This TED talk, Tim Harford on the folly of assuming one can control complex systems, is worth watching:
I have blogged about the problems with understanding causality in complex systems (in my case a system that is deceptively simple to describe but has complex behavior) before. I have Tim Harford's book Adapt, but haven't finished it yet; I will blog book notes (especially now that the Kindle App allows for copy-paste).
Experimentation, evolution, adaptation: the secret to a successful complex system. As in Nature so in business (and possibly other management fields).
Friday, July 15, 2011
Wednesday, July 6, 2011
Thoughts on the Kenan-Flagler $89,000 online MBA (and the MBA degree in general)
I saw the news this morning that the Kenan-Flagler Business School at the University of North Carolina—Chapel Hill is starting a new online MBA and charging the same as for its in-class MBA, $\$89,000$.
Online MBAs have so far been mostly consigned to the low end of the MBA spectrum; Kenan-Flagler is a serious school with serious quality, so this is a game-changer. Which raises the important question:
Can a online MBA be worth the same as a regular, in-class MBA?
Futurology is a field fraught with error, so let's do what smart managers do at the beginning of a category lifecycle: think carefully about the likely path of the value proposition and the revenue models. The revenue model here is tuition plus alumni donations, same as for a in-class MBA; let's analyze the four components of the value proposition:
1. Technical business material. Things like how to value a put option; how to measure consumer preferences; how to brief an advertising agency; how to organize a value chain; how to analyze the potential of a market. These technical materials are learned the same way every other technical material is (math, science, engineering): mostly by practice. Practice comes from preparing for in-class discussions or homework. So, this part of the MBA value proposition is easily transferred to a online (or even textbook-based) education.
We may like to think that students are learning the technical material in class – because we are so good at explaining it, of course – but the students only learn the material for real when they put it into practice. More often than not, when they are gearing up to solve problems or analyze cases they have to review their notes or read the textbook. All this can work in a self-guided study, be it from the textbook or from online materials. It all depends on how the motivation (aka the assessment) is executed.
2. Managerial skills. Things like leadership, decision-making on-the-fly, presentation, consensus-building, teamwork. These are essential parts of Participant-Centered Learning, and very hard to do online. There's a point in a manager's training where she has to stop analyzing, raise her hand and – in front of a group of people who are trying to find fault with it – present her view of the case. The ability to convince others and get them to execute your decisions is fundamental to the job of manager and this type of experience does require the presence in a classroom.
In fact many critics of the MBA degree as preparation for management jobs state that the in-class experience is not enough to develop these skills and should be complemented with specific soft-skill development exercises, which – needless to say – have to be done in-class.
This might sound trivial, but many students have told me that, before doing it, they had no idea what it felt like to be called upon to defend a decision that they were 51.5% sure of and make it sound convincing (otherwise it would be dead on arrival). These are the kind of skills that make the difference between a back-office analyst and a line manager.
3. Networking and the broader community. Some non-MBAs, who tend to believe in conspiracies to explain their personal shortcomings, dismiss the MBA degree as just a network-building exercise. That is incorrect, but the network one creates as part of one's MBA is a valuable part of the program. A consultant might look good "on paper," but you save your firm a lot of grief (and money) because your old Strategy teammate told you that the guy can't tell a experience effect from a sound effect. This kind of networking will only develop with continued physical proximity.
But the community doesn't end there: there are the other cohorts (older and younger) and even the contacts with faculty (which in a business school may be more useful than, say, in a humanities school). There's also the broader campus community; some MBA students at a school that shall remain nameless, located close to the Longfellow Bridge on Memorial Drive in Cambridge, MA, use their affiliation with the larger Institute to contact faculty in areas that they might find useful; engineering comes to mind. This broader community might be available to online students, especially in this age of email, instant messaging, and videoconferencing.
4. Screening and signaling. Getting accepted into the program, completing the coursework, and paying a high tuition on the expectation that future earnings will more than make up for it are all signals a student sends to the market. The more selective the school is with its incoming class, the more informative that signal is. Since the same criteria can be applied to online and in-class students, the signal should be the same. (Whether the market accepts that the criteria are the same, that's a different story.)
