S8E9: GSB at 100: “The Magic”

0:13Down a spiral staircase, around a corner, and through a quiet corridor, you'll find a door that leads to the archives of Stanford Graduate School of Business. Okay, so this is the archive. It's amazing to me that they still have these items. You know, they have the original telegrams from Herbert Hoover just sitting in a box. We're in the basement of Bass Library, and archivist Philip Lee is shuffling through old photographs, telegrams, and letters that tell the story of the school's founding. To me, it's like detective work. It's like a cold case. where you know there's stuff there, there's information, and you have to try and piece it together.

0:57I think the items, like some of the items here, they're like moments in time. Moments that in some cases take us all the way back to 1925. Herbert Hoover, a Stanford alum and future U.S. president, had an idea. He realized that the young businessmen were going to Harvard, to the business school, which opened in 1908. and it was floated at the time here that Stanford should follow Harvard and have their own business school and he was like he was thinking to himself we should really set up a business school because what happens is when they go to the east coast they don't come back so it's like a brain drain and a talent drain.

1:38Hoover wrote at the time quote a graduate school of business administration is urgently needed upon the Pacific coast. End quote. Hoover proposed raising$50 ,000 to launch the new school, in his words, experimentally for a period of five years. And that is truly the beginning of the GSB. Another document describes a mission. It quotes Jacob Hugh Jackson, a professor of accounting and an early dean at the school. The goal of the school is to train our students to work effectively for themselves and the business of which they are part of. To imbue them with the spirit of service for the communities and society as a whole.

2:24And to develop in them the ability to live rich and happy lives. This is the goal of the Graduate School of Business. That sounds a lot like the school's motto today. Change lives. Change organizations. Change the world. This year, the Graduate School of Business celebrates its 100th birthday, and we're making a podcast series to capture this milestone through the stories of the people who have shaped and continue to shape the GSB. You'll hear from faculty, staff, alumni, and students in a kind of scrapbook of memories, hopes, and dreams as we celebrate our first hundred years and look forward to the next.

3:11Today, we hear from six GSB professors. We ask them to reflect on the GSB's impact over the past century and what will be important for the school to get right in the future. Their answers touch on founding principles, frontier technologies, and the ideas and values that make the GSB unique. Because what sets the school apart isn't just research or rigor, its curiosity, humility, and the sense that we're contributing to the broader project of human progress. So let's get started. This is GSB at 100. I'm your host, Kevin Kuhl.

4:06Jeffrey Pfeffer is a professor of organizational behavior who has taught at the GSB since 1979. Pfeffer says it's the people, faculty, staff, and students that give the school its power. Many people believe that productivity is a consequence of ability times motivation. I don't actually agree with that. I think it is ability times motivation times your environment. That if you are smart and if you are motivated, but if you are surrounded by talent, you will almost by definition do better work. And by the way, you can see this in sports as well, where there are people who don't necessarily score a ton of points, but they make everybody around them better.

4:55And you see this in this work environment as well. We are a people-based organization, and the quality of the people makes the quality of the place. And that's simply what has made the GSB what it is. And the fact that our brand has grown, which makes us easier for us to attract the best faculty and the best students is, of course, extraordinarily helpful. And going forward, I would say I think it is extraordinarily easy to lose focus on what matters. It is easy to get diverted by revenues minus expenses, which is considered to be profits, even in a nonprofit organization. It is easy to lose sight of the importance of the human capital element, and we are in the human capital business.

5:47It is easy to lose perspective on short versus long-term investments. The thing that makes leadership hard is not the evidence on what produces success, which is overwhelming and which, frankly, everybody knows. So it is, in fact, this laser focus on the connection between human well-being, productivity, performance, profitability. If Pfeffer points us toward people, Anad Admati reminds us of the values that guide them. Admati is a professor of finance who started at the GSB in 1983. So the GSB, from the period that I know it, and I've been here 41 years and a half, it's a long time, has become, especially for the latter half of its existence, the example of, you know, an academic business school, which is highly respectable by the disciplines of the social sciences for the best quality research in various fields of the social science, and yet kind of teaching future business leaders in professional programs as well as in a PhD program.

