubinstein (CRR) Model, a “binomial” model for valuing a wide range of complex options. The model contributed to the growth of derivatives around the world and remains one of the most important valuation tools on Wall Street. A subsequent book, Options Markets (with John Cox), made option pricing theory accessible to a broad audience.
“His most famous contribution was in simplifying the option pricing model not only to a level that everyone could understand, but also to a point where everyone could use it effectively in the real world,” said Prof. Emeritus Hayne Leland, a finance colleague who worked closely with Rubinstein.
Leland O’Brien Rubinstein’s (LOR) influence
In 1981, Rubinstein joined with Leland and Haas Adjunct Prof. John O’Brien to form Leland O’Brien Rubinstein (LOR). The firm grew rapidly, and in 1987 the three founders were named among Fortune’s “Businessmen of the Year.” LOR developed a risk-hedging algorithm called “portfolio insurance.” To stem losses, the algorithm required selling off assets when markets declined, and portfolio insurance was accused of being a major accelerant of the October 1987 crash— when the stock market fell more than 20% in a day. These events and the role of LOR are recounted in Diana Henriques’ A First-Class Catastrophe: The Road to Black Monday, the Worst Day in Wall Street History.
The market eventually recovered, and the crash may have warded off a real recession by bringing stock prices back down to reality, according a later analysis. Traders today still use strategies that are roughly equivalent to portfolio insurance.
First Exchange Traded Fund
In an effort to protect investors without dynamic selling, LOR then pioneered the SuperTrust, an S&P 500-based fund that traded as a single security—which in 1992 became the first Exchange Traded Fund (ETF) in the United States. Rubinstein and Leland provided the economic arguments that convinced the SEC to give the first exemption to rules in the 1940 Investment Act that had prevented ETFs. These exemptions later became standard, and helped form the regulatory framework for what has arguably become the most important financial innovation in the last quarter century. In the years since, ETF funds’ assets have grown to more than $5 trillion globally.
Founded the Master of Financial Engineering Program
Rubinstein was elected President of the American Finance Association in 1992, and was named as the IAQF Financial Engineer of the Year in 1995. In 2001, he helped to found the Berkeley Haas Master of Financial Engineering (MFE) Program, which was the first such program in a U.S. business school and is consistently ranked #1.
MFE Program Executive Director Linda Kreitzman called Rubinstein a giant in his field. “He had a huge impact on our students’ lives and also our alumni. He was a brilliant, kind person and he’ll be deeply missed.”
An avid student of history, Rubinstein examined the development of modern theories of investment in his 2006 book, A History of the Theory of Investments: My Annotated Bibliography. He continued his academic research and mentoring of doctoral students at Berkeley throughout his career, and after his retirement, continued to nurture his intellectual curiosity with research and writing on classical Greece, Rome, and the early history of Christianity.
Rubinstein is survived and dearly missed by his wife Diane, and his children Judd and Maisie.
A memorial service will be held at 1:30 p.m. on Sunday, June 9 at Fernwood Mortuary, 301 Tennessee Valley Rd., Mill Valley.
When Adj. Prof. Henry Chesbrough, PhD 97, was researching open innovation in the pharmaceutical industry, he found one pharma that had 7,000 scientists working on tens of thousands of compounds. But the company only licensed out less than one a year, shelving the others.
Chesbrough is back to close the loop with his most ambitious work to date. Open Innovation Results: Going Beyond the Hype and Getting Down to Business (Nov. 2019, Oxford University Press) offers a clear-eyed view of the challenges that limit organizations’ ability to create and profit from innovation and practical tools for overcoming those challenges.
How societal challenges can provide organizations with unexpected growth opportunities will be the theme as innovation leaders gather for the sixth annual 
Adj. Prof. Henry Chesbrough received the 
Prof. 
The journal’s single-year impact factor is 5.0, and its five-year impact factor is 5.33 in this year’s Thomson Reuters’ 
