[Mick]

Their Chief Budget Officer, Garth Perry, doesn't seem to have lost his job:

https://www.linkedin.com/in/garthperry/
https://budget.arizona.edu/person/garth-...g%20System

[Mick]

Their Chief Budget Officer, Garth Perry, doesn't seem to have lost his job:

https://www.linkedin.com/in/garthperry/
https://budget.arizona.edu/person/garth-...g%20System

[BigJohn043]

Bookkeeping is pretty hard.  Big businesses have big well paid organizations to make sure it is done well.

10% misses happen all of the time.  This doesn't indicate fraud at all.

The miss here seems to be in the cash forecast.  It is much easier to miss a cash forecast than a budget.  Lots of things make cash move up and down that will work themselves out in future months.  Even experienced business people often don't focus enough on cash until the miss becomes really big.

True, but the "timing" of the transfer of assets (cash) from the UAGC where it would count in the "end of year" cash and later transferring the accompanying liabilities  is troubling. At the very least this should have been noted within the financial planning department and taken into consideration in the forecast. Apparently it was not.

Blaming the auditors for a miss in the cash forecast is bizarre.  Auditors look at the historical financial statements.  They don't look at cash flow forecasts at all.  They confirm that the cash on the balance sheet was actually true on the date of the balance sheet.  But there is no indication here that the financial statements were wrong.  This doesn't seem to be an auditor issue at all.

Of course the CFO is responsible for cash forecasting and rightly was fired.  Not sure who else in the department should be fired but this wasn't a one person issue.

The fact the "model" wasn't using the latest "actuals" is also very bizarre. It might make sense if the to date financials were hard to get at, but they weren't. Why this was being done would make an interesting study. It wouldn't surprise me at all if the CFO and essentially everybody else in the department had no idea how the model actually worked. It was a "black box" to them until it wandered off into fantasy land. 

Finally, part of the problem here is the leaders of these universities.  The President of UofA is a doctor.  He has lots of training in being a doctor.  He has no MBA or any training in managing an organization of any size.  I am not sure he has ever taken even a basic introduction to accounting course much less has the type of experience to manage a multi-billion dollar budget. A person with this type of background is going to be completely reliant on the CFO and will have almost no ability to detect an issue before it becomes a real problem.

Well, he may have not had formal training in accounting but he was CEO of the Texas Medical Center (TMC) in Houston for 5 years. That is a 100m+ revenue operation. I would expect he learned a bit doing that. Like him or hate him, RR is extremely competent. One of his main problems is that the creation of UAGC has been much more expensive and returned less revenue than planned. The operating expenses have also been higher, partly due to legal issues. This action was done despite the bitter opposition of much of the faculty. It was largely RR's "baby". It may turn out that in 10 years it looks like a genius move, but right now it isn't looking that way. RR had all kinds of reasons not to push the CFO too hard in reporting financial problems, especially if he believed they were "transient" in nature. To what extent that had an effect it unknown. It is clear there were revenue expectations from "somewhere" that never showed up. I do expect the CFO wasn't good in the "truth to power" framework, especially in so far as departments were actually operating at a deficit while still filing "balanced" budget paperwork every year. How was that done?

One thing that is mostly being missed in the statements by upper management is that all the financial activities going forward will be removed from the departments and transferred to the central administration, obviously to prevent a repeat of this mess. In the midst of said mess, RR is getting more direct control over spending. I smell a burning Riechstag building :-).

Bringing it back to sports, I am told that in response to concerns about Fisch leaving a committee was established by "boosters" to compensate him with money that was outside of the AD and University budget (public visibility) and control. Sort of an NIL for the coach.  I don't know where this ended up. Now that the Duke vacancy is filled, it may not be necessary :-).

As we look for our next President we should think carefully about what background we are looking for....

Agree. However, FWIW I seriously doubt the new president will be all that strong in accounting :-). RR is an example of an "entrepreneurial" presidency that is trying to do too much with too little (IMO). He may pull it off. I hope the next Stanford president is more concerned with educating students and less concerned about expanding "the business". BC's recent post about the report on Auburn is IMO very relevant here.

Thanks for your thoughtful response.  FWIW, I have no real view on RR or whether he is a good or bad President.  And you are right, his experience running a medical center is real management experience.

But this is a guy who spent the first 30 years of his career training as a doctor and being a doctor.  Why did they let someone with no management experience run a medical center?  And then why after five years of experience doing that do you put him in charge of a university with a $2B+ budget.

And I am not criticizing him.  Universities routinely hire these sorts of people.  What do they know about really running anything?  How does all of that time they spent getting a phd or becoming a doctor help them run a large organization?

And I agree with you that Stanford is going to hire someone like this....

[BigJohn043]

Bookkeeping is pretty hard.  Big businesses have big well paid organizations to make sure it is done well.

10% misses happen all of the time.  This doesn't indicate fraud at all.

The miss here seems to be in the cash forecast.  It is much easier to miss a cash forecast than a budget.  Lots of things make cash move up and down that will work themselves out in future months.  Even experienced business people often don't focus enough on cash until the miss becomes really big.

True, but the "timing" of the transfer of assets (cash) from the UAGC where it would count in the "end of year" cash and later transferring the accompanying liabilities  is troubling. At the very least this should have been noted within the financial planning department and taken into consideration in the forecast. Apparently it was not.

Blaming the auditors for a miss in the cash forecast is bizarre.  Auditors look at the historical financial statements.  They don't look at cash flow forecasts at all.  They confirm that the cash on the balance sheet was actually true on the date of the balance sheet.  But there is no indication here that the financial statements were wrong.  This doesn't seem to be an auditor issue at all.

Of course the CFO is responsible for cash forecasting and rightly was fired.  Not sure who else in the department should be fired but this wasn't a one person issue.

The fact the "model" wasn't using the latest "actuals" is also very bizarre. It might make sense if the to date financials were hard to get at, but they weren't. Why this was being done would make an interesting study. It wouldn't surprise me at all if the CFO and essentially everybody else in the department had no idea how the model actually worked. It was a "black box" to them until it wandered off into fantasy land. 

