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The Legacy Of The Rady School’s Founding Dean: Innovation

UC-San Diego Rady School of Management Dean Robert Sullivan will step down from the job he has had since the school was founded 16 years ago. Rady photo

Four years ago, while celebrating a $100 million gift from the school’s namesake, UC-San Diego Rady School of Management Dean Robert Sullivan made a bold prediction. He said within a decade, the Rady School would be a top-15 school, rivaling California’s other elite innovation hubs and joining the rarefied echelons of elite MBA programs.

To be sure, some great things have happened since the school opened its doors in 2003. Located in the heart of San Diego’s innovation ecosystem, Rady has built two state-of-the-art academic buildings; expanded to three MBA programs; launched a trio of specialty master’s programs; seen a huge expansion of its faculty; and established new academic and industry centers, including the California Institute for Innovation and Development, which houses Rady’s StartR accelerator program. Perhaps most impressively, since 2005 Rady students and alumni have contributed $2 billion to the global economy, starting 182 operational companies — 11 of which have IPOs.

At the time of Sullivan’s rankings prediction, Rady had just been ranked as the No. 1 MBA program in the U.S. for intellectual capital by Bloomberg Businessweek. But the MBA program’s anticipated rankings climb hasn’t (yet) begun. This year U.S. News ranked Rady 69th and Poets&Quants ranked it 68th, down from 63rd and 57th, respectively, the year Sullivan made his bold prediction. So why hasn’t Rady become the powerhouse?.

“We know exactly why we don’t get ranked in the top 20,” Sullivan, who this week announced his departure from the Rady School after 16 years at the helm, tells P&Q. “I tell our alumni, and I tell our supporters, that this school has all of the infrastructure necessary to be in the top 20, quite easily. Look at the quality of the faculty, the research and scholarship that they do, the impact on the community. But we’ve had key areas that have been a challenge for us — one is, we’re in San Diego, which has two Fortune 500 companies. We’re not the Bay Area, L.A., or the Twin Cities. For our full-time students to find those sustaining, professional opportunities, it’s more difficult for us here.

“Secondly, one of the paths that I chose works against us, because we have an extraordinary number of our students that choose to do with small startup companies. Some of them do it because they just want to stay in San Diego, by the way. The others do it because they have a passion for doing it. The identity that we created for innovation itself attracts individuals who want to go with small startup companies that don’t get paid the six-figure initial salaries with bonuses. It’s more difficult, but it’s a long-term strategy. We’re going to deal with that.”

INNOVATION: THE KEY DIFFERENTIATOR

“Look at a typical University of California campus,” says Robert Sullivan, “and everything looks like barracks, for the most part. Our building is phenomenal, because we did it with private money, and we had private architects, contractors, and so forth.” Rady photo

Sullivan announced last December that he would step down from the Rady deanship as soon as a replacement could be found; he acknowledges to Poets&Quants that that replacement will be announced in a matter of weeks, saying the school has narrowed its choices to a few unnamed candidates. He adds that he intends to stick around for a year or two on the faculty, to help with the transition. An expert in entrepreneurship, knowledge management, and operations management, Sullivan currently holds the Stanley and Pauline Foster endowed chair.

It may be an exaggeration to say he is irreplaceable at the Rady School, but only barely. Sullivan has led the school through a period of rapid growth, from a startup business school to a well-established institution. He has built strong community relationships, which have led to significant investments in the school, including a $100 million gift from naming donors Ernest and Evelyn Rady and $250 million total. Academically, Rady has grown by leaps and bounds under Sullivan’s leadership. From one MBA the school has grown to three: full-time, “flex evening,” and “flex weekend,” and seen student numbers climbed — Rady is still small, with 102 total enrolled students in the MBA, but it is no longer minuscule. The school also boasts a Master of Finance, Master of Business Analytics, and Master of Professional Accountancy; in just the last few years, its total faculty has grown tremendously, from 27 in 2015 to 44 now. 

Throughout all its programs and hires can be found a strong strain of innovation — the “key differentiator,” Sullivan calls it. A former dean of two highly ranked business schools — Kenan-Flagler Business School of the University of North Carolina and, from 1991 to 1995, the Graduate School of Industrial Administration at Carnegie Mellon University — he says he’s always considered innovation to be the Rady School’s lodestar.

“The area that became an identity for this school has been in innovation, and this notion of attracting people that had strong analytical backgrounds,” he says. “It was about giving them the support to be creative. I like doing that. I was dean at Chapel Hill, and I was dean at Carnegie. In both cases, I started programs that became not only popular, but they became very valuable to the students. Here, it became actually required in our program. When we started in ’03, it became a key differentiator for us.”

