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At This B-School, B Stands for Biotech

Just a year ago, Gail Naughton completed the executive MBA program at UCLA's Anderson School. Now, she's set to run a B-school of her own. On Aug. 1, she'll take the helm at San Diego State University's College of Business Administration. Although the ink on her MBA is barely dry, the 46-year-old Naughton -- who also has a PhD in medical sciences from New York University -- is a seasoned veteran of the biotech business, having co-founded tissue engineering company Advanced Tissue Sciences in 1987.

It's rare enough that a woman is named to head a B-school -- the Association to Advance Collegiate Schools of Business estimates just 11% of deans at accredited B-schools are female -- but it's perhaps even more so to see a biotech entrepreneur being handed the reins. Still, with high-tech and biotech companies representing a large part of San Diego's economy, Naughton's background makes her a perfect, if daring, choice for SDSU, says the director of UCLA's Executive MBA program, William Broesamle.

"It's not a typical appointment by any means," notes Broesamle, who served as a reference for Naughton. "But particularly in that context, where she's so well-connected and highly regarded, it seems as if they were lucky to get her."

Naughton recently spoke with BusinessWeek Online management-education reporter Brian Hindo about leveraging her biotech-industry experience in her new role as B-school dean and about the convergence of science and business (see BW Online, 7/18/02, "A Hard Road to New Wonder Drugs"). Edited excerpts of their conversation follow:

Q: It's not often that B-schools look to the biotech industry to hire administrators. How did your appointment come about?

A: San Diego State approached me. SDSU has a very close relationship with the industry leaders here in Southern California: A number of them are advisers to the past dean and the president. In asking them the question, "What do we need to differentiate our business school from other business schools globally?", they said we very much need to serve the San Diego community in what it's best known for, which is biotech and, in some regard, high-tech.

Q: What transferable skills can you take from starting up a biotech company to your tenure as dean?

A: The fund-raising is a big one. Also, we started a whole new industry in tissue engineering. No one even believed it could be done. They thought it was science fiction. We've had to make people believe that [tissue engineering] is not only science fact but that these products can be improved and can help a lot of people. That took a lot of being able to convert vision into reality, which is a lot of what running a school is all about.

Q: What roles can MBAs play in the biotech field?

A: Traditionally, MBAs without a science background would enter biotech in a corporate-development role, active in either "in-licensing" or "out-licensing" products, or more of a traditional financial/marketing role. What biotech and Big Pharma now are seeing is that for true innovation to take place, and to keep a cutting-edge advantage, it's great to have people who understand both the technical side as well as the business implications.

I feel that both biotech and Big Pharma are going to be looking for scientists who are trained as managers, which is a very key thing. And who understand how to look at a project in terms of NPV [net present value] and ROI [return on investment], not just, "Is this exciting science?"

Recently, we've had two very large pharmaceutical companies develop campuses here, Novartis and Pfizer. So, we're going to be servicing them as well. We're going to make sure that our students, whether scientifically trained with an MBA or MBA-trained for managerial roles, will suit Big Pharma as well as biotech.

We need to have business leaders who understand there are time hurdles, money hurdles, and regulatory hurdles that are key to the company's success. They also need to know how the product is going to be reimbursed: You can have a blockbuster technology and still, with all the managed-care changes, not do well in the marketplace.

Q: Do you plan to address those evolving needs in terms of new programs?

A: One of the first initiatives that I'd like to start is a joint PhD [in cellular and molecular biology] and an MBA. So that scientists going through the course get a very good management training, as well as the key technical training.

One of the problems with hiring new scientists is that they're trained to be technically astute but not trained in the business issues of a project. They are also not trained in basic teamwork. Many scientists are individual contributors.

When you train for academia in that way, it works. But when you suddenly find yourself in the multidisciplinary team of engineers, scientists, businesspeople, and finance people in a company, and you're charged with "get this product developed," it's a very different environment. To develop scientists who understand the business aspects, I believe, is going to feed very well into not only biotech, but Big Pharma as well.

Within the next few years, I'd also like to start a PhD program at the business school. Probably my first area of focus would be entrepreneurial management.

Q: You obviously have strong roots in the biotech community. But how will you relate to students interested in accounting, finance, or some more traditional post-MBA destinations?

A: I don't think it would be any different than if my background were in restaurant management. If you've been able to successfully take something from early concept through funding, through public offerings, through product launches, and many large partnerships, you basically understand what it takes to build a business. For most of my tenure in the company, I was the chief operating officer and president, so I had all of the operational departments under me. I had to learn all about manufacturing, distribution, accounting, corporate development.

Q: Will carving out a large presence in biotech be a niche strategy for SDSU?

A: Any one of us makes the most advancements by doing what we are already good at. And San Diego is already good at biotech -- it's the third-largest biotech center in the country -- so we take advantage of that. With my biotech background and the community wanting to grow the biotech and Big Pharma presence in town, I think that would be a great niche. But I would be remiss to say I'm not going to put tremendous efforts into growing the entire business school.

Q: What challenges do you face drawing scientists into a business-degree program?

A: Some scientists want to do strict, academic research...some still feel that even joining industry as a scientist is not a good thing. I don't think those folks are going to be an easy target for a business degree.

Then there are other scientists who are very much interested in being able to help grow or develop a business, or even someday take one of their own ideas forward. Those are the people who absolutely see the importance of being able to understand business hurdles and who take a lot away from the different case studies.

That's really the scientific method: learning from other people's work and taking it to the next level. Don't repeat the same mistakes if you can avoid them.

Q: Over the past couple decades, have more scientists been pursuing the

MBA degree?

A: Absolutely. You can look at the success of the Sloan School at MIT, where 70% of their MBA class is technology-driven, either engineers or scientists. My executive MBA class [at UCLA] had a large percentage of engineers, physicians, and general scientists.

Q: What role will you play with your company, Advanced Tissue Sciences, once you assume the deanship?

A: I will remain the vice-chairman. I'll be a board member, an active part of its scientific advisory board, and stay on about one day a week. That has been agreed to by the university. To oversee some longer-term research projects -- the real out-of-the-box type of high-risk but high-reward projects.

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