Finally, part of the problem here is the leaders of these universities.  The President of UofA is a doctor.  He has lots of training in being a doctor.  He has no MBA or any training in managing an organization of any size.  I am not sure he has ever taken even a basic introduction to accounting course much less has the type of experience to manage a multi-billion dollar budget. A person with this type of background is going to be completely reliant on the CFO and will have almost no ability to detect an issue before it becomes a real problem.

Well, he may have not had formal training in accounting but he was CEO of the Texas Medical Center (TMC) in Houston for 5 years. That is a 100m+ revenue operation. I would expect he learned a bit doing that. Like him or hate him, RR is extremely competent. One of his main problems is that the creation of UAGC has been much more expensive and returned less revenue than planned. The operating expenses have also been higher, partly due to legal issues. This action was done despite the bitter opposition of much of the faculty. It was largely RR's "baby". It may turn out that in 10 years it looks like a genius move, but right now it isn't looking that way. RR had all kinds of reasons not to push the CFO too hard in reporting financial problems, especially if he believed they were "transient" in nature. To what extent that had an effect it unknown. It is clear there were revenue expectations from "somewhere" that never showed up. I do expect the CFO wasn't good in the "truth to power" framework, especially in so far as departments were actually operating at a deficit while still filing "balanced" budget paperwork every year. How was that done?

One thing that is mostly being missed in the statements by upper management is that all the financial activities going forward will be removed from the departments and transferred to the central administration, obviously to prevent a repeat of this mess. In the midst of said mess, RR is getting more direct control over spending. I smell a burning Riechstag building :-).

Bringing it back to sports, I am told that in response to concerns about Fisch leaving a committee was established by "boosters" to compensate him with money that was outside of the AD and University budget (public visibility) and control. Sort of an NIL for the coach.  I don't know where this ended up. Now that the Duke vacancy is filled, it may not be necessary :-).

As we look for our next President we should think carefully about what background we are looking for....

Agree. However, FWIW I seriously doubt the new president will be all that strong in accounting :-). RR is an example of an "entrepreneurial" presidency that is trying to do too much with too little (IMO). He may pull it off. I hope the next Stanford president is more concerned with educating students and less concerned about expanding "the business". BC's recent post about the report on Auburn is IMO very relevant here.

Thanks for your thoughtful response.  FWIW, I have no real view on RR or whether he is a good or bad President.  And you are right, his experience running a medical center is real management experience.

But this is a guy who spent the first 30 years of his career training as a doctor and being a doctor.  Why did they let someone with no management experience run a medical center?  And then why after five years of experience doing that do you put him in charge of a university with a $2B+ budget.

And I am not criticizing him.  Universities routinely hire these sorts of people.  What do they know about really running anything?  How does all of that time they spent getting a phd or becoming a doctor help them run a large organization?

And I agree with you that Stanford is going to hire someone like this....

[oldalum]

But this is a guy who spent the first 30 years of his career training as a doctor and being a doctor.  Why did they let someone with no management experience run a medical center? . . . What do they know about really running anything?  How does all of that time they spent getting a phd or becoming a doctor help them run a large organization?

Just a guess (I know nothing about RR except that he was once one of ours), but it could be because he had intimate knowledge of and first-hand experience in producing the core "output" of a medical center (patient care and knowledge) (i.e., he had in-depth knowledge of the "business"), had a vision of what that medical center could be and do that was appealing to the Board that hired him, and a plan for how to get there. And at least in theory he could inherit or hire people who could fill in his gaps in knowing how to "run" a medical center. But assuming RR was either a bad hire or is doing a bad job, or both, I would question extrapolating his individual performance to the other "doctors" who are running almost all (if not all) of the many medical centers around the U.S. Is there evidence that collectively they are really doing a bad job?

Typically, doctors who have leading administrative roles are not simply plucked from the ranks of those just "being a doctor;" they start with lesser administrative roles (department chair, head of an institute, associate dean of a medical school) and have the interest and talent to take on bigger roles. Doesn't mean they don't have holes in their preparation for and experience in leadership roles. But the alternative of having non-physicians in charge of medical organizations is not a panacea, either: within medicine there is, to put it mildly, extreme discontent with many MBAs who are now in charge of medical organizations or parts thereof. How medical organizations are run affects the quality of patient care they provide, in ways that non-physicians may not understand or care about. There are growing numbers of MD-MBAs but I am not familiar with the experiences with them, except for a close friend who practiced medicine, started assuming some administrative roles, got an MBA along the way, and kept getting promoted until now she's head of a major medical foundation.

Putting a physician in charge of a university is a different matter, but the seemingly universal practice of tapping professors to be presidents poses analogous issues to having doctors run medical centers.

[oldalum]

But this is a guy who spent the first 30 years of his career training as a doctor and being a doctor.  Why did they let someone with no management experience run a medical center? . . . What do they know about really running anything?  How does all of that time they spent getting a phd or becoming a doctor help them run a large organization?

Just a guess (I know nothing about RR except that he was once one of ours), but it could be because he had intimate knowledge of and first-hand experience in producing the core "output" of a medical center (patient care and knowledge) (i.e., he had in-depth knowledge of the "business"), had a vision of what that medical center could be and do that was appealing to the Board that hired him, and a plan for how to get there. And at least in theory he could inherit or hire people who could fill in his gaps in knowing how to "run" a medical center. But assuming RR was either a bad hire or is doing a bad job, or both, I would question extrapolating his individual performance to the other "doctors" who are running almost all (if not all) of the many medical centers around the U.S. Is there evidence that collectively they are really doing a bad job?

