Commencement Address
Berkeley/Columbia Executive MBA Program

Richard "Sandy" Alderson, CEO, San Diego Padres

February 11, 2007

Distinguished faculty, members of the administration, graduating students, family and friends:

It is an honor for me to be here today and, in at least one respect, appropriate. Before joining the San Diego Padres, I spent over 20 years in the Bay Area, and then almost 7 years in New York City. So I have an affinity for the bi-coastal nature of your program.

In my days in New York, at the Office of the Baseball Commissioner, I was responsible for the successful attempt to shorten the length of regular season games. In the spirit of that effort, I promise that this speech will only last about as long as one half an inning, as successfully shortened. It will take you longer to get a beer and hot dog at your next Giants or Yankees game than it will to listen to my remarks.

It is, indeed, a pleasure for me to address the graduating class of the Berkeley-Columbia Executive MBA program. Those on whom degrees will be conferred here today constitute an exceptional group of capable, experienced, and motivated business men and women (with a few lawyers and a doctor included) who have benefited from an extraordinary faculty and business curriculum packaged in an innovative format. I participated in the Berkeley-Columbia Speaker Series in April of 2005 so I have a personal appreciation for the quality of students receiving degrees here today.

During your course of study you have been exposed to the traditional MBA disciplines, of course, but I wonder whether the fundamental challenge posed by this program, that is, how concurrently to seek excellence in your professional and academic lives and still maintain harmony at home, may have been the most difficult part of your program.

I can appreciate the stress faced by most of you in managing these obligations over the last 19 months. My wife, Linda, graduated from the Berkeley Evening Program in the early 1980s, and I know what she faced in managing the pressures of career, education and family. I can assure you I was no day at the beach during those years myself, but one reason I admire and respect my wife so much is the way in which she handled the stress of that time. In light of all of the interests competing for your emotional and intellectual energy, you should be commended for the tenacity each of you has demonstrated in getting to this memorable day.

As you move forward in your careers, you will continue to balance your personal and professional lives, but as professionals, you will also need to manage the dynamics of competing business interests. For example, there will often be tension between the choices that best enhance the bottom line and the ones that are the most ethical or socially responsible.

There's a story about the great Albert Einstein, who boarded a train one day in New York City. The train was bound for Philadelphia, Washington DC and points south. Shortly into the journey, the conductor came by and asked for his ticket. Einstein fumbled around in his pockets and briefcase but could not find that ticket. But the conductor said, "That's ok Dr. Einstein, I know who you are." A little while later, the conductor came back while Einstein was down on his hands and knees, rummaging around, still looking for his ticket. Again the conductor said, "It's ok, I know who you are." Einstein finally looked up and said, "I know who I am too, but I need my ticket because I don’t know where I’m going."

In any business, it is important to think strategically. Individually and as an organization, as your careers progress, you will need to know who you are and where you're going. You will need a clear vision and a plan for realizing that vision. Sometimes overlooked, but perhaps more important than any other tool in creating your vision, in finding your direction, will be your ethical compass.

There are core values that are common to success in every business, and ethics is one of them. Of course, you also need a good product, good people, good customer service, and good systems and processes to keep you on track. But running a business or charting a course as an executive is seldom as straightforward as a train ride from New York City to points south. Thankfully, the world does not operate a on a neat timetable; nor do trains between New York City and Philadelphia, as I've learned.

There will always be key decisions, course corrections, refinements in the business plan, changes in personnel, advances in technology -- an infinite number of variables and challenges that will make running a business fascinating. This is certainly true in my business, baseball. The game has changed tremendously in my 27 years in the sport. If we ran the San Diego Padres today the way we ran the Oakland Athletics in 1989, the year we won the World Series, the Padres would finish in last place. Quantitative analysis is now used heavily to evaluate professional and amateur players, as readers of the book Moneyball already know. International players now constitute about 30% of all Major League players. I expect China and India to be the next great sources of international talent. Baseball, as part of the sports and entertainment industry, has become a multi-billion dollar business.

But some things about baseball haven’t changed. Pitchers and catchers still report to Spring Training in the middle of February and it is still difficult to endure 60 (in a great year) to 100 losses in a season. And we still have stars who cut their pitching hand on a can of green beans and are lost from the starting rotation.

While my wife has an MBA, I do not. I never studied at Haas or Columbia or any other business school, except for a course or two taken by cross registration during my law school days. But I did have the privilege, for 15 years, to work for Walter Haas, whose loyalty and generosity helped propel the Haas School to its current high ranking among business schools throughout the world. During those 15 years, I wasn't awarded an MBA, as you will be today, but I was imbued with many of the same business values you have learned and have come to appreciate over the last year and a half. The principles of ethical conduct and social responsibility were just as important to Walter as the basics of finance, marketing and general management.

Your core values, and the ethical compass that guides you, should not change, and should remain your most important business tools. You will need a vision, the ability to communicate it to others, and a sense of where you are going personally and as an organization. The answers will seldom be easy, but a commitment to ethical conduct is vital to finding them, and to your ultimate success.

The need for high ethical standards is particularly important in the business of sports. This has to do, I think, with the competitive aspect of sport. Our product, generally speaking, is competition. Therefore, the credibility of the performances of the players and of the contest itself is important to the fans who watch and support the game. If you don’t have an underlying belief in the fairness and honesty of the competition, you don’t really have a sport. You have entertainment, but you don't have a sport. So the integrity of sport is critical to its very existence. Ultimately, this integrity must be manifested in every aspect of the organization, governance and presentation of the competition, because all of these elements affect the perception of the game between the lines.

In professional baseball today, the most pressing ethical issue is the use of performance enhancing substances, their effects on the human body and on the legitimacy of competition and the record book. On this topic, I have one or two general observations.

First, my own view of records is that the fans will ultimately decide which records and accomplishments are legitimate and which are not and should be footnoted. The court of public opinion will be the final arbiter of any dispute over records.

Second, history suggests that the problem of performance enhancing substances will continue to plague sport in the future. The need for ongoing vigilance is the unfortunate lesson learned from this gloomy chapter of baseball history. Baseball has made great strides by implementing more stringent testing and harsher penalties for use at both the minor league and major league levels, but these changes could not have been made without the involvement of the U.S. Congress. It should not take Federal action to make progress in this area.

The ethical issues that performance enhancing substances have raised in sport are rooted, in my opinion, in the fact that, historically, other more benign forms of cheating or skirting the rules have been accepted and, even celebrated, by sports and their fans.

In baseball, for example, we've allowed certain rules to be ignored by players or by umpires. We’ve celebrated pitchers who’ve prided themselves on the ways they can 'doctor' the baseball. At least one of these pitchers is enshrined in the Baseball Hall of Fame. We have executives who have made 'buyer-beware' a fundamental dictum of player trades. Our penalties for corked bats are modest. In many ways, we have acquiesced to the idea that bending the rules is acceptable and that any edge obtained is a legitimate one. Just win, baby. But you have to be very careful about where this kind of attitude can lead.

In that spirit, I would encourage all of you, as you continue your business careers, to set and maintain high ethical standards as part of your high professional standards. Your ethical compass will be the aspect of your leadership that will be most important.

In closing, as you re-board on that career train, remember who you are and where you are going. Set and observe high standards, including ethical standards, for yourself and others, and give those in your organization the confidence to perform up to those standards. If you do that, you will succeed and make all of us as proud of you in the future as we are today, as you receive your Columbia and Berkeley MBA degrees. Thank you and good luck.

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