MBA enrollments have been falling, and one of the side effects is that some MBA programs are going the way of the dodo bird. But sadly, this does not necessarily mean that that MBA degree is in decline. Unfortunately, internet MBAs are skyrocketing.
Now it may seem hypocritical for an MBA who clearly benefitted from getting the degree, at least in pecuniary terms, to criticize these programs. But your humble blogger graduated in 1981, when there were far fewer MBA programs and the financialization of the economy hadn’t yet started. 40% of my class had worked in manufacturing, meaning not just for manufacturers but in the “make the trains run on time” part of the operations. About the same proportion of the class were engineers.
I can’t prove these points, but I know they are true:
- Having a critical mass of engineers (and I mean real engineers, not “software engineers,” since software is shipped at performance standards that are unacceptable in other consumer goods) in MBA programs and corporate-land as a whole considerably reduced the incidence of bad managerialism that is associated with MBAs: thinking they can manage anything (that the intricacies of an industry aren’t that important) by metrics (gah!) and that lower level workers are disposable. Engineers understand that there are physical constraints, that tradeoffs matter and need to be evaluated, and that while production in theory can be made more efficient, there is often a difference between theory and practice, particularly if you keep losing people who have accumulated knowledge.
- Financialization and the rise of PCs synergized in a pernicious way, also fueling self-serving managerial and executive behavior. Remember how the product that put the PC on the map was VisiCalc? If you’ve ever done a financial forecast on green ledger paper with a calculator, it’s torture, because if you make one mistake, everything to the right is wrong. Spreadsheets made it possible to do much more modeling of M&A deals, facilitating the use of more complex financial structures, and it also made it easier to create new products like non-government-guaranteed mortgage securities. But more subtly, the proliferation of spreadsheets led to users treating the spreadsheet as reality, simply fooling with assumptions to make the model produce a needed outcome, and becoming desensitized to the fact that the model wasn’t reality.1
- The growth in MBA programs led MBAs to colonize non-business fields, like higher education, health care, and not-for-profits, to their detriment. The result has been adminisphere bloat and a focus on fundraising at the expense of delivery on organizational goals (for instance, more and more universities have become hedge funds with educational institutions attached).
Another problem with too many MBAs, or too many highly credentialed people generally, is that over-investment in education is not good for the individual or society. Jamie Galbraith made that unpopular point in his book The Predator State. The problem with high levels of education is that they greatly narrow one’s career options, so students can wind up with a costly investment in schooling that they feel compelled (or are required to) recoup, yet the financial rewards may not be there, or their chosen career may see great changes that reduce the value of the extra education that they obtained.
The situation has in many respects gotten worse since The Predator State was published (early 2000s) since college then was still a route into lots of entry-level jobs. But as more and more employers were hiring only people who’d done the same job somewhere else, they started looking even for new BAs with education or experience that was directly relevant. No longer was college a place to get a good general education and broad exposure to cultural history. It was now a place to get workplace skills.
Finally, I am highly skeptical of online degrees and wonder how much online MBAs will be valued in the job market.
The Forbes story explains that some universities are closing money-losing, sub-scale MBA programs, since their drain has gotten worse as students are leery of taking on debt, plus foreign enrollments have fallen off thanks to Trump. Key sections:
The University of Illinois’ Gies College of Business has become the latest school to announce that it is getting out of the full-time, on-campus MBA market. Instead, Gies will focus more aggressively on its online MBA option, the $22,000 iMBA, which has seen big growth since being launched in 2015.
Why is Gies giving up on its full-time MBA? For one thing, the school admits it is losing money on the program….
There are a surprising number of schools in this same predicament. They have sub-optimally sized programs that cannot support the expenses required to deliver a quality program. And that is why we have seen a number of schools drop out of the full-time MBA market. The list includes the Univesity of Iowa, Wake Forest University, Thunderbird School of Global Management, Virginia Tech, and Simmons College.
