Duke University Alumni Magazine

Taking Care Of Business
Tom Keller
by Edward Prewitt

Brian Smale / courtesy of the Fuqua School of Business

Fuqua's innovative dean, who steps down in June, ran the business school like a business: the product is not the graduate but the M.B.A. education; its customers are both the students and the companies that hire them.
hen Thomas F. Keller '53 became dean of Duke's fledgling Graduate School of Business Administration in 1974, the school had fewer than 100 students, twenty-four tenure-track faculty, and a professional staff of three. Today the Fuqua School of Business enrolls more than 900 master's and doctoral degree students and more than 2,000 participants in its executive education programs. The faculty and staff number sixty-two and forty-eight, respectively. In 1974, the school operated out of the basement of the Social Sciences Building on West Campus. Today it occupies three gleaming buildings on its own campus. The annual operating budget in 1974 was $1 million. It is $33.8 million today, bolstered by a $45-million endowment that did not exist in 1974. Finally, from a floundering program beset by internal dissension and external criticism in 1974, the school has risen to national prominence.

     Many people had a hand in these metamorphoses, but their driving force has been Tom Keller. Having taken the business school further than most would have believed possible in 1974, he retires as dean June 30.

     With twenty-two years in office, Keller is the dean of deans. He has served under six of Duke's eight presidents. He has seniority not only among deans at Duke but among deans at all business schools. "Twenty-two years!" exclaims his rival down the road, Dean Paul Fulton of the Kenan-Flagler Business School at the University of North Carolina at Chapel Hill. "To be there that long is really amazing. It's not an easy job by any means."

     Keller has nonetheless been hugely successful. "There's no question that the growth and success of the school is a testament to Tom Keller," says Terry Sanford, Duke's president during the first dozen years of Keller's tenure. "It's primarily due to him that the school has come so far in so little time," says benefactor J.B. Fuqua. Yet the business school, so secure- ly established today, almost failed to get off the ground. Keller nearly left Duke, and became dean only when the positionwas thrust upon him.

     Now sixty-four years old, he was a charter member of the faculty when Duke formed its graduate business school in 1969. Duke President Douglas Knight had chaired a committee to decide whether Duke needed such a school. Southern businesses, several that were represented on Knight's committee, had tired of going north to find top-notch M.B.A.s, while ambitious Southerners chafed at the need to leave the region for a brand-name business education, Keller recalls. The conclusion was quickly reached to go ahead-but only if the new school could be made competitive with the best in the country. Keller, who had been teaching accounting at Duke for a decade, thought the university had the internal resources and outside support to pull it off.

     Within a couple of years, however, he and others had soured on the initiative. The new school was failing. Students were unhappy: Nearly half of the twenty in the first class quit before graduating. Donors were also unhappy: Burlington Industries simply stopped paying the installments on the half-million-dollar pledge it had made in 1969. "They weren't getting what they thought they were paying for," says Keller. Corporate recruiters such as Burlington said Duke students were not competitive with those from other business schools. Deciding what to do about this unhappy situation was one of Sanford's early tasks as president. "There were some major problems that had to be ironed out," he says today. Shutting the school down was a real possibility. Some of Duke's trustees were reconsidering their support for graduate management education. The departure of the school's initial dean, Louis Volpe, for Columbia University in 1973 was a further blow to its shaky foundation, but, at the same time, cleared the way for Sanford to make major changes.

     A search committee decided on Dan J. Laughhunn as the successor. But Laughhunn, a popular senior professor today, found the position a poor fit and asked to be relieved of his duties after just six months. Seeking the school's third dean in five years, Sanford considered Keller.

     For administrative experience, Keller had only a short stint as university vice provost in 1971-72. But within the business school, he had gained a reputation as a dissenter among the initial administration, with lucid ideas on how to do it differently. Volpe and much of the early faculty "had a very unusual idea, in my opinion, of what a business school should be, which was that you teach students some concepts like mathematics and out of that they could somehow become managers," Keller says. "My thinking was that you find out what general concepts businesses need their managers to know, and you teach those things. You teach students to take those general concepts and apply them to a specific case. My sense was that using that [existing] model, we weren't going to become a leading business school in North Carolina or the South, much less the country."

