Pulse: Sam Katz’s Power Lunch: Quick Study

Between meetings, Drexel president Taki Papadakis schools Sam Katz (over salads) on creating an A-list university

Thirteen years in as president of Drexel University, ebullient Constantine “Taki” Papadakis is renowned as Drexel’s savior — the man who turned a school on the brink of extinction into the fastest-growing research university in America. Today, Drexel is in full bloom, with 21,000 students and annual research expenditures exceeding $100 million — a ­Harvard B-school case study just waiting to be written.

After more than a decade here, you still seem to love this job. You bet!

Why? So much pressure. So many demands. Yet you still have that zest. Every year I come up with something new and something big that energizes me and the university administration.

Energizes or exhausts? That’s good! First energizes, then exhausts. That helps us keep our eye on the ball. In the early ‘90s, Drexel was an institute of technology. Today we’re a comprehensive research university with professional schools and a research budget that exceeds $100 million annually. We’re among the top 100 private universities in the U.S. Our growth has been phenomenal. We have 21,000 students, up from 8,000 when I arrived. Plus we have 13,000 Drexel students who attend via the Internet and don’t come to the campus.

How does that work? We started Drexel eLearning, Inc., in 2003, a for-profit business, to be the marketing arm of Drexel to build a virtual university with Drexel professors. We are among the biggest providers of e-learning among American universities. And the quality is outstanding. There are no limitations — no 55-minute lecture, unlimited virtual office visits, extensive interaction and working groups among students — like there are in classroom-based education.

You took over the medical school when the Allegheny Health System collapsed. People thought you were crazy. Actually they told me I was crazy. It was more than just thinking it. We took over the medical school, a school of health professions, the schools of nursing and public health. All of them were losing serious money. It was very tough going in 1999. It took Drexel three years to reverse the financial conditions of these colleges. Now Drexel College of Medicine is the largest private medical school in the U.S., and it is making money. The Nursing School, with 3,000 nursing students, is the largest in Pennsylvania. The College of Public Health just celebrated it tenth anniversary as a Drexel college and is one of only two public health schools in the state. Pitt is the other.

You keep talking about profitability. Are you unique among university presidents keeping financial metrics in the forefront? Our first line of business here was to bring finances back in line. This university lost money consistently. When I came here the school’s bond rating was junk. It’s A+ today. Sound finances enable us to grow, take risks, try important initiatives and deliver a better product to our customers, the students of this university. If you don’t pay a lot of attention to the bottom line, it will eventually pay a lot of attention to you.
If you have the resources, you can buy quality and have a better university — better services, better faculty, more programs. There are two categories of universities — the "haves" and the "have nots." Drexel used to be in the middle of the "have nots"; today we’re at the top of the "have nots." But we’re still "have nots” compared to Ivy League universities. The gap is wide and gets bigger. So our strategy has been to grow faster than the "haves." I benchmark against 25 universities [such as Boston, USC, MIT, and  Penn]. My goal is simple: Grow faster. Revenues, research grants and contracts. And we’ve done it. Drexel is number one in growth, and has been consistently. This is our way of closing the gap. It can’t be done through conventional means. We can’t compete head to head by offering the same programs and competing on quality and services. We could only succeed competing by deploying unconventional means.

Like what? We acquired a company called Math Forum to help tutor students in math and science. Drexel eLearning will, we think, be a huge educational business for us and for many students. We started the ASP company in information technology to provide services to smaller universities like Cabrini and Neumann — seven customers in total. We provide the back office and IT service to a university in downtown Buffalo with a couple thousand students. Each of the enterprises contributes to Drexel’s financial health. Plus we keep our IT professionals engaged in interesting and challenging stuff and that has enabled us to keep them at Drexel. And these businesses make a lot of money.

How is Drexel getting ahead of the curve in addressing educational methods? We are starting an institute of innovation in teaching and learning and hope to be operational in the fall. We’ll train professors to create and deliver more engaging and entertaining methods for educating students. Some people call it edu-tainment, but the fact is students don’t want dull. They want inspiring and interesting and provocative. A "have" university will emphasize research, attendance at international conferences, and publishing. We want to be the university that delivers the next generation of educational methodology. Too often the curriculum is inflexible. This generation wants flexibility. They want to combine engineering, media arts and business. We want to create an environment where the best students will find expert academic advice to make a curriculum that speaks to what they want to do in their lives.

