Commencement 2002

Karl Schmedders,
L.G. Lavengood Professor of the Year

June 22, 2002
Dear Graduates, Families, and Friends:

I am grateful to you, the Kellogg class of 2002, for honoring me with the L.G. Lavengood Professor of the Year Award. I am very moved by this recognition. Thank you.

The first thing the deans told me after the award announcement was that I would have to give a speech at this commencement about why I like teaching. I offered instead to talk about regression analysis, optimization models, or even better, general equilibrium with incomplete markets. I assured them that I would not need to show any excel spreadsheets, or even use any equations in my talk. Somehow they weren’t convinced and insisted on a different topic. So, I hope that these remarks prove to be adequate.

As I started to reflect about you and what you may or may not want to hear, I got very much distracted by the Soccer World Cup. Due to the lack of sleep and the emotional exhaustion that only a World Cup can cause, I never got beyond the audience analysis and so all I can talk about today is you, my audience. So, I am going to interpret – from my viewpoint as a Kellogg teacher – what it means for you to be called a “Kellogg MBA.” What are the take-aways after one, two, three or more years at Kellogg? What did you learn during your time here, and what do people expect from you in the future? There are four ideas that I’d like to put forward for your consideration.

Idea number one: One of the important things that I hope every one of you will take from your experience here is that rigorous thinking and technique is central to good decision-making. Intuition and gut feeling are good, and can lead the way to hypothesis testing, but you will excel above others based upon your analytical abilities applied to those hunches. In my own case, I really do like teaching and I always had the hunch that enthusiasm is very helpful in teaching complex material. Last year the editor of the Merger asked me to run some regressions on the teaching evaluations of the most recent quarter. The regressions convincingly showed that enthusiasm was the single most significant factor influencing the overall evaluations. So, you see, a little rigor can inform and help in even simple situations.

Idea number two: The Kellogg experience has a profound impact on how you look at the world. In years to come many of you may first remember legendary ski trips, ferocious paintball battles, late nights at the Deuce or O’Toole’s, or pizza at the 1030 club. But beyond those great memories I believe you take something much more important away from Kellogg. You see the world with different eyes than you did before you came to us. The Kellogg education is not so much about giving you just a simple tool kit. And let’s face it, most of you do not remember anymore – in particular after all the parties and activities of the last week – how to detect multicollinearity or what heteroskedasticity is – as so clearly demonstrated by some of you in the award video. You may also have forgotten how to flip a decision tree and many other intricate procedures. And don’t think that we, your teachers, are naïve. We know that you will forget many details that we covered in our courses. But what you will keep and use almost daily for the rest of your life are the analytical thinking skills that you developed by taking all those classes, participating in class discussions, and solving endless cases. You learned theoretical frameworks and concepts that help you to structure your thinking when you have to tackle a new problem. You read the Wall Street Journal, the New York Times, or The Economist, differently today than before you came to Kellogg. You learned to think about firms’ strategies in a game-theoretic fashion and of market structure as an equilibrium outcome. Those of you, who came to Kellogg with a very much qualitative background, have realized that data don’t hurt and numbers are used for other things than counting pages in a book. And even though you may have forgotten the details on how to apply a particular method, you know about useful concepts and where to read about them. As Samuel Johnson said, “Knowledge is of two kinds. We know a subject ourselves or we know where we can find information upon it.” As a teacher, I really do think that you had to have suffered through learning about heteroskedascity at least once in order to know that there are some peculiar technical problems in regression analysis and to figure out where to find the right information about it.

My third point: All this new expertise comes with a price – and by that I don’t mean your past tuition bills. When you walk out of Kellogg with your diploma today, then you are going to wear a label. People now have very high expectations of you. A recent incident illustrated this fact to me. Ten days ago, I had lunch with one of my TMP students from last quarter and his boss. We were discussing possible ways to analyze price data in a thinly traded futures market, when the boss said to my student: “I only went to the “so-and-so” business school and never experienced an intellectual environment like Kellogg. I am sure all I just said you have heard before. You must have covered this stuff in some introductory class.” At which point my student said “Yeah, sure!” and looked at me in total bewilderment. The boss made similar statements two more times during lunch. Just like in the case of this student, the expectations that people have for you as a Kellogg MBA – with all the attributes that the Kellogg name stands for – can be quite flattering but also intimidating. Your employers, colleagues, and staff members are going to expect a sophisticated analysis of the problems they pose to you, they are going to expect you to communicate your solutions clearly, and they are going to expect you to be both a team player and a leader. Even your families and friends may expect you to have an educated opinion about interest rates, the recovery of the U.S. economy and labor market, or the Turkish currency crisis. I think every teacher, maybe me especially, experiences similar situations. Students listen to me talk about things that I hope I know about and so teach them with a certain degree of confidence. But then they come and ask me about the most intricate details of statistical analyses that I have never studied myself. It’s sometimes not easy to deal with these questions and expectations. An important part of life is to learn to deal with them, in particular when people may have expectations concerning issues you don’t know anything about. And as people look at you for leadership and knowledgeable help with their problems, you take on a considerable responsibility. Just as for me in teaching, this responsibility includes admitting when you do not know.

My forth and last idea: As a Kellogg graduate you continue to have a responsibility towards the entire Kellogg family. Your class has made great contributions to Kellogg. Allow me to name just two: The Leadership Club that was founded during your time at Kellogg has worked with the administration to brand Kellogg as a school for leadership and has established the new Kellogg-McKinsey Award for Distinguished Leadership. The European Business Club is helping to improve the awareness of the Kellogg brand in Europe. Even though you graduate today, you continue to be a stakeholder in the Kellogg brand. Your behavior, decisions, and careers will continue to reflect upon all of us. Although that may be a scary thought and may keep some of us here on stage awake at night, I have utmost confidence in you that will do good for Kellogg.

Congratulations to all of you. As you walk out of here today with a Kellogg MBA, you take with you an appreciation for rigorous thinking, the ability to use such thinking when you will be confronted with new problems, and a responsibility to many people, including the Kellogg family. I have enjoyed teaching sections in your class. My wish for you all is that you can feel as enthusiastic about your work as I’ve found teaching you.

So, good luck, do good work, and keep in touch.