Typically, doctors who have leading administrative roles are not simply plucked from the ranks of those just "being a doctor;" they start with lesser administrative roles (department chair, head of an institute, associate dean of a medical school) and have the interest and talent to take on bigger roles. Doesn't mean they don't have holes in their preparation for and experience in leadership roles. But the alternative of having non-physicians in charge of medical organizations is not a panacea, either: within medicine there is, to put it mildly, extreme discontent with many MBAs who are now in charge of medical organizations or parts thereof. How medical organizations are run affects the quality of patient care they provide, in ways that non-physicians may not understand or care about. There are growing numbers of MD-MBAs but I am not familiar with the experiences with them, except for a close friend who practiced medicine, started assuming some administrative roles, got an MBA along the way, and kept getting promoted until now she's head of a major medical foundation.

Putting a physician in charge of a university is a different matter, but the seemingly universal practice of tapping professors to be presidents poses analogous issues to having doctors run medical centers.

[82lsju]

Their Chief Budget Officer, Garth Perry, doesn't seem to have lost his job:

https://www.linkedin.com/in/garthperry/
https://budget.arizona.edu/person/garth-...g%20System

well people are often slow to update LinkedIn when they lose a job and I assume most of UA staff are off now so if he was recently fired updating the UA website probably would not happen until after they get back in January.

[82lsju]

Their Chief Budget Officer, Garth Perry, doesn't seem to have lost his job:

https://www.linkedin.com/in/garthperry/
https://budget.arizona.edu/person/garth-...g%20System

well people are often slow to update LinkedIn when they lose a job and I assume most of UA staff are off now so if he was recently fired updating the UA website probably would not happen until after they get back in January.

[Goose]

In my experience there are lots of different paths to the "top job" leading large businesses. Almost nobody in those positions are competent at every single aspect of the organization. I have seen examples of people from HR, Sales, Operations, and yes, Finance run companies. My personnel bias, based on experience, is that is almost always better that the organization be led by someone who knows what the company's expertise is and what it's products are, i.e. a medical operation is best run by a "doctor", an engineering firm by an engineer. However, that person has to be at least conversant with what the "support" organizations do and can "speak their language", at least to a degree. The leader has to know what the right questions are and have the ability to penetrate the jargon to the actual core of the matter.

FWIW Stanford offered (probably still does) an in-residence "instant MBA" that you can get over the summer :-). The main purpose of this for the vast majority of the people taking the classes is to be able to penetrate the fog of the finance folks. One such person described it as "learning to be an anti-nerd nerd". That appeared to work well, as both became "presidents" running business areas for large companies. These business areas did well. I can't claim to know to what degree the leadership was responsible, but I do know those guys were both very competent.

I also have two personal experiences with the CFO taking over the presidency of a company that is having trouble. In both cases, the CFO was a key member of the effort to oust the CEO. They were absolutely convinced they could do a better job than the CEO. In both cases, after the CFOs took over, things went from bad to impossibly worse. The problems centered around the new CEO's inability to recognize that the customers and products weren't just numbers. The company needed to actually sell and deliver product. The new CEOs had no idea how to make either happen. Their point of view and how they "looked at the world" was so far from reality those companies had no chance. For that reason, I am biased against the notion that the Finance people really understand what the companies they work in actually do. Certainly, there are exceptions, though I must admit I have yet to meet one :-).

[Goose]

In my experience there are lots of different paths to the "top job" leading large businesses. Almost nobody in those positions are competent at every single aspect of the organization. I have seen examples of people from HR, Sales, Operations, and yes, Finance run companies. My personnel bias, based on experience, is that is almost always better that the organization be led by someone who knows what the company's expertise is and what it's products are, i.e. a medical operation is best run by a "doctor", an engineering firm by an engineer. However, that person has to be at least conversant with what the "support" organizations do and can "speak their language", at least to a degree. The leader has to know what the right questions are and have the ability to penetrate the jargon to the actual core of the matter.

FWIW Stanford offered (probably still does) an in-residence "instant MBA" that you can get over the summer :-). The main purpose of this for the vast majority of the people taking the classes is to be able to penetrate the fog of the finance folks. One such person described it as "learning to be an anti-nerd nerd". That appeared to work well, as both became "presidents" running business areas for large companies. These business areas did well. I can't claim to know to what degree the leadership was responsible, but I do know those guys were both very competent.

I also have two personal experiences with the CFO taking over the presidency of a company that is having trouble. In both cases, the CFO was a key member of the effort to oust the CEO. They were absolutely convinced they could do a better job than the CEO. In both cases, after the CFOs took over, things went from bad to impossibly worse. The problems centered around the new CEO's inability to recognize that the customers and products weren't just numbers. The company needed to actually sell and deliver product. The new CEOs had no idea how to make either happen. Their point of view and how they "looked at the world" was so far from reality those companies had no chance. For that reason, I am biased against the notion that the Finance people really understand what the companies they work in actually do. Certainly, there are exceptions, though I must admit I have yet to meet one :-).

[Mick]

Their Chief Budget Officer, Garth Perry, doesn't seem to have lost his job:

https://www.linkedin.com/in/garthperry/
https://budget.arizona.edu/person/garth-...g%20System

well people are often slow to update LinkedIn when they lose a job and I assume most of UA staff are off now so if he was recently fired updating the UA website probably would not happen until after they get back in January.

I understand the LinkedIn part. But companies are merciless about updating their web site with respect to bios, even non-profits -- particularly of those who have departed. I assume Mr. Perry still has his job.

[Mick]

Their Chief Budget Officer, Garth Perry, doesn't seem to have lost his job:

https://www.linkedin.com/in/garthperry/
https://budget.arizona.edu/person/garth-...g%20System

well people are often slow to update LinkedIn when they lose a job and I assume most of UA staff are off now so if he was recently fired updating the UA website probably would not happen until after they get back in January.

I understand the LinkedIn part. But companies are merciless about updating their web site with respect to bios, even non-profits -- particularly of those who have departed. I assume Mr. Perry still has his job.

[82lsju]

Their Chief Budget Officer, Garth Perry, doesn't seem to have lost his job:

https://www.linkedin.com/in/garthperry/
https://budget.arizona.edu/person/garth-...g%20System

well people are often slow to update LinkedIn when they lose a job and I assume most of UA staff are off now so if he was recently fired updating the UA website probably would not happen until after they get back in January.

