Over the decades, seven Chicago Booth faculty members have won the Nobel Memorial Prize in Economic Sciences. Alumni have helmed the world’s biggest companies and launched unicorns. The school regularly ranks among the most elite business schools in the world.
What continues to set Booth apart is the school’s distinct educational philosophy. Based on the fundamental scientific disciplines—mathematics, statistics, law, psychology, sociology, and of course economics—The Chicago Approach provides a framework for thinking about any business problem, in any industry, in any economy, even as the global marketplace continues to evolve.
In 1956, Booth dean W. Allen Wallis and associate dean James H. Lorie, PhD ’47 (Economics), set out to define the Booth education and cement the school’s world-class reputation. By 1961, they had changed the course of Booth’s history. In fact in 1997, the late Nobel laureate and professor Merton H. Miller, at the Booth centennial gala, summed up the importance of The Chicago Approach: “The Wallis-Lorie team gave us our Constitution and also our Declaration of Independence.”
But to hear Wallis tell it, the reception was not exactly enthusiastic. In a 1991 interview with Statistical Science, Wallis recalled: “We changed the character of the Business School drastically in ways that other business schools have subsequently followed to some degree; but at that time, it was considered either radical or screwball—or both.”
The birth of The Chicago Approach has commonly been tied to the Wallis-Lorie partnership. “We have such a temptation to think about who was the leader that made the change and had the impact—the Carlyle heroic leader,” said Harry L. Davis, Roger L. and Rachel M. Goetz Distinguished Service Professor of Creative Management, referring to the 19th century Scottish writer’s views on hero worship. “This is a story about a team of people who made this happen.”
Indeed, the origins of Booth’s core educational philosophy trace back to before Wallis and Lorie were even born, to the beginning of the 20th century, and are rooted in the fundamental values of the University of Chicago.
Looming large in Davis’s “team” picture would be Booth’s fourth dean, Leon Carroll Marshall. In 1909, just turning 30, Marshall took the helm of a school—known then as the College of Commerce and Administration—that didn’t have any graduate programs. Marshall envisioned greater things, imagining the school as a “‘community of scholars for the scientific study of business,’ an ‘educational powerhouse,’” Davis noted in a mid-2000s oral history of Booth.
Marshall exhorted colleagues to change the way the University of Chicago taught business. As Davis recounted, Marshall urged: “Let us organize to secure cumulative work, not additive work; comprehensive work, not fragments; broadly professional work, not trade school work; creative work, not routine lesson getting.” In his 15-year tenure, Marshall succeeded in establishing the first business doctoral program, which graduated the first PhD student in 1922.
During the first half of the 20th century, however, one significant roadblock stood in the way of turning Booth into anything resembling Marshall’s vision of an “educational powerhouse”: money. The school was simply not well funded throughout those decades. That situation did not seem likely to change under Robert Maynard Hutchins, who served as University of Chicago president from 1929 to 1945, and then chancellor from 1945 until 1951.
Named president at the age of 30, Hutchins was a legendary figure in the history of higher education. Under his leadership, the university instituted the so-called New Plan for undergraduate education. As described by John W. Boyer, AM ’69, PhD ’75 (History), in his book The University of Chicago: A History, the New Plan sought to “introduce [undergraduate] students to broad realms of knowledge, based on the best contemporary research, and key analytic skills in the first two years of college study that would logically flow into the greater specialization that students would encounter in the second half of their college careers.” (Boyer, the Martin A. Ryerson Distinguished Service Professor in History at the University, has served as dean of the College since 1992.)
Hutchins’s general education philosophy ultimately provided the basis for the undergraduate “Core curriculum” in science, mathematics, humanities, and social sciences that the university still employs today. In 1939, Hutchins famously abolished the school’s Big Ten football team, which had featured undergraduate business student Jay Berwanger, AB ’36, winner in 1935 of the first-ever Downtown Athletic Club Trophy, later renamed the Heisman Trophy.
Addressing graduating students in 1929, shortly before he became president of the university, Hutchins showed he viewed professional training about as dimly as gridiron prowess. “Education is not to teach men facts, theories, or laws,” he said. “It is not to reform them, or amuse them, or to make them expert technicians in any field; it is to teach them to think, to think straight, if possible, but to think always for themselves.”
