COLUMBIA BUSINESS SCHOOL
A CENTURY OF IDEAS E DITED BY BRI AN T H OM AS
f oreword Ideas with Impact Glenn Hubbard, Dean and Russell L. Carson Professor of Finance and Economics
Columbia Business School’s first Centennial offers a chance for reflection about past success, current challenges, and future opportunities. Our hundred years in business education have been in a time of enormous growth in interest in university-based business education. Sixty-one students enrolled in 1916. Today that number stands at over two thousand. It is also a time of flux in the direction of the education. As was typical at that time, Columbia Business School began as a school emphasizing strictly vocational business. It was only after two books—Higher Education for Business, written by economists Robert Aaron Gordon and James Edwin Howell (commissioned by the Ford Foundation), and The Education of American Businessmen: A Study of University-College Programmes in Business Administration by the Carnegie Foundation—were published in 1959 that schools shifted focus toward greater theory and research. Both reports were critical of current programming at business schools, and they encouraged higher education institutions to advance a discipline’s knowledge. Today, Columbia Business School continues to build on those early programming shifts, but it goes beyond, making decisions aimed at connecting faculty with industry practitioners across disciplines in an effort to link Columbia research with practice.
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This book devotes a chapter to each of Columbia Business School’s divisions, arranged roughly in order of size, starting with the Finance and Economics division. It also includes chapters that align with four of the School’s many centers (value investing, entrepreneurship, international business, and social enterprise). Selecting these four was no easy task, as all our centers do significant work and make a valuable contribution to the intellectual life at Columbia Business School. What set them apart— in three out of four cases—was their holistic influence on what and how we teach and the very way we understand business today. They are crossdisciplinary and span the boundaries of academic division, business function, or industry. The outlier, of course, is our chapter on value investing; with the investing approach’s intellectual origins here at Columbia Business School, no commemorative volume would be complete without it. Finance and Economics
Chapter 1 is the book’s longest—an omnibus of the intellectual achievements in finance and economics, from real estate to corporate finance to asset pricing, and everything in between. The bulk of Columbia Business School’s graduates over the years have gone into either finance or consulting at some point in their careers, and finance and economics have been at the center of their education. Value Investing
Chapter 2 is dedicated to a single scholarly pursuit that had its origin at Columbia Business School: value investing. This chapter traces the origins of value investing from before the publication of Benjamin Graham and David Dodd’s seminal text Security Analysis, through its practical application by masters such as Warren Buffett, to the present day. Even now, the theories first posited by Graham and Dodd continue to influence how investing is thought about and taught at Columbia Business School and all over the world. Management
Management is the subject of chapter 3. Of all the divisions at Columbia Business School, management has perhaps undergone the greatest
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evolution. It is one of the oldest areas of teaching at the School, and it has also been the most influenced by new teaching methods and new academic priorities, including path-breaking work on social intelligence and insights into management fads.
Marketing
Chapter 4 focuses on scholarly achievements in marketing, a field which necessarily brings together concepts from disparate academic traditions including psychology, sociology, and communications, to name a few. A deep understanding of consumer decision making and the leading buyer-behavior model was developed by the Marketing division. In recent years, the Marketing division in particular has experienced rapid change as new technologies revolutionize the real-world practice of marketing and advertising.
Decision, Risk, and Operations
Chapter 5 looks at the School’s achievements in operations management and the development of mathematical models for decision making. The research triumphs of this division have been particularly important to the development of modern emergency services in metropolises such as New York City.
Accounting
As noted in chapter 6, accounting has been at the core of Columbia Business School since its foundation. Despite their occasionally esoteric nature, the innovations in accounting developed at Columbia have radically altered the way value is measured and businesses are understood. In addition to its core divisions, Columbia Business School has a wealth of special centers and programs that produce exceptional research and provide students with cross-disciplinary opportunities. These centers have grown in response to new challenges in business and are a fundamental part of Columbia Business School, assisting scholars, students, and practitioners alike in engaging with difficult research questions and challenging real-world scenarios.