     This frustration with the school's early direction had propelled Keller to Price Waterhouse & Company in the summer of 1972, when he was a Faculty Fellow in the company's New York headquarters. He was thinking seriously of returning to Price Waterhouse for good when Sanford called with a surprise request: to "save the school," Keller recalls.

     Sanford's choice shocked everyone. A program on the brink of being shuttered was being entrusted to an academic with the briefest of track records, little internal support, and negligible clout in the business world. Sanford recognized the risks but saw an upside in Keller's character. "It seemed to me after talking with him several times that he was someone who'd be active," Sanford says. "It could have been a bad choice, but he wasn't." Keller accepted with the caveat that Sanford had to back him up when his decisions were questioned. "I think there was an element of reluctance in Tom to take the job," says Charles R. Fyfe '68, M.B.A. '74, the former "Boy Dean" who was hired as assistant dean and director of admissions right after graduation and is now managerof corporate planning and budgeting at Carolina Power & Light Company in Raleigh. "He was never one who likes the limelight. He was thrust into it. I get the feeling that Tom took [the offer] out of love for Duke and because it was expected of him."

     To this day, Keller considers his first action as dean his most important. He asked a dozen senior and up-and-coming managers to serve on a board of visitors for the school. At many graduate schools and institutions, such groups are honorary, chosen more for their deep pockets than organizational acumen. But Keller's board gave him the credibility he lacked. "I could go to a company and say 'These people are on it' and people knew who they were," he says. "Also, they gave very good advice."

     In particular, the board's first meeting resulted in a redirection of the school. The group gathered in the fall of 1974 for an afternoon meeting. Many hours later-after dinner reservations had been canceled and Keller excused himself so that chairman Edward S. Donnell '41 could hold an executive session-the group requested a meeting with Sanford early the next morning. "They told Terry, 'We don't have a business school. At best, we have an operations research department that's not very good,'" Keller remembers. "'We recommend you change or get out of business. There's no market for what you have now.'"

     Keller was determined to run the business school like a business, thinking in terms of products and markets. The school's product is not the M.B.A. graduate, but rather the M.B.A. education. The school's customers are both the students and the companies that hire them. Listening to these customers' needs "was Tom's biggest innovation," says John A. Allison IV M.B.A. '74, an early graduate who is now a member of Fuqua's board of visitors. "It sounds obvious, but it was revolutionary, especially then and especially from a business school."

     One important area in which a graduate school is unlike a private business, however, is labor relations. To a certain degree, the faculty isthe school. Tenured professors cannot be sacked if they disagree with the administration, even on key matters. Instead, they must be persuaded. "We had a group of faculty with a particular agenda. Tom was able to cut through that," says Fyfe. "It took time and a measured pace and a lot of committee meetings. But Tom was able to articulate what it would take for the school to survive and communicate that to the faculty. Not because he was a great orator, but because he was believable."

     Over a period of several years, the curriculum was refocused on basic functional areas such as marketing, accounting, finance, and operations. "That was the single biggest hurdle initially," Keller says. "Once you get everybody moving in one direction, the professors want to hire more people like themselves, so you build momentum."

     Within a very few years, this momentum had gathered so quickly that the school could no longer be considered at risk. The growing value of the Duke name in the mid-1970s contributed greatly. "You couldn't have done this at a university of lesser repute," Keller says. "Duke's name was a big draw." Southpoint magazine claimed in a 1990 article that the B- school "had an aura of class before it was worth a damn because it was part of Duke."

     Even so, the school's steak wasn't far behind the sizzle. "When I went there, it was a second-class school," says Allison, who (despite his inferior education) is the chairman and chief executive officer of Southern National Corpor- ation in Winston-Salem. "Tom changed that quick. Instead of imitating other [M.B.A.] programs, he leaped over many other programs."

     By 1978, Keller felt confident enough of the school's future to go before Duke's board of trustees to seek permission to conduct the business school's first capital campaign. The plan he presented to the trustees envisioned $20 million in new funds that would be used to erect a building, increase the number of M.B.A. students from sixty to 250, and more than double the size of the faculty. "Probably nobodythought we could do it," Keller says. But the trustees went for it anyway-the first time they had ever approved a capital campaign for a single school rather than for the university as a whole.

