Interview with New MIT Corporation
Chairman John Reed

John Reed

The following interview by the Faculty Newsletter (FNL) with MIT Corporation Chairman John Reed (JR) was held on July 27 of this year.

FNL: As a broad opening, how come you wanted the job and what kind of vision do you have for MIT?

JR: I am not sure wanted is the right word. I was asked by the Chairman of the Search Committee to think seriously about taking the job. I love the Institute and have been involved with it for a long time. I am a graduate, as was my father, so I thought that being asked to consider it was fair. I talked about it with my wife, I spoke to Dana [Mead, retiring chairman], to Susan [Hockfield]. I read the By-Laws and discussed it with the Search Committee. At the end, I thought that maybe I could be useful, and so here I am.

I do not have an agenda. I hope to be engaged in the conversation that touches on our problems and opportunities. I hope to work with the Corporation so as to bring our talents to the table.

FNL: If you had to list, not necessarily in order, the five duties that you view as being most important for the chairman, what would they be?

JR: Clearly, my role is to engage the members of the Corporation and strengthen their involvement with the Institution.

• We should be engaged with the routine of the Institute, the Visiting Committees that include Members of the Corporation, and the reports of these committees that go to the Executive Committee and then to the Corporation itself are the primary mechanism for this. The President also makes a report at each meeting.
• We should be engaged with the Institute’s finances.
• We should be engaged with the Institute’s plans and visions for the future and understand the human and financial dimension of these.
• We should be somewhat engaged with the human fabric of the Institute as a community.

FNL: Isn't the chair usually a member of the Corporation?

JR: Always.

FNL: So isn't that administration?

JR: No, because the Corporation sits above the administration. What you have is the Corporation, which has a set of fiduciary responsibilities with regard to the well-being of the Institute; they basically delegate the day to day to the Executive Committee. So if you had to define legally who is accountable for the proper functioning of the Corporation, it would be the Executive Committee of the Corporation.

FNL: But we're a faculty newsletter, so let me phrase the question slightly differently. How accurate do you think the information you get through the Visiting Committees is in respect to reflecting the faculty point of view?

JR: A Visiting Committee is not designed to reflect the faculty point of view. The Visiting Committee is designed to allow the Corporation to have insight as to how these various units are functioning. We talk to students, graduate students, undergraduates – we talk to junior faculty, we talk to senior faculty, we talk to the administration (typically the dean) and so forth and so on. So it's intended to give a rounded view.

FNL: What type of things would you do if we had more money?

JR: One thing is you might renovate this main building, if you happen to have an extra billion dollars. We have quite a bit of deferred maintenance that would be nice to start chopping in on. So we have a deferred maintenance problem. We need to renovate the main building. We probably need to build a few buildings. I mean the Energy Initiative would be well served if it had space that was contiguous and so forth. And we're tight. Were we to want to redo this main building, we'd need some swing space while the construction was going on and we don't have a lot of space sitting around campus. And there are other programs we’d like to pursue.

FNL: But what would we need to cut out?

JR: I wouldn’t cut out anything. Look, if this were a private sector company, there probably are some savings that I'd be able to identify for you. But this isn't a private sector company. Our reason for being isn't to make a profit. It's to educate people and move forward on some intellectual frontiers. We're not going to be as efficient as the company that's run on a profit making mode.

FNL: I was referring to whole programs.

JR: I don't have any insight as to programs. That will be something you'd have to ask the faculty and the administration. The Corporation wouldn't claim to have sufficient understanding of the academic programs. They could respond to recommendations. They could think about things.

FNL: So that opens up an interesting question as to the relationship between the Corporation and the administration and by extension through to the faculty. You mentioned the Energy Initiative. One thing we were going to ask you was given that BP is the founding and a major sponsor of the Energy Initiative, and given the incredibly negative publicity BP has received recently, does that reflect on MIT or is that something you would not get involved in?

