Doug Farren, managing director of Ohio State’s National Center for the Middle Market, discusses how to build research programs that generate big ideas and marketplace interest.
How do B2B organizations build multiyear research programs that generate big ideas and marketplace interest? A number of big ideas have come out of such programs – the Challenger Sale of CEB; the Balanced Scorecard and business reengineering. Doug Farren runs a relative newcomer to this list of influential thought leadership research centers. He is managing director of the National Center for the Middle Market, a think-tank at Ohio State University’s Fisher College of Business.
Since 2011 the Center has focused on a sector of the U.S. economy that had long been ignored by the press AND academia: middle-market companies. The spotlight for decades has been on Fortune 500 multibillion-dollar companies on one end of the spectrum, and on the other, on small companies – especially startups funded by venture capital firms.
In this interview with Bob Buday, Farren talks about what it’s taken for the business school to make the NCMM the leading source for knowledge on the middle market.
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Transcript: Doug Farren, National Center for the Middle Market
Bob Buday: Doug, it’s great to have you on our show. You’re the first Penn State graduate to be on here, of course, besides me.
Doug Farren: Why did you wait so long? Bob, thanks for having me. You’ve been a great supporter of the National Center for the Middle Market. And so it’s a real pleasure to be on the show.
Bob: The Center clearly has been on a roll. Give us an update on the progress.
Doug: We are in our 12th year, which is really hard for me to believe because when I helped co-found the center back in 2011 with our current dean, Dr. Anil Makhija, I had no idea where this was headed. You know, it could have lasted three or four years. But here we are going strong a dozen years later.
Not unlike most organizations, we faced some pretty significant challenges, particularly around the pandemic. So in 2020-2021, we scaled back quite a bit. We focused on some core activities, including our Middle Market Indicator, which is our bread and butter and what we’re known for most of all.
We did pick up a little bit of additional work. We focused on some COVID-related pulse surveys. We wanted to understand how the pandemic was affecting the middle market. Those were all very beneficial, and we got a lot of interest and attention. At the start of 2022, we really started to see things pick back up in terms of interest: from corporate sponsors, collaborators and partners around the country. Different organizations that we may have worked with in the past, for example, Chambers of Commerce and trade associations, started to open back up.
And people were eager to get back in person again, and do networking and learning in the way they did pre-pandemic. So today there is very positive momentum. We, of course, have continued with the Middle Market Indicator, now with 11 full years of data. It’s the longest continually running study on the middle market in the U.S. We’ve done 38 waves of that. So again, that’s the survey of 1,000 businesses. It’s great longitudinal data, and we’re doing all kinds of things with that.
We are also excited about a project that we recently completed with Google Cloud. They approached us last spring to understand how we could collaborate together. We landed on doing a research collaboration together to look at the use of cloud technology at middle market companies. We released that report in early March. And we’ve got a whole series of activities we’re going to be doing with them over the next eight to 12 months.
In addition to that, we recently released an impact report. It had been a few years since we’d summarized the work of the Center. Traditionally, we had published annual reports for about six or seven years. And then we put that on hold again, while resources were a little tight. So we did a three-year Impact Report summarizing all the accomplishments [of The Center]. We’re really proud of that, and we’re sharing it across our network.
Finally, I’m still teaching the undergraduate middle market class that we have at Fisher College of Business, now in its ninth year. We are about a month out from wrapping up five student team projects with middle market companies. That’s been one of the most exciting and unexpected parts of my role — an educational component that’s connected me with students, to hopefully get them interested not only in learning about the middle market, but also thinking about it as a potential career destination. So, lots of good things are happening and I’m really excited about where we’re headed.
Metrics that Matter
Bob: When you look at the center’s most important metrics — and I know in any organization there can be differences of opinion on this — what do you see as the Center’s most important ones?
Doug: It’s a great question. We are in a unique position because we are a research organization that resides within a business school. Yet we are funded externally by corporate partners. The thing I’ve noticed over my time at the Center is there’s this constant friction between what are the right goals and metrics and things we should be measuring.
In our first five or six years, we spent a significant amount of our annual budget on funding academic research. For the college that’s extremely important. One of the goals of our former dean, Chris Poon, was to have Fisher College of Business be known as the hub of middle market academic research. To that point, there hadn’t been a whole lot of that done.
When you think about our corporate partners — whether they be GE Capital in the early years, or moving on to SunTrust bank and Cisco, and today we’re working with Chubb and Visa — their goals are much, much different. They’re trying to create awareness, engagement, getting information to their clients, educating their own teams to be smarter about how they engage with middle market companies, as they’re supporting their growth.
It is a very difficult question that I don’t think we’ve ever truly been able to solve: What are those right metrics? I’ll share a quick story to show you the closest we’ve come to answering it. We’ve done some work in the past with the Brookings Institution in [Washington,] D.C. One of the questions I had for their team was, “Hey, you’re one of the world’s most renowned think-tanks. How do you measure your work?” They said, “Well, what we like to do is monitor the nature of the conversation out in the marketplace. Has our work changed the conversation?”