I understand the LinkedIn part. But companies are merciless about updating their web site with respect to bios, even non-profits -- particularly of those who have departed. I assume Mr. Perry still has his job.

true, the place I would look for his bio to be dropped first would be their top level finance page here

https://businessaffairs.arizona.edu/about

in addition to the link you shared for him he appears in at least one other place on UA websites

https://provost.arizona.edu/person/garth-perry

I find it amusing that all three sites use different pictures of him

[82lsju]

Their Chief Budget Officer, Garth Perry, doesn't seem to have lost his job:

https://www.linkedin.com/in/garthperry/
https://budget.arizona.edu/person/garth-...g%20System

well people are often slow to update LinkedIn when they lose a job and I assume most of UA staff are off now so if he was recently fired updating the UA website probably would not happen until after they get back in January.

I understand the LinkedIn part. But companies are merciless about updating their web site with respect to bios, even non-profits -- particularly of those who have departed. I assume Mr. Perry still has his job.

true, the place I would look for his bio to be dropped first would be their top level finance page here

https://businessaffairs.arizona.edu/about

in addition to the link you shared for him he appears in at least one other place on UA websites

https://provost.arizona.edu/person/garth-perry

I find it amusing that all three sites use different pictures of him

[Goose]

Their Chief Budget Officer, Garth Perry, doesn't seem to have lost his job:

https://www.linkedin.com/in/garthperry/
https://budget.arizona.edu/person/garth-...g%20System

well people are often slow to update LinkedIn when they lose a job and I assume most of UA staff are off now so if he was recently fired updating the UA website probably would not happen until after they get back in January.

I understand the LinkedIn part. But companies are merciless about updating their web site with respect to bios, even non-profits -- particularly of those who have departed. I assume Mr. Perry still has his job.

There are all kinds of reasons he is "still there". Nobody, it appears, is actually getting "fired for cause", at least so far. Mr. Perry may be viewed as necessary, at least temporarily, to transition to the new system, whatever it turns out to be. Those with a conspiratorial streak may also believe that "he knows too much and must be kept inside the tent".  OTOH, he may have had a reason to make it to the end of the year and resign tomorrow :-).

[Goose]

Their Chief Budget Officer, Garth Perry, doesn't seem to have lost his job:

https://www.linkedin.com/in/garthperry/
https://budget.arizona.edu/person/garth-...g%20System

well people are often slow to update LinkedIn when they lose a job and I assume most of UA staff are off now so if he was recently fired updating the UA website probably would not happen until after they get back in January.

I understand the LinkedIn part. But companies are merciless about updating their web site with respect to bios, even non-profits -- particularly of those who have departed. I assume Mr. Perry still has his job.

There are all kinds of reasons he is "still there". Nobody, it appears, is actually getting "fired for cause", at least so far. Mr. Perry may be viewed as necessary, at least temporarily, to transition to the new system, whatever it turns out to be. Those with a conspiratorial streak may also believe that "he knows too much and must be kept inside the tent".  OTOH, he may have had a reason to make it to the end of the year and resign tomorrow :-).

[Mick]

In my experience there are lots of different paths to the "top job" leading large businesses. Almost nobody in those positions are competent at every single aspect of the organization. I have seen examples of people from HR, Sales, Operations, and yes, Finance run companies. My personnel bias, based on experience, is that is almost always better that the organization be led by someone who knows what the company's expertise is and what it's products are, i.e. a medical operation is best run by a "doctor", an engineering firm by an engineer. However, that person has to be at least conversant with what the "support" organizations do and can "speak their language", at least to a degree. The leader has to know what the right questions are and have the ability to penetrate the jargon to the actual core of the matter.

FWIW Stanford offered (probably still does) an in-residence "instant MBA" that you can get over the summer :-). The main purpose of this for the vast majority of the people taking the classes is to be able to penetrate the fog of the finance folks. One such person described it as "learning to be an anti-nerd nerd". That appeared to work well, as both became "presidents" running business areas for large companies. These business areas did well. I can't claim to know to what degree the leadership was responsible, but I do know those guys were both very competent.

I also have two personal experiences with the CFO taking over the presidency of a company that is having trouble. In both cases, the CFO was a key member of the effort to oust the CEO. They were absolutely convinced they could do a better job than the CEO. In both cases, after the CFOs took over, things went from bad to impossibly worse. The problems centered around the new CEO's inability to recognize that the customers and products weren't just numbers. The company needed to actually sell and deliver product. The new CEOs had no idea how to make either happen. Their point of view and how they "looked at the world" was so far from reality those companies had no chance. For that reason, I am biased against the notion that the Finance people really understand what the companies they work in actually do. Certainly, there are exceptions, though I must admit I have yet to meet one :-).

Great post. Succession in the professions is always interesting. I worked for a midwestern law firm, specifically for one of two deputy CEOs. I was hired by a Yalie CEO who had a simple, brilliant strategy -- undercut the pricing structure of coastal law firms by using smart UMich lawyers to serve clients on the coasts. We had over 700 clients in California before we ever had a California office. My deputy CEO would have been an excellent CEO, she had excellent command of all the administrative functions. The other deputy CEO got the job and the firm had a sharp, pronounced downturn. I got out of dodge right as the new guy was taking office.

My experience is mainly with accounting and law firms where the same phenomenon exists; e.g., they take a spectacularly successful litigator, then ask that individual to manage a half-billion dollar enterprise. The accountants actually do a pretty good job running the Big Four firms. The lawyers...mixed bag. Depends on how much they let the professional administrators do their jobs. Also helps to have one lawyer in charge of top line revenue, and another in charge of cost management. The first firm I was with, based in Silicon Valley, was and is exceedingly well run. The others...man, I could tell you stories.