Red flags are going off with Drexel seeking to be a bicoastal university. How can you make a major campus in Sacramento, California, work? The better question may be how can we not? Two years ago we looked at demographics of 18-year-olds. Our research showed that we will face a significant reduction in the 18-year-old population — about 7 percent over 10 years — in the northeastern U.S. and significantly more in Pennsylvania. At the same time, Phoenix will grow 38 percent, California by 25 percent, Florida and Texas by 30 percent. Drexel does not have a national brand. So we decided to configure a national network for Drexel with nodes in the fastest-growing places in America. We want to start slowly. On January 1st we started offering courses in Sacramento in business administration, engineering management, nursing, education and library sciences, all taught by our Philadelphia faculty. We’re focused on getting our MBAs in Sacramento collaborating in teams with our Philadelphia MBA students. This has generated a very positive response from the business community out there. We’re leasing a building downtown for our classroom-based courses plus our online programs. This is new territory — blending traditional with virtual classroom learning. Drexel is a leader in this.
Some wonder why a new Drexel law school — though not Lauren Katz’s father (me) who is in the first class and loves it. Why did you go in this direction? After our medical school experience we saw the collaboration between technology and health care — in research and commercialization. Multidisciplinary integration was robust. We thought that a new law school could focus on technology, health care, and intellectual property issues, where we already had expertise. Add to that co-operative education that is the hallmark of Drexel, and which no other law school except Northeastern in Boston has. So our law program was designed with these unique characteristics in mind. Then we appealed to the legal community by arguing that we would create a freshly minted lawyer would be ready to work. We knew that the five [area] law schools were getting 15,000 applicants and admitting 4,000. What was happening to the other 11,000? We got 2,000 applications and only admitted 140 students and their quality — including Lauren — was outstanding, higher than we could ever have hoped. This School of Law, which took us two years to create and open, has been a tremendous success already.

How can you get stuff done so quickly? Around here everything usually takes forever. We work very fast here. We never use committees to do anything.

That’s not the academic way. Committees are places to bury decisions and give people the false sense that they are avoiding making mistakes. We’re going to make mistakes. So let’s make them up front and fix them. This is our philosophy.

What are the big mistakes that Drexel has made since you got here? Actually, we haven’t made any mistakes. It’s been a terrific run.

If that’s true, what is the key to managing the enormous amount of risk you seem willing to take? I took a lot of heat when I converted our library from books to online, but that has worked out remarkably well. We’re customer- (student-) driven and not faculty-driven. We have a one-stop shop to help our students solve their basic business issues, usually student finance, with the school. We took an employee engagement survey, not a satisfaction survey. I don’t want people to be satisfied. I want them to want promotions, better benefits, and higher pay. Corporations do these all the time — Drexel was the first university. Decisions are made overnight. If we have limited data, we make the best out of it and move on. Senior management at Drexel could work at the most prestigious universities but they stay here because they love the challenge. I went to the Inquirer editorial board in 2004 and told them we were going to open a law school in 2006. The staff read about that. Rather than complain, they rolled up their sleeves and we made it. Eighteen months later we received provisional accreditation. There is no other university in America like Drexel, and everyone here understands that.
In the last several decades, universities, medical schools, and educational institutions have become dominant drivers of the regional economy. How has this fact of life changed your job, and is Philadelphia getting from the leaders of these institutions the leadership it needs to capitalize on a knowledge based infrastructure? The contributions of these institutions to the development of the region was not publicly understood or discussed in the early 1990s. This became better understood during the Street Administration and when Mark Schweiker took over the Chamber. The value add of these institutions is in excess of $20 billion annually. $2 billion of that comes from Drexel. Penn leads the way but Penn, Drexel and Temple really drive the bus. These are captured assets-we can’t fold our tents and move elsewhere. We are entwined with the city. These facts dictate that Presidents of universities act more like CEOs.

Maybe we need CEOs to act more like Presidents of Universities? (Laughing) I think I’ll let that one pass. That’s how I saw my job from day one. That is why I am so involved with the corporate community in Philadelphia. That community sees Drexel as a profitable and well-run business, which happens to be one of the largest in the city and which is in the education business. We are growing by 1,000 students per year. I asked the economy League to evaluate the impact of that and they found that for every 1,000 students we brought in we created 500 jobs and this at a time when the city was losing 10,000 jobs for year. Our strategy is to be highly visible. Our ads say that "Drexel is Philadelphia’s technology university". We are Philadelphia and we will always be. The modern University President is not to simply be titular or functionary. The CEO really runs the place and that’s been my approach.

How important are the ratings published in U.S. News and World Report? When U.S. News found a gap in college rankings they capitalized and helped to create the brand. Universities failed at measuring their performance, creating an opening that was filled by U.S. News. We want good ratings, and we are in the top 100 of private doctoral universities, but we don’t want to do stupid things to up the ratings. We want to do the right thing for our business and the needs of our customers. Rating improvements should never be a component of strategic planning. They are important and people get excited about them — I just don’t want Drexel to pay too much attention to them.