7:03So that was probably the crowning achievement. What also happened, though, in the last standard years is we had one dean who I want to single out, and his name was R.J. Miller. R.J. Miller came to Stanford in 1969, and his condition for becoming the dean of Stanford Business School was that Stanford Business School admits 10 % of the students to what he called the public management program, in which he thought that people who are going to be in the government, in the public sector, should get the same education as we have the private sector, so they understand what a balance sheet is and what's going on, And they can have this expertise that sometimes people in government don't have.

7:46And he really understood and appreciated the importance of good government. He said, for example, the mayor of Detroit has many more problems than I have at Ford, which is where he was the president. Then he gave a speech to academics in December 1968 that sounds like it could be given today. We wanted to tell you a little more about Miller's speech. He delivered it on December 29, 1968, in the final days of a turbulent year of anti-war protests, urban riots, and the assassinations of Robert F. Kennedy and Martin Luther King Jr. At the time, Miller was also vice chairman of the board of Ford Motor Company.

8:31We don't have audio or video of Miller's speech, so I'm going to read some of it. There can be no doubt about the magnitude and gravity of the present challenge to our free society. The task we face is both awesome and urgent. But there can be no doubt, on the other hand, of our power to meet our problems and achieve a better society. Having that power, we have also an obligation to recognize the challenge and the opportunities and to make a beginning. Let us not fail to use all of the vision, goodwill, and power at our command. R.J. Miller, December 1968 Now back to Professor Edmati. I did speak with him when he was already 100 years old and very clear-minded.

9:32And he knew what we needed to do, which I believe we should be doing, which is, again, step into the big picture and see where we and our students fit in and try to integrate ourselves in the broader societal issues, as opposed to only teach our students these essentially techniques for succeeding in the private sector. From values to breakthroughs, Professor of Economics Susan Athey describes pioneering work in market design that changed the world, as well as frontier research in machine learning that continues to change it. And the GSB has had so many impacts, but let me just pick one particular issue that's sort of close to my heart, which is that it's been several times in its history, it's really been on the frontier of important ideas.

10:29One of the big ideas in the group that I'm in was market design and the use of formal strategic thinking and game theory and information economics to understand real phenomena. And Bob Wilson, who's one of the grandfathers of the group that I sit in in economics, he worked with oil companies in the 1960s and looked at their bidding data and then developed formal theories that helped understand what was going wrong in those markets and how to fix it. And then later, he advised one of my advisors, Paul Milgram, and they shared the Nobel Prize for some of their work on market design. And so there's many different takes on that.

11:09But one of my takes was that there was the connection to the world and the fact that the problem they were solving was coming out of a real problem leading to cutting edge theory that then created a field that didn't exist. More recently, we were on the cutting edge of using machine learning for decision problems and what's called causal inference formally. And now Stanford is the best place in the world to do this kind of research. To go from like zero in 2012 to best in the world with multiple amazing young scholars doing cutting edge research in just 12 years is like really stunning. And the GSB really supported us in that endeavor.

11:59So I think the GSB has been a really fabulous place for helping us stay grounded and really connected to real problems, but also allowing us to hire the kind of talent and giving us the space to do the pure research that doesn't just like solve today's tactical problems, but that actually builds the foundation for many people to solve applied problems. The GSB has long been a place where theory meets the real world. Matteo Maggiore, professor of finance, connects formulas developed here, which today bolster markets worth trillions of dollars, to a new wave of economic inquiry made possible by the power of AI.

12:46Let me start from the history, and in particular the history of, I guess the field that is closest to me, which is finance. Bill Sharp, who's a Nobel laureate, is certainly a big figure in the history of the school and the development of what are called equilibrium models of asset pricing, like the basic models. And now the entire industry works on has been developed by Bill together with other academics. Similarly, you know, Myron Schultz is one of my colleagues, is one of the inventors of the option pricing formula. We have, you know, trillion dollars worth of derivative markets that exist today that would probably not have existed had it not been for those discoveries that told us how to understand those risks, price these derivatives.

