'A force for social and economic good'

At Penn's Wharton School, Robertson has lofty goals for the institution and its students.
At Penn's Wharton School, Robertson has lofty goals for the institution and its students. (TOM GRALISH / Staff Photographer)
Posted: August 31, 2012

"The time that the business of business was business, is passé."

So says Thomas S. Robertson, dean of the University of Pennsylvania's prestigious Wharton School. His crusade is to make Wharton "a force for social and economic good in the world."

At 69, the mirthful professor has been in Philadelphia for most of his professional life. The Scottish-born Robertson first came to Philadelphia as a Wharton marketing professor in 1971 and stayed for 23 years. He left the city for a position at the London Business School and later became dean of Emory University's Goizueta Business School in Atlanta.

In 2007, he returned to Penn as dean of Wharton.

It was a homecoming for his family, too. His wife, Diana, also an academic, teaches business ethics at Wharton. Their youngest daughter, Alexandra, received her Wharton MBA this year, the second of their three children to do so.

Robertson works from a spacious office and dresses as one would expect of a business dean: Navy suit, white shirt, tie and cuff links. He looks 20 years younger than his age. He speaks quietly, at least most of the time, and is free with opinions on notable colleagues and infamous alumni.

"We have 5,000 students and 91,000 alumni who have all kinds of political opinions," Robertson explained. "I have [political] opinions, too. But I'm not out selling them. I don't think my university would like that."

When it comes to talking about his ambitions for Wharton, he opens up. When the topic is Philadelphia, he is almost lyrical: "Benjamin Franklin! The Barnes Foundation," he marvels, and broadly smiles.

Here are portions of an interview last week with Robertson, beginning with his goal for social and economic good.

Question: Aren't you expecting too much of your alumni, whose primary role it is to assure profits for a company?

Answer: Yes, you have to care about shareholders, or you're not going to be in business. But in order to do that you have to care about stakeholders, too.

Q: The financial crisis showed that the business-and-finance world isn't always a force of economic good. Many people, therefore, don't like the close ties between business and politics. Do you agree?

A: No. I think the ties between business and politics may not even be close enough. [After the crisis] the center of gravity has shifted somewhat from Wall Street to Washington. But there is this view that business doesn't understand government as much as it should. And by the same token, government doesn't understand business and finance as much as it should.

As a business school, we want to be a go-between for politics and business. We give seminars to regulators and congressional staffers, trying to educate them about finance and about business. And we're stepping up efforts to educate business leaders about government, and the way policy decisions are made."

By the time they are CEOs, business leaders have spent more than half of their time on issues that affect not just the company but society as a whole. Once they reach that step on the corporate ladder, these people have to think more broadly. That's where Wharton can play a role.

Q: Wharton MBA graduates excel in doing well for themselves, earning on average $172,000 a year. How can you make alumni focus more on doing good?

A: There is a major trend among our students to start their own businesses. One hundred or so of our 800 MBA students have been working on the West Coast this summer, because they want to start their own companies. That is a good evolution, a sign that things self-correct. The economy is driven more by new business than existing companies. Most of the growth in employment has been in small- or medium-sized enterprises or start-ups. We do want to encourage that.

But we're not in the business of telling our students what to do. It's true that many of our students still want to go in to private equity or consulting, working for McKinsey, BCG or Bain. They think that's where the money is.

We want our students to follow their passion, but at the end of the day, there's still a lot of students who will be chasing the places where there is a lot of money.

Q: A criticism of elite business schools is that the leaders they educate risk losing connection with the real world, as they seldom get exposure to it. Do you recognize that?

A: It's a wonderful thesis. And I'm sure there's some truth to it. Sometimes companies do make that mistake, where they [even] get out of touch with their own employees. But it's a good way to fail if you can't understand your employees and their motivations.

At one occasion, I was visiting a company. I took the executive lift to the executive floor and had lunch in the executive dining room. And then they let me use the executive car to go to the airport. After that experience, you think: 'This company is in real trouble. They have totally lost touch with their own employees.'

Maybe it's not efficient, but you have to hang out with your own employees, manage by wandering around.

Q: As a business school with a global outlook, how much can you care about the sentiments of American workers? Many blame "outsourcing" for a loss of American jobs. But for your graduates, outsourcing might be a good thing in leading a company.

A: Of course I care! There is a lot of frustration out there with 8.3 percent unemployment. That cannot be ignored. But how can we as business schools solve that?

We must take a more abstract point of view. We educate our students to go out and manage businesses and make them efficient, or to start new businesses. The end result should be employment and economic growth, which have social value. That's what we're in business for: to create social and economic value.

Q: Wharton is known for its financial innovations. One former professor developed the credit-default swaps, another graduate was instrumental in starting mortgage-backed securities. Both of those innovations helped cause the financial crisis. Is there still a positive role for financial innovation?

A: We are still proud of our financial innovations. The system of mortgage-backed securities is in itself a great invention. But it's not great when banks don't pay attention to whom they're handing out loans.

But there was nothing wrong with the MBS invention itself. It was just being improperly used. It will be more properly used in the future.

Finance is important at Wharton; there is no doubt about it. But it is only one of 10 teaching departments. And about two-thirds of our students are majoring in other fields, such as marketing and entrepreneurship. That has really become a major focus of the school too.

Q: Some of your alumni have been involved in criminal activities, such as Michael Milken. Raj Rajaratnam, who was convicted for insider trading last year, met his accomplices, Rajiv Goel and Anil Kumar, at Wharton. Does that worry you?

A: Maybe a few of our alumni go off the rails. I wish they wouldn't, but in any society and any field of study, there are some people who do.

We've been teaching ethics for 30 years, and we take it very seriously. As our students go out, we hope they don't succumb to the outside pressure . . . have a moral compass instead.

Peter Vanham is a financial reporter and a Belgian fellow of the Pascal Decross Fund for investigative reporting. He has been writing for The Inquirer this summer.

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