Is the plan to create a more dynamic campus life at Drexel working? Yes, and it’s really important. Thirteen years ago this was a dead campus. We didn’t have the students. We used student growth, built dormitories, and converted the essential character from commuter to residential, and scheduled events, meetings, and entertainment to help create a critical mass. We use the day to prepare our students to be great professionals. After 5 p.m. we want to prepare our students to be great citizens. We require civic engagement with community service so they learn how to give back. We had very little weekend campus life. We have now taken over the armory from the National Guard and plan to create a world-class convocation center to bring in concerts, shows, and sporting events to strengthen the weekend program.
How is being Penn’s neighbor? It’s been great, and we couldn’t ask for a better neighbor. We think along the same lines and have many of the same goals for our students. There is a resurgence of interest that we share with Penn toward the University City Science Center, toward University City, toward major construction projects. We are working to develop a major four-star hotel. Penn’s plan for the Postal Annex site has been amazing. Drexel focuses on Mantua and Powelton. Penn is headed west and south.

Has the Harvard Business School showed up to do a case study on big vision, customer-driven programming and attention to business and the bottom line in running the modern university? Not yet. [Some laughter.] I don’t think that the majority of the 3,500 universities in the U.S. subscribe to our business model. They are more traditional. But the best-run universities have a similar outlook to Drexel. I’m talking about schools like Southern Cal, which experienced a similar transformation to Drexel; NYU, almost broke, and now one of the best and a product of smart growth; and Boston University.

What do you hope your legacy here will be? It’s almost cast already, as the team that transformed Drexel from a small tech institute to a major university. I don’t think too many schools can make that claim. It’s not enough to be good at what you do. You have to be lucky. MCP Hahnemann fell into our lap.

An awful lot of people wouldn’t have qualified that as a stroke of good luck. For us it was great timing. One year earlier, we couldn’t have done it. We weren’t ready. The transition of Drexel was still underway. My staff was poised. My CFO had worked with Tenant before. All the stars were aligned, and it helped that the bankruptcy trustees realized that Drexel was critical to the retention of the whole hospital system. My board had second thoughts. The bankruptcy trustees came back with an offer of $50 million to help ease the transition to Drexel. This was a huge undertaking and the most exciting time in my life.

What’s next for Taki Papadakis? I don’t plan to retire early. As long as I can produce for Drexel and the board feels that I am adding value, I will continue here. Drexel is a very exciting place to work because of the environment we have created. You won’t find this anywhere else. Universities don’t like change. We had no choice when I came. There was no place to go other than change. If not, the school would have gone under. So now we have a culture where change is accepted as a key variable. Being a CEO or a cabinet officer represents so much bureaucracy they would drive me nuts. Being around people who are unwilling to change isn’t a place I could ever see myself. Politics requires too much compromise for my tastes.

What worries and excites you about the future of Philadelphia? The obvious ones — crime, the quality of schools, jobs creation, traffic. You helped get the corporate community to focus on the key issues when you ran Greater Philadelphia First. The political class here has not been consistently effective, and the business community has developed into a very strong force. Now the new administration gives us the best chance to have two powerful forces working hand in hand to tackle some of the bigger issues.
You have the highest retention of graduates to the Philadelphia area. How are you making that happen? One thing we do is to require our freshmen to use their cultural passport to visit about 30 different places — the Zoo, Bartram Gardens, museums, theater, etc. They have to get them stamped when they go. So our kids get out and get to know Philadelphia right away. They become citizens of Philadelphia. Many come from here but don’t know anything about their hometown. They do by the time the complete the first year at Drexel. I’ve been amazed that even after five years of our running this requirement, none of the other schools have picked up on it. The cultural passport contributes to our effort to make good citizens. Our students are given a camera and tokens and are told to get pictures and bring them back, so during orientation they’re all over the city. They’re building the same attachment and connection to Philadelphia that Drexel University has long had.

What surprises you most? Nobody copies Drexel. We go to conferences around the country and explain our methods and approaches. We get kudos but not copycats. Our business is working and steady now. We do things to keep our customers happy, to give ourselves challenges and to create a fun and stimulating environment. We will discover new mountains to climb. We don’t want to stand still. We have to embrace change. We might feel comfortable and say let’s not do crazy things anymore. Let’s not go to California, let’s not acquire another school or start a new business. Then you become a traditional run-of-the mill university that isn’t too exciting a place to be the president of.

I don’t think you have to worry about that happening, Taki. I don’t plan to!

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