The spirit of Kellogg: teaching and research

Professor Daniel Diermeier

Professor Daniel Diermeier

Daniel Diermeier, the IBM Professor of Regulation and Competitive Practice, discussed the strength of Kellogg's teaching and research, as well as aspects of his own diverse academic investigations.

Kellogg World: In your estimation, what are some of the elements that distinguish Kellogg from its peers as a teaching and research institution?

Professor Daniel Diermeier: At Kellogg, the departments are very important. In 1997 I came to Kellogg from Stanford where they don't have departments, and where the school is considerably smaller than Kellogg. One thing I have seen here that's very important is that many of our faculty have a strong disciplinary basis. For example, the people who work in MORS [Management & Organizations] are very well regarded in social psychology. The people who work in MEDS [Managerial Economics & Decision Sciences] are very well regarded in economics. Some of these people could, if they wanted, work at the best arts and sciences schools as well. There's a very solid basis in the social sciences, and the disciplines that make up the social sciences: psychology, sociology, economics and political science. That makes Kellogg different from most business schools. That's the secret: have faculty who are absolutely first-rate in their disciplines, then put them in an environment where they can participate in interdisciplinary work. Then exciting things can happen.

So would you say that Kellogg, organizationally, constructs less rigid barriers to keep people exclusively in their own disciplines, but rather encourages faculty to interact with other talented peers who may be working in another area?

Yes. In a certain sense, there's a self-selective aspect to what goes on here. Kellogg's academic environment attracts people who are interested in testing the boundaries and breaking new ground. On the other hand, you have to be careful about how the departments are set up. You need a balance of having enough people to talk to in your area of interest but still enough people from other areas who can talk to each other such that interesting collaborations are possible. You want to establish links across different disciplinary groups. MEDS in particular has been very successful in this regard.

Are there special constraints or challenges that business school faculty may face with regards to their research that their peers in other disciplines might not encounter?

That's the paradox of teaching in business school: If the school resists the temptation to have everything immediately appear on the front page of Business Week, and if the school really allows for basic research, then you get a school that thinks outside the box to explore these different approaches much more than a traditional academic department would. Why? MBA teaching (because it needs to be close to practical applications to be successful) allows us to hire much more broadly. In contrast to a typical academic department, we do not need to hire for a specific "slot" that is defined by the existing discipline. For example, a decision analysis class can be taught by a mathematics PhD, an economist, a statistician, an engineer, or a mathematically trained political scientist or psychologist. That allows us to hire smart people from many different disciplines and let them interact.

A school has to resist the temptation to find the "next big thing" right away and get it out to the public for promotional purposes. Most of that stuff is shallow. If you resist that temptation, or balance it at least, and have enough freedom for faculty to develop deep concepts or new approaches in a kind of protected environment, then the potential for business school research is tremendous.

What are some of the institutional factors that help create this kind of culture here?

The first institutional factor is that Kellogg holds faculty to a very high teaching standard, and the research standards in terms of promotion are also very high. But the school will not tell you what you can and cannot do in terms of your research. There's no interference on the topics that people pursue. The only stipulation is that the work must be first-rate. So people are encouraged to take risks.

Is such an arrangement the norm among Kellogg's peer institutions?

This is not very common among business schools. This environment, I think, has come as a result of leadership from the Office of the Dean at Kellogg.
The second institutional component to consider here is the school's culture. Kellogg has historically recognized very good talent early, and then promoted and rewarded that talent. At Kellogg, you don't see a lot of what goes on in other academic settings, where there are a lot of bureaucratic hurdles and where it might take a faculty member 20 years to become a full professor. That pace just doesn't happen here. If you're recognized as a leader in your field at an early age, you will be very nicely rewarded.

Kellogg has created an atmosphere where both very practical and very abstract research finds a home, and where this research can connect in surprising ways. Your work can be something very abstract, something dealing with interactive epistemology or stochastic processes, for example. But if it's considered important work, the school will let you do it. In these cases, I don't think it's a matter of the school necessarily having a great interest in epistemology or probability theory in themselves; but the school is interested in having really creative people around.

What you describe sounds like an evolutionary process where you want to have variety and innovation that encourages exactly these kinds of synergies. Can you talk a bit more about the departmental structure at Kellogg?

The obvious advantage of departments is that I know people in my department very well. I know what they are working on. Having departments also ensures a very thorough search process for hiring faculty and for the promotion and tenure process.

How does the departmental structure help ensure academic rigor in the tenure process?

If I'm promoting somebody in my department, that person will be my colleague for a long time. So I want to make sure that they are first-rate. The smaller department structure encourages us to take our responsibilities regarding promotion and tenure very seriously. It's like getting married in a certain sense -- but without divorce.