JR: The Corporation, we're fiduciaries. We worry about the proper functioning of the Institute and we worry that we have the resources necessary to evolve in a reasonable way. BP is important, but I don't think a singularly important part of the Energy Initiative. They are probably more important to the Sloan School. They have a major executive educational activity with the Sloan School, which I could imagine them expanding, because the purpose of the educational effort at the Sloan School was to help them improve their management of large projects. Yet on the other hand, you could say that they've had this relationship with Sloan for a couple of years, and it doesn't seem to have accomplished its mission.

BP's a good company. They had a major blowout; they've had a bad history of accidents in the United States. Having run a big company, I know something about how one has to worry about that, and BP clearly has a cultural problem. They have not managed the U.S. organization, or figured out how to deal with some of these safety issues. And that's an organizational problem and a management problem. And it's something BP's obviously going to have to address and do better. But I don't think there's any problem with MIT. It is, however, really a great engineering problem, and something that I think some people here could have a deep understanding of. But that doesn't have anything to do with the Corporation.

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FNL: That segues into one of the questions that some members of the Newsletter editorial board wanted us to ask. It revolves around the issue of BP and the U.S. government essentially ignoring advice and offers of assistance from the leading scientists in the field regarding the Gulf disaster. There are particular people at MIT who made overtures and were rebuffed and who early on did calculations and had MIT expert insight, and they were totally ignored. These people were very upset, and I guess the question is, do you have any insight as to why this would be, or is there some way we can deal with this?

JR: Frankly, I'm not surprised. I think the government's response was totally political. And having MIT experts probably didn't change the political equation much. I don't think the administration would have been seen to have been better or worse for having engaged such people. As it was, the administration, frankly, didn't have much to contribute. They had very little expertise. They aren't particularly expert at cleaning up oil spills; the oil industry is. So the government was there because people were ticked off and the people expect the government to be at least doing something, so the government responded. It had very little practical implications. And probably, they wouldn't have known what to do with MIT advice because they did not have the substantive expertise to use it.

Now, the industry group is different. This was run by BP and was a consortium of all the expertise of the people around the Gulf. There I think you have a legitimate question. I mean, if there was some outside engineering or scientific advice that could have helped, that is the unit that should have reached out for it. My guess is they were just overwhelmed and were unable to necessarily reach for the advice. You know, this was very much an engineering problem, and very much an engineering solution. It wasn't a scientific solution. So no one sat back and said, OK, let's figure out what is the best pathway to reduce this; they just said, hey let's try this, let's try that, let's try the other. I mean, it reminds me of engineering. They tried a thing, it doesn't work, you try something else, maybe it'll work, somebody else has an idea, and finally they get the well capped. I also don't think they had a particularly good idea of how to try to disperse the oil once it was in the water. They, again, were experimenting. There may very well have been some knowledge here at MIT that could have guided them more intelligently. They don't know to this day whether the chemicals they used at deep depths were net positive or net negative. So I think that the faculty at MIT just has to understand that under these kinds of circumstances the government's doing politics, and the people involved probably were too busy. Truthfully, I'm not at all surprised. I mean, I've been around various crises, and rarely are they dealt with in a theoretically wholesome way.

FNL: We interrupted you with your list of duties.

JR: Well I said get the people engaged, and then I said manage and get the engagement. Then I talked about the financial and the cognizant, both in terms of things we need to do, like deferred maintenance and things of that sort, as well as moving forward. Next you want the Corporation to have some sense of the people, of the human fabric of the organization. You want them to know senior faculty, deans, people of that sort, because you don't get to know the faculty through the administration. The administration is typically all faculty but they're in different roles and they're playing different roles.

FNL: How do you manage that one?

JR: Well, it's a question of having faculty presentations, including the faculty at various lunches, and there's a fair amount of interaction, but I doubt that it's representative. It's sort of arbitrary.

FNL: Former Associate Provost Jay Keyser runs what he calls Random Faculty Dinners.

JR: I hadn’t heard of them.

FNL: They’re monthly dinners, where he invites randomly faculty from across the Institute, and brings them in and just gets them together. You ought to go to one of those.