[Mick]

In my experience there are lots of different paths to the "top job" leading large businesses. Almost nobody in those positions are competent at every single aspect of the organization. I have seen examples of people from HR, Sales, Operations, and yes, Finance run companies. My personnel bias, based on experience, is that is almost always better that the organization be led by someone who knows what the company's expertise is and what it's products are, i.e. a medical operation is best run by a "doctor", an engineering firm by an engineer. However, that person has to be at least conversant with what the "support" organizations do and can "speak their language", at least to a degree. The leader has to know what the right questions are and have the ability to penetrate the jargon to the actual core of the matter.

FWIW Stanford offered (probably still does) an in-residence "instant MBA" that you can get over the summer :-). The main purpose of this for the vast majority of the people taking the classes is to be able to penetrate the fog of the finance folks. One such person described it as "learning to be an anti-nerd nerd". That appeared to work well, as both became "presidents" running business areas for large companies. These business areas did well. I can't claim to know to what degree the leadership was responsible, but I do know those guys were both very competent.

I also have two personal experiences with the CFO taking over the presidency of a company that is having trouble. In both cases, the CFO was a key member of the effort to oust the CEO. They were absolutely convinced they could do a better job than the CEO. In both cases, after the CFOs took over, things went from bad to impossibly worse. The problems centered around the new CEO's inability to recognize that the customers and products weren't just numbers. The company needed to actually sell and deliver product. The new CEOs had no idea how to make either happen. Their point of view and how they "looked at the world" was so far from reality those companies had no chance. For that reason, I am biased against the notion that the Finance people really understand what the companies they work in actually do. Certainly, there are exceptions, though I must admit I have yet to meet one :-).

Great post. Succession in the professions is always interesting. I worked for a midwestern law firm, specifically for one of two deputy CEOs. I was hired by a Yalie CEO who had a simple, brilliant strategy -- undercut the pricing structure of coastal law firms by using smart UMich lawyers to serve clients on the coasts. We had over 700 clients in California before we ever had a California office. My deputy CEO would have been an excellent CEO, she had excellent command of all the administrative functions. The other deputy CEO got the job and the firm had a sharp, pronounced downturn. I got out of dodge right as the new guy was taking office.

My experience is mainly with accounting and law firms where the same phenomenon exists; e.g., they take a spectacularly successful litigator, then ask that individual to manage a half-billion dollar enterprise. The accountants actually do a pretty good job running the Big Four firms. The lawyers...mixed bag. Depends on how much they let the professional administrators do their jobs. Also helps to have one lawyer in charge of top line revenue, and another in charge of cost management. The first firm I was with, based in Silicon Valley, was and is exceedingly well run. The others...man, I could tell you stories.

[BigJohn043]

In my experience there are lots of different paths to the "top job" leading large businesses. Almost nobody in those positions are competent at every single aspect of the organization. I have seen examples of people from HR, Sales, Operations, and yes, Finance run companies. My personnel bias, based on experience, is that is almost always better that the organization be led by someone who knows what the company's expertise is and what it's products are, i.e. a medical operation is best run by a "doctor", an engineering firm by an engineer. However, that person has to be at least conversant with what the "support" organizations do and can "speak their language", at least to a degree. The leader has to know what the right questions are and have the ability to penetrate the jargon to the actual core of the matter.

FWIW Stanford offered (probably still does) an in-residence "instant MBA" that you can get over the summer :-). The main purpose of this for the vast majority of the people taking the classes is to be able to penetrate the fog of the finance folks. One such person described it as "learning to be an anti-nerd nerd". That appeared to work well, as both became "presidents" running business areas for large companies. These business areas did well. I can't claim to know to what degree the leadership was responsible, but I do know those guys were both very competent.

I also have two personal experiences with the CFO taking over the presidency of a company that is having trouble. In both cases, the CFO was a key member of the effort to oust the CEO. They were absolutely convinced they could do a better job than the CEO. In both cases, after the CFOs took over, things went from bad to impossibly worse. The problems centered around the new CEO's inability to recognize that the customers and products weren't just numbers. The company needed to actually sell and deliver product. The new CEOs had no idea how to make either happen. Their point of view and how they "looked at the world" was so far from reality those companies had no chance. For that reason, I am biased against the notion that the Finance people really understand what the companies they work in actually do. Certainly, there are exceptions, though I must admit I have yet to meet one :-).

I agree with much of this.

Doctors spend ~10 years training to be doctors.  I would assume they then spend at least 10 years as junior doctors.  They can then run departments but isn't this often a part time job while they continue to practice medicine?  My point of course is that the vast majority of their experience isn't really running anything.

In any case, I really wonder if doctors get put in charge of medical institutions because they are best positioned or because doctors have power in those organizations and they want one of their own.  I would make the same point about universities & professors.

Of course the largest organization in the country is the US Government and it has been run by people whose management experience is dealing with a <10 person Senate office.

---

In my experience there are lots of different paths to the "top job" leading large businesses. Almost nobody in those positions are competent at every single aspect of the organization. I have seen examples of people from HR, Sales, Operations, and yes, Finance run companies. My personnel bias, based on experience, is that is almost always better that the organization be led by someone who knows what the company's expertise is and what it's products are, i.e. a medical operation is best run by a "doctor", an engineering firm by an engineer. However, that person has to be at least conversant with what the "support" organizations do and can "speak their language", at least to a degree. The leader has to know what the right questions are and have the ability to penetrate the jargon to the actual core of the matter.

FWIW Stanford offered (probably still does) an in-residence "instant MBA" that you can get over the summer :-). The main purpose of this for the vast majority of the people taking the classes is to be able to penetrate the fog of the finance folks. One such person described it as "learning to be an anti-nerd nerd". That appeared to work well, as both became "presidents" running business areas for large companies. These business areas did well. I can't claim to know to what degree the leadership was responsible, but I do know those guys were both very competent.

