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May 17, 2001


University Senate Matters, Nathan Hershey

A few days after commencement I received a copy of a memorandum from my department requesting information from all faculty in the department. The memorandum included the following: "Dr. Levine has requested Annual Reports and Business Plans for each of the Schools of the Health Sciences." The requested information was to assist the department in responding to Dr. Levine's request.

On many occasions during the nearly 45 years I have spent at the University of Pittsburgh, I have received information requests to assist in the planning conducted by my department and by GSPH. This recent communication was the first that referred to "business plans." I had some questions. Is a "business plan" different from the type of plans previously prepared by my department and GSPH? Is there a special significance attached to the term "business plan" that I should recognize?

To gain some insight, I spoke with a faculty member of the Katz school. From what he told me it appears that, while there are certain elements that are generally found in a business plan, there is not much substantive difference between a business plan and what would be present in a university's or other nonprofit entity's strategic plan. In short, a business plan is a blueprint for how to get from an idea to something real; put another way, how to get from where we are to where we want to be. It needs to be realistic — it should describe the product or service to be offered, identify markets and the methods for delivery of the product or service, identify the sources of financing and contain sound revenue and expense estimates.

I have heard from faculty expressions of concern from time to time about what is usually termed the increasing corporatization of the University. One subject to which the term was applied was the practice of the Board of Trustees in awarding bonuses for the performance to the chancellor and certain other officers of the University when their compensation for the next year was being set. That practice was not followed when the July 1, 2000-June 30, 2001 compensation was set. In comments I made in response to questions from media representatives about those compensation decisions, I said that I and some other faculty membersbelieved that awarding bonuses was not a good practice for the University for several reasons, one of which was that it made the University appear too much like an ordinary business distributing a portion of its profits.

There are many references to failed business plans in what I have read about the collapse of many of the dot-com companies. The articles state that, at the height of the dot-com mania, venture capitalists were making large sums of money available to entrepreneurs based only on their business plans, and these new ventures often had no revenue at all, let alone net earnings. The impression I gained was that a good many of the business plans contained unreasonably high expectations, if they were not works of pure imagination, rather than anything grounded in rational belief supported by evidence. The dot-com experience indicates there is no magic in the words "business plan." In my opinion, calling a plan a business plan does not bestow any particular aura to it. However, use of the term may represent changes in approach, purposes and objectives from what has been called planning in this academic environment previously.

If so, should not University officials inform the Pitt community why such a change in terminology is appropriate or even, perhaps, necessary? If there is no substance to the change, is it only a matter of style — an example of being trendy? Perhaps plans at the National Institutes of Health, where Dr. Levine was previously employed, are called business plans.

On a related note, for a good number of years there has been a change of outlook underway in the public, nonprofit and business sectors of our nation. Approximately 30 years ago an individual who was then, and still is, a frequent consultant to government agencies and office holders, told me that a new philosophy was evident in Washington. In brief, government and nonprofits were being urged to behave in a much more business-like way, and businesses were being told to accept responsibilities to society, and to the communities with which they had direct relationships, and to focus less on the bottom line. His view was that this transition would be difficult, and unlikely to occur. However, we see businesses taking more active roles in what they consider public service. For example, Philip-Morris Inc., has a set of advertisements describing that organization's contributions through its employees and its financial resources to communities where it is located. Of course, Philip-Morris has its business reasons for attempting to appear enlightened.

Universities and other nonprofits are being urged to be entrepreneurial. Pitt has certainly moved in that direction. Entrepreneurship is much more likely to be possible in some schools and departments than others, because of the very nature of the fields and activities of the faculty in those units. Perhaps it is time to examine carefully how to maintain academic values and, at the same time, incorporate lessons from the business environment where they can prove helpful in achieving the University's primary objectives. I have already heard misgivings expressed about inadequate attention being given to the impact of entrepreneurship on the core functions of an academic unit.

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