Many are putting more resource behind their undergraduate business programs, specialty master’s in business, and online MBA programs. Today, nearly 32,000 students are studying for an online MBA at the 25 largest programs in the U.S. At the same time Gies experienced declining interest in its full- and part-time MBA programs, interest in its online MBA has exploded. Applications to its iMBA are expected to hit 3,200 this year, up from 1,099 in 2016, even though the program isn’t yet ranked among the best online MBAs in the U.S.
Another “cheaper degree” approach is “specialty degrees” such as in data management and….drumroll…entrepreneurship. I’ll let readers have at that one in comments.
The reason I needed to have a high-powered degree in the early 1980s was that women were only a half a generation into having broken into the professional track at major firms and big companies, and you needed every advantage you could muster. It’s sad that things are so precarious now that the need to go to extra lengths to be able to get your foot in the door has now become widespread.
_____
1 This isn’t just my view. It’s discussed at some length in Michael Schrage’s book on modeling, Serious Play. Admittedly, some parties have a professional incentive to encourage their clients to regard the output of a computer model as more real than it is because it will facilitate a sale.
69 comments
Comments are closed.
I see online MBA take up by a large amount of sales staff at my company. It’s seen as a means to move towards a managerial role. It seems silly to me as the company also pays for managerial classes for anybody that transitions into a management role.
The comments regarding the centrality of the spreadsheet as the MBA carriers weapon of destruction is spot on. MBAs need “metrics” to manage, even if those metrics are poorly designed and ill suited to getting better outcomes. Education and Healthcare are precisely the fields that come to my mind as being destroyed by spreadsheet 101.
One of the best things I’ve read on NC in ages. Hurray!
I mean real engineers, not “software engineers,” since software is shipped at performance standards that are unacceptable in other consumer goods: an aperçu to pass around.
the proliferation of spreadsheets led to users treating the spreadsheet as reality, simply fooling with assumptions to make the model produce a needed outcome, and becoming desensitized to the fact that the model wasn’t reality I’ve done a lot of mathematical modelling of physico-chemical systems and have always warned people against falling in love with their models.
Which is why I am an utter sceptic about the whole Catastrophic Anthropogenic Global Warming business, where uncritical acceptance of model outputs is so conspicuous. I read some of the early work with a reasonably expert eye – golly, it was low grade stuff. But it was probably more or less honest however incompetent and clumsy it was. The dishonesty came later, so that the whole taradiddle changed from being principally a fiction into being principally a scam. There are still model-lovers there but mostly the silly sods are being exploited by crooks.
Either you are clueless or this is a malicious lie. The claim, that the climate models are uncritically accepted in the community is factually false. Don’t confuse accepted for publication in a journal with acceptance in the scientific community.
Yeah as presented their opinion of other peoples’ opinions about climate models is totally unfounded. And the idea that error in the models would necessarily be biased toward overpredicting change is really silly.
Yes. There are a lot of people completely lacking in understanding of the scientific method that make absurd claims about climate ‘science’.
Forget the serious physicists who are Nobel Prize winners who have called out the climate scientists for lack of rigor in their methods and unreliable conclusions. We should remember that CO2 today is about 10% of historical highs and is a trace gas with only 0.04% of the air we breathe. So the historical low is 180 ppm and the high is 4000 ppm. Today, we are near 400 ppm and coming off an historical low. You are modelling an open system. You can’t predict a lot of the inputs over time and how they will interact. Only a fool would fully trust predictions by these models.
The tell in the lack of seriousness is in the solutions especially when we have hard evidence on the deleterious effects of pollution. Approaches by politicians are basically an excuse for more tax increases and regulation.
Why not focus on pollution and particulate matter? Where are the calls for environmental tariffs? Why aren’t we using finance to invest in more efficient infrastructure? Nope, crickets. Politicians want concentrated corporate control and campaign contributions with the ability to determine winners and losers.
Look at China’s use of CFC’s and the ozone layer despite their signing the Montreal Protocol. Why aren’t the EU and US banning any Chinese industry that uses these materials?
rc, the failure of a political system owned by financiers and fossil fuel companies to act on global warming proves that the science is wrong? And if the science is wrong and biased in the direction of hyping a nonexistent problem in order to promote regulation, how come it’s now come to light that the fossil fuel companies’ own scientists detected and predicted this problem 30 years ago, and the companies’ managements then suppressed the research?