Hutchins’s disdain for educating “expert technicians in any field” is revelatory. “Hutchins had no interest in professional education,” Davis said. “His interest was really in the humanities. He would have probably felt comfortable getting rid of the business school.”
A strident defender of intellectual values, Hutchins proved less concerned with university’s financial security. Between 1940 and 1950, the school’s budget had ballooned roughly $10 million, without offsetting income. In January 1951, Hutchins left to become associate director of the newly created Ford Foundation, leaving a legacy of higher education innovation and severe financial straits.
Over the course of the late 1940s and 50s, Wallis and Lorie had often discussed plans for changing the direction of education at Booth. In the twilight of the Hutchins era, though, the school lacked the necessary resources to take any initiative. “By the 1950s James Lorie recalled that ‘the business school was in a very bad situation,’” Boyer wrote. “‘There was no money, no zeal, no imagination, not even telephones anymore.’”
Wallis and Lorie suffered no such lack of zeal or imagination. The men also shared a passion for numbers. Lorie had mined decades of agricultural data for his dissertation, and in the early 1960s, he founded the Center for Research in Security Prices to provide historical stock market data. Wallis was unquestionably one of the brightest statisticians of his generation; in 1949, he founded the Committee on Statistics at the university, renamed the Department of Statistics in 1957.
“If you’re smart, but can’t translate knowledge into meaningful actions with and through other people, you’re not going to have impact.”
Taking over for Hutchins in 1951, new University of Chicago chancellor Lawrence Kimpton grasped the financial exigencies facing higher education institutions and embraced the business school. In 1956, when Wallis became dean and Lorie associate dean at Booth, Kimpton allotted the pair the requisite funds—in the form of the income on an endowment of $10 million—to develop a blueprint for the future.
“Freedom, especially joined with power, is sobering,” Lorie wrote in “The Chicago Approach to Business Education,” a short history published in the early 1960s. With Kimpton opening the university’s purse strings, Wallis and Lorie felt the pressure to execute. As scholars trained at world-class institutions, they dove into research to outline a 10-year program plotting the new course for Booth.
Business schools in that era—Lorie recounted in his short history—generally espoused one of three philosophies about management education: the institutional approach, where students were exposed to business institutions and current practices; the case method, with students examining actual business decisions and coming to decisions; and the scientific analysis of business decisions, where experts from the fields of economy, psychology, sociology, math, statistics, and other disciplines examined the decision-making process.
Wallis and Lorie, however, envisioned an alternative philosophy of management education. Certainly this philosophy was influenced by their long association with the university, starting as students in the 1930s and ’40s. But their research turned to the history of professional education in medicine, law, and military science. Practitioners in those fields had historically taken apprenticeships in which they learned by observing before studying at an educational institution.
But in the late 19th century, German medical educators had adopted a different path. They required students to master the basics of bacteriology, biochemistry, anatomy, and physiology before the students could go on rounds with doctors to apply their knowledge. By the 1920s, medical schools in the rest of Western Europe and the United States had adopted this approach. “The Germanic system,” Lorie wrote, “was superior not only in developing new knowledge through research but also in developing skilled practitioners.”
A short walk across the UChicago quadrangle provided Lorie a firsthand example of the efficacy of the German approach. “This development has progressed farthest at the University of Chicago,” Lorie wrote, “where the Medical School is part of the Division of Biological Sciences, where doctors and faculty do not have private practice but are full-time professors who treat patients, teach students, and do research.”
Their inquiry complete, Wallis and Lorie set out to adapt the Germanic system of medical education to business. They aimed to take management education further than the scientific analysis of business decisions. After all, in their view, a university “has its greatest advantage in teaching basic disciplines such as mathematics, statistics, accounting, economics, law, psychology, and sociology,” Lorie wrote.
These basic disciplines became foundational to business education at Booth. “After studying these disciplines, [students at Booth] learn how they can be applied to the solution of business problems in the various functional fields such as finance, marketing, personnel administration, industrial relations, and production management,” Lorie continued.
