The Fallacy of Equivocation at the Economist

In a remarkably shoddy example of anti-market propaganda emanating from the Nottingham Business School, the Economist runs a screed that starts out with the debatable but reasonable premise that business leaders exaggerate their omniscience. It somehow ends up with the unsupported conclusion that business schools should abandon economics, finance, and the pursuit of profit for the cant trio of “sustainability,” “social responsibility,” and “leadership for all not for the few.”

The crude equivocating shifts from intellectual humility to moral humility to altruism would qualify for an F in any class on composition, much less philosophy. The vague assertions about “business excess” (entirely unsupported or even defined), the implicit attribution of these excesses to the teachings of business schools (ditto), and the wild leap at the end (replacing business school education with an agora-like setting in which sophists mingle with scientists and philosophers with philistines to figure out what are “social needs”), all conduce to a massive loss of reader brain cells per sentence. This article might be useful as a sort of mine detector–anyone who finds it congenial is best separated from responsibility for educating or commenting on business or economic issues.


McKinsey Quarterly Top 10 of 2012

The McKinsey Top Ten Articles of 2012 (registration required) contains a few items of interest for strategy folks.

First, it looks like the “s-word” is coming back into style in the endless wheel of business language faddism. Four of the articles have strategy in the title, and some of the others make heavy use of the term in the text. Birshan and Carr in “Becoming More Strategic” say

We are entering the age of the strategist. As our colleagues Chris Bradley, Lowell Bryan, and Sven Smit have explained in “Managing the strategy journey,” a powerful means of coping with today’s more volatile environment is increasing the time a company’s top team spends on strategy. Involving more senior leaders in strategic dialogue makes it easier to stay ahead of emerging opportunities, respond quickly to unexpected threats, and make timely decisions.

Second, we have Cynthia Montgomery’s rumination on “How Strategists Lead,” which makes a decent complement to Dick Rumelt’s Good Strategy, Bad Strategy and is based on a forthcoming book. It’s mostly wisdom-talk, but of a refreshingly skeptical and thoughtful type that fits many of my prejudices, so I’m endorsing it. One part that will be of interest to many of our readers is her insight that since going into executive teaching she’s found that her students are largely incapable of allowing their analyses to temper their optimism or to link their business plans to their analysis of competitive forces. We want executives with a can-do spirit, but we also want executives who are good at the Serenity Prayer and have the wisdom to know the difference between the things they can change and the things they cannot.

Third, we have “How Leaders Kill Meaning at Work,” worked up from a 2011 book, which is based on a large diary study (“…nearly 12,000 daily electronic diaries from dozens of professionals working on important innovation projects at seven North American companies.”). The article is based on “entries in which diarists mentioned upper- or top-level managers—868 narratives in all.” It turns out that “killing meaning” is equivalent to “interfering with success on projects and thereby demoralizing team members,” so the worker-motivation angle isn’t really necessary to their catalogue of upper-management dysfunction. The main quibble I have with the article is that they make no allowance for the possibility that experimentation and/or creating options might be the right way to go, although in the examples they give, if that was what was going on, communication with the front-line troops was inadequate.

All in all, might be worth registering for.

What’s an Academic Fraud?

I recently discovered I am an academic fraud. Now, I am sure there must be people out there whose immediate response is “of course you are”, “knew it” or “I am not surprised”, but I was. 

Admittedly, what amounts to fraud when publishing as an academic isn’t always entirely clear to me – which, to some,will probably suffice to consider me suspect already (if not guilty-till-proven-innocent). I do get the extremes: If one writes up a truly new academic study giving the full account of the research underlying it, it ain’t fraud. If you make up the data – emulating the now infamous Diederik Stapel – it is. But sometimes in between, I am not always sure… Let me give you a few potential examples.