Lack of seriousness…solutions.
There is always the cui bono question when it comes to solutions.
Of those, only one is free of any conflict of interest – less consumption (we can argue over how much less).
Moreoever, less consumption is good whether the planet is warming up, cooling down, or staying the same.
So, it comes to this: Are we OK with consuming less? Can you or we do it, handle that?
You mean the historic low that allowed life as we know it to flourish? Yeah, who needs that – let’s get back to the good old days when slime molds ruled the earth!
You mention all these Nobel winners who have called out climate scientists without naming any. Here’s Richard Muller, a physicist and erstwhile climate change skeptic who actually changed his mind after doing some research of his own –
Sorry, Yves, to sidetrack the discussion, but this nonsense really ticks me off. Good to know MBAs are on the decline. Their influence is everywhere and has caused the crapification of just about everything and fewer of them can;t be a bad thing at this point in time.
At risk of pointing out the obvious, computer models constitute only a small part of the findings of climate science, but are the go-to target for climate change deniers, because their projections seem removed from the “real world” and have in the past produced widely varying outcomes. But their overall accuracy at projecting a bleak future, given present and future trends is not in dispute. That said, the overwhelming accumulation of data from field work over decades by thousands of dedicated researchers in multiple disciplines convincingly shows the planet to be warming dramatically.
If you are an utter sceptic regarding climate change due to the use of computer models, at this point perhaps you might try simply looking out the window and taking in the reality?
I look out the window: I see no catastrophic global warming. Do you?
Planted my garden over the weekend after an extremely cold and wet spring. Despite there being a lot of flowers out, albeit very late this year due to the changing climate, I saw very few pollinators around.
So yeah, from what I read and can then see with my own eyes, I’d call massive species die-off pretty damn catastrophic, despite the fact that I personally continue to remain above ground.
+1. A determined acquaintance with the abstracts of papers from Nature, some time spent on sites like Skeptical Science and Real Climate, Spencer Weart’s “The Discovery of Global Warming” (on line also), and beginning with Elizabeth Kolbert’s “Field Notes from a Catastrophe”, will disabuse you of the belief that climate change ain’t happening. Also check out your state’s climatological data– phenological changes in your own area–like earlier bud break, first and last frost dates, etc. The USDA revised its gardening zones northward some years back because of the changes already ongoing regarding climate.
Utterly depressing to see comments like this from presumably intelligent people. We really are probably fucked.
Doesn’t Trump have an MBA? The man can barely spell.
I’ve been told by one of our former librarians that there’s no secure employment there without an MLS–even for back room clerical type jobs. Perhaps some future discussion could talk about education as the new class structure. The days when someone like Gore Vidal could blow off college and still consider himself American aristocracy may be past., The recent college entrance cheating scandal brings it into focus. Parents were willing to spend hundreds of thousands to buy their children this ticket into the elite.
Trump has an undergrad business degree from Wharton, not an MBA. Bush Jr. had an MBA from
HBS.
Thanks for the correction. I’m more up on my movies than politicians. In Oliver Stone’s W they say daddy got Dubya into Harvard Business School.
Well being “a C student, scoring 77% (with no As and one D, in astronomy) with a grade point average of 2.35 out of a possible 4.00” wasn’t going to get him into Harvard Business School. Years ago they did an interview with a guy that said he missed out on a place at Harvard as Bush took his spot instead. But Bush was always relaxed about the whole thing. He could afford to be-
https://www.youtube.com/watch?v=FcSa_S8tlNc
A classic:
http://www.physics.mcgill.ca/~arobic/funny/bush_fermilab.html
One of my Fermilab friends thought this was quite a hoot.
For those who have never seen this classic Onion page, it’s a “must read”.