That can be really difficult to put your finger on. It’s not a hard-and-fast metric, like “page views” or “impressions” or “media hits.” But it really struck me as maybe the right approach, which is where we were in 2011, when the Center was launched, to where we are today in 2023. Has the conversation around the middle market changed? I believe it has, just from the nature of activity and the number of presentations we do and people who want to know more about the NCMM.
I think the Center has played a crucial role in changing that conversation. That’s the North Star in the back of my mind, and we are always trying to further that conversation.
The Rise of the Middle
Bob: It seems to me that before the Center, this vast middle market of the U.S. economy was forgotten. Everybody was looking at the Fortune 500, on one end of the spectrum, or the venture-funded startups on the other. The companies in the middle? Nobody knew who they were, or their impact on the economy. But it seems to me that you guys have changed that conversation.
Doug: We put a little structure around it. I think different organizations did annual middle market studies, including some of the big banks. They would survey a couple hundred clients, but they each had their own definitions [on what was a middle market company] — different revenue bands. Some even used employee headcount as the basis for what defined the middle market.
I think we’ve gained enough credibility where we’ve become the credible voice that created the definition. We’ve got survey-based data that is academically credible; it’s from a third party. There are a number of great attributes about the Center that have driven a lot more consistency around how different groups around the country view the middle market.
Bob: What were the key steps in getting the Center to that place?
Doug: When we started, we had a vision and a mission. Those have remained largely unchanged. The vision was to ensure that the U.S. middle market was recognized as fundamental to the economy.
I think we can agree that we’re raising that visibility. The mission is to provide insights, thought leadership, data, programs, networks, to help these companies. That’s what we’re striving for: areas that we can continue to provide value and easily accessible resources in those areas.
Our activities have remained largely unchanged as well. They’re about research, outreach and education. In the early years we built a library and a foundation to establish that credibility. And we’ve gotten into different topics: operations, talent, management, innovation, globalization, or building a deeper depth of understanding.
The key steps of it have been staying disciplined to that approach and not being tempted by a lot of the other opportunities that have come our way. At the end of the day, we look at them and say, “Is this really advancing our mission? Or is it just something that would be fun to do and is tangential to supporting the middle market?” So, learning to say no has been difficult. A lot of times, you just want to please people and be helpful. As an academic institution, that’s part of our charter as well. But we’ve had to say no to some things. Without that, we have to recognize that we are resource constrained and only have so much time. So I always try to focus our team on what matters most. And it’s those three areas.
Challenges to the Mission
Bob: What do you see as the biggest challenges to getting where you have gotten? And how did you address those challenges?
Doug: Our makeup is, is unique. As a research center at Ohio State University, we’re expected to be fully self-sufficient. That means we’re not taking taxpayer dollars, not using student tuition dollars. It’s all been driven by these corporate relationships.
Something that was unexpected for me has been the significant amount of my time that I have spent in true business development: talking to potential partners, talking with organizations that cannot only bring capital to help fund a lot of these activities, but also bring subject matter expertise and insights. We can collect data and do surveys. But those partners are the ones that bring the real insight to the different topics that we study.
Our model has been the Center bringing an issue to light and raising questions about it. But those partners then pick it up and say, “Here’s how we can help solve these challenges.” For us, it’s about building new relationships.
But those can take a long time. I mentioned the Google example. That took over a year, from the start of the conversation to having a finished research report and some content we’ve now started to put out there. So being patient with that [is a challenge]. We’ve cycled through a number of sponsors. I’m always keeping my eye on who would be a good fit to work with. And we could diversify a lot of the topical areas we’ve studied or want to continue to study.
Dealing With Tough Times
Bob: Has there ever been a crisis — like an existential crisis – at the Center? Especially when GE Capital pulled out? Did anyone say, “Why do we need this program?”
Doug: Yes. Ironically, a lot of those questions come from our faculty. Our faculty members don’t necessarily understand what our centers do, and we’re one of six centers. I’m not the only one in this position. We have a risk institute, a real estate center, and an operational excellence center. And if you think about our college’s strategic plan, all of those are conduits into the business community. We’re viewed as one of the key mechanisms to bridge what we’re doing in an academic environment with the true needs of the business community.
Even when GE Capital ended their relationship with us in 2015, I don’t think there was any question that we were on the right path and we were going to continue this work. We just had to find new sources of funding and partners. But a lot of times the criticism comes from within our own walls at the college, where people say, “What is this program really doing?” There’s a misconception about how we’re funded and how we operate and what we’re truly providing. I make it my mission to share as much as possible. I obviously don’t want to clog people’s inboxes, especially busy professors and instructors. But I look for key opportunities, and that Impact Report is one of them. I shared that across the college to both faculty and staff to say, “Hey, take five minutes and browse through this. And if you have any confusion about what we’re doing, hopefully this helps solve that.”
Externally, the reception has been very positive. And we continue to make presentations to groups all over the country. I’ve had five or six events in the last month. I’ve got five or six more in the coming four weeks. The interest is as high as it was when we launched.