  • Earlier this month, at the Editorial Board Meeting of the Academy of Management Journal, the editor reported that the journal would now start screening every submitted article for plagiarism. The software turns up whether parts of the text have been copied from earlier publications, including articles by the same author (in a case of self-plagiarism). After this, a fellow board member asked “can we access the same software to pre-screen our own articles before submitting them?” There wasn’t a murmur or hint of discontent in the room following this question, but I found it strange and uneasy. If you copy a piece of text, then pre-screen it and the software tells you you would be found out, you rewrite it a bit plugging in a few synonyms here and there and then it is ok and no longer considered fraud and plagiarism?!
  • Geert Hofstede, one of the most highly cited social scientists ever (citations are considered a signal of “impact” in our academic world, and I seem to remember him once telling me that he had more citations than Karl Marx…), became famous for developing dimensions of national cultural differences. He published these dimensions left-right-and-centre – in academic journals, magazines and books – which greatly contributed to their and his exposure. He nowadays would be covered in tar and feathers and chased out of the ivory tower for self-plagiarism?
  • Situation A: PhD student A copies a paragraph leading up to one of his hypotheses from a working paper by someone else he found on the web, without citation. Situation B: PhD student B copies a summary of a previously published academic article from a third, published paper that summarised the same article. Situation C: likewise, but with a citation to that third article, but no quotation marks. Situation D: likewise, but with citation and quotation marks. Who should get kicked out of the programme? At London Business School we have already dealt with situations A and B (the students were chased out), and D of course, but I am left wondering what we’d do in situation C.
  • An academic – and an obvious fan of the Matthew Effect – buys 20,000 followers on Twitter. Yes, if you didn’t know, buying (fake) twitter followers is possible and easy. In fact, yesterday, I learned it is as cheap as chips. Yesterday, the Sunday Times covered the tale of an aspiring English celebrity who bought about 20,000 followers on Twitter to boost her profile. It just cost her a few hundred pounds/dollars. And, in fact, it sort of worked; she did raise her profile. But when she was found out – which isn’t actually that easy – she was ridiculed and quickly chased back to the dubious and crowded ranks of the British B-celebrities. But what would we do? How would we react to an academic buying 20,000 “followers”? Tar and feathers or applause for bringing the Matthew Effect to practice?

I am – apparently – a shameless self-plagiarising fraud because I sometimes get approached by business magazines who say “we read your blog post X and would like to republish it in our magazine”. And if they’re half decent (even by business magazine standards), I tend to say “yes”… In fact, I sometimes make the suggestion myself; when some magazine asks me “would you like to write an article on X for our wonderful magazine?” I usually say “no (way), but chapter X from my book would suit you well. Feel free to republish that”. Some acknowledge it was previously published; some don’t.

And, frankly, I don’t really care, and I will probably do it again. If it is my work, my copy-right, the magazine is fully aware of it, and it doesn’t harm the reader (they will know if they’ve seen it before, and otherwise they probably didn’t, or they might suffer from an enviable dose of business magazine amnesia), I won’t fear or dodge the tar and feathers. In fact, who knows, you may have read this very same post before!

Marginalism and the Higher Ed Paradox

By now, you may be getting sick of reading articles and blog posts about the crisis in higher education. This post is different. It proposes an explanation of why students have been willing to pay more and more for undergraduate and professional degrees at the same time that these degrees are becoming both less scarce and more dumbed down. And that explanation rests on a simple and plausible economic hypothesis.

Read the rest of this entry »

Higher education disruption update

This online education thing seems to be picking up steam:  Stanford Professors Daphne Koller & Andrew Ng Also Launching a Massive Online Learning Startup. The missing piece is still certification. Once that exists, bricks-and-mortar delivery of higher ed will face some nasty competition … and we’ve seen how people feel about BaM — just ask Best Buy, Borders, or Blockbuster.

Of course, retail shopping is not the same thing as getting educated. There are similarities. For example, BaM is expensive and inconvenient in both cases. Also, in both cases, the younger generations are extremely comfortable with the online technology. Yet, it’s the differences that should be most concerning. Education-on-demand has the potential to solve many problems. This feature will be highly appealing to most potential students. Even more threatening to the traditional model:  the price of online education taught by professors from top schools is not just lower by the savings in BaM distribution costs — it’s zero. Think about that – zero.

Most of the colleagues with whom I discuss these developments argue that there is simply no substitute for the real-time, in-person, interactions available in the traditional classroom setting. They believe that this will continue to motivate students to pay a premium for the experience. I wonder. It is not obvious to me that students get some special utility premium from classroom interactions. Ask yourself this: do your students consider “cold-calling” a welcome feature of sitting in your class? In my judgment, most students would actually pay to avoid it.

Besides the assessment problem, there is another hurdle for the online education model. Clearly, no professor can answer the specific questions of 100,000 students. The online institutions are going to have to find a way to staff some form of virtual office hours in which students can get answers to their questions. My sense is that there is plenty of well-trained talent in India to staff office hours for these courses. Heck, in ten years, online course providers will be able to pick up highly experienced, unemployed domestic PhDs to man the chat rooms on the cheap.