W was part of what was referred to as the “happy 25”, that is they were unqualified for admission, were legacies or donor connected, and knowledgeable in the fact that would passed along whether they did the work or not. Same for his time at Yale.
And no one takes someone’s spot at a private school. They pretty much have complete control over their admissions, and including the progeny of the rich and famous, no matter their qualifications, is their prerogative.
We write regularly about how the rich are able to pass their advantages on across generations, but please don’t exaggerate, which you effectively did here.
What they also call the “happy bottom” at Harvard College wasn’t just legacy kids (there were fewer in my day, Harvard has become more and more a hedge fund with an educational institution attached) was limited to the undergraduate program and it primarily consisted of people who weren’t tippy top academically but were likely to wind up being community/business leaders due to their personalities (gregarious, emotionally mature).
The reason Harvard institutionalized and set such a high percentage (25% of the class) as the “happy bottom” was that the year Harvard had riots on campus, it decided to admit the smartest and most studious people it could find (at that point in time, Radcliffe had separate admissions and Radcliffe had always made smarts its most important admission criterion, so you could view it as Harvard adopting Radcliffe’s practices).
Freshman suicided tripled in the first class admitted under the new regime.
Harvard dropped it like a hot potato and adopted its “happy bottom” policy.
The MBA program doesn’t have that, and it has not much in the way of incentive to admit “legacy” kids since the MBA program is handsomely profitable plus many graduates get stinking rich and give to the school, so the best way for the school to do well is admit people who look likely to be very successful. Even in my day, it had a few kids of rich or politically connected families, and the rationale was that people who were part of substantial family businesses had something to offer, and having some in the class added a valuable perspective (and Harvard MBAs might wind up working in them, witness famously, Richard Rainwater with the Bass brothers; he and Sid Bass were Stanford classmates). With a Bush, the combo of family $ plus political connections would have been super attractive independent of $ (it would have impressed the hell out of classmates). And he had gone to Yale, even if that was a legacy admit. There are no Bush building or chairs at HBS, FWIW.
Trump got a male order MBA.
[Y]our humble blogger graduated in 1981, when there were far fewer MBA programs and the financialization of the economy hadn’t yet started.
How exactly does one date the financialization of the economy?
After Nixon took us off the gold standard, after Volker finished tightening, after the student loan programs really started ramping up.
That’d be the rise of one Michael Milken, a/k/a Darth Vadar of business. He started to get going in the late 1970s and by the time Yves finished business school, Milken and his raiders were getting up to speed ruining the world. Carl Icahn, Ronnie Perelman, Ivan Boesky, Nelson Peltz, T. Boone Pickens, Larry Tisch, Steve Wynn … Milken’s raiders were (and are) a whose-who of terrible people. Around the same time was also the legalization of stock buybacks in the early 1980s and the rise of securitization, another Milken innovation (albeit it for corporate debt).
In talking to a friend about Michael Milken back in the early 1980s, I called him a crook, my friend said that I was “dead wrong“, and that some day Milken would be looked at as a hero because his “business innovations” were the only thing making the economy grow at that moment.
I was surprised that he thought new and better ways to screw people over was ‘innovative‘, and on balance, positive.
From his perspective, “…there’s nothing else going on.”
And yes, in hindsight that was the beginning of the neo-liberal revolution that brought us the M&A craze, and the attendant hysteria of creative destruction that turned out to be simple destruction.
“From his perspective, “…there’s nothing else going on.”
Outside of investment for the defense and now surveillance industry, nothing else is still going on but financial growth through financial services and skimming from those and you watch my ads and I’ll watch yours.
You see what I see.
One of Milikens “accomplishments” was to tap into the drug money being deposited in Carribean banks by our South American neighbors. An economic columnist (Don Broder or Bowder? not sure of hs name) at the San Diego Union newspaper wrote in the 90’s that from what he was able to determine approximately 30-40% of money used for leveraged buyouts came from illegal drug profits.
Now that was a real laundry operation.
I have a chapter in ECONNED on financial deregulation.
