Prof. Corey Phelps, Dean of the Michael F. Price College of Business at the University of Oklahoma in the United States and an Executive Advisor for OYSTEC, talks to Gernot Kapteina, Founder of OYSTEC about the impact of COVID-19 on university and organizational environments as well as the best strategies for growth beyond the pandemic.
Corey, thank you very much for taking the time for this interview. You have recently become the Dean of the Price College of Business in Oklahoma. How is it going?
Phelps: Thank you, too! Well, I went from managing a group of 20 people at McGill University in Canada to now having a college in Oklahoma with about 170 people including faculty and staff, so clearly the scale of the organization I am in right now is bigger. The scope of responsibilities is also much bigger than previously. Deans are the CEOs of their colleges; we are responsible for all aspects of operations plus the strategic direction of the college. There are other things that makes the transition special: one, I am a newcomer to the university, so I have to learn a lot about the context in which I am operating. The way I think about universities is that they are multi-business companies: you have a corporate headquarters - that is the central university office, the president, the provost and so on; and then you got the business units - those are the colleges. Each business unit has to operate within a broader company which means we have to work with other colleges, other business units. We take directions from corporate headquarters – from the President and provost office. There are policies, procedures, rules that we have to obey on the university level.
I have to learn about all of these new things; plus I have to learn about the college itself, including the new people I am working with: faculty staff, students, alumni, different advisory boards and so on. That is a challenge, but the final challenge is of course – Covid. We are in a global pandemic, and it is a challenge to step into a new leadership role in the middle of a global pandemic. Just in terms of time, the amount I spend on a weekly basis on Covid-related issues is quite a bit. If we were not in a pandemic, I could use the time for other important things to advance the college. So, all in all it is a challenge, but it is a good challenge. It is certainly interesting, it keeps me on my toes, it is motivating – it is an energizing challenge.
You and I met before you became Dean in Oklahoma, namely when you were Associate Dean of Executive Education and Professor of Strategy at McGill University before. If we look back even further, can you briefly describe to our readers how your entire career has developed?
Phelps: My academic career started with my PhD. I decided when I was 29 to go back to University and to do a PhD with the objective of becoming a faculty member and a Professor at a research-intensive university. I did my PhD at NYU in New York. My first job out of the PhD was at the University of Washington in Seattle. I spent eight years there as an Assistant Professor. Then I moved to France where I was an Associate Professor at HEC Paris for 5 years. After, my wife, my daughter and I moved to Montreal where I became a Professor at McGill at the Faculty of Management. In addition, I was the Associate Dean of Executive Education. I managed three degree programs as well as non-degree executive educations. After 6 years there, I came here to the Price College of Business at the University of Oklahoma. I have been very fortunate in terms of the places I have lived and the organizations I have worked for, the people I have worked with, so I count myself very lucky in terms of the career I had so far.
It is a polite understatement of you to say that this is "luck", since it is a lot about the habit of working hard, too: The more you prepare, the more fortune you have.
Phelps: Thank you – that reminds me of a quote from Louis Pasteur: “In the fields of observation chance favors only the prepared mind.” Success in life is best-described as a mixture of preparation and good fortune.
Let's now take a look at the different university environments you have worked in during your past global engagements. Are there cultural and/or institutional differences, or also many similarities?
Phelps: Let me start with the terminology: In the US we call my current “school” a college, while in Canada we have the tradition of calling them faculties. E.g., in McGill, we had the Faculty of Management which is equivalent to a College or School of Business in the United States. And to be honest with you, colleges or schools of business or faculties of management or whatever term you want to use – to the extend that some are major research universities – they are often quite similar in multiple ways.
When I think about any university I have been at – NYU, University of Washington, HEC Paris, McGill, or the University of Oklahoma – all of them have internationally-diverse faculties where the people come from all continents. And that is true here as well at Price College: beyond all the Americans, we have people from India, China, Canada, European countries. We have representations from a lot of different places. In that way, it is very familiar. The other thing which is familiar is – when you take a look at other organizations across the world – they all do things in a very similar way: processes, procedures, performance metrics, et cetera – because what happens is that over time, regardless of geography, they all become very similar on how they are organized and how they conduct their work. The same is true for business schools. A simple example: In Higher Education, we have this tradition of tenure for faculty. Tenure is a milestone in somebody’s academic career, and it exists in many universities around the world. This practice, which originated largely in United States, has spread to a lot of other places.