I also have two personal experiences with the CFO taking over the presidency of a company that is having trouble. In both cases, the CFO was a key member of the effort to oust the CEO. They were absolutely convinced they could do a better job than the CEO. In both cases, after the CFOs took over, things went from bad to impossibly worse. The problems centered around the new CEO's inability to recognize that the customers and products weren't just numbers. The company needed to actually sell and deliver product. The new CEOs had no idea how to make either happen. Their point of view and how they "looked at the world" was so far from reality those companies had no chance. For that reason, I am biased against the notion that the Finance people really understand what the companies they work in actually do. Certainly, there are exceptions, though I must admit I have yet to meet one :-).

Great post. Succession in the professions is always interesting. I worked for a midwestern law firm, specifically for one of two deputy CEOs. I was hired by a Yalie CEO who had a simple, brilliant strategy -- undercut the pricing structure of coastal law firms by using smart UMich lawyers to serve clients on the coasts. We had over 700 clients in California before we ever had a California office. My deputy CEO would have been an excellent CEO, she had excellent command of all the administrative functions. The other deputy CEO got the job and the firm had a sharp, pronounced downturn. I got out of dodge right as the new guy was taking office.

My experience is mainly with accounting and law firms where the same phenomenon exists; e.g., they take a spectacularly successful litigator, then ask that individual to manage a half-billion dollar enterprise. The accountants actually do a pretty good job running the Big Four firms. The lawyers...mixed bag. Depends on how much they let the professional administrators do their jobs. Also helps to have one lawyer in charge of top line revenue, and another in charge of cost management. The first firm I was with, based in Silicon Valley, was and is exceedingly well run. The others...man, I could tell you stories.

Really great example.  I have worked with lots of law firms and in my experience they are pretty poorly run.  Their HR, feedback & customer experience systems are often somewhere between antiquated and non-existent.  We can't do an employee survey because we might find that some of our senior partners treat people poorly.

FWIW, consulting firms are the exact opposite.  Very thoughtful 360 and feedback processes.

I would also note that by far the best run schools I ever attended was Wharton.

[BigJohn043]

In my experience there are lots of different paths to the "top job" leading large businesses. Almost nobody in those positions are competent at every single aspect of the organization. I have seen examples of people from HR, Sales, Operations, and yes, Finance run companies. My personnel bias, based on experience, is that is almost always better that the organization be led by someone who knows what the company's expertise is and what it's products are, i.e. a medical operation is best run by a "doctor", an engineering firm by an engineer. However, that person has to be at least conversant with what the "support" organizations do and can "speak their language", at least to a degree. The leader has to know what the right questions are and have the ability to penetrate the jargon to the actual core of the matter.

FWIW Stanford offered (probably still does) an in-residence "instant MBA" that you can get over the summer :-). The main purpose of this for the vast majority of the people taking the classes is to be able to penetrate the fog of the finance folks. One such person described it as "learning to be an anti-nerd nerd". That appeared to work well, as both became "presidents" running business areas for large companies. These business areas did well. I can't claim to know to what degree the leadership was responsible, but I do know those guys were both very competent.

I also have two personal experiences with the CFO taking over the presidency of a company that is having trouble. In both cases, the CFO was a key member of the effort to oust the CEO. They were absolutely convinced they could do a better job than the CEO. In both cases, after the CFOs took over, things went from bad to impossibly worse. The problems centered around the new CEO's inability to recognize that the customers and products weren't just numbers. The company needed to actually sell and deliver product. The new CEOs had no idea how to make either happen. Their point of view and how they "looked at the world" was so far from reality those companies had no chance. For that reason, I am biased against the notion that the Finance people really understand what the companies they work in actually do. Certainly, there are exceptions, though I must admit I have yet to meet one :-).

I agree with much of this.

Doctors spend ~10 years training to be doctors.  I would assume they then spend at least 10 years as junior doctors.  They can then run departments but isn't this often a part time job while they continue to practice medicine?  My point of course is that the vast majority of their experience isn't really running anything.

In any case, I really wonder if doctors get put in charge of medical institutions because they are best positioned or because doctors have power in those organizations and they want one of their own.  I would make the same point about universities & professors.

Of course the largest organization in the country is the US Government and it has been run by people whose management experience is dealing with a <10 person Senate office.

---

In my experience there are lots of different paths to the "top job" leading large businesses. Almost nobody in those positions are competent at every single aspect of the organization. I have seen examples of people from HR, Sales, Operations, and yes, Finance run companies. My personnel bias, based on experience, is that is almost always better that the organization be led by someone who knows what the company's expertise is and what it's products are, i.e. a medical operation is best run by a "doctor", an engineering firm by an engineer. However, that person has to be at least conversant with what the "support" organizations do and can "speak their language", at least to a degree. The leader has to know what the right questions are and have the ability to penetrate the jargon to the actual core of the matter.

FWIW Stanford offered (probably still does) an in-residence "instant MBA" that you can get over the summer :-). The main purpose of this for the vast majority of the people taking the classes is to be able to penetrate the fog of the finance folks. One such person described it as "learning to be an anti-nerd nerd". That appeared to work well, as both became "presidents" running business areas for large companies. These business areas did well. I can't claim to know to what degree the leadership was responsible, but I do know those guys were both very competent.

I also have two personal experiences with the CFO taking over the presidency of a company that is having trouble. In both cases, the CFO was a key member of the effort to oust the CEO. They were absolutely convinced they could do a better job than the CEO. In both cases, after the CFOs took over, things went from bad to impossibly worse. The problems centered around the new CEO's inability to recognize that the customers and products weren't just numbers. The company needed to actually sell and deliver product. The new CEOs had no idea how to make either happen. Their point of view and how they "looked at the world" was so far from reality those companies had no chance. For that reason, I am biased against the notion that the Finance people really understand what the companies they work in actually do. Certainly, there are exceptions, though I must admit I have yet to meet one :-).