Simon Johnson has it as starting between 1983 and 1985, which is consistent with my experience on Wall Street, when bond trading and pay moved up in a very big way. From his classic article, The Quiet Coup:
https://www.theatlantic.com/magazine/archive/2009/05/the-quiet-coup/307364/
When I arrived at my college (Ivy) in the early 80s, the student wisdom seemed to go as follows:
(a) for liberal arts BAs not grad school bound, you’d expect 32k/year at Wall St entry level or in quants (eg engineering, accounting), and 25-28k for non-quant marketing type corp jobs (keep in mind this was a living wage in NYC/Boston/DC if you had flatmates and no car). A few went to civil service, about 23k but good benes back then.
(b) setting aside those bound for academia or med school, the bulk of our Dean’s List liberal arts types seemed headed for law school. You basically extended college by 3 further years in exchange for an 85k base in a midtown corp firm and entree to a 10 percenter life. All you need to do is study and work your tail off.
(c ) Then around 1984 the various I-banks began offering analyst programs to BAs, major irrelevant, with a 50k base plus big bonuses. You didn’t need a rich daddy, just good grades at the right school and to fit in with the popular kids (‘good interview skills’). Having a network of guys (yes, I said guys: frat bros, crewbies, etc.) already on the inside talking you up was key too….
In my recollection, this instantly became the brass ring for the ‘social smart’ jocks who might otherwise have gone to corporate America as well as Wall Street. It also pulled away some of the less dweeby prelaws and premeds. Nearly all my classmates who are now multimillionaires in their 50s took this track, moving from the analyst program to a Top 5 MBA and then back to Wall Street again.
That is when the bankster class visibly separated itself out, in my memory, from the rest of us mere strivers.
Almost none of them btw were Type A broker trader mad genius types, just smart enough to get into an Ivy and identify the easy A courses, then sociable enough to fit in with the Team….
Apologies, the above post took on a life of its own. Relevant to today’s topic, I had intended to point out that until Wall Street became THE place to be, top school undergrads either went to grad school, government or were hired into various firms. I view the Wall Street ‘analyst’ programs and the competing management programs founded by many large corporates as the turning point of the MBA from a stand alone degree to a box checking exercise.
Great post. As an underpaid engineer who got frustrated with low pay and high stress I took an MBA in the 1990’s and it paid off in spades. The difference between life as an engineer and as an excel jockey was night and day. As an engineer you had to find the detail in the system that can go wrong and gnaw at the whole system till that detail problem was solved. The excel jockey has to get the big picture to look right and then smudge ( I assumed this detail works was a great one ) or ignore the detail that messes it up. it was easier and WAY more profitable to go the second route.
I couldn’t agree more on your comments re on-line MBA’s. It seemed to me the “stuff” I learned on the MBA was less in the curriculum and more in the intense social atmosphere. The most valuable stuff was in connecting with other ambitious students and sharing plans/conversations with them – one reason a top school is important. On the cynical side, it was also useful to see how those with connections and sharp elbows get ahead and to develop skills in dealing with angry entitled narcissists. All real world skills that cannot be developed In an on-line setting.
Important points about the real value of an in-house MBA. I can’t cite the study but it claimed that it is primarily the top-tier schools that show a clear correlation with high incomes, because it’s about who you meet there. The manifest curriculum is tangential.
The USA, via MBA promotion, may be following a well-charted path of mother England from a long time ago.
From Kevin Phillips book “Bad Money: Reckless Finance, Failed Politics, and the Global Crisis of
American Capitalism”:
British colonial secretary, Joseph Chamberlain, told a group of his country’s financiers: “Granted that you are the clearinghouse of the world, [but] are you entirely beyond anxiety as to the permanence of your great position? . . . Banking is not the creator of our prosperity but is the creation of it. It is not the cause of our wealth, but it is the consequence of our wealth.”
The year was 1904…
I graduated from the Wharton School in 1972 with a BS in Economics.
About that time most large company recruiters, e.g., Xerox, IBM, GM, etc., came to the realization that Wharton undergraduate degrees were just as valuable as MBAs, if not more so.