This raises the question of performance metrics, which are now more or less the same, regardless at which university you are at. They are predominantly focused on research performance which is usually measured by publications in the world’s top academic journals. So, whether I am at a faculty at McGill or University of Oklahoma or another university, the performance metrics are similar, , the nature of the job is similar in terms of my responsibilities, what I research and what I teach. Even though there are differences, it’s probably more similar than different in terms of the actual organizations. Now, in terms of where the organization is located, there are substantial differences. Oklahoma City is very different from Paris which is quite different from Montreal which is quite different from Seattle from a cultural background. But the organizations I have worked with, to a great extent, they are similar, which makes it easy to move from one organization to another.
Understand. The next question is now related to the first time we have met during your engagement for the McGill Japan MBA program where you were the Professor for our class for ‘Technology Entrepreneurship’. What is your opinion on this program, now and then?
Phelps: Personally, I enjoyed my experiences with the McGill MBA Japan program. I found the students very, very bright, and I loved the international mixture. And that was also great for the Japanese students for having people from different parts of the world in the class together with them to get a different perspective on things. What also made it interesting and attractive for me beyond the diversity in the classroom was the academic level of the students which was also very high. As you said, I taught Entrepreneurship in that program and people were really interested in it. When students are interested in what you are teaching, that’s always motivating for a faculty member.
I think the program on multiple dimensions is a very good program. As you know, the business model of the program was to fly faculty members from Canada to Japan, which I think is great for the students because what you are getting is the same type of program which you would otherwise get in Montreal, but you are getting it thousands of miles away – in Tokyo. What I often struggled is to truly understand why we didn’t have even more demand for the program: Given that we were one of only two officially approved providers of an MBA from outside Japan in Tokyo, and given the brand name of McGill and the quality of the students we did get plus the strengths of the alumni – I was often surprised that there were years that we were struggling to still get sufficient numbers into the program. I don’t know if this was a lack of investment to market the program. For me, it was a jewel in Desautels MBA offerings. I am disappointed that Covid has happened and it makes it difficult to deliver the program further. I do not believe that the program remains the same if we move to a virtual delivery model; in other words, if it goes completely online.
There is huge value in in-person onsite classes. And to be honest, if the pandemic has taught us anything, it is to appreciate the value of in-person interactions even more, because once you take it away, and all the interactions are happening with a screen like we are doing now, I think you lose something in that. The model of the Japan MBA program was a very good model, but the pandemic made it impossible to continue with that model.
Thank you for your opinions on the McGill MBA Japan program. You just also talked about Covid – now, when you think about universities in general, what impact does Covid have, and do you think there is anything different which also will remain once the pandemic is over?
Phelps: There will be a lasting impact of Covid on Higher Education and how it will be delivered and consumed. Before the pandemic started, most of my colleagues and I did not have a lot of interest in teaching our classes online. But the pandemic was and is a real shock to Higher Education. The pandemic has forced us to teach online. But there is a downside: When you teach online, you lose something like the quality and the richness of the interactions. On the other hand, there are a lot of upsides, too. For example, I can be much more accessible to students and vice versa. And I can merge the two approaches as a hybrid. I can complement and extend the in-person aspect of teaching. The best example is the so-called “flipped classroom” where I can deliver theoretical and conceptual material in a highly engaging online video, post that, have my students consume it whenever it is convenient for them – and then I can reserve the in-class part to applying those concepts and making them come to life. With this, I can leverage the best of both worlds.
The pandemic has made instructors around the world realize the benefits to move online. It is not a complete substitute for what we do in-person, but in some ways, it can be a complement. But institutions have to make investments into the technology infrastructure to teach online at scale. What is happening is that many faculty members are teaching their classes from their laptops at their kitchen tables, which – let’s face it – is not the highest quality production value and does not lend itself to the best experiences for students. So, when you go online, whether it is synchronized or asynchronized delivery, you have to undertake a minimum level of hardware investment such as three-point-lighting, greenscreen background, virtual whiteboarding, high-definition camera and microphone – these are definitely necessary conditions.