JR: If invited, I would go.

FNL: I'm sure we could get you invited.

JR: But getting to know the people is quite important, and not only the faculty, but also the people responsible for construction or people of that sort. I mean, we're spending a lot of money building things. It's not a bad idea to have some idea of who's doing the building.

FNL: One of the things that's happened recently, I think in part because of financial concerns, is that some of the really very best people, from my limited, anecdotal point of view, have been let go. Sometimes without any obvious cause. Occasionally when I've looked into it I learn that these were choices that were made in order to make things more efficient. We were talking about that indirectly before. So that's just a concern I thought I'd bring out. Colleagues are often not sure why these people were let go; sometimes they weren't even told why they were let go.

JR: Well, sometimes you're let go just because you're shrinking down an organization. That has nothing to do with the individual performance. It's just that you decide that although you have 15 people, you really only need 10. It’s a managerial decision.

FNL: Right. But the managerial aspect of the Institution over the last 10 years has become, many of the faculty feel, too corporate. That is American corporate, not MIT corporate.

JR: I am aware of these things, and by the way one of my jobs, not the Corporation's job but my job, is to know about them. One of the reasons they want me to be here is to just get insight, because there are times, particularly when the Executive Committee might want to have a view that isn't just necessarily the administration's view, but somewhat, I say somewhat, separate from the group. When I was in a management position – which I’m not here – I liked two voices. We never let anybody go without getting two opinions. Because one person is more inclined to make mistakes. When you have to discuss and explain it to somebody else there is usually more balance. But in any event, this management thing is an issue. You know, the faculty and the whole idea of the university is great. I mean you have 1,000 independent practitioners, basically, each of whom has certain interests and disciplinary expertise, and they're willing to agree to teach a certain amount, but by and large they're independent. Yet they have to somehow coalesce around the meaningful whole.

FNL: So you have no boss until you become a member of the administration.

JR: Yeah, that's right.

FNL: Once you do that, you've taken a step down from the top of the mountain.

JR: I was on the board of Sloan-Kettering Memorial in New York for about 30 years. And doctors have a certain quality that's not dissimilar from professors. And attaining efficiency within hospitals is hard, because you're really there to improve the health of your patients, and that may or may not allow for efficiencies. I think this government medical plan is probably going to destroy some good medicine because it's hard to run efficient systems when you're dealing with something like human health. But anyway, I'm sensitive to it maybe, in some ways, more than most, because I probably know more about management than most of the folks around here. But I also have some appreciation for the academic enterprise, and that's why, when you said what do you cut, well....

If I were running a business enterprise, I could tell you some things of the cost sort that you could cut here. But I don't think we are particularly well-designed for that. I would like to – and this is a conversation that I'll have with the administration – find ways to not be so tightly coupled to the value of our endowment. One of the things that I've seen not only here, but at Stanford and Harvard and all over the place, is that when the endowment goes down, there is a feeling that they immediately have to cut the budget down.

Now, obviously, you can't totally ignore the financial reality, and if you have resources that have been reduced, then you have two problems. Number one is you've got fewer resources. And the second one is you're trying to maintain an image with donors of being responsible, which does play a role. If that weren't there, I'm not sure the universities would all respond as they do. But many of them, such as universities and hospitals and libraries and museums and others that live off endowments, are not particularly well structured for managing costs as you might in a business. There you would manage your revenue and expenses tightly. And you expect that you will adjust your expenses if your revenues fall. In fact, one of the characteristics of this recession is that the businessmen have done spectacularly well at cutting their costs, which is why we have unemployed people and relatively low investment and good corporate profits. Because they haven't given up much in the way of margin. I took the S&P 500 companies and I got rid of the financial sector, because that's different, and I took revenue and expense for 10 quarters for the remaining companies, going backwards, and they absolutely matched. As revenues slowed down, expenses slowed down. And so private-sector business is designed to have those kinds of response capabilities. Universities, hospitals, museums are not. Nor would you want to architect them so that they could.