Great post. Succession in the professions is always interesting. I worked for a midwestern law firm, specifically for one of two deputy CEOs. I was hired by a Yalie CEO who had a simple, brilliant strategy -- undercut the pricing structure of coastal law firms by using smart UMich lawyers to serve clients on the coasts. We had over 700 clients in California before we ever had a California office. My deputy CEO would have been an excellent CEO, she had excellent command of all the administrative functions. The other deputy CEO got the job and the firm had a sharp, pronounced downturn. I got out of dodge right as the new guy was taking office.

My experience is mainly with accounting and law firms where the same phenomenon exists; e.g., they take a spectacularly successful litigator, then ask that individual to manage a half-billion dollar enterprise. The accountants actually do a pretty good job running the Big Four firms. The lawyers...mixed bag. Depends on how much they let the professional administrators do their jobs. Also helps to have one lawyer in charge of top line revenue, and another in charge of cost management. The first firm I was with, based in Silicon Valley, was and is exceedingly well run. The others...man, I could tell you stories.

Really great example.  I have worked with lots of law firms and in my experience they are pretty poorly run.  Their HR, feedback & customer experience systems are often somewhere between antiquated and non-existent.  We can't do an employee survey because we might find that some of our senior partners treat people poorly.

FWIW, consulting firms are the exact opposite.  Very thoughtful 360 and feedback processes.

I would also note that by far the best run schools I ever attended was Wharton.

[Goose]

Doctors spend ~10 years training to be doctors.  I would assume they then spend at least 10 years as junior doctors.  They can then run departments but isn't this often a part time job while they continue to practice medicine?  My point of course is that the vast majority of their experience isn't really running anything.

In any case, I really wonder if doctors get put in charge of medical institutions because they are best positioned or because doctors have power in those organizations and they want one of their own.  I would make the same point about universities & professors.

I would argue that the doctors and professors in fact do NOT have the power. The power to appoint CEOs is usually vested in some kind of "Board of Trustees" that often is made up of people who do not actually work at or for the organization in question. One of the factors these boards often (IMO must always but sometimes do not) take into consideration when selecting a new CEO is the ability of that CEO to gain the respect of his subordinates. If he cannot, things probably will not go well. Unfortunately, sometimes the board chooses a candidate whose main qualification is convincing the board to select them.

It is however more common the boards make a "safe" choice. In a University a professor is usually a relatively "safe" choice. The fact is that most Universities can get by just fine with relatively ineffectual CEOs because the support staff is usually what "runs" the University anyway. These type of CEOs don't usually make any big mistakes and also don't do anything that is risky. For a place like Stanford, that "works" most of the time. Universities are not rapidly changing businesses that may need to change direction on a dime. Of course, in times and situations of rapid change and significant stress (like the PAC-12 implosion), such leaders don't do well.

Of course the largest organization in the country is the US Government and it has been run by people whose management experience is dealing with a <10 person Senate office.

The political sphere is an example of the situation where the number one imperative is finding a way to get "the board" (electorate) to chose you. It is quite possible you have no real skills to "run" anything. If one looks at US history there are lots of presidents who weren't very bright and were not good managers. In may cases it didn't matter because they were fortunate and times were "easy". There are unfortunately quite a few other cases where there were things that could have been done that would arguably have eliminated problems that became critical 10 or more years after these ineffectual leaders were gone. In many cases the choice not to act was made based on current political advantage and/or sheer incompetence. In other cases, the foreseeable problem was not even recognized. A "smarter" leader might well have done so. OTOH there are also quite a few cases of questionably qualified presidents doing the "right thing" because of political pressure. Sometimes it was the right thing done for the wrong reasons. It can go both ways.

IMO there are two factors that must be acknowledged. First, the CEO of many companies that are doing "well" are often almost irrelevant in the short term. These companies are in a position that even if they are not managed anywhere near optimally they will be fine for many years. The cumulative long term effects of poor management might catch up to them eventually, but baring a major error by the CEO this will happen slowly many years after he is gone. Stanford is probably in this condition.

The second factor applies mostly to government, but also to some companies. It is often said that "The US Navy is an organization designed by geniuses so that it can be run by idiots.  Unfortunately, it can only be run by idiots". In large measure, our government has been like that. There are so many good people in the trenches that less than great leadership can still make it work. In what other organization is the entire next level of management (cabinet offices) replaced when the CEO (President) is? The old GS-<big number> saying "I was here before he came and I will be here after he is gone" fortunately has covered a multitude of mediocrity. This approach can't go on forever in government, just as it can't in business. Eventually, times change and forces build up that must be acknowledged and dealt with.

[Goose]

Doctors spend ~10 years training to be doctors.  I would assume they then spend at least 10 years as junior doctors.  They can then run departments but isn't this often a part time job while they continue to practice medicine?  My point of course is that the vast majority of their experience isn't really running anything.

In any case, I really wonder if doctors get put in charge of medical institutions because they are best positioned or because doctors have power in those organizations and they want one of their own.  I would make the same point about universities & professors.

I would argue that the doctors and professors in fact do NOT have the power. The power to appoint CEOs is usually vested in some kind of "Board of Trustees" that often is made up of people who do not actually work at or for the organization in question. One of the factors these boards often (IMO must always but sometimes do not) take into consideration when selecting a new CEO is the ability of that CEO to gain the respect of his subordinates. If he cannot, things probably will not go well. Unfortunately, sometimes the board chooses a candidate whose main qualification is convincing the board to select them.

It is however more common the boards make a "safe" choice. In a University a professor is usually a relatively "safe" choice. The fact is that most Universities can get by just fine with relatively ineffectual CEOs because the support staff is usually what "runs" the University anyway. These type of CEOs don't usually make any big mistakes and also don't do anything that is risky. For a place like Stanford, that "works" most of the time. Universities are not rapidly changing businesses that may need to change direction on a dime. Of course, in times and situations of rapid change and significant stress (like the PAC-12 implosion), such leaders don't do well.

Of course the largest organization in the country is the US Government and it has been run by people whose management experience is dealing with a <10 person Senate office.