At first I was flabbergasted that K-F was going to charge the same for the online as for the in-class MBA, but now I think that's actually smart on two levels: one, by having the same price for both, K-F signals that both programs are in fact two variants of the same degree; two, by keeping it expensive, they feed the third component of the signal, that those enrolling expect to make a lot of money, which means work hard.
So, what is the verdict?
On one hand, there are a few serious impediments to delivering the full value proposition of an MBA through a online environment. On the other hand, some of those issues can be mitigated with short "in campus" events. And, some people point out, many MBA students never really get the "soft-skill" parts that would be missing from an online MBA; even at K-F. (Even at Halberd, come to think of it.)
The market will decide, but a-priori there's no reason why, at least for technical jobs in business (including most of the consulting and finance jobs that MBAs crave) this wouldn't be a useful program.
Online MBAs have so far been mostly consigned to the low end of the MBA spectrum; Kenan-Flagler is a serious school with serious quality, so this is a game-changer. Which raises the important question:
Can a online MBA be worth the same as a regular, in-class MBA?
Futurology is a field fraught with error, so let's do what smart managers do at the beginning of a category lifecycle: think carefully about the likely path of the value proposition and the revenue models. The revenue model here is tuition plus alumni donations, same as for a in-class MBA; let's analyze the four components of the value proposition:
1. Technical business material. Things like how to value a put option; how to measure consumer preferences; how to brief an advertising agency; how to organize a value chain; how to analyze the potential of a market. These technical materials are learned the same way every other technical material is (math, science, engineering): mostly by practice. Practice comes from preparing for in-class discussions or homework. So, this part of the MBA value proposition is easily transferred to a online (or even textbook-based) education.
We may like to think that students are learning the technical material in class – because we are so good at explaining it, of course – but the students only learn the material for real when they put it into practice. More often than not, when they are gearing up to solve problems or analyze cases they have to review their notes or read the textbook. All this can work in a self-guided study, be it from the textbook or from online materials. It all depends on how the motivation (aka the assessment) is executed.
2. Managerial skills. Things like leadership, decision-making on-the-fly, presentation, consensus-building, teamwork. These are essential parts of Participant-Centered Learning, and very hard to do online. There's a point in a manager's training where she has to stop analyzing, raise her hand and – in front of a group of people who are trying to find fault with it – present her view of the case. The ability to convince others and get them to execute your decisions is fundamental to the job of manager and this type of experience does require the presence in a classroom.
In fact many critics of the MBA degree as preparation for management jobs state that the in-class experience is not enough to develop these skills and should be complemented with specific soft-skill development exercises, which – needless to say – have to be done in-class.
This might sound trivial, but many students have told me that, before doing it, they had no idea what it felt like to be called upon to defend a decision that they were 51.5% sure of and make it sound convincing (otherwise it would be dead on arrival). These are the kind of skills that make the difference between a back-office analyst and a line manager.
3. Networking and the broader community. Some non-MBAs, who tend to believe in conspiracies to explain their personal shortcomings, dismiss the MBA degree as just a network-building exercise. That is incorrect, but the network one creates as part of one's MBA is a valuable part of the program. A consultant might look good "on paper," but you save your firm a lot of grief (and money) because your old Strategy teammate told you that the guy can't tell a experience effect from a sound effect. This kind of networking will only develop with continued physical proximity.
But the community doesn't end there: there are the other cohorts (older and younger) and even the contacts with faculty (which in a business school may be more useful than, say, in a humanities school). There's also the broader campus community; some MBA students at a school that shall remain nameless, located close to the Longfellow Bridge on Memorial Drive in Cambridge, MA, use their affiliation with the larger Institute to contact faculty in areas that they might find useful; engineering comes to mind. This broader community might be available to online students, especially in this age of email, instant messaging, and videoconferencing.
4. Screening and signaling. Getting accepted into the program, completing the coursework, and paying a high tuition on the expectation that future earnings will more than make up for it are all signals a student sends to the market. The more selective the school is with its incoming class, the more informative that signal is. Since the same criteria can be applied to online and in-class students, the signal should be the same. (Whether the market accepts that the criteria are the same, that's a different story.)