FNL: The recent faculty wage freeze was obviously a concern.

JR: And there's also another thing. You inevitably have a catch-up later. In other words, if you hold wages for three years or so and created a bubble, and then things get back to normal, and then you start to look at Stanford and Harvard and everybody else, and then all of a sudden you discover that because of this three-year interval that you're way out of whack. And then you end up having to play catch-up ball, and the net of it is that you look at it over five years, you haven't saved a nickel.

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FNL:So how do you communicate as chair or as part of the board those ideas to the

administration, the ideas about perhaps not restricting the endowment so much, or the salary freezes? What is the process?

JR: I talk to the administration; I talk to Susan. We set up scheduled meetings every two weeks between now and next June. I see her more frequently than that, but we set it up just so we have some points on the calendar. I see Rafael [Reif, the provost]. I've walked the hall here, and I'm around the corner from everybody, and the men's room is on the other side of the hall. So I can't get to the men's room without walking past the offices of the president and provost. And I offer advice. Susan and I have a good rapport. She and I were working together before I had anything to do with this particular job. I used to see her about every three or four weeks, and we'd talk about managerial kinds of things. Because I've had more experience than most academics. It doesn't mean that I'm more correct always, but I have had more experience. So I offer advice. It is accepted 15-20% of the time, and that's fine. I'm not in the administration; I have no responsibility for any of these things. So my role is to be useful, and if have some insight and advice, if I think something's truly serious at the corporate level, then I would take it to the Executive Committee, and I would just say that I don't agree with the administration, and we have to decide whether or not the executives want to do anything about it. But I can't conceive of that happening.

FNL: A related question. One thing that has concerned the faculty, perhaps more in the last half dozen years or so, is the idea of there being really no administrative accountability; no checks and balances.

JR: The Executive Committee is a clear balance.

FNL: Yes, but you just said that you could hardly imagine something happening where the Executive Committee would actually comment.

JR: Well first of all, I have not yet been to the Executive Committee meetings. I've seen the minutes, because the minutes are circulated to the Corporation. They're deeply engaged. I was quite surprised to find that they're meeting eight and nine times a year for a full day. You know, I ran a much bigger enterprise than this with much less need for that kind of meeting. And there is also an executive session, where all of the administration leaves and the chairman runs the Executive Committee where we talk amongst ourselves, see if there's anything we'd like to talk about that we don't necessarily want to share with the administration, and that's good corporate practice. So there are checks and balances here. The administration runs the place, as it should. The president is selected by a search committee that has the Corporation well represented, and the president serves at the pleasure of the Corporation. Were the Corporation ever to feel that the president wasn't doing his or her job properly, there would be a reaction. And I think you probably know that after five years there was a review of Susan. I wasn't at the time chairing the Corporation, so I was asked for some of my own comments, but I didn't see the results. I presume Susan was given feedback. MIT has a very traditional organizational structure, in the sense that legal responsibility clearly resides at the corporate level. And the management works on a day-to-day basis, and all the academics decisions are approved at the corporate level – tenure appointments and degree granting and so on. That's the rubber stamp, because we have no insight whatsoever on the substance of any tenure discussion or any degree decisions. That's really totally in the hands of the faculty.

FNL: So in an overall sense, perhaps the Institute is being run a little more corporately than many faculty would like. And there’s certainly been an increase in the legal staff. The basic idea seems to be that for many years, MIT worked from the bottom up. That the ideas – and not only scientific ideas but money-raising ideas as well – came from the faculty and were administered by the administration. Far more frequently now it appears that the administration initiates the moneymaking procedures and participates to a far greater degree in the distribution of that money, and that there is some concern about that top-down versus bottom-up process. Some of this obviously has to do with the nature of the relationships the Institute is now forming, not only with companies, but with foreign governments. And the need for more legal input and perhaps corporate input. But it is, just to express it to you, it is somewhat of a concern within the faculty.