The political sphere is an example of the situation where the number one imperative is finding a way to get "the board" (electorate) to chose you. It is quite possible you have no real skills to "run" anything. If one looks at US history there are lots of presidents who weren't very bright and were not good managers. In may cases it didn't matter because they were fortunate and times were "easy". There are unfortunately quite a few other cases where there were things that could have been done that would arguably have eliminated problems that became critical 10 or more years after these ineffectual leaders were gone. In many cases the choice not to act was made based on current political advantage and/or sheer incompetence. In other cases, the foreseeable problem was not even recognized. A "smarter" leader might well have done so. OTOH there are also quite a few cases of questionably qualified presidents doing the "right thing" because of political pressure. Sometimes it was the right thing done for the wrong reasons. It can go both ways.

IMO there are two factors that must be acknowledged. First, the CEO of many companies that are doing "well" are often almost irrelevant in the short term. These companies are in a position that even if they are not managed anywhere near optimally they will be fine for many years. The cumulative long term effects of poor management might catch up to them eventually, but baring a major error by the CEO this will happen slowly many years after he is gone. Stanford is probably in this condition.

The second factor applies mostly to government, but also to some companies. It is often said that "The US Navy is an organization designed by geniuses so that it can be run by idiots.  Unfortunately, it can only be run by idiots". In large measure, our government has been like that. There are so many good people in the trenches that less than great leadership can still make it work. In what other organization is the entire next level of management (cabinet offices) replaced when the CEO (President) is? The old GS-<big number> saying "I was here before he came and I will be here after he is gone" fortunately has covered a multitude of mediocrity. This approach can't go on forever in government, just as it can't in business. Eventually, times change and forces build up that must be acknowledged and dealt with.

[82 Card]

I would also note that by far the best run schools I ever attended was Wharton.

I assume this means they've upgraded since my days in Dietrich Hall.

[82 Card]

I would also note that by far the best run schools I ever attended was Wharton.

I assume this means they've upgraded since my days in Dietrich Hall.

[McKenwood]

I would also note that by far the best run schools I ever attended was Wharton.

I assume this means they've upgraded since my days in Dietrich Hall.

Funny. WG '84 here. Wharton/Penn were not well run operations in my time there. Campus was beat and often unsafe. Decent professors but limited job placements help especially on the West Coast.

[McKenwood]

I would also note that by far the best run schools I ever attended was Wharton.

I assume this means they've upgraded since my days in Dietrich Hall.

Funny. WG '84 here. Wharton/Penn were not well run operations in my time there. Campus was beat and often unsafe. Decent professors but limited job placements help especially on the West Coast.

[82 Card]

I would also note that by far the best run schools I ever attended was Wharton.

I assume this means they've upgraded since my days in Dietrich Hall.

Funny. WG '84 here. Wharton/Penn were not well run operations in my time there. Campus was beat and often unsafe. Decent professors but limited job placements help especially on the West Coast.

I'm W'79. When you arrived, the campus had been gussied up a lot since my first year. I actually preferred the old campus. I grew up in NJ, spending a lot of time in Manhattan in the 60s and 70s. Philly seemed quite civilized by comparison. I used to go all over at all over at all hours on foot and bicycle, including the semi-annual Walnut Walk. Loved the cheap steak and brew places near campus. However, the school itself was not much help (except for the financial aid office).

[82 Card]

I would also note that by far the best run schools I ever attended was Wharton.

I assume this means they've upgraded since my days in Dietrich Hall.

Funny. WG '84 here. Wharton/Penn were not well run operations in my time there. Campus was beat and often unsafe. Decent professors but limited job placements help especially on the West Coast.

I'm W'79. When you arrived, the campus had been gussied up a lot since my first year. I actually preferred the old campus. I grew up in NJ, spending a lot of time in Manhattan in the 60s and 70s. Philly seemed quite civilized by comparison. I used to go all over at all over at all hours on foot and bicycle, including the semi-annual Walnut Walk. Loved the cheap steak and brew places near campus. However, the school itself was not much help (except for the financial aid office).

[BigJohn043]

I would also note that by far the best run schools I ever attended was Wharton.

I assume this means they've upgraded since my days in Dietrich Hall.

Funny. WG '84 here. Wharton/Penn were not well run operations in my time there. Campus was beat and often unsafe. Decent professors but limited job placements help especially on the West Coast.

I'm W'79. When you arrived, the campus had been gussied up a lot since my first year. I actually preferred the old campus. I grew up in NJ, spending a lot of time in Manhattan in the 60s and 70s. Philly seemed quite civilized by comparison. I used to go all over at all over at all hours on foot and bicycle, including the semi-annual Walnut Walk. Loved the cheap steak and brew places near campus. However, the school itself was not much help (except for the financial aid office).

I am WG98.  I think the school had changed a lot in the 10 years before I got there.

Students were surveyed multiple times a term on their profs.  Many classes had a quality circle where students would give feedback on how the class could be better.  Students were also frequently surveyed on other issues and the admin seemed to do their best to act on the feedback.

My sense is Philly also got better at some point.....

[BigJohn043]

I would also note that by far the best run schools I ever attended was Wharton.

I assume this means they've upgraded since my days in Dietrich Hall.

Funny. WG '84 here. Wharton/Penn were not well run operations in my time there. Campus was beat and often unsafe. Decent professors but limited job placements help especially on the West Coast.

I'm W'79. When you arrived, the campus had been gussied up a lot since my first year. I actually preferred the old campus. I grew up in NJ, spending a lot of time in Manhattan in the 60s and 70s. Philly seemed quite civilized by comparison. I used to go all over at all over at all hours on foot and bicycle, including the semi-annual Walnut Walk. Loved the cheap steak and brew places near campus. However, the school itself was not much help (except for the financial aid office).

I am WG98.  I think the school had changed a lot in the 10 years before I got there.

Students were surveyed multiple times a term on their profs.  Many classes had a quality circle where students would give feedback on how the class could be better.  Students were also frequently surveyed on other issues and the admin seemed to do their best to act on the feedback.

My sense is Philly also got better at some point.....