Transforming business

Zenger sets a standard for excellence both inside and outside the classroom

Ask Todd Zenger, Ph.D., how his tennis game is progressing, and he’ll tell you, “It’s coming along.”

That’s because he has been playing regularly with Olin Business School colleague Ron King, Ph.D., the Myron Northrop Professor of Accounting. And their court performance is set to improve with the recent hire of strategy professor Nick Argyres, Ph.D., also a tennis player.

Photo by Robert Boston

Todd Zenger, Ph.D. (left), the Robert and Barbara Frick Professor of Business Strategy, meets with students Mark Lardie and Christine Neubauer, both of whom will graduate from Olin’s Executive MBA program in December 2008. An award-winning teacher known for inspiring and motivating his students, Zenger also serves as academic director of the EMBA program, an intense applied learning experience that prepares managers to innovate and lead their organizations.

“We need one more, and we’ll be set for doubles,” Zenger quips.

For Zenger, the Robert and Barbara Frick Professor of Business Strategy, the very best rallies, far and away, occur in the world of management research, where ideas and theories are volleyed, lobbed, popped, angled, spun, cross-sliced, punched, base-lined and routinely smashed to create new knowledge that shapes and improves the understanding and practice of business.

Zenger studies corporate strategy. He has written on economic theories of the firm, employee compensation, organizational design and innovation.

And at a career high point, when many academics might relax their research agenda, Zenger fires his up with a youthful energy akin to that of junior faculty.

Large firms, small firms

Where do entrepreneurs come from? Are they born with innate qualities, or are they shaped by their experiences?

Zenger is examining these questions and others in a study based on data describing U.S. scientists and engineers, groups likely to generate large-growth businesses when launching their own firms.

Working with colleagues Dan Elfenbein, Ph.D., assistant professor of organizational behavior, and Bart Hamilton, Ph.D., the Robert Brookings Smith Distinguished Professor of Entrepreneurship, he found that the decision to found a new venture is predominantly made by those employed in small firms rather than large firms. Moreover, employment in small firms appears to serve as an important training ground, as those ventures founded by employees of small firms are also more successful once founded.

“Interestingly, we also found that small firms tend to accumulate those from the two tails of the ability distribution, who in turn are the most likely to found new ventures,” Zenger says. “Those with very high ability tend to migrate to small firms because they effectively reward high ability. And those with low ability join small firms, in part, because they have been screened away from large firms. Both tails then look to migrate to self-employment.

“This helps to explain why large firms struggle to promote innovation and increasingly choose to innovate by simply acquiring small firms. The research suggests a cautionary approach to acquiring large firms because you often end up driving away the very people you want to keep,” Zenger says.

“From a public policy view,” Zenger adds, “the obvious question is, ‘How do we create an economy that encourages economic growth through entrepreneurship?’ “

Pendulum theory

In the classroom, Zenger is known for setting lofty standards and inspiring students to think in new ways.

The academic director of the Executive MBA program, he also has taught extensively at WUSTL’s EMBA program in Shanghai, where “the economic transformation has been more incredible with each visit,” he says.

His work with EMBA students has made Zenger privy to the key issues facing businesses today. What might those be?

That’s difficult to generalize, he says, but many issues are the result of a recent shift in corporate focus.

“Many firms spent prior decades focused on operational excellence, cutting costs, downsizing or spinning off unrelated businesses,” he says. “Basically, it amounted to how much cash you could squeeze out of your existing business.

Courtesy Photo

The Zenger family: (seated from left, in front) Chase, Andrew, Lara and Hanna; wife, Shawn (standing); and Todd.

“Increasingly, the focus is turning to growth. How do we effectively grow the top line and expand? It’s a shift away from organizations obsessed with exploiting all they have in their systems,” Zenger says.

These shifts within an organization are nothing new, Zenger says. While managers’ aim is to build organizations that are effective in doing both, this often requires dropping one approach for the other.

“Now, you’re focusing on becoming a hyper-innovative organization on the prowl for new businesses, new products and new services,” he says. “You decentralize and gear your company toward that approach. And very often, the result is increased innovation.

“Soon, however, the structure and approach breed inefficiencies, which precipitates a swing back to centralization and an emphasis on operational excellence,” Zenger says.

Zenger and frequent collaborator Jackson Nickerson, Ph.D., the Frahm Family Professor of Organization and Strategy, have studied how and why these continuous shifts occur within companies, dubbing it organizational vacillation or, as some describe it, the pendulum theory.

Their collaboration has spawned many influential papers on various topics, including a prizewinner that examines “comparison costs” — costs to the firm when individuals feel slighted in their rewards. The two were presented with the 2008 Olin Award in recognition of research that transforms business.

“Todd is a marvelous colleague,” Nickerson says. “As researchers, we have wonderful conversations, pushing each other’s thinking, clarifying questions and refining theory on topics of mutual interest. Todd does not write papers, he crafts prose. He sets a high bar, and I have learned a great deal from him.”

Inspired by the best

Todd Zenger

Favorite ski resort: Solitude Mountain in Utah

No. 1 challenge for businesses today: sustaining growth

Greatest personal challenge: : finding enough time

Most memorable family moment: “With three in college … any time we are all together,” Zenger says.

Raised in northern California, Zenger was brought up by parents who prized and modeled the value of education. While both earned doctorates — his mother in music and his father in business administration — neither pursued an academic career.

Zenger himself had no inclination until he took a handful of courses in the undergraduate economics program at Stanford University. Two of these courses, in organization and strategy, were taught by prominent scholars and a third by a well-known consultant who would reshape management thinking with a seminal book on the art and science of leadership.

“Tom Peters had, in that same year, published what had become the all-time best-selling international business book, ‘In Search of Excellence,’ ” Zenger says. “He was teaching a graduate course at Stanford, and I obtained special permission to take it.”

Inspired by these teachers, Zenger applied to both master in business administration and doctoral programs during his senior year. In the end, he took his father’s advice — “You can do anything an MBA can do with the Ph.D.” — and, upon graduation with distinction in 1983, he headed to the University of California, Los Angeles, where he earned a doctorate in organization and strategic studies.

After a year on the faculty of Pepperdine University, Zenger answered an advertisement for a position at Olin. “It was a perfect fit,” he says.

“I arrived as the fourth hire in a combined strategy/organizational behavior group,” he says.

A new vision

At Olin, Zenger quickly became a standout.

Within a few years, he was invited to teach executive education courses and increasingly played a hand in developing the core curriculum across all of Olin’s programs.

The scope of his influence on the school’s continuing trajectory is broad and deep. Committed to building undergraduate strengths, he recently helped develop a new vision for the program.

“We want to engage students with deep-dive experiences in faculty research,” he says.

At the other end of the spectrum, he continues to teach and advise doctoral students. This year, he also begins his term as chair of the tenured faculty at Olin.

Other roles include associate editor of Management Science (strategy area) and board appointments on the Academy of Management Review and Strategic Management Journal.

A former chair of Olin’s strategy area who also served two years as senior associate dean for academic affairs, Zenger is pleased with the company he keeps.

“We’ve had a lot of success with faculty recruitment, and I’m excited about our group,” he says. “We’re not huge but have become prominent in the field of strategy.”

One measure of the muscle is that the four tenured strategy faculty serve on the editorial board of Strategic Management, the most prominent journal in the field. Tenured faculty also serve as senior or associate editors for other top strategy journals.

Clearly, those net assets are hard to beat.