The reasoning was that MBAs had to be paid more to start and most of them had to un-learn a bunch of irrelevant stuff before they could be trained for their positions. Undergraduates didn’t have this problem because the undergrad program required 25% of credits be taken in the liberal arts college, so they were much more well-rounded as well as much cheaper to hire.
We took the same classes as the MBA students and, according to at least 2 professors, we were much better at it than they were.
I thought about getting into MBA program so many times. But if my bachelors cannot get me into higher wage job, why take more loans for MBA.
I see people doing better and get promoted without any degree. Education is important but not too much.
Agreed that its importance depends very much on the field. For instance, one of my brothers (mid 50s, been in outsourcing virtually from the inception of the industry, starting at EDS) even though he’s in a sales function and his pay is heavily bonus driven, and grey hair is reassuring in these deals, had trouble switching firms when the one he had moved to was having trouble in the market for reasons unrelated to the performance of his team. The reason? He doesn’t have an MBA.
Maybe one thing, one good thing, the virtual world of progress gave us is the recognition of what fiat money actually is. It took financialization to get here, mentally. Because it finally exposed the unreality of it all; plodding along the fantasy of the gold standard was a dead end by 1960. The uneasy thought intrudes here: But what if we had not become a “growth” model but stayed in a sustainable paradigm? That is one of the questions we have to look back on. We’d have progressed at a slower pace, certainly. We wouldn’t have as much CO2 in the atmosphere. We might even have gotten control of our population explosion. But even tho’ all those things were predictable, they were always out of our control. It’s kinda like we just went along for the ride and tried our best to keep things going forward. So now it’s a different world. Let’s hope that all those on-line MBA hopefuls get a dose of reality in their assignments. Sort of wondering what those doses will look like.
You wrote:
I profoundly disagree.
Speaking as a mechanical engineer, but not an MBA, much of what is taught in MBA courses is techniques for the mathematically disinclined to provide some semblance of quantitative reasoning.
Engineers know how to count, and typically have an ability to make mathematical estimates on the fly.
Second, I think that much of the instruction in MBA courses is actually destructive, and would likely acculturate engineers in the culture.
See the example of Bill Agee, when he came to the helm of Morrison Knudson declaring that he was going to show the engineering types what a finance type could do.
I do think that engineers do need additional training to take on positions of senior management, with some courses in accounting, to get them to the point of recognizing scams promulgated by the finance types, and some basic management, as the administrations of engineers of Herbert Hoover and Jimmy Carter demonstrate.
However, a full up MBA is not helpful.
In the best case, it is a waste of time, with the course work ignored, and worse is that an engineer take those lessons to heart.
Straw man. I suggest you read more carefully.
Nowhere does the say that MBAs are a plus for anyone other than the degree recipient. The headline and the first two paras are clearly critical. My comment was that the MBAs were less destructive in the past (among other reasons, because fewer were conferred).
Yes, maybe more numbers, fewer letters in the Post would make it more recognizable.
Let me clarify: I think that MBAs can make it more likely for an engineer to become a manager, but I also think that MBAs generally make whoever goes into the programs worse managers.
I believe that MBA programs actually produce negative value.
As to engineers, and this is something that I am aware of because of personal and family experience, (I am an engineer, and my dad was a management consultant and city planner) engineers bring their own sets of problems at the top, including inflexibility and over focusing on details. (see my Hoover and Carter examples again)
There are things that engineers need to unlearn in order to be good managers, at least at the senior level.
I am not sure what the best way is to ensure that managers actually manage in the best long term interests of the company, but it does appear to me that the incentives are very screwed up.
Hoover may have been a disaster as President, but he was well accomplished as a manager when he was in charge of the US Food Administration and the American Relief Administration during/after WWI. He even managed to head the Commerce Department for 8 years and emerge scandal free.
Considering just how corrupt the federal government was even into the 1920s, that’s no small achievement.