Then, you also need faculty members that have been effectively trained to teach effectively online. Because, what we have learned from the pandemic is that you cannot simply transport how you deliver a class in-person to online. That means things like instructional design skills, how to engage people online, and more. I believe universities who make these investments into infrastructure and human capital are the ones who are going to thrive in the long run. And this will be a lasting result of Covid. It is accelerating many of the trends that had been occurring in Higher Education and brought them to the surface. Those universities who don’t make the transition will likely shut down. In any market that undergoes a massive transformation, there will be winners and losers – and the ones who are willing to invest and adapt are the ones who are going to be the winners.
These are true insights. Now, if we leave the university sector to look at companies around the world - both start-ups and larger companies - how risky is Covid for them, or are there perhaps even new opportunities? Through your current and past roles, you have gained a lot of market insight into how these organizations operate. How does Covid impact them now, and what changes will remain?
Phelps: That is a great question. There is both, and it largely depends on the nature of a sector and the business model. Right now, we are talking on Microsoft Teams, so the pandemic was a tremendous opportunity for those companies that have enabling technology, like in this case any sort of videoconferencing. Just look at the stock price of Zoom since the pandemic started. The demand for some sectors has gone through the roof. Then, there are other sectors that have collapsed. This is partly because of the social distancing requirements used to minimize transmission of the virus. Sectors whose fundamental focus is to bring people together have been negatively impacted.
The question is, will these businesses come out of it? I believe that after the pandemic, many will. For example, airline stocks will rebound because air travel will rebound. But will we go back to what existed pre-Covid? I think one of the lasting impacts of Covid across all sectors of the economy is probably a better understanding of where it is absolutely necessary to be physically co-located – in other words where do we need in-person experiences versus what can be done remotely. This has implications for a variety of industries.
Let’s take for example commercial real estate: there are billions of square meters of office space around the world right now that is unoccupied because of remote working. Once Covid subsides, I do not think we are going back to all of the office space being used as the way before. We will see a sizeable drop of the commercial real estate and we will see an increase in things related to work from home remotely. Those companies which have products and offerings that enable you to work from home – those businesses will benefit from this. This is for example Amazon as we see a growth in terms of e-commerce as result of people working from home and areas like goods and food delivery. In broad terms, we do not go back to the same volume of air travel, commercial real estate, physical meetings. There will be a shift in demand to more technology enabled delivery like we are doing right now in many sectors. People’s behavior will fundamentally change.
Let’s now talk more specifically about OYSTEC. You have been the Professor to evaluate the business plan few years ago. As planned, there are especially two pillars – the management and IT services as well as the digital product and platform pillars. As an Executive Advisor, when you look on OYSTEC with and without the impact of Covid, what do you recommend to OYSTEC about how to scale and where to further invest resources?
Phelps: I understand that both pillars are important for OYSTEC. However, the longer-term future of OYSTEC may be on the platform side, because it is more scalable. In other words, you are dealing with digital offerings where we know that there are huge economies of scale. Yes, it is expensive to develop those things initially, but the marginable costs of reproducing them is almost zero. To the extend that you can find large demand, means you are going to face a business where the margin grows when you get bigger.
On the service side, it is a body business by renting out people. There is little in terms of scaling economies there. If you need to do an additional project you have to hire additional persons so the costs scale linearly. That is why in the long run, the platform business is probably the more viable profitable business. But in the short run, the question is, where are you going to get the cash to invest in the platform business. This is why I think your approach of doing both is the right way. One analogy I think of is Netflix: In the early days, Netflix rented DVDs. You are renting people; they were renting DVDs. But even in the beginning of Netflix, they had the idea that they eventually wanted to go online for digital distribution, streaming. The problem with that time was that the technology was not yet there to do it economically and efficiently. They knew it requires a huge investment in technology and content. They used the original business model of renting DVDs through the U.S. postal service to generate cash to invest into the streaming business. They knew that one is going to cannibalize the other, because once I can stream, why would I rent a DVD – and this is exactly what was happening then. This is, however, not a perfect analogy, but using the service business with more identifiable demand to reinvest the return into the platform business is smart. I believe in the short to medium run, you have to do both of these things. But in the longer run, my guess is that the digital product and platform side can be the one with a very big potential for profitability.