The goal of this educational philosophy was to prepare students to “continue education through experience” once they left Booth and embarked on their careers, Lorie concluded. Booth students would be “better equipped” to put “untidy and unpredictable experience into a meaningful framework.”
“If you’re smart, but can’t translate knowledge into meaningful actions with and through other people, you’re not going to have impact,” said Davis. A combination of outside circumstances, and Wallis’s and Lorie’s unique gifts, allowed the two men to convert their insights into action.
“They understood this place,” Davis said. “They were articulating the values of the university: no-nonsense, empirical, tough-minded, discipline-based thinking.” As longtime denizens of the Hyde Park campus, they also had deep, influential networks. “Wallis had a lot of respect around the university, and Lorie had a great deal of support within the faculty,” said Davis. “That gave them political clout to get things accomplished.”
Of course, Wallis and Lorie’s educational vision and their networks would mean little without corresponding deep pockets to fund a world-class faculty. In 1955, Kimpton reached into the coffers for $375,000 for new faculty appointments at the business school.
Wallis also had shared his vision with the Ford Foundation, which supported the idea of a discipline-based management education. As director of the foundation’s Program of University Surveys of the Behavioral Sciences in 1953–54, Wallis helped organize discussions among business schools about how future business leaders could learn from other fields of science.
In 1956, newly appointed dean Wallis and assistant dean Lorie began implementing their vision, emphasizing research of scientific quality and placing heightened standards on students. In 1957, the Deans’ Office boldly asked the Ford Foundation for a staggering $9.5 million dollars and received $1.375 million, equivalent to about $12 million in 2016.
The school immediately went on a hiring spree, with Lorie recruiting such notable professors as George Shultz—a future dean who later went on to hold four federal cabinet posts, including secretary of state—and future Nobel laureate George Stigler. Influential accounting professor Sidney Davidson, another future dean, joined the faculty in 1958, and Merton Miller joined in 1961.
As Wallis and Lorie’s plan unfolded, business schools in the United States fell under scrutiny in the mid to late 1950s. The booming automobile, oil, and steel industries complained that graduates were ill prepared for a rapidly changing business climate.
Meanwhile, the Ford Foundation and Carnegie Foundation separately were studying US management education, and in 1959 they released two watershed reports: “Higher Education for Business,” by Robert Aaron Gordon and James Edwin Howell, commissioned by the Ford Foundation; and the Carnegie Foundation’s “The Education of American Businessmen: A Study of University-College Programs in Business Administration,” by Frank Pierson.
Both studies praised the standards and innovation at Chicago Booth and at other top-tier schools, but they slammed curricula at most business schools across the nation. Harvard Business Review described the findings as “devastating reports on the woeful state of business school research and theory.” The good news: Both foundations offered grant money to business schools to improve their academic quality.
Business schools started popping up across the country. In 1962, Wallis left Booth to become president and later chancellor and CEO of the University of Rochester, which had opened its business school in 1958. But his mandate impacts Chicago Booth to this day, Davis said. “It’s fair to say that every dean since that time has basically continued to execute on that strategy: the vision of a serious institution committed to the scientific study of business, in a broader context.”
The incredible momentum spurred by Wallis and Lorie buoyed the reputation of Chicago Booth throughout the 1960s and 70s. However, in the ’80s, Booth’s emphasis on discipline-based training began to show signs of a backlash. By 1988, a BusinessWeek (now Bloomberg Businessweek) ranking of business schools placed Chicago Booth 11th. “Even more troubling,” Boyer wrote in his history, “Chicago students themselves rated their program twentieth in the nation, complaining that the professors were ‘too research-oriented.’” Had The Chicago Approach become too discipline based?
Dean John P. Gould, MBA ’63, PhD ’66, and Davis, then serving as deputy dean, had been stressing the need for more leadership training at the school. “Davis championed experiential education as a complement to the highly theoretical framework of the Wallis-Lorie curriculum,” Boyer wrote. Davis’s efforts culminated in the creation of the Leadership Education and Development (LEAD) program.
Originally an experimental course, LEAD became part of the curriculum in 1991. “LEAD’s formal mission was to promote individual leadership development and experiential learning skills as well as community building,” Boyer wrote, “but it also ended up creating social solidarity and fostering feelings of loyalty to the school.” (Read in-depth about LEAD in “This Is Not a Spectator Sport.”)