At first I was flabbergasted that K-F was going to charge the same for the online as for the in-class MBA, but now I think that's actually smart on two levels: one, by having the same price for both, K-F signals that both programs are in fact two variants of the same degree; two, by keeping it expensive, they feed the third component of the signal, that those enrolling expect to make a lot of money, which means work hard.
So, what is the verdict?
On one hand, there are a few serious impediments to delivering the full value proposition of an MBA through a online environment. On the other hand, some of those issues can be mitigated with short "in campus" events. And, some people point out, many MBA students never really get the "soft-skill" parts that would be missing from an online MBA; even at K-F. (Even at Halberd, come to think of it.)
The market will decide, but a-priori there's no reason why, at least for technical jobs in business (including most of the consulting and finance jobs that MBAs crave) this wouldn't be a useful program.
Tuesday, July 5, 2011
An annoying mistake people make using game theory
There's a lot of confusion between actions and strategies, at least in the minds (and presentations and papers, sadly) of some analytical modelers.
In a game each agent $i$ has a set of actions $\mathcal{A}_i$. For example, in the prisoners' dilemma, the actions are {Defect,Cooperate}; in the matching pennies game they are {H,T}.
A strategy for player $i$, $\sigma_i$, can be a simple action, in the case of pure strategies. For example, the strategy for the prisoners' dilemma is to Defect always, a pure strategy. So in this very particular case, the observed action, say $A_i \in \mathcal{A}_i$ coincides with the strategy $\sigma_i$.
A strategy can be a distribution $\sigma_i(A_i) \in \Delta(\mathcal{A}_i)$ over actions $A_i \in \mathcal{A}_i$, which is the case with mixed strategies. The balanced matching pennies game has a unique Nash equilibrium where both players play H with 1/2 probability and T with 1/2 probability.
And this is where a lot of modelers get confused.
I've heard (and read, sadly) modelers say "we never see mixed strategies, so we are going to look at equilibria with pure strategies only." (Usually even this statement is wrong. What they are looking at are "equilibria" in which players are forced to play pure strategies, which is different. These are usually not equilibria at all: typically they have competitive best responses in mixed strategies that dominate the "equilibrium" one.)
Of course you don't see mixed strategies. You never see any strategy; all you can see are actions. What you see in pure strategies is an action that happens to coincide with the strategy. In the matching pennies game, any play is executed by drawing from the distribution an action; that is what you see, say H. There's still an underlying $\sigma_i(H) = \sigma_i(T)=1/2$, but it is not visible; it must be inferred from the structure of the game's payoffs.
And, of course, a strategy can be a distribution $\sigma_i(A_i|\mathcal{I}_i)$ over $\mathcal{A}_i$ that is a function of information set of player $i$ at the time of play, $\mathcal{I}_i$, which makes things even more complicated. And more error-prone.
Some times during my first game theory course I thought all the formalism was a bit pedantic. Then I met people who didn't learn game theory properly, and realized that the formalism is there for a reason.
It removes the confusion.
Saturday, July 2, 2011
Putting some thought into presentations - backward induction approach
Thinking about presentations as a persuasion device led me to this short exercise in backward induction (click through for larger picture):
Sometimes a picture does capture more than one thousand words.
Sometimes a picture does capture more than one thousand words.
Thursday, June 30, 2011
Taking presentations seriously to avoid wasting effort
Many presenters who are hard workers don't care for working on their presentations. That's odd.
Many researchers, data scientists, academics, and other knowledge discoverers are not very good at presenting their work. They argue, somewhat reasonably, that their strength is in formulating questions, collecting and processing data, and interpreting the results. Presentations are an afterthought.
The problem with this is the following:
If the purpose of finding out a true fact is to influence decision-makers, communicating that fact clearly is an essential step of the whole process. In fact, all the work done prior to the presentation will be wasted if the message doesn't get across.
Does it make sense to waste months of work discovering knowledge because one isn't in the mood to spend a few hours crafting a presentation?
Many researchers, data scientists, academics, and other knowledge discoverers are not very good at presenting their work. They argue, somewhat reasonably, that their strength is in formulating questions, collecting and processing data, and interpreting the results. Presentations are an afterthought.