UPDATE:  Elite Universities’ Online Play (HT: Instapundit)

MBA tuition bubble update

If you want to see just where the MBA business may soon be heading, read this – just in from Balkinization (HT: Instapundit): The Law School Crunch Is Here–Finances and Quality to Suffer. New numbers released by LSAC show applicants to law school for 2012 are down in every region of the US vs. previous year, with the majority experiencing drops of 15%-20%. Enrollment is also dropping – 2012 may see the lowest enrollments since the 1990s (from 52,000 enrolled in accredited programs two years ago to a possible 43,000 this year). With such a precipitous enrollment drop comes low quality students and severe financial difficulties. The bad news is that even at these low numbers, the number of graduates far outstrips the number of available jobs. Tamanaha estimates the equilibrium number of first year enrollments to be around 35,000. The good news is hard to find.

The law school industry appears to lead its b-school counterpart by a few years. Many of the trends affecting law schools – the most salient being the discouraging cost/benefit ratio facing prospective students – are also affecting graduate business schools. The lag between the two may be due to the fact that, for law schools, the immediate value of a law degree is much more transparent. One cannot be a lawyer without a law degree and the only purpose in having a law degree is to become a lawyer. When the bottom falls out of the market for lawyers, one would expect it to fall out of the market for law education in short order. Since MBAs are, ostensibly, useful in any business endeavor, the connection between the education and practitioner markets is less obvious.

That said, business schools face other challenges. For example, law schools still provide an important certification function and, as such, have presumably retained a requisite level of educational content. This maintains their position as a necessary link in the professional chain. Business school educational content, on the other hand, has been on a downward glide path ever since the advent of Business Week surveys in the late 80s (and the Northwestern response innovation to treat students as “customers”). With no objective certification requirement, b-schools have been free to dumb down the education, admit large numbers of questionably-qualified-but-able-to-write-a-check students, and increase activities that have little to do with learning (e.g., social networking). Simultaneously, we see the stirrings of competition from untraditional  sources, such as high quality schools in Europe, China and India (previously a growth segment of the domestic MBA education market), free online courses from top schools such as MIT and Stanford, and alternative forms of education (such as E[enstitute]‘s apprenticeship approach). These differences suggest that the bottom, when we hit it, may be worse than that for law schools.

During a discussion of these developments the other day, a young colleague objected to (what he interpreted as) my Cassandra-like apocalypticism on this topic. The objection was misplaced. I do believe the market for MBAs is going to get a lot tougher in the near- to mid-term – perhaps catastrophically so for programs outside the first tier. In the long-term, however, the turbulence is going to force our institutions … wait, I mean us, the faculties … to revise our business and educational models to compete effectively. The reason to start thinking about the bad-news scenarios now is to prepare. So, when the crunch comes, clear-thinking colleagues can step up to implement successful responses. In my judgment, the market for business education is going to become much more fragmented and diversified. This strikes me as a good thing, with one  winning strategy being to take the research-education link and its attending certification role seriously once again. And, that, in my opinion, would be a wonderful development.

B-School Disruption Update

Want to be an entrepreneur? Enstitute is bringing back apprenticeships

This is the answer to those who think we will keep our research-based MBAs above water by making the curriculum more “relevant in the real world” … by which people seem to mean sacrificing academic content for: external projects with business sponsors, “living” case studies, 1st summer internships, support services for personal grooming, etc. As I have long argued, research faculty are not efficient providers of substitute “real world” experiences.

Apropos this discussion, last week, E[nstitute] launched in NYC by founders Kane Sarhan and Shaila Ittycheria. The idea is to pick up promising candidates with a high school diploma and put them through a two-year apprenticeship program mentored by some of NYC’s top entrepreneurs. Impressive.

And, it isn’t just business schools this program threatens — in a recent article, Brad Mcarty, editor at Insider points out, “… the average public university (in the US) will set you back nearly $80,000 for a 4-year program. And a private school will cost in excess of $150,000. At the end of that time, you have a bellybutton,” he writes. “Oh sure, you might have a piece of paper that says you have a Bachelor of Science or Art degree but what you actually have is something that has become so ubiquitous that it’s really not worth much more than the lint inside your own navel.”

That’s strong stuff and, sadly, uncomfortably close to the truth. Moreover, it speaks to strong potential demand for apprenticeship-style entrepreneurship programs like the one mentioned above. Personally, I think it’s terrific. The existence of programs like this create more value at the society level. From the b-school foxhole, they also force research-based MBA providers to think more carefully about what, if any, comparative advantage we have vis the many non-traditional competitors we now see invading our industry.

Hint: the answer will have to involve our research. This is what we do. And, contrary to the whining and hand-wringing of so many traditional MBA providers, teaching young people cutting-edge general principles (i.e., research-based knowledge) has substantial market value. We just stopped doing it a couple of decades ago.



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