Whatever speed bumps Booth may have encountered in its curriculum in the 1980s proved as ephemeral as the decade’s vogue for parachute pants. By 1992, Booth had returned to the No. 2 spot in Bloomberg Businessweek’s rankings, and in the new millennium—except for an anomalous No. 10 ranking in 2000—remained in Businessweek’s top three.
“Your class belongs to you at Chicago in ways it never belongs to you at any other school.”
As the only required course in any of Booth’s programs other than the Executive MBA, LEAD is the exception that proves the rule about Booth’s curriculum: its flexibility. When it comes to the continuum of business school program structure, Booth’s and Harvard Business School’s sit at opposite edges. The curriculum at Harvard Business School follows a very prescribed structure. “Every student has to take exactly the same classes the first year,” said John Huizinga, Walter David “Bud” Fackler Distinguished Service Professor of Economics. “You put your seatbelt on, like a ride at Disneyland, and they take you for your ride. And look, they’re incredibly successful.”
At Booth, to a great extent, students steer their own ride. “We want students to have an anchoring in the disciplines: microeconomics, financial accounting as the language of business, and statistics as a tool,” said Lisa Messaglia, executive director of faculty services at Booth. “We recommend that students take classes on management, finance, marketing, and operations.” Within those “buckets,” however, students have enormous flexibility to choose specific courses. “Each student can pick a curriculum that matches what they’re trying to get out of business school,” Huizinga said.
This flexibility allows Booth faculty to apply their discipline-specific expertise however they think will be most beneficial to students who need to solve business problems, not write academic journal articles. “The Chicago Approach interacts in a serious way with another aspect of who we are,” said Huizinga. “That is, highly individualistic.” Booth gives faculty enormous freedom to teach their course their way. Take, for example, an ethics course taught by John Templeton Keller Professor of Behavioral Science Nicholas Epley, Huizinga said.
“It’s not going to be like any other ethics course. He’s going to bring his psychology education and experience, and has the flexibility to teach ethics how he wants, to reflect his personal style,” Huizinga said. “This individuality that we have lets Nick teach his ethics course based on how a psychologist looks at ethics, and that creates a passion in him that makes him a better teacher.” (Learn more about Epley’s course in “Master Class.”)
“Your class belongs to you at Chicago in ways it never belongs to you at any other school,” Huizinga said. “This keeps our curriculum fresher and closer to the frontier of what’s going on in the academic world.”
Over his exemplary career, W. Allen Wallis served as an adviser to US presidents Eisenhower, Nixon, Ford, and Reagan. After Wallis’s death in 1988, the University of Rochester named the W. Allen Wallis Institute of Political Economy in his honor. Canice Prendergast is the current W. Allen Wallis Professor of Economics.
A dynamic teacher known for telling his “Lorie’s Stories”—often bawdy tales—during classes, James Lorie taught at Booth for 45 years, retiring in 1992. He remained as a professor emeritus until his death in 2005. In 2002, grateful students helped establish the James H. Lorie Professorship at Booth—currently held by Sanjay K. Dhar, James H. Lorie Professor of Marketing.
The education philosophy Wallis and Lorie championed continues to thrive. “I often describe the values of this place like mold in a shower stall. You try to scrub them and get rid of them and they grow back,” Davis said, smiling at the peculiar simile. “[People thought], ‘My god, what will happen when Milton Friedman retires or George Stigler leaves?’ These values are so strong that the place continues to stay alive.”
Huizinga also takes a long-term perspective on business education. “Some business schools try to preach business education as relevant in that you learn it one day, and apply it the next,” Huizinga said. “It’s not immediacy that matters. A much more valuable criteria is, does the business education serve you for a long period of time? Does it serve you when the stakes are most high, and when you’re making the most critical decisions?”
But one key aspect of The Chicago Approach echoes something Robert Maynard Hutchins said more than 87 years ago.
“With The Chicago Approach, we try to teach people how to think,” Huizinga said. “It’s not the direct knowledge, per se, that we’re conveying. It’s teaching people how to evaluate evidence, how to have a framework where you organize thoughts, how to think about problems in a way that is somewhat universal.”
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