Success and failure

A new dean at London Business School

It’s all down to George W Bush. If he hadn’t won the election, Laura Tyson might have become a member of President Al Gore’s cabinet. “I assume I would have been invited to return,” says Tyson, previously a senior figure in the Clinton team . Did Gore make her an offer? “That’s not how it works,” she says. But a former colleague, ambassador Charlene Barshefsky, has no doubt. “Laura would have been asked. And she could have taken any one of a number of cabinet positions.”

But Gore lost, and at Davos last year Tyson – by then dean at the Haas School of Business, at Berkeley – ran into John Quelch, her counterpart at London Business School, and LBS’s joint deputy chairman, Sir Martin Sorrell. Quelch told Tyson he was about to resign, for personal reasons, and Sorrell asked Tyson if she’d be interested in taking over.

One year later, she has taken up residence at the dean’s house overlooking Regent’s Park. But she’s only here for a short period: no more than four years. Rather than give up her tenured position at Berkeley, she’s taking a series of one-year leaves of absence. So she has no time to waste in her mission – to build a small mountain of cash and raise the school’s profile.

Among people who know about business schools – a tiny part of the population at large – LBS enjoys an excellent reputation. The Higher Education Funding Council for England, for instance, this year rated as world class no less than 100 per cent of research produced by LBS faculty. And its MBA programme has consistently been ranked among the world’s top 10. Last month, the Financial Times ranked LBS ninth – down from eighth the previous year, but well ahead of the next-best British MBA programmes, from Cambridge and Oxford, which ranked 22nd and 28th respectively. (The best in Europe, ranked sixth, is the course at Insead, in France.)

Over two and a half years, I’ve followed the school’s fortunes closely. My first insights came from Quelch, in the hot summer of 1999. He spared no trouble explaining the school’s unique status over a table on which he’d arranged neat piles of paper and a bowl of over-ripe pears. British-born and Oxford-educated, Quelch had until recently been a professor at Harvard, and he won the dean’s job against competition from three internal candidates, largely thanks to his high profile in the US. He told me the school lacked the endowments amassed at older schools and received less government money than any other provider of higher education. But as a marketing professor he was able to turn this into a plus: he said it obliged LBS to be entrepreneurial.

I also talked to students, then working on their summer placements. Several pointed out that LBS’s location, close to an abundance of businesses, gives students seeking placements a real advantage over counterparts in, say, Boston or Philadelphia. At the school’s invitation, I went back a year later. I looked round the school’s incubator unit, meeting students who were careful to conceal aspects of their business plans. And I popped in for coffee with a recent graduate, at a brightly painted café called Fresh!. Chantelle Gottgens, who’d previously worked for several years as a lawyer, had noticed how eagerly consumers were moving towards organic products and concluded that they might like an organic version of Pret A Manger. As soon as she finished her course, she set up Fresh!, on property owned by LBS near the school. Fellow students helped put together a business plan. She’d overcome early difficulties – with suppliers, and a fridge that didn’t fit through the door – and told me that she’d like eventually to open 20 branches.

When LBS announced the appointment of Tyson, 54, I went to see her at once. I wanted to know more about the woman considered capable of replacing the tireless Quelch. I found a woman who physically resembled one of the cops in the old TV series, Cagney and Lacey – but was groomed like Hillary Clinton. She was low key without being falsely modest, and essentially serious but willing to spell out the obvious.

Tyson’s own background was not particularly academic. She took her first degree at Smith College and a PhD at Massachusetts Institute of Technology. Shocked by MIT’s vigorously mathematical approach, she initially considered giving up, but her tutors encouraged her to stay. “I worked hard,” she remembers. “I was known as the person always to be found in the library.”

In 1990, after some years working at Berkeley, she was invited to teach at Harvard for a year. Robert Reich, her colleague there and an old friend of the Clintons, asked Tyson to help out with the 1992 presidential campaign. She agreed and after Clinton won he invited her to join his team as chairman of the Council of Economic Advisers. And in February 1995 Clinton promoted her to national economic adviser.

