The Stanford Business Reporter

On a few occasions over the past year, we have reflected in these pages on the concept of "creative destruction" – the process by which old industries, economies, and at times entire ways of life get supplanted by new technologies, international trade, new competitors, and new business models.

We have noted that the virtue of "CD" is that it promotes long-run efficiency as capital and services flow to the most profitable opportunities available. The additional wealth creates jobs and investment, generates tax revenues for the government, strengthens infrastructure and education, and raises the overall standard of living.

But "CD" can have great vices as well – especially in the short-run. It can displace people. It can disrupt people’s lives. It can decimate traditions and alter local cultures. For those most vulnerable – the elderly, the young, and those with dependents – it may not be easy to gain the new skills and education necessary to adjust to the changes brought by "CD."

As a consequence, "CD" often raises the ire of those who might be adversely affected by it in the short run. We have seen a number of protests across the globe in recent years by those most affected by the changes brought by rapid industrialization, technological development, the lowering of trade barriers and globalization.

We have also witnessed some mild – or perhaps not so mild – examples of "CD" here in the United States over the past few weeks. The latest poster children for a troubled economy – Enron and Kmart – have consumed business and news headlines alike. The amount of damage these failures have wrought – to the junior employee, to the mid-level manager, to the senior management, and to the investing community (informed and uniformed investor alike) is staggering. Life savings were lost, careers disrupted, and reputations tarnished. And at Enron, federal authorities are looking into deception and possible wrong-doing.

Here at the GSB, the ripple effects of the troubled economy – and the "CD" they have unleashed – are being felt. This year has been, and will likely continue to be, quite challenging for those of us seeking jobs or raising money for entrepreneurial ventures.

According to Dean Joss, this Fall quarter, 64 companies recruited on-campus for second years, compared to 92 last year. This thirty percent drop-off is similar to slides at other business schools. For first years, the number of companies coming this Winter is 61, down from 87 last year, a similar 30% drop. For second years this quarter, only 4 companies signed up, compared to 30 last year.

These are certainly depressing statistics, but we suspect that they will not depress the sense of determination, optimism, and focus that folks on the Farm possess. If anything, we have observed that the current climate is leading to more thoughtful risk-taking and creativity than may have existed around here a few years ago.

We hear that several people are pursuing "search funds" – raising financing from investors for the purpose of buying an existing business with decent fundamentals. We also understand that the entrepreneurship classes with a business plan component have attracted interest beyond capacity.

Perhaps this is due to a realization that the risks of entrepreneurship relative to traditional MBA employment are not as great as they once were. In the last recession, instances of consulting firms and investment banks rescinding offers were not uncommon – and there have been similar instances of firms reneging on offers over the past year as well. Talk of delayed start dates for recent grads and of impending layoffs at major consulting firms has been making the rounds. So, for many, the entrepreneurial path is almost a "safer" route.

Yet the entrepreneurial spirit is not restricted to traditional "entrepreneurial" pursuits. We find that it is also alive and well in most students on campus – and is leading folks to use the CMC, the alumni network, their own social networks, and any other resources they can tap, to secure internships or post-GSB employment.

In challenging times like these, it might be tempting to "look out for No. 1" at the expense of others, or to sacrifice one’s integrity or principles to get ahead. Yet doing so risks sullying one’s credibility and reputation – assets that are often a source of competitive advantage in the long run.

Professor Grousbeck regularly reminded his students in his fall course – "Formation of New Ventures" – of the critical importance of reputation and credibility in both business and life. At the end of the day, it’s all we really have.

A famous economist once said to the effect, "In the long-run, we are all dead." He was certainly correct – if you take the "long-run" out long enough, and consider it over generations rather than an individual’s life span.

But if you choose to see the "long-run" in terms of one’s career or lifetime, then the manner in which one conducts himself or herself over the "long-run" – in the good times as well as the difficult times – becomes paramount.

In the interest of helping the first years learn from the experiences of the second year class, The Reporter approached a number of second years about their summer experiences last year. Our hope is that their reflections – the good, the bad, and the ugly – will be helpful to first years as they consider their own options. It may also be of benefit to second years who are still uncertain of either the career path they would like to pursue or the particulars of how to pursue a specific one.

Whatever your outlook and employment prospects, we hope you find this issue helpful as you consider your career options. And we hope you will keep in mind the long-run – and maintain your character and cooperative spirit in the weeks and months ahead.

Keep the faith.