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Entrepreneurship
Chapter 7 traces the evolution and tradition of entrepreneurship at Columbia. From the School’s earliest days, alumni used the skills learned in the classroom to found organizations and companies that have changed the face of business. The focused study of entrepreneurship as an academic subject at Columbia has grown exponentially in recent decades. Steady growth in student interest has coincided with a concerted effort by Columbia’s scholars, alumni, and administrators to change the way entrepreneurship is thought about in academia and in the business world.
International Business
Chapter 8 notes that international business has grown in prominence as an area of study. Globalization has radically shifted the attention of business leaders overseas. Techniques that may have been effective even thirty years ago in an insular domestic economy no longer suffice. Columbia Business School’s scholars have risen to the challenge of shifting paradigms to fit global demands.
Social Enterprise
Chapter 9 explores social enterprise as both an academic and cultural phenomenon. Today’s students want to dedicate their careers to achieving specific societal goals in addition to generating new wealth. This dual aspiration goes back to the first years of Columbia Business School, though it has taken on even greater prominence over the last few decades with courses dedicated to the teaching of civic-mindedness and public influence. The Tamer Center for Social Enterprise was born from the realization that management and strategy are just as important in government and the nonprofit sector as in private industry. With a strategy grounded in what it takes to succeed in the future, building on the distinctive assets of Columbia’s past and present, I know one thing: Anything written for the sesquicentennial and the bicentennial will talk about Columbia’s leading role in developing ideas that drive and shape business, nurturing future business leaders and entrepreneurs in its students, and engaging its amazing network of alumni in ideas and talent.
—from the foreword by glenn hubbard, columbia business school dean and russell l. carson professor of finance and economics
B R I A N T H O M A S is an experienced
business writer, with extensive knowledge of renewable energy, the capital markets, and climate change. He is a former consulting editor for Climate Change Adaptation in New York City, part of Mayor Bloomberg’s Climate Change Adaptation Task Force. He has also worked with Swiss Re, Bear Stearns, and Merrill Lynch as a corporate speechwriter. While at Swiss Re, he edited and managed the firm’s participation in the Climate Change Futures Project, undertaken by Harvard Medical School’s Center for Health and the Global Environment.
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which was established in 1916 and is a highly distinguished graduate school within Columbia University in the City of New York. Its mission is twofold: to educate and develop leaders and builders of enterprise who create value for their stakeholders and society at large, and to create and disseminate groundbreaking knowledge that advances the understanding and practice of business.
COLUMBIA BUSINESS SCHOOL A CENTURY OF IDEAS
COLUMBIA BUSINESS SCHOOL,
EDITOR
Written by Columbia Business School faculty members, this volume celebrates
“After a hundred years, Columbia Business School continues to build on its early programming, but it goes beyond, making decisions aimed at connecting faculty with industry practitioners across disciplines in an effort to link Columbia research with practice. With a strategy grounded in what it takes to succeed in the future, building on the distinctive assets of Columbia’s past and present, I know one thing: anything written for the sesquicentennial and the bicentennial will talk about Columbia’s leading role in developing ideas that drive and shape business, nurturing future business leaders and entrepreneurs in its students, and engaging its amazing network of alumni in ideas and talent.”
COLUMBIA BUSINESS SCHOOL
A CENTURY OF IDEAS E DI T E D BY B RIAN THO M AS
H
ighlighting the scholarship of distinguished faculty members both past and present, this retrospective of the first hundred years of Columbia Business School recounts the role of the preeminent institution in transforming education, industry, and global society. From its early years as the birthplace of value investing to its seminal influence on management and marketing, the School has been a profound incubator of ideas and talent, determining the direction of business. In ten chapters, each representing a subject of the School’s research and teaching, faculty members recount the collaborative efforts and innovative approaches that led to revolutionary business methods in fields like finance, economics, and accounting. They describe the pioneering work that helped create new quantitative and stochastic tools to enhance corporate decision-making, and profile several prominent centers and programs that have helped the School adapt to recent advancements in international business, entrepreneurship, and social enterprise. Columbia Business School has long offered its diverse students access to the best leaders and thinkers in the industry. This book not only reflects on these relationships but also imagines what might be accomplished in the next hundred years.