Professors Sven Larson and Kenneth Carpenter (A) Custom Case Solution & Analysis

Evidence Brief: Professors Sven Larson and Kenneth Carpenter (A)

Financial Metrics

• Consulting Fee Structure: Larson and Carpenter charged clients 15,000 USD per day for their services (Case text).
• Academic Salary: Larson earned 85,000 USD per year as a tenured professor; Carpenter earned 75,000 USD per year (Case text).
• Opportunity Cost: Every day spent consulting represented approximately 340 USD of academic salary (based on 250 working days per year).
• Financial Disparity: A single day of consulting work generated roughly 20% of their annual academic base salary.

Operational Facts

• Dual Roles: Both individuals maintained full-time tenured faculty positions at a prestigious business school while managing a high-end consulting practice.
• Client Profile: High-level corporate executives seeking strategic advice on complex organizational issues.
• Engagement Model: High-intensity, high-cost advisory work that required significant intellectual preparation and travel.
• Capacity Constraints: Academic obligations (teaching, grading, research, committee work) competed directly with billable consulting hours.

Stakeholder Positions

• Larson and Carpenter: Driven by the desire to apply academic theory in practical settings and the substantial income premium provided by private consulting.
• The University: Concerned with maintaining academic rigor, faculty availability for students, and the potential reputational risk of professors prioritizing private interests over institutional duties.
• Students: Expect access to professors for mentorship and instruction; likely frustrated by frequent absences or distracted faculty.

Information Gaps

• Specific contract language regarding outside earnings and time allocation for faculty.
• Total annual consulting revenue per professor (the case implies high volume but does not disclose exact annual billings).
• Institutional policies on conflict of interest and the definition of a full-time academic load.

Strategic Analysis

Core Strategic Question

Can Larson and Carpenter maintain a high-intensity consulting practice while fulfilling the tenure requirements of a top-tier business school, or does the academic model necessitate a binary career choice?

Structural Analysis: Value Chain

The professors operate two distinct value chains. The academic chain prioritizes long-term research impact and student development. The consulting chain prioritizes immediate, high-impact problem solving for corporate clients. The tension arises because both chains demand the same finite resource: the professors intellectual bandwidth and time.

Strategic Options

• Option 1: Institutional Integration. Formalize a consulting wing within the university. Trade-off: Increases school prestige and revenue but risks mission creep and faculty burnout.
• Option 2: The Binary Pivot. Resign from the university to pursue full-time consulting. Trade-off: Maximizes immediate income and focus but sacrifices the long-term career security and intellectual freedom of tenure.
• Option 3: The Structured Hybrid. Cap consulting at 20% of time (one day per week). Trade-off: Maintains professional balance but likely results in losing top-tier consulting clients who demand full availability.

Preliminary Recommendation

The binary pivot is inevitable. The current model is unsustainable because the consulting market values total availability, while the academic model values consistent presence. Attempting to force a hybrid approach will lead to underperformance in both domains.

Implementation Roadmap

Critical Path

1. Audit current consulting contracts to identify exit clauses or transition requirements.
2. Negotiate a transition period with the university to fulfill remaining teaching obligations.
3. Establish a formal legal entity for the consulting firm to manage risk and professional liability.

Key Constraints

• Reputational Risk: Leaving the university must be handled with extreme care to maintain the academic credibility that serves as the foundation for their consulting brand.
• Institutional Policy: The university may invoke non-compete or intellectual property clauses regarding research developed during their tenure.

Risk-Adjusted Implementation

Phase out academic duties over one full academic year. During this time, shift consulting engagements to a project-based model that does not require physical presence on campus. Maintain a secondary role as an adjunct or guest lecturer to preserve the connection to the institution without the burden of full-time faculty responsibilities.

Executive Review and BLUF

BLUF

Larson and Carpenter must choose between the academy and the boardroom. Their current attempt to occupy both spaces is an unsustainable compromise that threatens their standing in both. The consultancy generates 20% of their annual salary in a single day, exposing the absurdity of their academic compensation relative to market value. They should resign from their tenured positions to capture the full market value of their expertise. The primary danger is not the loss of tenure, but the erosion of their intellectual rigor once they are no longer pressured by the academic peer-review cycle.

Dangerous Assumption

The assumption that their consulting value is derived from their status as professors. In reality, their value is derived from their ability to solve complex problems; the academic title is merely a signal. They overestimate the necessity of the university brand to their future consulting success.

Unaddressed Risks

• Intellectual Atrophy: Without the requirement to publish and teach, the professors risk losing the theoretical edge that differentiates their consulting advice.
• Institutional Retaliation: The university may aggressively contest their right to take certain research methodologies or industry contacts with them.

Unconsidered Alternative

The professors should pivot to creating a boutique research institute that bridges the gap—selling high-end research insights to corporations while maintaining a small, selective teaching load that keeps them intellectually sharp without the administrative burden of full tenure.

Verdict: APPROVED FOR LEADERSHIP REVIEW