JR: I've had no particular insight into that. I presume, but I don't know, that Susan and Rafael spend a lot of time with the faculty, their deans, the department heads, and so on and so forth, and that ideas generate from there. For example, take the Energy Initiative, or bioengineering, which are the two things Susan spoke about early on when she became president. I doubt seriously that she arrived from Yale with either one of those thoughts.

We also have joint ventures: Whitehead and the Broad institutes, and so forth, which require senior attention and staff.

FNL: I’m sure you’re right.

JR: You know, we're basically a research and educational institution, and the question is how best to create the right kind of environment so that we function well. And we certainly better be listening to the folks who are doing the work. And I have to presume that we are. But that certainly is not the responsibility of the Corporation. If we wanted the Corporation to have knowledge of the ideas generated from individual faculty, we'd have to totally reconfigure, and we'd have to have meetings every other week.

And remember, there are four meetings during the year. You’ve got 75 people who meet four times a year. I set my first objective for the Corporation as engagement. It's an issue when you meet only four times a year. One way you get the engagement are the Visiting Committees. That brings them on campus for other reasons, and then we make a big deal over graduation, which also tends to bring people back onto campus. But we want this engagement. But listening to the faculty and where it drops down or bottoms-up, that has to come from the administration.

FNL: One small thing that we try to do, is that we do send each issue of the Faculty Newsletter to all the Corporation members so that they can get at least roughly 20 pages of the unfiltered view – to get some idea.

JR: That is good. By the way, I think we do get a fair amount of unfiltered comments.

FNL: E-mails?

JR: We do get e-mails, and also faculty and student publications. One thing is that if somebody is going to send an e-mail, sign it. What I do, and I've done this for years, is if it's not signed, I throw it in the wastebasket. You just can't deal with allegations that a person isn't going to put his name to. And I understand the problem of retribution and all of this kind of stuff. You've got to create an environment where that doesn't happen. You know, every person has a “contract” with the Institute that sort of says, this is what I expect of the Institute, and this is what they can expect of me. It's got to be clear what's expected of each professor or each graduate student, or whomever. But they also have a claim on the Institute. There are certain things that they can demand, and should expect. You should think about those things from time to time and make sure we keep those contracts alive and well. And on average, by the way, I think MIT does quite well. I've seen a lot of institutions, and it's hard to judge performance, but if you judge performance precisely in the sense of will we attract the kind of people we'd really like to into the faculty and into the graduate students, without much exception, you'd have to answer yes.

FNL: The faculty is definitely aging. One of the things contributing to that is that the department centers has squirreled away a lot of money for a rainy day. And it's been raining for several years now, and the money is more or less gone. And one of the reasons it's gone is because there's no administrative help either from the provost or the dean for new hires. And so all that is very expensive; it can cost a million dollars for a new hire. And so that's an issue. And then as the faculty ages, there are changes in the retirement portfolio. Health benefits and financial benefits have continued to erode to the point where people feel that they can't retire and maintain the standard of living they've had before, whereas there was a time when that wasn’t true.

JR: Although the people retire quite well.

FNL: Not as well as they used to, and not as well as the expectation.

JR: The expectation I can't comment on. Professors as a group in the top universities have moved up at least two levels in the hierarchy of standard of living, you know. Full professors at good universities live awfully well, are paid well, amazingly well. And the other thing is, I'm told by Human Resources, that the typical 401K of retiring people from MIT is quite full. Now this is money that's been matched, but also contributed by the individual, but the point is, it used to be that if you chose to follow an intellectual life and become a professor, you were sort of in the lower middle class and maybe the middle of the middle class in income distribution in the United States. Culturally, they're probably in the top 1%. But now, you know, the professors at major universities, at MIT and Harvard, Yale, and all these places, do quite well and are well up in the distribution of incomes.

FNL: Well thank you for sharing some of your time with us.

JR: Thank you. And I might suggest that we talk again say in a year. I’m pretty new at the job and some of my ideas now might be different then.

FNL: We certainly will.