How to Set Up a Research Institute
Bob: If you met someone from another university who was in a similar role and was setting up a research institute on some topic, what would you tell that person to expect?
Doug: One of the things to consider is this: What is your point of differentiation? That’s where we’ve benefited. This predates my time, but there was a brilliant discussion between the college and GE Capital. But we didn’t name it “The Center for Middle Market.” We named it the National Center for the Middle Market. We cornered that space.
When I visit other universities or I look at other centers, I see many of them as being very local or regionally focused. Real estate centers or entrepreneurship centers are pretty common across the U.S. I feel fortunate that we grabbed on to a relatively unexplored topic and cornered the name. A lot of internal kind of arm-wrestling too place, because GE was very adamant that we establish our own brand around identity, that we weren’t on a university server. So we’re “.org” instead of “.edu.”
I didn’t think that would be very significant at the time. But it’s turned out to be a significant advantage.
So, I would tell those other organizations to establish a clear vision. What is going to differentiate you from all the competition out there? Pick a lane that you want to be really good at, and focus on that and build your expertise. Don’t try to do 10 different things, because your audience is just going to get confused. And they’re going to say, “What is this center really trying to provide?”
I’ve often asked myself the same question: “Is there a way for us to continue doing great research and thought leadership, but also doing more things that directly impact middle market companies like education or executive education programs?” But I don’t want to have too many things at the same time that could distract us from our main mission. I think it’s about establishing the right differentiator, establishing your goal and your vision. Then the first couple of years is about how you get people to know who you are.
We were fortunate to benefit from establishing a really strong network coast to coast with different organizations. Some reached out to us; we’ve established some pretty strong partnerships with others, some of which continue to this day. Even though we have had a very small team, we leveraged a lot of partnerships to get our name out there. Without that, it would have been a struggle to establish the identity and the awareness around NCMM. In fact, in our last survey 60% said that they were aware of NCMM, which surprised me. I think that’s pretty significant from where we were five years ago, when that number was less than 25%.
How to Build Momentum
Bob: If somebody from another university asked you if they could make substantial progress in year two of a research center, would that be enough time?
Doug: We didn’t start to hit our stride until year three or four. We also benefited from some substantial marketing events. GE Capital held a summit on the campus of Ohio State every fall. That was a significant driver of awareness, because two of those summits were a two-day event, bringing 1,200 people and celebrity speakers like Warren Buffett and George W. Bush.
But two of those were broadcast live from campus, one on Bloomberg and one on MSNBC’s “Morning Joe.” The acceleration that we received from that was tremendous. But again, it wasn’t until 2014 or 2015. It takes a good couple of years to establish that identity and awareness.
We’ve gotten better at it too. Over the years, we’ve figured out how to leverage social media appropriately. I think the appetite of wanting to read a 20- or 30-page white paper has changed now that we’re in this more digital consumption environment. We are sending out snippets of bite-size information on these research reports. I challenge our team to think about how we can take one report and extend it for four or five months. It’s pretty easy when you put forth the effort. Instead of just putting it out there once or twice, grab a chart, grab a little nugget, and keep posting that.
We established a newsletter, which has also been helpful. Every other week we’re sending out information about new research event recaps, podcasts, things of that nature. That has helped tremendously.
You must be creative about your plan and how to engage whatever audience you’re trying to reach.
Bob: What’s next for the Center?
Doug: There are a couple of things in our plan going forward. One is to continue to focus on our strength, which is research. We will continue doing these collaborations. The Middle Market Indicator, as I mentioned, is our strongest piece of work. That’s going to continue.
We think about digital transformation. We started exploring the topic in 2019. We’re going to continue down that path, particularly as you think about Visa [as a Center sponsor] and our growing relationship with Google. All the things around how technology will impact the middle market, whether it’s addressing workforce challenges or different growth opportunities, will be significant for us.
We were also part of a [request for proposal] process the college had with the U.S. Department of Education to apply for a CIBER grant. That is an acronym for “Center for International Business Education and Research.” Our part of the RFP — the middle market and NCMM — was a key part of that. We have funding from the U.S. government to explore middle market topics. We’re going to be launching a project here very soon on the global supply chain and the middle market, given all the disruption that has happened, given a lot of reshoring. That’s happened with a lot of manufacturing.
I’m also excited to say that after having two articles in Harvard Business Review in 2021, I’m getting ready to write another. They approached us about whether we would be interested in an online post about how the middle market is navigating change. That’s in process now.
The final thing to say is that we’re talking with the Ohio Chamber of Commerce. Steve Stivers, who’s the CEO of the Ohio Chamber, and was formerly our congressional representative and a big supporter of the middle market. He reached out to us late last year about developing a training program. If that goes well and gets perfected, he would like us to take it to other states and grow it into a national program.
These are really exciting things, and we have a lot on our plate. I don’t know how we’re going get all that done, but we’re starting to plan it all out right now.
Bob: That sounds great. I hope you guys will continue to be on a roll. And it looks like you’ll be on a roll for the foreseeable future.
Doug: I appreciate it. Thanks for all the support.