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Department Chairs Flipping Out and Sinking Ships

Posted Feb 15 2011 7:36pm

It all started with an email: “My chair flipped out when I told him.”

Someone had signed up for an intensive grant writing course, then backed out because his chair didn’t want to make the investment with their “dwindling pool of funds.” Instead the chair said he would spend his own personal time helping the fellow in question do a better job of getting his grants funded.

Here’s an analogy for that. Let’s say this issue wasn’t about grants, instead, let’s say it was about a fancy new next-generation sequencer.

Let’s say at some point (after the warranty expired), it stopped producing the expected quantity or quality of data.

An expert service technician gets called in, and after diagnosis, says, “The repair bill will be $5,000.”.

The prof in charge of the machine goes to his chair, who says, “We don’t have the money for that repair, we need to preserve funds, so I’ll fix it myself.”

The chair is a busy guy, and he doesn’t really know how to fix next-gen sequencers. He fiddles around with it to try to get it working right, but that doesn’t produce results. Then he runs out of time for fiddling.

At this point Professor X’s research is held up and he can’t collect the data he needs for a paper. So he misses out on his grant renewal, costing the department $50k or more in missed overhead funds.

So the chair saved $5k, but lost $50k. (Shall we call this “reverse investing”? Or how about “inverse investing?”)

The same response is common in business. Let’s consider Sally the store owner, challenged by the bad economy and slower sales. She cuts costs and prices, hoping that she’ll bring more customers in. But some of her competitors react the same way, slashing their prices too.

By focusing solely on reduced price, Sally and her competitors attract the price-conscious shoppers, who go from store to store looking for a bargain, only buying from whoever has the lowest price. It becomes a race to the bottom.

Pretty quickly, the profit margin shrinks to zero. That’s when Sally and anyone else playing that game go out of business. Unfortunately, that’s not just a hypothetical scenario – many businesses have fallen prey to this downward cycle in the past few years.

In any endeavor involving money—whether in business or academia—there are two sides to the balance sheet: costs (C) and income (I). Income minus costs must stay positive (I – C > 0), unless you are a government with a printing press, or you can convince someone to loan you money based on the promise that in the future this equation will turn positive (thus increasing “I”).

When facing a dire financial situation, many people solely focus on cutting C, and forget about I. While cost cutting is important to a degree, its limit is the number zero. If you cut costs to zero, then you have nothing left to do. Zero is zero.

Relentless cost cutting kills employee morale. It focuses people on their weaknesses, rather than on doing more of what they they’re good at. Relentless cost cutting—without paying good attention to building I—is a negative spiral leading downward into oblivion.

But income is much more flexible than costs. In a business, new income can be generated by effective marketing, or developing exciting new products, or in many other ways. In academia, this might come from investing in faculty training (e.g. grantwriting, innovation, etc); hiring new faculty with great ideas; tapping into new sources of funding (such as corporations, foundations or donors); and doing a better job of lobbying the state or the feds for funding.

There’s no doubt that building income is more difficult. It requires foresight and patience. Often, it requires a short term investment (i.e. increase in costs) to yield a longer term return. But on the flip side of this difficulty is a big reward: the potential for increase is virtually unlimited, especially when compared with cost cutting’s bottom line.

Unfortunately, our flipped out chair was focused solely on the cost cutting side, and he’s not alone. The short-term costs seem to loom very large in his mind, drowning out the potential that lies down the road on the income side of the balance sheet.

If that were the first time I’d seen this in academia, it would be of little note. But in my experience, it is rampant. Everyone is scrambling to cut, cut, cut, without seeing the corner they are forcing themselves into.

As morale sinks, the stars will leave for greener pastures, and the rest will just suffer quietly as the enterprise sinks ever deeper into the morass. Without the stars, grant revenues decline, costs get cut more, and so on it goes.

On the other hand, the institutions who have those rare leaders with foresight to build long-term income by investing will emerge as the winners—much like the businesses who have weathered the bad economy. They never lost sight of the income side of the equation in a desperate rush to cut costs.

To sign up for a free upcoming webinar that shows you how to build some research income (I) via grant writing the easy way, hop on over here: http://grantfoundry.com and get registered before it fills up.

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