The problem with this is the following:
If the purpose of finding out a true fact is to influence decision-makers, communicating that fact clearly is an essential step of the whole process. In fact, all the work done prior to the presentation will be wasted if the message doesn't get across.
Does it make sense to waste months of work discovering knowledge because one isn't in the mood to spend a few hours crafting a presentation?
Wednesday, June 29, 2011
The problem with "puzzle" interview questions: II - The why
Part I of my post against the puzzle interview is here.
There are two related "why?"s about puzzles in interviews: 1) Why do companies use puzzles as interview devices? 2) Why are puzzles inappropriate for that purpose now?
The last word answers the first question, really: because in the past puzzles were a reasonable indicator of intelligence, perseverance, interest in intellectual pursuits, and creativity. Since these are the characteristics that firms say they want workers to have, puzzles were, in the past, appropriate measurement tools.
Why in the past but not now, then?
In the past, before the puzzle-based interview was widely adopted, people likely to do well in one were those with a personal interest in puzzles. People who spent time solving puzzles instead of playing sports or socializing with members of the opposite sex -- nerds -- incurred social and personal costs. This required interest in intellectual pursuits and perseverance. Now that puzzles are used as interview tools, they are just something else to cram for and find shortcuts; that's the mark of those intellectually uninterested and lacking perseverance.
Furthermore, since they were solving puzzles for fun, nerds were actually solving them instead of attending seminars and buying books that teach the solutions and mnemonics to solve variations on those solutions (what people do now to prepare for the puzzle interview). Solving puzzles from a cold start requires intelligence and creativity; memorizing solutions and practicing variations requires only motivation.
In technical terms, the puzzles were a screening device that decreased in power over time as more and more people of the undesired type managed to get pooled with the desired type.
Every metric will be gamed, both direct measures and proxies. Knowing this, firms should focus on the direct metrics. They will be gamed, but at least effort put into gaming those may be useful to actual performance later.
Memorized sequences of integers from a puzzle-prep seminar will definitely not.
There are two related "why?"s about puzzles in interviews: 1) Why do companies use puzzles as interview devices? 2) Why are puzzles inappropriate for that purpose now?
The last word answers the first question, really: because in the past puzzles were a reasonable indicator of intelligence, perseverance, interest in intellectual pursuits, and creativity. Since these are the characteristics that firms say they want workers to have, puzzles were, in the past, appropriate measurement tools.
Why in the past but not now, then?
In the past, before the puzzle-based interview was widely adopted, people likely to do well in one were those with a personal interest in puzzles. People who spent time solving puzzles instead of playing sports or socializing with members of the opposite sex -- nerds -- incurred social and personal costs. This required interest in intellectual pursuits and perseverance. Now that puzzles are used as interview tools, they are just something else to cram for and find shortcuts; that's the mark of those intellectually uninterested and lacking perseverance.
Furthermore, since they were solving puzzles for fun, nerds were actually solving them instead of attending seminars and buying books that teach the solutions and mnemonics to solve variations on those solutions (what people do now to prepare for the puzzle interview). Solving puzzles from a cold start requires intelligence and creativity; memorizing solutions and practicing variations requires only motivation.
In technical terms, the puzzles were a screening device that decreased in power over time as more and more people of the undesired type managed to get pooled with the desired type.
Every metric will be gamed, both direct measures and proxies. Knowing this, firms should focus on the direct metrics. They will be gamed, but at least effort put into gaming those may be useful to actual performance later.
Memorized sequences of integers from a puzzle-prep seminar will definitely not.
The problem with "puzzle" interview questions: I - The what
I like puzzles. I solve them for fun; I don't like when companies use them for recruiting, though.
Some companies use puzzle-like questions as interview devices for knowledge workers. Other than the obvious inefficiency of using proxies when there are direct measures of performance, many of these questions penalize creativity and thinking outside the box defined by the people who are conducting the interview (usually the potential coworkers).
Here's a thought: if hiring a programmer, ask a programming question. For example, give the interviewee a snippet of code and ask what its function is; ask how it could be optimized; ask what would happen with some change to the code or how a bug in a standard subroutine would affect the robustness of the code.