What I thought Yves was implying was that the engineer in charge of making, for instance, a bridge, a train, or a pacemaker, was forced by experience to take a much more serious view of the value of expertise than someone in an industry where updates are always possible. From there, the MBA would tend toward a death spiral of self-cheapening, where more and more participants learned that expertise does not matter.
Yes, that’s correct, plus that there are real world constraints to activity. A cliche is engineers how disassemble a washing machine and put it back together for fun. Stereotypical bad MBA thinking would be that you could make it run even if you removed a part, you just needed to be clever about which part to remove.
Given how long today’s washers last compared with the ones from decades ago, I think your example is probably true in real life.
The MBA: hidden factor in crapification?
Bingo!
Though perhaps hiding in plain sight…
Matthew:
The fun part of working with engineers is having to rewrite their papers because they could not string a series of words together causing it to be coherent to the customer. As a non-degreed (engineer) consulting engineer (Masters) experienced in manufacturing, this was one of the tasks assigned to me by my doctorate Rensselaer boss.
The problem with advanced degrees is the cost associated with them which rose with the rising cost off other things as explained in Baumol’s cost disease. Implied in a world of rapid technological progress, we should expect the cost of manufactured goods — cars, smartphones, T-shirts, bananas, and so forth — to fall, while the cost of labor-intensive services — schooling, health care, child care, haircuts, fitness coaching, legal services, and so forth — to rise. Indeed it did for the cost of getting an education as witnessed by the cost of a Masters.
If you can not describe it in a coherent sentence a customer can read, then what is the purpose of your education?
Of course even Excel spreadsheets can have bugs – let alone the program itself. People may recall the Reinhart and Rogoff Excel spreadsheet error:.
This was quite important because they were quoted as supportive evidence for austerity measures.
Getting hold of the original spreadsheet, somewhat after publication was somewhat of a hassle to replicators.
Which is why make all data and computer code publicly available at an early stage – preferably when the research paper documenting the study is submitted for review. Its happening now somewhat which is a good thing.
for example : yesterday NC linked to a Bank Of England paper. The author also put their code and data out there, not on Alpha Centauri but on the usual spot – github. I could download it easily and overnight I’ve been running the code ! 35 iterations out of 50 done – that’s on a Ryzen CPU at that. Still, it will get done I’m sure and I’ll be able to check the results. And learn something along the way.
Open Data and Open Code is the way to go for scientific publications. And its starting to happen.
Straw man. Wonder why this topic is producing so much of this.
This isn’t about bugs. This is about seeing a model as a substitute for reality. “Oh,we couldn’t make the merger economics work, but we goosed the assumptions and now it does.” No one say anything like this out loud to the people nominally in charge, but this happens pervasively. Also for new product development, outsourcing projects, you name it.
Anyone who does financial forecasting will tell you than changing no more than 5 key assumptions (all within a range of reasonableness) will lead to bottom line results of X to 5X. With that big a range, spreadsheeting is just glorified storytelling, but because math, people incorrectly treat them as way more valid than narrative descriptions of the same scenarios depicted in the model versions.
Which is also a problem in the sciences. You keep goosing the baseline way of analyzing, choosing this metric over that, the way the experiment is setup, etc., until the result you wanted gets produced. This, along with other factors, contributes to the reproduction deficit in the sciences, wherein promising results from a study are rarely confirmed by future testing of the same hypothesis by other scientists.
Now the fix in the sciences is relatively easy; journals just need to require researchers to submit their methodology *before* performing the experiment, as to guarantee that the methodology isn’t getting adjusted when the results aren’t what they wanted. It’s a bit trickier to achieve something similar when you’re dealing with a private entity.
I would only suggest those that have a grandiose sense of models pop by Lars blog.
Not that in the application of Royal Science a 2% chance of failure is considered a smoking hot no go zone.
I hope more schools would shut football programs as well.
Too violent and risky healthwise…especially when it comes to concussion.
Don’t forget the pre-NBA programs, of equal social uselessness.
