Kenneth Dunn has come full circle. A popular finance professor at Carnegie Mellon University's business school in the 1980s, Dunn helped develop early research on mortgage-backed securities before leaving for the corporate world of money management in 1987.
He went on to become a managing director at Morgan Stanley, and less than a year before he was set to retire from the firm, he got a curious phone call. It was someone from Carnegie Mellon asking if he would be interested in being dean of the B-school. Dunn spoke with BusinessWeek B-Schools Editor Jennifer Merritt about his reasons for returning and his plans to turn the school around. Following are edited excerpts:
Q: You had already had a successful career in academia and in Corporate America. What made you decide to come back to Carnegie Mellon -- and to take the assignment for $1 a year?
A: My wife Pam and I had always intended to give back to Carnegie Mellon. We thought maybe we would finance a [professorship] chair. But when I got the offer to be dean, I wasn't doing it for the money, I was just doing it to give back to the school.
It seemed the best way to give back was to do [the job] pro bono. We didn't intend to be public about the fact that I was doing this pro bono, but it somehow got around, and the students got hold of it, and then everyone knew. Then I [found out] it's a whole lot easier to ask people to give money when you have a passion for the school and you're committed to it so much that you aren't getting paid.
Q: You retired from Morgan Stanley in 2000, but didn't become dean until July, 2001, so what did you do in between?
A: That January, I started coming in every few weeks to have meetings with people. I met with other deans, I had about 10 faculty dinners, with 8 to 10 faculty members at every dinner. I wanted to get the faculties' views on what I should be focusing on.
I also met with [B-school] staff, and I met with students and major alums. I did a lot of listening during that period. By the time I had the first meeting with the students, I had developed a number of ideas.
Q: What was your assessment of the school after you did all that listening?
A: I asked a group of students to raise their hand if Carnegie Mellon was their first choice [MBA program], and only about 10% of the hands went up. That was really a problem. We had become a backup school. I realized we needed to change our curriculum to become a first choice for the majority of our students.
That's how it was when I was on the faculty. The problem was that we had decided at some point in time to become a full-service B-school, and that made us a generic B-school program. Over time, generic MBA programs become a commodity. But Carnegie Mellon is a small school, and if it is to survive and thrive, [I felt] we had to be innovative. I also felt there was a gap between the perception and the reality of the school.
Q: What was the perception gap? And what do you feel has to be done to close it and revive the school?
A: There was a perception gap between the quality of the MBAs we educate and the...B-school's external reputation. Closing that was my No. 1 priority. To do that, I knew that we had to raise money. I took the view that we had to invest [in the school]. But there was a real sense of urgency. We had to do things immediately and without knowing where the money would come from.
Q: What kind of things did you do?
A: When I first got here, students weren't particularly happy. In some cases, what students wanted wasn't all that big. There were little things -- [repairing] a door that had been broken for a while and hadn't been fixed. Students were embarrassed by our interview rooms, so we remodeled them.
When you fix these little things, that gives you a lot of credibility. It's making them feel listened to, even if you can't always do what they ask. That gives you the ability to do things they might have been critical of, [like] redesigning the curriculum in ways they can see are unique and will better prepare them for the future.
Q: You were able to raise some money, though, even before the $55 million naming gift from alum and hedge-fund guru David Tepper. How did you do that?
A: The first thing I did was tell the faculty that if I was going to go out and raise money, one of the first things I would be asked was how much the faculty was giving. The first time I met David Tepper, that was one of the first questions he asked.
I told them, when I was on the faculty, I felt like I gave every day when I came to work and didn't feel that I needed to give to annual giving, but that I now realized that was a bad attitude. I was working at an institution that was very worthy of getting some of the money that I give to charity each year. And if I didn't view [the school] as important to give to, then why was I working there?
With that, we went from some tiny percentage of faculty giving [to our annual fund] to 76% giving. I had also been going to alums and telling them what I was doing, and how I was doing it all without knowing where the money was going to come from.
I've never really been comfortable asking people for money -- it's sometimes hard for me to get the question out. Some [of the alums and executives] are surprised when you don't ask for money the first time you meet them, and some of them ask me if I'm going to ask them for money right before I leave the meeting.
Q: Well, that seems to have worked -- you raised $13 million since 2001 and also doubled annual giving to $1.1 million. But the Tepper gift really put things over the top. How did that one come about?
A: When I was out meeting alums, they would often say to me, "You need to raise a lot of money and find a big donor to name the school -- but it's not me."
Then, one of our alums, Raymond Smith, former CEO of Bell Atlantic, said if I could get permission [to change the name of the school], he would be happy to convene a committee to think about who I could approach to give the donation. David Tepper was one of the people I had asked if he would be interested in serving on the committee. Then he began to ask questions about how much we needed to name the school. And then he said he might be willing to name the school. I was definitely surprised at that.
Q: But renaming the school, called the Graduate School of Industrial Administration, wasn't just a simple matter, was it?
A: We had offered an MSIA [master of science in industrial administration], and when we changed the degree to the MBA, not only did we have alums asking for a new diploma because the MBA is the recognized degree, but that year we also saw a huge increase in applications to the program. But the name GSIA was creating confusion in the marketplace.
Then I began to investigate with the university what I would have to do to make the name change possible. We had to go the Mellon family to get permission and then win a vote of the trustees. I went to the family's representative, and [the family] came back with a generous response. They agreed that GSIA was no longer a name that was valuable in the marketplace, and they said when their grandfather put his name on the school as founder [the official name is GSIA, William Larimar Mellon, founder] it was [with the intention of] keeping open the opportunity for someone in future to come along and make a large gift to name the school.
Q: Now that you've begun to raise big money for the school, what's next on your agenda?
A: We're starting to get the word out about the school. We've seen the impact in terms of the applications that we're getting from prospective students. So, we're on the right path.
There's more work to do, but the gifts will help accelerate our ability to better exploit the collaborative culture at Carnegie Mellon. This means expensive course development, getting faculty to do research with people outside their traditional area. I want to continue the excitement we have built, and have it result in a lot of innovation, very quickly. My main goal is to match the perception with reality of school.
My subgoals are to leverage the strengths of the B-school and the university to create unique opportunities in our curriculum. Another is to enhance the environment for faculty and make sure we have an exciting research environment, a great place for junior faculty to develop their careers and become stars. And we want to retain the best faculty. The third goal is raise more money to achieve all of this