Here's a second though: if hiring statisticians, instead of trying to trip them with probability puzzles (especially when your answer might be wrong), show them a data-intensive paper and ask them to explain the results, or to consider alternative statistical techniques, or to point out limitations of the techniques used. Perhaps even -- oh what a novel idea -- consider asking them to help with an actual problem that you're actually trying to solve.
My job interviews, in academe, were like these thoughts: I was asked, reasonably enough, about my training, my research, my teaching, and to demonstrate the ability to present technical material and answer audience questions; job-related skills, all, even though some interviewers were interested in puzzles.
In social events, however, some acquaintances have asked me questions from interviews; here are a couple of responses one could give that are correct but unacceptable to most interviewers:
How would you move Mount Fuji?
Well, in a universe in which the Japanese people and government would allow me to play around with one of their most important landmarks, I'd probably be too busy simuldating Olivia Wilde and Milla Jovovich to dabble in minor construction projects. But if I had to, I'd use a location-to-location transport beam from my starship, the USS HedgeFund.
Or did you want to know whether I can come up with the formula for the volume of a truncated cone?
What is the next number in this sequence: 2, 3, 5, 7, 11,...
It's pi-cubed. You are enumerating in increasing order the zeros of the following polynomial
\[ (x - 2) (x - 3) (x - 5) (x- 7) (x - 11) ( x - \pi^3).\]
Or did you think that there was only one sequence starting with the first five prime numbers?
Bob has two children, one is a boy. What is the probability that the other is a boy?
I made a video about that. (Even after that video, or my live explanation, some people insist on the wrong answer, 1/3; proof that there are few things more damaging than a little knowledge matched with a big insecure ego.)
-- -- -- -- --
I'll have a later post explaining the deeper problem with using puzzles (and its dynamics), part II of this.
Some companies use puzzle-like questions as interview devices for knowledge workers. Other than the obvious inefficiency of using proxies when there are direct measures of performance, many of these questions penalize creativity and thinking outside the box defined by the people who are conducting the interview (usually the potential coworkers).
Here's a thought: if hiring a programmer, ask a programming question. For example, give the interviewee a snippet of code and ask what its function is; ask how it could be optimized; ask what would happen with some change to the code or how a bug in a standard subroutine would affect the robustness of the code.
Here's a second though: if hiring statisticians, instead of trying to trip them with probability puzzles (especially when your answer might be wrong), show them a data-intensive paper and ask them to explain the results, or to consider alternative statistical techniques, or to point out limitations of the techniques used. Perhaps even -- oh what a novel idea -- consider asking them to help with an actual problem that you're actually trying to solve.
My job interviews, in academe, were like these thoughts: I was asked, reasonably enough, about my training, my research, my teaching, and to demonstrate the ability to present technical material and answer audience questions; job-related skills, all, even though some interviewers were interested in puzzles.
In social events, however, some acquaintances have asked me questions from interviews; here are a couple of responses one could give that are correct but unacceptable to most interviewers:
How would you move Mount Fuji?
Well, in a universe in which the Japanese people and government would allow me to play around with one of their most important landmarks, I'd probably be too busy simuldating Olivia Wilde and Milla Jovovich to dabble in minor construction projects. But if I had to, I'd use a location-to-location transport beam from my starship, the USS HedgeFund.
Or did you want to know whether I can come up with the formula for the volume of a truncated cone?
What is the next number in this sequence: 2, 3, 5, 7, 11,...
It's pi-cubed. You are enumerating in increasing order the zeros of the following polynomial
\[ (x - 2) (x - 3) (x - 5) (x- 7) (x - 11) ( x - \pi^3).\]
Or did you think that there was only one sequence starting with the first five prime numbers?
Bob has two children, one is a boy. What is the probability that the other is a boy?
I made a video about that. (Even after that video, or my live explanation, some people insist on the wrong answer, 1/3; proof that there are few things more damaging than a little knowledge matched with a big insecure ego.)
-- -- -- -- --
I'll have a later post explaining the deeper problem with using puzzles (and its dynamics), part II of this.
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