Where Culture Really Matters: Berkeley’s Haas School

The school’s defining leadership principles—Question the status quo, Confidence without attitude, Students always, and Beyond yourself—are deeply embedded at Berkeley’s Haas School of Business

For Rich Lyons, the notion that culture could be a powerful tool to shape an organization’s identity, values and principles had to be a contrarian idea. Afterall, the culture of an organization was something that was soft. With his PhD in economics from MIT and a career spent teaching finance and economics at both Columbia Business School and UC-Berkeley’s Haas School of Business, Lyons came from the hard place. His professional life was grounded in data and models.

But during his 20 months as chief learning officer for Goldman Sachs from 2006 to 2008, the dean of Berkeley’s Haas School of Business found himself in front of CEO Lloyd Blankfein and the firm’s management committee leading a presentation on the top five culture shocks experienced by Goldman managing directors who did not come up through the ranks but were recruited from the outside.

Much to his surprise, Lyons discovered that the success rate for senior people hired into Goldman was largely a function of their ability to adapt and connect with the firm’s cultural norms. “It was a massive eye opener,” recalls Lyons. “I discovered that culture is something that makes an enterprise successful. When you are intentional about culture, it makes you stronger. It allows you to compete more effectively in the marketplace. I never appreciated that element of a strong culture.”

THE BIG AHA 

When Lyons returned to Haas as dean in July of 2008, he began surfing the school’s website for core values, principles and culture. He found zilch. “We had never made anything explicit,” says Lyons. “That was the point where I could see there was no intentionality here around the culture. That was the number one big aha.”

Intrigued by his discovery, he led the school through a survey of business school cultures, attempting to see which institutions embraced culture as something integral to their schools or mere window dressing. “Nobody in our industry was being intentional about competing on culture the way Goldman does or the way a lot of great companies do. That felt like a giant opportunity so I began to ask myself what would being truly intentional on culture look like?”

Ten years later, with Lyons about to step away as dean at month’s end, there is no doubt that Haas stands alone among business schools in consciously defining and shaping a strong culture to its competitve advantage. The school’s defining leadership principles—Question the status quo, Confidence without attitude, Students always, and Beyond yourself—are deeply embedded in the school and the mindset of many of its stakeholders.

ONE IN FOUR STUDENTS CITE THE PRINCIPLES AS A STRONG REASON FOR CHOOSING THE SCHOOL

Haas Business School Dean Rich Lyons

Every business school, of course, has a culture. Almost always, however, it is something that has evolved on its own, over time, often by accident. Rarely is a school’s culture cultivated or measured by senior leadership. More often that not, culture is something that happens to an institution. It is not something that is deliberately created, with concrete metrics regularly applied to insure that everyone is living up to the organization’s values.

Lyons didn’t want Haas to be in the same boat. He quickly became a dogged champion of the principles, seizing every opportunity to drive them more deeply into the school’s culture. Today, MBA applicants to Haas are assessed on how well they meet the principles in their applications and interviews. New faculty must discuss a case study written on the cultural initiative as part of their on-boarding process.

Teaching evaluations now grade professors on how well they represent the principles in and outside the classroom. Ten “deputies” have been appointed to give a broad swath of individuals ownership of the ideals. They’ve even been carved into stone at the roofline of the school’s buildings as well as on the tiled walkways of the Haas campus courtyard.

THREE OF EVERY FOUR MBA STUDENTS SAY THE PRINCIPLES SWAYED THEM TO GO TO HAAS

The impact of them is indisputable. A glimpse of the school’s most recent admission stats proves that. Last fall’s incoming class was drawn from a record 4,132 applicants, rising from 252 to 284 students – the school’s largest class ever. The school also boasted an average GMAT of 725 – up eight points from the previous year. Haas  leapfrogged Columbia Business School in terms of GMAT averages, while also distancing itself from such public programs as Michigan Ross and UCLA Anderson.

More crucial, among applicants, students, alumni and recruiters, the principles have become a significant symbol of what the school believes and stands for. Surveys of Haas’ MBA and undergraduate business programs have found that three of every four students cite the principles as a strong reason for choosing the school. More than 90% of alums from the past decade are familiar with Haas’ ideals and frequently cite them as beacons in navigating their own professional and personal lives.

“Maybe there was rumbling that this was just fluff, but the results speak for themselves,” says Lucas Davis, an associate professor who connects the principles in his stat class. “The students love it. Students refer to these defining principles in class without irony. Sometimes there is a bit of a chuckle. But they get it and they have bought into it. The staff loves it, too. And I am a true believer in these defining principles. I think they got it just right. They really do differentiate us as a school and that is hard to do.”

‘BE CAREFUL: YOU’RE SOUNDING VERY CORPORATE’

Getting to this point, however, has not been easy. In the early days, many faculty did not share Lyons’ enthusiasm for the ideals. They were skeptical that culture, something that sounded fluffy and irrelevant, could be turned into a  true competitive advantage. Recalls Lyons, “An economist faculty member who is close to me, and not wired to look at culture efforts positively, told me after I came back from Goldman Sachs, ‘be careful because to some faculty, you’re sounding very corporate. Just remember that a lot of us chose to become academics because we didn’t choose that world.’”

Some faculty, in fact, were actively hostile. “The Haas School is known to be heavily domianted by the discipline of economists, and the economists were pretty skeptical,” says Jennifer Chatman, an organizational behavior professor at Haas who has been a Lyons ally in the culture initiative. “They were unfamiliar with it and thought these were lightweight corporate branding notions. The faculty felt that Rich could go on and do his thing but we really weren’t going to be invovled in this. The attitude was how little can we do and get it to stop.

“Many believe that culture is something that simply happens to an organization, and you can’t change it,” adds Chatman. “We believe that you can drive culture based on your strategic objectives. And when you are deliberate about it, you can change it and drive strategic objectives. To some, it seems too soft. not methodical enough, and unrelated to financial performance. Those are all myths at this point because we have evidence that all of those things are possible.”

About the Author...

John A. Byrne

John A. Byrne is the founder and editor-in-chief of C-Change Media, publishers of Poets&Quants and four other higher education websites. He has authored or co-authored more than ten books, including two New York Times bestsellers. John is the former executive editor of Businessweek, editor-in-chief of Businessweek. com, editor-in-chief of Fast Company, and the creator of the first regularly published rankings of business schools. As the co-founder of CentreCourt MBA Festivals, he hopes to meet you at the next MBA event in-person or online.