“Dean Sullivan has been a fantastic dean, fulfilling a need in our community for leaders in the innovation economy and creating more value than anyone could have imagined,” Ernest Rady said in a written statement in December when Sullivan announced his intention to step down. “I, and the entire community, are grateful to Dean Sullivan for all he has done for San Diego and past, present, and future students of the Rady School of Management.”

HOW THE RADY SCHOOL FOUND ITS IDENTITY

Sullivan tells a story about the Rady School’s founding that illustrates the school’s journey. When it was created in 2002 and 2003, there were lots of stories about the school: Businessweek ran two. The Financial Times had an article, and so did The Economist. A common theme: “whether the world needed another business school,” especially on a big research campus like UC-San Diego that prided itself on science and technology.

The B-school was approved by University of California regents in 2001 but nothing was done until 2003, Sullivan recalls; Rady officially recognizes July 1, 2003 as its founding date. Sullivan says the expectation among school officials was that the University of California would support the new B-school financially, “like they did most everything at the time. If they created a school, they would provide the resources to do it,” he says. The intent was further clarified by UC’s heavy involvement in fundraising at the time.

“Initially, we had the expectation that the resources were in place to do something in a spectacular way, that would be appropriate for this community, which is a startup community of the life science hubs, like the Bay Area is,” Sullivan says. “We needed to have something that would create value to this particular community. What happened is, I was going in for a Businessweek interview, and the vice president for development met me in the lobby of the building to tell me not to say anything about resources, and he would tell me why after the interview. After the interview, I came out, and he said, ‘The reason is, it looks as though the university office of the president is not going to be providing the resources.’ The initial $50 million of endowment that was raised actually disappeared because of the dotcom bust.”

Kneecapped. But the loss of $50 million in state funding became a pivotal moment for the Rady School, which was forced to forge ahead with any state resources and instead seek community support.

Now, Sullivan says, “We’ve raised $250 million with no alumni. This is not a question of folks that were grateful alumni stepping forward. We had none, but we had a grateful community that stepped up and said that this was important, this particular community, at this time, that we would have a school. We’ve had just unbelievable community support that allowed us to do this. We have a self-sustaining model, unlike any of the business schools within the UCs. Most other business schools, you see some type of support. Our buildings were privately funded. We had to come up with the resources to get the land to put the building on. We paid for our faculty and benefits. Everything has to be self-sustaining. It really defined a new type of model.

“I’m proud that the community has valued this school so much, that they continue to support it in really extraordinary ways.”

From left, Rady School Dean Robert Sullivan, Ernest Rady, and UC-San Diego Chancellor Pradeep Khosla in 2015. Rady photo

A TOP-15 SCHOOL BY 2025? RADY CAN DO IT, SULLIVAN SAYS

When the Great Recession hit in 2008, it “changed the world,” Sullivan says, “because everybody then recognized that the big companies weren’t hiring their graduates, and they recognized also that all job growth was coming from these startup companies. You ended up with many schools now saying, ‘We specialize in innovation. We specialize in startups.’ There were even great schools in the Bay Area, by the way, that never mentioned innovation. They do now. In fact, that’s what they want to be known for.”

It was the right path at the right time, he says, and the Rady School has continued to build on it. But it is not a one-hit wonder school. “We also need to grow,” he acknowledges, “and we need to do the things that are the right things, so that the world recognizes us for something more than just the startup. We have to be something that has an impact in a much broader way.” As evidence of its overall impact, he cites a Money Inc. story on the 20 most influential business leaders who are alums from the UC-San Diego campus, a school with 200,000 alumni. “Out of the top 20 that are viewed as business leaders, seven are our graduates, if you can believe that,” Sullivan says. “It’s amazing.”

And what about that prediction that the Rady School would take its place among the very best U.S. B-schools by 2025? Sullivan isn’t backing away from it all.

“We have about 1,700 MBA alums,” he says. “That’s all. There are 200,000 alumni for the campus as a whole. We’re 1,700. We’re minuscule. There are nearly 200 companies that are alive and well, raising capital, employing people, that at least one of the founders is an alum. Two hundred. This almost 200, they have raised over $2 billion in capital, and 11 have IPO’d. This path is certainly a long-term path and strategy for us, but it’s going to pay off.

“I’ll say — and I’ve told the students, by the way — within five years, they should ask, ‘Are we approaching? Are we in the top 20?’ Five years from now.”

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