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Avy Stein delivered the convocation speech (excerpts below) at the College of Business MBA and Executive MBA convocation on May 17. Stein is a 1977 graduate of the College with a degree in accountancy. He received his JD from Harvard in 1980. He is currently managing partner with Willis Stein & Partners, LP, in Chicago.

Good morning.

I am honored to be talking to some of the brightest new business people in America today. Congratulations.

Things have changed since you decided to enter business school around Spring 2001. The Dow was 20% higher, the NASDAQ was 30% higher, WorldCom and Enron were two of the Fortune 50 and, for graduating MBAs the all important unemployment rate was barely over 4% instead of the nearly 6% current rate.

Even cocktail party conversation has changed. Nobody answers, "I am the CEO, CFO, Auditor." Now I might rather, even given the jokes, answer, "I used to be and am still trained to be a lawyer."


As if we all needed to be reminded things are tough, on May 6th -- just 10 days ago -- the Wall Street Journal got into the act with an article entitled "New MBA'S Find Closed Doors." The Journal points out that 5 years ago, 86% of MBAs graduating had jobs vs. 60% this year. And the article goes on to argue that students everywhere are doubting the value of the MBA.

You should not. The value of your education and your MBA is enormous.

So how bad is it really?

Short term we have some issues but you are well situated for the long term.

With respect to the current situation, substantial overhang and excess capacity from the excess of the last decade still exist. The effects of recent geopolitical events and SARS remain unknown variables. We are still at the point in the cycle where we need to stimulate capital spending.

But I definitely see things stabilizing. Our businesses that are leading indicators of economic health -- those in ad-based media and marketing services -- are stable and showing some initial signs of life. Our company that manufactures components that go into computers, routers servers and appliances is beginning to recover -- comparisons to prior periods finally are favorable.

Significant growth opportunities have developed from similar points in previous cycles.

Since the 1974/1975 recession, which I suspect is around when many of you were born, our economy has grown from $1.5 trillion to $11 trillion. During that same time our economy has created 58 million new jobs, 60% filled by women.

Since the 74/75 recession entire industries have been created in areas of:

  • PCs
  • Software
  • Wireless Communications
  • Mutual Funds
  • Discount Brokerage
  • Hedge Funds
  • Super Stores
  • Club Stores
  • And many more

MICROSOFT AND ORACLE both were launched out of the early 80s recession and in that same timeframe.

You are in a great position. You are graduating from a top business school with a focus in the accounting and technology areas and a reputation for turning out great managers especially in technology driven businesses.

Excellent, honest management talent is the scarce resource.

All you need to do is get in the game on one of the healthy, growing teams in a good league.

The likelihood you will end your career at the same company in which you begin is less than 1%. Why not learn how to make something. Learn how to sell something. Learn how to manage something. As my father used to say, "learn on someone else's nickel". It surprises me when I think about how much demand there is for solid managers and how little I hear about young MBA's starting their careers as salespeople, manufacturing people or middle managers.

In hiring people for my own firm as well as for our portfolio companies I am always impressed by in-depth domain knowledge and management experience. ...

How do you choose the right league or industry?

Prior to leaving IBM, former CEO Louis Gerstner observed:

"Computers are magnificent tools for the realization of our dreams,but they will never replace the dreamers."

You need to do the dreaming to find the growth opportunities.

After all, it is always easier to succeed with the wind at your back. To have that advantage, I believe that you have to look to business, demographic and societal trends as growth predictors.


[L]ooking at trends can help us to make better career and investment decisions. For example, the business trend toward businesses focusing solely on their core competencies and outsourcing other functions is continuing if not accelerating. Technology gains and globalization will continue to drive this trend. Growth will come in businesses providing payroll and attendant services, running information technology for other businesses, providing outsourced accounting and bookkeeping, human resource functions, procurement of goods and services, marketing, customer services, and outsourced manufacturing. Why? Because it simply makes sense that through focus we can achieve more efficiency and technology can support these efforts.


Success is a wonderful thing. It should give us the confidence to expand our horizons-but it will never teach us as much as failure. We all will be far better at what we do having gone through the past 2-3 years.

If you read my bio, you know that I did many things from lawyer to CEO to entrepreneur before entering into the private equity business. I can assure you that I learned far more from the failures of the security alarm business I founded and ran than from all of my successes combined.

You will not be alone if you try and fail. Henry Ford, Thomas Edison, Larry Ellison (Oracle) all had great failures. Harry Truman even became the President of the United States after his haberdashery business went bankrupt before the Great Depression.

Honest failure will serve you far better than dishonest success.

In 1981 Sam Nunn made the following observation:

"Education does not develop your character until it merges with integrity and wisdom."

Warren Buffet was once asked, "Isn't it the worst combination to have as a CEO of one of your companies someone who is dishonest and incompetent with no initiative?" He replied, "NO." That person won't hurt you too much. Watch out for the one who is extremely competent, dishonest and loaded with initiative. Unfortunately, that describes some of these people.

That many of our CEOs claim ignorance of any of the wrongdoings is laughable. I am sure that many of you watched a lot of the recent war coverage. It is like watching the Iraqi information minister, Bagdad Bob. Total denial. You know - the statues of Saddam Hussein are being torn down behind him, the U.S. marines clearly are wandering at will through Bagdad and he proclaims:

"Iraq has defeated the U.S. The allies are about to surrender."

What is in many ways more troubling to me is the actions of the young finance staffers who became caught up in what might have began in their minds as overly aggressive financial engineering they could later make right. In no way am I condoning their actions. They too should be punished severely. Their breaches of trust have harmed not only themselves but the suppliers, co-workers, investors, and pensioners of their companies. This conduct cannot continue.

But typically this happens because a culture of cheating starts at the top and pervades the organization. Initial indiscretions occur perhaps spawned by the pressures of making quarterly earnings estimates, the impact of missing those estimates on employee bonuses and the value of executive and employee stock options. Then, the problem gets out of hand. The whole reason the manipulation occurred was poor performance. Should we be surprised when it continues or gets worse?

The obvious answer here is don't - under any circumstances start down that road. There is no such thing as a temporary breach of integrity -You cannot fix it later. You need to be ethics leaders. Choose to work for and with people whose integrity is unquestionable and who set a standard and create a culture of honesty and fairness. Management with integrity is the key. It will help you to enjoy your journey.

I have what I would describe as an interest in golf. My wife would probably call it an obsession. I play a lot of "business golf." I watch golf - not every night. I read about golf - not every day, and in particular I read about the lives of golfers.

Davis Love, who is a successful tour pro, grew up under the watchful eye of his father, a successful player and teacher. Unfortunately, the elder Love was killed in a plane crash. Just before his death, in the book of ongoing tips from himself to Davis he wrote the words, "Enjoy the Journey"

I am sure this sounds both obvious and trite, but it doesn't happen by itself. I cannot tell you how many people I know in many careers who wish they were somewhere else, or who wish they had more balance in their lives. You have to be willing to engage in critical self-assessment and take some career risks early on. Don't be afraid to give back in the form of CIVIC commitments. It's the right thing to do. It also creates good balance and is good business. Whatever you do you have to believe in yourself and find your passion. Believe me it is worth it. It leads to success.