13:31Essentially, you know, they were really instrumental in creating a market for these instruments. Those are incredible achievements by any intellectual standard. If I look at the next 50 years, now one of the things that has certainly happened throughout many fields, but certainly in economics and in finance, is the advent of very large data. We can measure things or sort of have a look at economic relationships around the world that 10 years ago would have been impossible. Computing power has expanded enormously. Right now, we're seeing a wave of artificial intelligence on large language models that, again, 10 years ago would have been hard to imagine.

14:12And, you know, we should jump as a school or as an intellectual enterprise into the leadership of these developments. These are, to me, they fit the bill of incredible intellectual pursuits that at the same time clearly have a very large impact on the real world. And that's a great space for GSB to be in. As Majori explores how new technologies could transform our understanding of markets, Amir Goldberg, a professor of organizational behavior, evaluates how they're already being used in business and government. Goldberg believes that the GSB is uniquely equipped to help future leaders deliver on the enormous promise of AI.

14:56So I think what makes the Stanford GSB unique is that it has always resisted the temptation of giving simple recipes and one size fit all war stories. And we have always been at the forefront of analytical thinking and research driven insight. Or at least that's how I see the GSB. We're not in the business of solving our students, our MBA students, our participants in executive education programs. We're not in the business of giving them simple practical advice about how to solve their problems. We are helping them think about the world in analytical ways that will become analytical instrumentation for them to become better leaders and better managers.

15:54and we have often resisted the temptation of quick fixes and always invested in fundamental social scientific innovation. I think that's been, at least in the 13 years that I've been here and probably the decades, the few decades that preceded that, I think that has been our differentiating characteristic. In terms of the second question of what the GSB needs to get right in the future. We are at the mecca of and have been for 40 years of computational innovation. We're going through a revolution again with the introduction of AI. No university, no school is better poised to be the leader in understanding the implications of AI, the ability to use it and harness it as a managerial, as a productivity tool, than the Stanford GSB.

16:59And I think our role is to educate our students how to think with and through data and predictive and generative AI as tools. And I'm very excited about that. I think we are definitely taking on this challenge. We'll get a lot of things wrong, for sure. but hopefully we will produce some insights that will be useful.

17:26Whether the professors you've heard so far are talking about people, purpose, research, innovation, or leadership, what connects these reflections is something harder to define. Michelle Gelfin, a professor of organizational behavior, describes that intangible thing that gives the GSB its character. The magic here, and I will say it's magical, is the simultaneous focus on humility, but also impact and trying to really change. I mean, that's the logo, change people, change organizations, change the world. But the humility that goes with that is just astonishing. And I would say also just the level of curiosity at the GSB combined with that humility is really amazing.

18:19So it's very magical combination of having humility, curiosity, and impact. And so I guess I would say that I would just want to keep those elements to this place because I don't think they're found together in any one place that I've been in. Kind of an ambidextrous place. I think there's certainly a lot of sense of creativity and question and move fast and these kinds of things. But there's also a sense of accountability that we have a mission, that we have to contribute something to the world and leave the place a better place. That I think our students and faculty, there's kind of that secret code that unites us.

18:57100 years from now, someone might find this episode in a digital archive. What will they hear in our voices? What will they imagine about this moment in time? And about the people who lived it? The GSB was founded with a simple but ambitious purpose. To train leaders who could serve society. 100 years later, that mission still holds. But so does something else. the belief that progress depends on people willing to question, imagine, and build. And if the past is any guide, the next hundred years will produce ideas we can't yet see and leaders whom we haven't yet met. That's the promise of this place.

19:47Not that we know what's next, but that we're creating it together. On our next episode, we'll hear from the people who helped make it all possible. Members of the GSB staff. At some point, I will eventually retire from this place, but I'm still going to be, in my head and my heart, part of it. And I know I can always look to the GSB to understand what's coming next. A special thanks to all those who made this podcast possible. And thank you for listening. So last week it was the 19th of July 2025 and the letter I was getting scanned was the 19th of July 1924. And I'm like, wow. I wonder if that person who was writing the letter at that day would know that in 100 years time there'd be an Irishman in Stanford looking at this letter.

20:40You know what I mean? It's so weird when you think about it.