From the moment she arrived in Washington, she received help from Alan Greenspan, chairman of the Federal Reserve. “I was a complete outsider,” she says, “and he was extremely significant in terms of establishing my bona fides. He said, ‘All you have is your credibility.’ He respected the institution and therefore the person who ran it – even though we’re identified with different parties.”

Inevitably, she made mistakes. In one early TV appearance, she admitted she had not been included in certain high-level discussions. “Somebody told me afterwards that you should never admit that.” She had a tendency to forget she was being filmed when others were speaking. “I would assume that I was not on camera and make quizzical looks.”

Greenspan, a master of deadpan, also advised her on presentation. “The problem in Washington is how to be credible and not have your comments misused,” she says. Following Greenspan’s advice, she learned to rest her chin on meshed fingers, motionless, with a blank expression.

Working closely with Clinton was intense. “I did see some very stressful moments. The president is charming, but he is also very intense and focused. The president likes the details of policy making. He would remember things that other people in the room forgot. He has a memory that is staggering. He might catch me out on factual issues.”

“Laura truly had the ear of the president,” remembers Barshefsky. “That is very rare. In a meeting he would always come to Laura first. He might say, ‘Gee, I see the trend this way… ’ but she is very adept socially and was always able to disagree in an effective way. Laura was never a rubber stamp, as some people are likely to become when confronted with the president of the United States.”

Tyson’s son, Elliot, had not relished moving to Washington – he threatened to become a Republican – but he softened up after sitting in the Oval Office while Clinton recorded a radio broadcast. Her husband, the writer Erik Tarloff, made himself well known in Washington by writing droll stories about his humble role as a cabinet spouse and a novel, Face Time, which described the ruinous philandering of a US president. He also socialised with Greenspan, helping to take the Fed chairman’s mind off work by, among other things, challenging him to identity passages of Mozart.

By the end of 1996, Erik and Elliot had enough of Washington and Tyson moved back to Berkeley. It was a huge relief. “It had been extremely stressful. You don’t have a life. Washington – maybe like London – is a night town: parties and dinners. You’d get home at midnight, then have meetings the next morning that started at 7.30. I never understood the word stress until after I left. I’d go to coffee shops and say, ‘Gee, I’m in a coffee shop.’”

At Berkeley, Tyson was asked to help find a new dean and when several candidates dropped out she was offered the job herself. Her biggest problem was dealing with University of California bureaucracy. When the business school put up a new building, for instance, it was not allowed to install air-conditioning because other buildings, in other departments, didn’t have it. Hiring world-class faculty, on world-class salaries, was similarly difficult.

She first visited LBS in 2000, when Berkeley was considering a joint MBA programme (which never happened). She was impressed by the international ethos, contrasting with the inward-looking flavour of American schools. At LBS, more than 70 per cent of faculty is from overseas – from 23 different countries. The student body is even more diverse: more than 80 per cent of students, from 55 countries.

As well as returning to teaching, Tyson joined the boards of several companies after leaving Washington: Morgan Stanley Dean Witter, Eastman Kodak, and Human Genome Sciences, whose president and chief executive, William Haseltine, tells me she has given useful advice on financings: “Her advice has been extremely valuable, and also accurate.” Ed Whitacre, chairman and chief executive of SBC Communications, tells me that Tyson can also usefully predict how the government will respond to initiatives in the heavily regulated telecoms industry. “She has been able to be more optimistic than I might have been. It’s easy to get cynical but she will say, ‘You should speak to this person or that person.’”

Clearly, LBS is hoping that Tyson’s high-powered network will come in useful. “A lot of chief executives have said they would be happy to drop in,” she says. “London is seriously in the loop for a lot of the people in my network.” Whitacre, for one, tells me he’d be willing to visit. But Haseltine says sourly: “I’m personally very unhappy to see her in London. I would rather she was heading up one of our universities.”

Others in Tyson’s network of influential Americans have only a hazy idea which institution she has come to London to run. One guesses it’s where Mick Jagger studied – that was the London School of Economics. Another, similarly mistaken, says, “The LSE is a great place. It’s so lucky to have her!”