There is some value in an MBA, maybe the older programs, I learned quite abit in my MBA program. That said – there’s an awweful abundance of MBAs. To the point that engineers must stick to and solve a problem. That is the case in financial systems as well. More so over the recent years. The problem that I observe is an unwillingness to examine and understand the problem as well as work the solution. There is a tendency across all business, especially finance, to just move on the easiest answer and worry about it later – next bonus cycle. In the end it’s all about incentives. Another point raised. Proper alignment of incentives is critical to success.
I definitely learned something, but I had no full time work experience, so I was in a position to learn more than most MBAs. I did pick up finance, some accounting, strategy, decision theory, and some vocabulary and key concepts from marketing and production. But you learn 85%+ of what you are going to learn in the first year; second year students are preoccupied with getting a job and as a result, the profs teaching second year courses aren’t highly motivated either.
I worked for HP starting in the late 1970’s and remember when business downturns caused the company to have temporary pay cuts. IIRC, one time the pay cuts were progressive, at the manager/engineer level, the pay cuts were 10% while the hourly workers were cut 5%, with the reason given that the hourly workers had less say in the company’s direction/product mix (unstated was that they probably had lower discretionary income).
But I remember one time when they had financial incentives for workers to leave to trim the workforce while avoiding layoffs. The rumor was that there was a group of “young turks” that wanted to do layoffs, but the “old guard” didn’t go along with that, hence the costly incentives.
I attribute much of HP’s attitude to the values of the founders, who expressed that they did not want a “hire and fire” company.
Perhaps this was because they came of age during the Great Depression, an experience current executives in the USA do not have.
And in my view inside the company, billionaires Bill and Dave were well liked by employees.
I suspect that is something few billionaires of today can claim.
Dear patient readers,
I am sorry I wound up trashing a few comments, but someone who was banned for violating site rules (ad hominem attacks and other forms of invalid argumentation) while engaged in promoting Tesla jail broke and to poke a stick in my eye, engaged in more Tesla flag-waving.
Jail breaking results in expungement of the comment. Banned is banned.
The way our software works, I have to rip out the replies to a comment, otherwise it breaks the nesting of all comment below the excision. So I ripped out two replies disputing the Tesla cheerleading and manually restored the one above (which takes a smidge of time). Apologies to our on the ball readers Oh and lyman alpha blob, but we are hostage to the limits of our technology.
No worries Yves and thank you for the explanation.
OK, I’ll admit to being ignorant but what does “jail breaking” mean when used in this context?
Please see our site Policies. If someone is banned, they are banned, so finding a way to circumvent what we have done to keep their comment from appearing leads to the comment being deleted.
VisiCalc not VisiCal.
Aargh, my trademark typos. Fixing, thanks!
I am pleased to see the skepticism of spreadsheets discussed here. I used to call the sway such presentations held over the innumerate as “the tyranny of math”
By all means, use calculations where they are warranted, but be mindful that they are not applicable always and everywhere
Here’s a link to a book that tells the story of the development of business schools in the US. It may be somewhat more optimistic about the potential for improvement in this domain than many would think plausible, perhaps in keeping with the author’s perch at HBS, but it’s informative nonetheless
https://press.princeton.edu/titles/8463.html
A friend who graduated with an MBA from Chicago in 1981 (as I recall) said of the experience:
“We learn efficient ways to do things that probably shouldn’t be done in the first place.”
–RC
Thank you for this post as I am currently contemplating in applying for an online MBA program within this year. I’m someone who is rather ambitious in striking out on their own, but do not have the proper connections and financial background to endeavor a new business. This does provide some nuances as I am considering the online program (value, investment, etc).
In the UK it used to be that the exams you took at 18 were rigorous and hard and you could prove you were smart at this point and then go and get a decent job with training or go to university and have some fun before getting a decent job at 21, on the training program I joined there was a mix of 21 year old Brits and 26-30 year old MBA’s from the US. Then over time exams were dumbed down and anyone could go to university and to get a decent job at a corporation with a decent training program you needed to get an MBA or at least a masters to prove you were smart, This extra education that actually teaches very little is a huge waste of energy when really hard exams at 18 would make things much fairer and cheaper for all parties.