     The campaign garnered $24 million in three years. The principal contribution, of course, was J.B. Fuqua's $10 million in 1980; the school officially became the Fuqua School of Business. Had things worked out as originally planned, however, a different name might have graced the school's logo. Keller had been warned away from soliciting Fuqua, who was seen as a prime potential donor to Perkins Library. (Fuqua has said that much of his primary education came from the books Perkins lent him through the mail.) Instead, Keller sought out the Belk family of North Carolina. But they couldn't be persuaded to part with more than $100,000. When Fuqua decided he was interested in the business school, Keller was elated.

     Keller and Fuqua broke ground on the new edifice in 1981. Two years later, the school moved into its universally acclaimed main building. Architect Edward Larrabee Barnes achieved Keller's aims for the new space: a visual landmark with expansive open spaces, yet designed to encourage small groups to gather. Keller and the board of visitors had the foresight to insist that the building be wired for personal computer connections. The resulting capability for computer use and computer-mediated learning won the school a reputation for technological eminence that it retains today.

     Ironically, the event that was arguably the single biggest contributor to the school's success was not related-at least directly-to Keller's efforts. In October 1985, a Wall Street Journal article on how corporate recruiters ranked business schools listed the Fuqua School at number ten. It was an extraordinary position for a school in danger of being closed just a decade before. Arbitrary though such rankings may be, it was a windfall for the school. "The biggest difference in the world is between ten and eleven," Keller jokes. The applicant pool rose by nearly 40 percent and the yield rate (the percentage of admitted students that accept) with it. Duke has largely stayed in the top ten of such rankings ever since.

     The ranking "was a major, major milestone" in a string of successes, says Keller. "It was crazy. We just had a series of very good events. Here we were struggling along with sixty students and I said, 'Next year we're going to admit 120.' People said, 'How in the world are you going to do that?!' and I said, 'We'll just work at it.' A lot of things happened like that."

Photo: Les Todd

     Indeed, one of the most remarkable features of Keller's deanship is the apparent absence of missteps. The school's fortunes have improved during each of his twenty-two years-too long a time to be attributed solely to luck. "Tom seems to have shown almost unerringly good judgment," says Rex D. Adams '62, who succeeds Keller as dean July 1. "There are many, many decisions that a dean confronts, especially one in office as long as Tom. He seems to have made the right decision every time."

     Keller likens himself to a good gambler, dependent on luck but also insight. "You've got to know the cards. Sometimes I just had a feeling. One year I said our tuition isn't up there with the best schools. Well, if you want to be up there with the best schools, you've got to have the tuition. So we increased tuition 17 percent and the applicant pool doubled, just like that. I didn't know that would happen, but I had a feeling."

     As the school has grown and strengthened over the last decade, Keller's role has changed with it. At the start of his term, he recruited faculty and participated in their evaluations, met regularly with the university administration, taught classes in accounting, and even attended the monthly student gatherings around a beer keg. Today, associate deans manage academic programs, faculty and research, executive education, external affairs, and administration. Keller oversees the deans but retains hands-on responsibility for the school's relations with companies anddonors. "As the school gets bigger, you have to give up something, but the thing you can't give up is the external world," he says. "They just won't meet with anyone else."

     Keller's skill in dealing with the external world is most evident in his success at fund raising-always one of the most critical parts of a dean's job. The school has never had an annual fund-raising target it has not been able to exceed. On top of that, he has guided three major fund-raising initiatives: the initial capital campaign in 1980-83, bringing in $24 million; the 1989-90 campaign for executive education, which raised $14 million, anchored by a $4-million gift from R. David Thomas, founder and senior chairman of Wendy's International, Incorporated; and the current effort, begun in 1993, for endownment to support faculty, student, and program development. To date, nearly $30 million has been pledged.

     Keller's approach to potential donors has always been low-key, like his demeanor. "Tom was not the snappiest dresser. But he could go to New York and wow any executive," Fyfe recalls. "I think it was just his approach. He was honest, direct, and believable. And he knew what would sell. It's always amazed me that this guy from accounting, who's supposed to be in green eyeshades in the back room, turned out to be so good at marketing."