So, how does Covid relate to that? For example, your business includes program and project management with related services. That also means that you are selling knowledge in the form of frameworks and toolkits. These things can be the basis for digitalization. Leveraging machine learning and AI can be an enabler to substitute for the traditional way of renting people to still ensure the utilization of the frameworks and toolkits you are offering. In the longer run, you may need to keep the service business there as well, but you want to further sharpen the platform business. What I have seen as a result of the pandemic in many companies is an accelerated investment in machine learning and AI. What they have learned is that pandemics affect people to the extend that people are critically important to a business like a service-based business – that means that this business is fragile; it can be easily disrupted in terms of that the business can come to an hold. If I am using a machine, an algorithm, I am less fragile, less subject to be affected by a human-transmissible virus. One thing that I have noticed in many companies is that they are increasing their investments in AI, which accelerates the process of some substitution – machines for people – in the long run.
AI in combination with other techniques, like automation.
Phelps: Yes, these are two things which go hand in hand.
I want to confirm that my current strategy when it comes to offerings is indeed to focus on both pillars for now: scaling the services by establishing even stronger trustful bonds to customers, plus also to re-invest the cash into the further growth of the digital products and platform business. Thank you for your deep thoughts. Let's now take a look on an asset you have created not long ago - beyond your roles as Professor and Dean - and that is that you and two other professors have published the famous book entitled "Cracked it! How to solve big problems and sell solutions like top strategy consultants". Can you tell our readers about the core messages of your approach which you describe in this book?
Phelps: I would say the biggest value is that it gives you a structured framework and a set of tools that you can use to solve difficult organizational problems. Methods, tools and frameworks are useful because they help you to make sense of what is otherwise a very messy, complex world. Often times, people then do not know where to start attacking the problem. But if you have a structured process that says, here are the steps to follow, and here is a set of tools for each step – this can actually give you greater confidence and enable you to come up with a viable solution for that problem by using a structured method with the right tools by any individual by any organization to tackle challenging problems.
In addition to the structured and helpful content of your book to assist organizations solving problems, is there anything in addition you have realized once organizations started utilizing your findings and maybe gave feedback?
Phelps: What I think would be another value add is something where we actually walk readers through how to apply the method and toolkits to actual problems. We do this already in the book to illustrate each of the stages of what we call the 4S-framework, but what I really would like to do is to have a set of cases, meaning problems from real organizations, and to use these problems as targets to apply our 4S-framework. It would be a case book – to be used in addition to what we have already published.
What are your next ambitions in your current role as Dean and Professor, and maybe also beyond?
Phelps: The next major initiative for me in my role as Dean, after being here for four months, is to start a strategic planning process for the college. What we really need to do as a group – faculty and staff,– is to decide: what do we aspire to? where do we want to compete and what are the capabilities we need to win? These are core strategy questions. We need to do this, because the last time the college did this was around six years ago. The world has changed since then, and the university itself has a new strategic plan, which just came out a few months ago. The time is right for us to do that. That will be a major effort and will take place over a six months period. We are going to engage a variety of different stakeholders – clearly faculty and staff, but also students, alumni, members of our different advisory boards. We will come together and ask the basic core questions of strategy. That will require a lot of effort, because what will come out of that is our clear strategic direction, areas we are going to compete in, capabilities which we either need to build or borrow.
After, we will spend a lot of time on executing on that. That is the next immediate challenge that I have for the next six to nine months. What are my aspirations beyond that? They are largely embedded in that strategic plan on where we want to take the college. Beyond being a Dean of a college of business, I am interested in the next step up which would be to be the President of the university. I have the benefit of being in a role of a Dean and the benefit of working closely to the current President, and that gives me insight on what is the nature of the job. I cannot yet tell you whether this will be attractive for me or not. But if it is – and I do not know yet in how many years – but I can see myself maybe stepping into the role of being the President of a research university.
We now come to the end of the interview. You have given a lot of insight into the strategic thinking of both university and organizational environments. Thank you very much for that. I am sure that this is of great value for our readers.
Phelps: It was great to have had this conversation. Let's stay in touch and continue to collaborate on a regular basis.
We definitely will. Thank you very much, Corey!
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