Evan Porteus '64, Sanwa Bank, Ltd., Professor of Management Science, and recent director of the Stanford University Graduate School of Business Ph.D. pro-gram, is in a unique position to understand the influence of California itself on today's crop of West Coast-trained business leaders and theorists. The California Gold Rush, after all, chipped away at the centuries-old belief that the only good money was old money, as fortunes amassed overnight with the fortuitous pounding of a pick axe.

"The children of California shall be our children," Leland Stanford is said to have told his wife upon founding Stanford University. These ingrained California roots still affect the experience of Stanford students, Porteus says. He cites the state's independent nature, cultural diversity, and sense of openness. "In contrast to the East—not only the East Coast but also England—the farther west you go, the greater the importance of meritocracy, a sense that, 'if you have an idea, and you succeed, then more power to you.'"

That's why the dot-com revolution happened in California, not Chicago, he says, and that's where the fun—and the challenges—begin.

Although Stanford's Graduate School of Business is considered by many to be one of the most selective graduate programs in the nation, with only 5.3 percent admitted, it also faces the challenge of convincing the best and brightest to pursue Ph.D.s.

"We can't tell the students in the Ph.D. program, from the first day, that they've just committed to becoming a professor," Porteus explains. "They have to be in the program awhile to realize the dimensions of academic life that are so attractive—solving puzzles that no one has solved before, having control over where you go and when you do it," he says. "We prepare students to be professors—not to return to practice—and show them that the flow goes both ways, from theory to practice and back.

"A Ph.D. in business is not a super-MBA," he explains. "It really is a decision to teach and do research."

Porteus understands how the route to academe can often be circuitous. He chose CMC after visiting his brother, David '59, and credits CMC's balanced curriculum and careful blending of academics and athletics for his eventual career decision. "I might not have taken accounting and political science if I'd gone to another college, and probably wouldn't have majored in math," he said. "I didn't see myself as a math nerd—I was a football player." His interest in problem-solving was sparked by Professor John Ferling's work in applied math. "I found it extremely exciting," he says, "to see how math could be practical."

The siren song of problem-solving led to his research focus of inventory theory. Unlike the stereotypical dusty-textbook model, Porteus compares his work to television's popular CSI: Crime Scene Investigation. "It's a question of gathering evidence and making sense of it," he says. "That's what you do in research, and a television show like that demonstrates how fascinating it is to solve practical puzzles."

Porteus and his wife, Ann Wilson Porteus (SCR '63), a lecturer in Stanford's School of Education, went from Claremont to Cleveland, where Porteus earned a Ph.D. in operations research at the Case Institute of Technology (now Case Western Reserve University). Porteus then joined the Pentagon as a systems analyst, and later returned to California, along with Ann and their three children, Matt, Kim, and Brad, to work at the RAND Corporation. But a passion for problem-solving drew him back into the academic arena, and in 1970 he accepted a teaching position at Stanford that allowed him not only to investigate puzzles at the mathematical level, but also to formulate research paradigms in his field.

Although operations and inventory theory were part of the backwater when he moved to Palo Alto, Porteus says that began to change in the '80s, when a new production system developed by Toyota sparked a renaissance in operations information and technology. The technique took Henry Ford's assembly line one step further, streamlining and fine-tuning operational details with just-in-time production, showing that high-quality products could be produced at low cost. "Toyota's rise," he says, "startled executives and policy-makers into realizing that operational details were of strategic importance to a company's bottom line.

"Companies like Intel or Microsoft dominate their markets," he says. "But suppose a new invention comes along that could put their main product out of business? Their only handle on continued market leadership is a level of production efficiency that allows them to see tomorrow's product as an opportunity instead of a threat. This focus on process as a strategic element of industry is the direction in which the field is moving."

The business Ph.D. program's appeal for students may also lay, ironically, in the disgrace of recent corporate scandals. Corporate governance structures in which auditors can be trumped by management just beg for trouble, Porteus says, and academe can help urn the tables and shape the decision-making process of future business titans. "Academics are the ideal people to study the structures of management and governance, and make it easier for people to be ethical," he says. "Many of our students would love to prevent another Enron."

It is ultimately this potential for leadership that defines the graduate programs, he says. "Leading the paradigm that affects how future managers and leaders think about problems is a subtle form of leadership," he says, "that, in turn, influences the way the world operates."

Reflecting on his term as program director, Porteus says he achieved two major goals he set when taking on the new responsibility: to increase overall applications, and to increase the number of American applicants after a surge in interest from foreign-born students. "The role of a Ph.D. program in any business school is somewhat misunderstood," he says. "An MBA wants to know how, and a Ph.D. wants to know why.

"If the goal is to increase knowledge through research, then it really is a waste of time if that knowledge isn't shared."

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Inventory theorist Evan Porteus '64, Sanwa Bank, Ltd., Professor of Management Science at Stanford University and recent director of its business Ph.D. program, says that future professors should not underestimate the importance of their own leadership in shaping the way the world operates.