     "Tom has an understated, quiet personality that on first impression can lead people to underestimate him," adds Adams, a longtime member of the board of visitors. "He in fact is very forceful and determined. He's a man of basic and fundamentally sound reasoning. And he's a superb manager, which is very rare in academia."

     For someone whose formal training was largely in accounting, Keller turned out to be remarkably adept in many key areas of the M.B.A. curriculum: management, strategy, marketing, and finance. As an undergraduate at Duke, he majored in accounting, graduating Phi Beta Kappa. He spent two years in the Army before going to the University of Michigan for an M.B.A. and Ph.D. in accounting. He returned to Duke in 1959 as an assistant professor. Within only a few years, surviving "Killer Keller's" accounting classes became a badge of honor. Keller co-authored several accounting texts during the 1960s that were widely used across the U.S. and Canada.

     Both as an undergraduate and a professor, Keller had to be persuaded to give up other plans in order to come to Duke. Since graduating from high school in Greenwood, South Carolina, his hometown, he had his heart set on attending Georgia Tech. But when he accompanied a friend on a visit to Duke, the admissions director induced him to apply. Later, after he had completed his studies at Michigan, Keller planned to start work for Price Waterhouse. A Duke professor talked him into teaching for just one year back in Durham. Keller left Duke a few times more-for stints as a visiting professor at the University of Washington, then at Carnegie-Mellon University, and to Australia to teach accounting on a Fulbright scholarship-but he always came back.

     Duke managed to pull him back one last time when he tried to retire in 1995. He agreed to stay on for another year when the search committee's top candidates were found to be unavailable until 1996.

     Now at the end of his tenure as dean (though not as a professor; he will remain a member of the faculty), Keller looks forward to the future, despite a lack of hard plans. "It gives me an opportunity to focus on something different. I don't know what that is-I haven't had time to think about it," he says. "I'm not going to retire and sit by the stove, I can say that. I'll do something else."

Friendly persuader: Keller, top, unites the corporate with the academic; above, at podium during 1989 dedication of R. David Thomas Center, he shares dais with, from left, William A. Stokes B.S.C.E. '53, president and CEO of George W. Kane Inc.; Duke board of trustees chairman Fitzgerald S. Hudson B.S.C.E. '46; J. B. Fuqua, for whom the business school was named; R. David Thomas, senior chairman and founder of Wendy's International, Inc.; Dean of the Chapel William H. Willimon; and President H. Keith H. Brodie
Photo: Jim Wallace

     One possibility is increased involvement with one or more of the corporate boards on which he sits, including Wendy's, DIMON Incorporated in Danville, Virginia, American Business Products, Incorporated, in Atlanta, and Ladd Furniture in High Point, North Carolina. He has rejected several offers to become president of a university or anything else that would require him and Margaret Query Keller A.M. '57, his wife of forty years,to move. The couple plans to spend more time at their vacation home in Virginia and see more of their two sons, thirty-three-year-old Neel and thirty-year-old John C. Keller M.B.A. '94, who both live and work in Chicago.

     After more than two decades as dean, the only regret Keller expresses is having to undergo the retirement ceremony that the university insisted on throwing March 22. "I'd just as soon close the door and walk away," he says. Nevertheless, a daylong series of events, including a luncheon headed by J.B. Fuqua and a panel discussion on globalization of the Fuqua M.B.A. (a top priority for Keller in recent years), was capped by the renaming of the school's east and west wings as the Thomas F. Keller Center for M.B.A. Education.

     The dedication of the Keller Center was preceded by a yearlong campaign to raise $10 million in his name for the school's endowment and operating expenses. It was a mark of respect for Keller that donors gave $15 million.

     "He will be missed, there is no doubt about that," says President Nannerl O. Keohane. "He has laid a tremendous foundation at the Fuqua School. It's a very impressive case of leadership."

     "I can't replace Tom, I can only succeed him," says Adams, Fuqua's new dean. "Tom is the founder of this institution. I hope to continue in the course that he has established."

Prewitt '85 is a freelance writer living in Boston.

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