Carnegie Mellon's Secret? Sticking To What It Does Best

Robert Mehrabian has plenty of ideas about good management: Focus on niches, and market aggressively. Measure progress against your competition. Break down the internal barriers. Stay lean. Never lose sight of the customer. It's the same line that consultants are spreading throughout Corporate America. But Mehrabian isn't a consultant. He's president of Carnegie Mellon University in Pittsburgh, and he is not discussing nearby Westinghouse or Alcoa. The business he's talking about is the very university he runs.

Managing a university as if it were a business seems to pay off. While many of America's great universities are struggling to make ends meet, Carnegie Mellon seems perfectly positioned for the '90s. Research money pours into its computer science department. Industry pays for fully half of the engineering department, with each professor bringing in an average of $215,000 a year in outside research money. Tuition, meanwhile, rose only 4.9% last year, the smallest increase in 15 years and far below the average for private universities.

TEAMWORK. CMU's success, says Mehrabian, is a product of its own limitations. A private university of fewer than 7,000 students, CMU "couldn't afford to be everything to everybody." That forced administrators to follow a mandate that could have been written by General Electric Co.'s John F. Welch Jr.: CMU participates only in fields where it can aspire to world-class performance. This includes computer science, engineering, and drama--but not medicine, law, or the classics. "It's a niche play," says Patrick Keating, vice-president. "We don't want to cover the waterfront."

Thanks in part to its limited resources, CMU has long shuttled professors from one department to another. This pays off in many ways. It breaks down the departmental barriers that often create bureaucratic fiefdoms in universities. The computer science department, says Mehrabian, was born in the basement of the business school. And CMU's cognitive psychology department grew out of artificial intelligence studies. "We like to think of CMU as the seamless university," says Mehrabian.

For research projects, CMU creates multidisciplinary teams, called centers. Some 50 centers are working on everything from industrial emissions controls to developing unmanned vehicles. Funding sources, such as corporations and the National Science Foundation, like the teams for their mix of skill and their focus on real-world problems. CMU's Engineering Design Research Center, for example, brings together designers from the fine arts department and computer scientists, engineers, and business researchers. The goal is to produce "rapid tool designs" to speed up manufacturing.

Mehrabian predicts that budget squeezes will produce a shakeout across the U.S. and that only a handful of research universities survive. The rest, he predicts, will have to cut back on research and turn themselves into teaching colleges to cut costs. "You always have to have a comparative advantage," he says.

CASHING IN. Mehrabian is at work developing new roles for CMU in such subjects as environmental and international affairs. The idea, he says, is to prepare students for some of the fastest-growing areas of the economy. His initiatives already proved themselves in a spectacular way this year, when one student in an entrepreneurship seminar, John Kam III, raised millions in funding for an office-paper recycling business.

One place where the university comes up short is in racial diversity. Only 200 or so students are African-American, compared with more than 1,100 students from overseas. And only 6 out of 550 faculty members are black Americans, a ratio that, in part, reflects a nationwide shortage of black engineering and science professors.

To be sure, not all universities can follow a niche strategy, especially some of the giant public institutions. But in trying to find the right path in a world of tight budgets, other universities could do worse than take some lessons from CMU.

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