The arrangement and composition of the department may ultimately affect your own career and promotion.

Absolutely. One aspect of the departmental system that we should remain attentive towards involves communication among the various areas of the school. At times, there's just not enough information about what's going on in other places around the school. I'm calling up a colleague in New York when I need information that turns out to be really right across the hall from me. That's not good. It's not insurmountable but it should be acknowledged because then we can start to think about institutional factors that can be used to help bridge these gaps.

Do you find that your teaching and research complement one another, or do you encounter challenges between these aspects of your professional life?

There is frequently a gap between the actual research and the teaching. There's no question about it, and it takes effort to bridge that gap. What is one of the advantages to being in a business school in terms of research is that it's clear we're dealing with exceptional students at the graduate level, in both the MBA and PhD programs. They're more mature, they're much more experienced and they are much higher quality than undergraduates. On the other hand, they are more demanding. If a professor adopts the right attitude towards the students, the classroom experience can be very rewardinge for all involved, and it can be a help to your research. The students really force you to look at whether your research matters, and whether your discipline is asking relevant questions. The classroom dynamics impose another set of disciplines on your research to help you reevaluate and sharpen what you do.

What else is special about teaching business students compared to other students?

The students I'm teaching are the ones who are going to run the corporations of tomorrow. These are the next generation of business leaders who will have a lot of responsibility. This circumstance makes you aware of the profound responsibility you have as a teacher. What an incredible opportunity! We are, in sense, educating this country's (and other countries') elites. It's a tremendous responsibility and it is tremendously motivating, if you take it seriously.

Clearly, you are making an impression on these students. One indication of your effectiveness is the fact that you garnered a recent Teacher of the Year award. What have you found to be most challenging in your role as teacher here?

One challenge a teacher has to overcome is perception by the students. One of the things that's different from teaching undergraduates and PhD students, is that for MBAs the professor is not a role model. The students you are teaching do not want to be professors when they graduate. They want to learn something specific from you and that's that. I'm clear on this when I step into the classroom.

So you have to make the classwork relevant.

What I hear from some of my students that, as a teacher, makes me most happy is they tell me they look at the world differently after taking my class. They say "I'm looking at the newspapers and now suddenly the news makes sense to me when it never made sense before." To get to these types of insights about business problems doesn't come easy. That comes from research.

What aspects of your research are you currently finding most exciting, and what are the potential ramifications of this work?

I'll give you a few examples and they are far removed from one another. My class is basically a business and political environment class. What I'm researching and excited about is some work I've done on governments, in particular European governments: how they are formed, how they last and how they collapse. There's a large literature on this topic. My colleague Antonio Merlo, an economist at the University of Pennsylvania, and I are inventing a new methodology to look at these problems. It turns out that if you take that new methodology seriously, then a lot of what we believe were empirical regularities in the literature are all wrong. That's exciting.

We want to know what features in a political constitution lead to, for example, good, stable governments. With our methodology we can actually quantify what happens when we remove or manipulate certain aspects of a constitution. We can perform "what if?" experiments. It's all built on theory and then we combine it with empirical analysis.

What are some of the implications of this research?

There are some far-reaching implications. We can consider how these political and social institutions affect behavior, and where these institutions come from. At a practical level it means that we start to understand decision making in parliamentary democracies at a more profound level. This is important if we want to predict the actions of foreign governments and develop strategies for managing business-government relations in a global business environment.

I'm also very interested in how norms and conventions are sustained, and there's a variety of work I've done in this area. I'm also interested in common-knowledge theory and in boycotts. I mentioned before the abstract work on interactive belief systems (an area in abstract game theory and theoretical computer science). At MEDS we have a faculty reading group on this topic. This seems as far removed from a practical application as possible. But it turns out that it can be very fruitfully used to model bubbles, currency crisis and other phenomena that critically depend on shared beliefs. I am particularly interesting in consumer boycotts and the role of the media. How do consumer boycotts come about and what role does the media play? Information is being created by the media rather than simply transmitted. Through its coverage of news events, the media helps shape and create common knowledge and that may enable collective action that otherwise would be impossible. In that sense news coverage "creates" social phenomena such as boycotts.

It really seems as if media theory and political science are now interwoven into contemporary business training, perhaps in ways that formerly were not as apparent or as pervasive.

You have to think about technology - biotech, for instance - how it will be regulated by public officials and how it will be received by the public and the media. If I don't think about it carefully, then what happens to me is what happened to Monsanto in Europe: my wonderful technology goes nowhere. To understand these things we need to understand the strategic interactions of very different kinds of actors: companies, politicians, the media, the public, etc. It is going to take some different approaches and it's going to require some hard, difficult work to get anywhere.