Tyson is not unduly worried: “People in the business school world know about LBS. The name recognition is there.” Anyway, the US is just one of many sources for new blood. “US schools are going to be competing even more for international students… and the real area for growth is women.”

After talking to Tyson, I go back once more to LBS to sample a class, accompanied by two students in their first year: Jennifer Weitzel, a former civil engineer from Canada who is president of the student association, and Franco Danesi, a consultant from Milan who has the awkward job of criticising the faculty on behalf of his peers. (Students, who spend £39,000 on fees alone on the two-year MBA, require high standards of teaching.) Thankfully, says Franco, the professor taking this class is a blast.

Taking a seat in the half-empty lecture hall – many students are absent this afternoon, interviewing for summer internships – I look round at the laminated name cards students fix on to the desks. These give a good impression of the school’s international mix: among others, I find Gautam, Andrew, Jeevan, Anatoly, Roy, Hideko, Deepak, Gustavo and Yipeng.

Mark Ritson, assistant professor of marketing, speaks with an accent that blends Cumbria with the American Midwest (where he previously worked). Like all LBS teachers, he spends a significant part of each week working off campus with real businesses. His teaching is peppered with bluff comedy: he gets a laugh when he says that business-to-business marketing and business-to-consumer involve “the same shit, different flies”. But he’s also serious, drilling complex information from students in the time-honoured way: by endlessly questioning them and scribbling answers on a board. Students, who get marks for participation in class, don’t hold back.

The first half of the class is dry, having to do with a distributor of electrical components and its variously profitable and loss-making customer base. The second half, following a 15-minute break, is livelier. Ritson shows a documentary, filmed in 1980, in which a leading jeans manufacturer – Ritson asks me not to use its name – attempts unsuccessfully to launch a range of tailored suits.

The central character is a marketing guy called Goldstein, with big hair, big glasses and a big moustache – and a decent amount of customer research. At least, that’s what the students agree when Ritson interrogates them after stopping the tape (which he does several times). But as the film continues, students become more critical – particularly when Goldstein ignores explicitly negative feedback from a focus group. “We’ve seen a marketing guy go down in flames,” concludes Ritson as the lights go up again. “He’s stopped being a marketing guy. He’s fallen in love with the suit idea and become a product guy.” Then comes the warning: “It’s all very well watching a video of some poor guy with an afro, but when your time comes you have to keep asking yourself: are you doing a good job?”

Few copies of this documentary remain in circulation, Ritson says. One belongs to another business school, where Goldstein himself is brought in, to the horror of outspoken students, when the tape has finished. Business schools are nothing if not practical, and that kind of stunt is common. Gottgens told me last year that another member of the faculty, John Bates, had done the same to her class. After allowing students to conclude that the executives in one case study were “tossers”, Bates told students: “I want you to know that the chief executive was me.”

Afterwards, wandering outside, I decide to go up the road to Fresh! for a coffee with Gottgens. But I find her café is closed, presumably for good. A heap of mail lies behind the glass door. The window frames have faded. A sign says “Fresh! will be closed during the summer break.” I’m sorry to find her business has failed, but not that sorry. Running a business – or any kind of enterprise, not excluding a business school – is hard work. It can’t always succeed. Tyson, in our chat, never suggested anything else.

I try to get hold of Gottgens, to find out what happened. Perhaps she just moved to better premises. But my e-mails get no response. So I dig out an old notebook and look up our conversation.

“Every day we learn about the good things that people have done,” Gottgens told me – back in the days when any fool could set up some flourishing dotcom – “and we don’t hear enough of the bad things. The English approach is that starting a business is spivvy. In the UK, you put your whole reputation on the line. I’m of the American school of thought. It’s fine to fail. It’s healthy. You can’t learn only from the good things.”

After this story appeared, Gottgens – who now uses the name Ludski – got in touch. She was unhappy about my suggestion that her business failed. In fact, she assured me, it had only moved to new premises (on Hanover Square).