GlobalEd

BOOK REVIEW: “Austerity: The History of a Dangerous Idea” by Mark Blyth (2013)

Mark Thomas — Wed, 22 May 2013 12:54:17 +0000

Success often depends on timing. Though Mr Blyth has been working on this book for two years, its launch seems to have come at a very appropriate moment. After several years of austerity measures, public opinion in countries across the world is becoming more critical on the cutbacks their governments have brought in to reduce their deficits. Adding to that is the discovery that Reinhart and Rogoff’s models, the theoretical underpinning of these policies, were erroneous. This is a well researched and well argued book and the title, “Austerity: The History of a Dangerous Idea”, will give you a clear indication of where the author stands.

Key words

Economics, finance, economic crisis, debt crisis, governmental fiscal policy, leverage effect.

Summary

Mark Blyth

“Austerity doesn’t work. Period.”

So concludes Mr. Blyth at the end of this very clever book. (And if you are thinking that the ending has been spoilt, you’ll have got the message long before reading the final chapter.)

The logic behind policies of austerity has always been that, by reducing wages, prices and public spending, confidence is retored in a defunct economy and business will begin to reinvent itself. This idea is not new and can be traced back to philosophers, such as Locke, Hume and Adam Smith, who all fought to limit the influence of the state. Germany’s disastrous period of hyperinflation in the 1920s have made it a champion of avoiding inflation at all costs, even if that leads to high unemployment.

Austerity = all will pay for mistakes of the rich.

According to Mr. Blyth there are several problems to this policy. Firstly, it is blatantly unfair since most of the costs of such policies are met by the poorer sector of society, who had nothing to do with the curent crisis, rather than the affluent.

“Austerity is the penance- the virtuous pain after the immoral party- except it is not going to be a diet of pain that we shall all share. Few of us were invited to the party, but we are all being asked to pay the bill.”

The second reason is that , by voluntarily deflating the economy we will never get the public to start spending again and to thus create new and sustained economic activity. This takes us back to Keynes’ argument of the 1930s in that the decision to save and to invest is separate.

One of the strengths of the book is that it gives an objective stance to the current crisis. This is rather than meekly following and jumping on the morality bandwagon. Too much time has been wasted talking about what some bankers did in their private lives rather than concentrating on the decisions that they were making, which would lead to the financial meltdown.

“The moral failings of individuals are irrelevant for understanding both why the financial crisis in the United States happened and why austerity is now perceived as the only possible response, especially in Europe.”

The book is sometimes full of very dry wit indeed. Take one or two examples.

” (Adam) Smith economics are a bit like Shakespeare – often quoted, seldom read. “

“Smith’s invisible hand had just given the public the finger.”

The difficulty with Mr Blyth’s arguments is that they are far less easy to understand than those of the austerity camp and require a certain knowledge of economics to grasp the underlying logic of the author’s arguments.

Adam Smith

Still, he is not short of courage. He is happy to take on the Scottish Enlightenment philosophers (Hume and Smith, in particular) and comes back time and time again with examples to reinforce his central theme that reducing taxes and public services will not lead to growth.

Mr. Blyth’s solution to this problem is through higher taxes. He admits that this idea is not generally liked by the public, but concludes that “since I found out in 2010 I paid more taxes than the General Electric Corporation…I’m willing to give financial repression a chance.” This could be done by a one-off tax on the richer parts of society or chasing corporate money in tax havens, which are in hiding from governments.

After, several years of hearing « there is no alternative » (to quote she that shall not be named !), this book is very interesting reading indeed, and I recommend it to any of those who wants to get a different, well argued view as to why the current austerity policies may not end our current economic woes.

Mr. Blyth on Austerity

Interesting Quotes:

Part of what academics do is generate ideas and teach. The other, perhaps more important part, is to play the role of “the Bu*I*hit Police.”The arguments given for why we all must be austere do not pass the sniff test.

Italian public-sector debt in 2002 was 105.7 percent of GDP and no one cared. In 2009, it was almost exactly the same figure and everyone cared.

There never was any general risk of the whole world turning into Greece.

There was no orgy of government spending to get us there (in the US). There never was any general risk of the whole world turning into Greece. There is no risk of the United States ever going bust anytime soon.

Austerity is intuitive, appealing, and handily summed up in the phrase you cannot cure debt with more debt.

We tend to forget that someone has to spend for someone else to save; otherwise the saver would have no income from which to save.

Austerity is a zombie economic idea because it has been disproven time and again, but it just keeps coming. Partly because the commonsense notion that “more debt doesn’t cure debt” remains seductive in its simplicity, and partly because it enables conservatives to try (once again) to run the detested welfare state out of town, it never seems to die.

The overall approach towards the poor and the rich is not always fair.

In sum, austerity is a dangerous idea for three reasons: it doesn’t work in practice, it relies on the poor paying for the mistakes of the rich, and it rests upon the absence of a rather large fallacy of composition that is all too present in the modern world.

Austerity is the penance- the virtuous pain after the immoral party- except it is not going to be a diet of pain that we shall all share. Few of us were invited to the party, but we are all being asked to pay the bill.

The moral failings of individuals are irrelevant for understanding both why the financial crisis in the United States happened and why austerity is now perceived as the only possible response, especially in Europe.

According to Mr. Viniar, (CFO of Goldman Sachs) what happened in 2008 was “comparable to winning the lottery 21 or 22 times in a row.

Leverage effect can be costly in bad times.

Leverage is how banks make such absurd sums of money. The Germans have a saying, “when you have two marks, spend one.” In modern banking that becomes “when you have one dollar in the bank, lend thirty or forty or more.”

So, part of the reason no one saw the crisis coming lay within the very models that the banks used to see things coming. Such models see the future only as a normally distributed replication of the past.

The models used were worse than inaccurate. As Andy Haldane of the Bank of England put it, “these models were both very precise and very wrong.”

The banks may have made the losses, but the citizenry will pay for them. This is a pattern we see repeatedly in the crisis.

Since the 2008 crisis, banks that file with the US Securities and Exchange Commission have awarded themselves $2.2 trillion in compensation.

CNN: The Austerity Debate

Other Book Reviews

Slaves of Defunct Economists

Washington Monthly: “Economists themselves do not think that ideas are powerful, and their models usually assume that people are motivated by straightforward self-interest rather than complicated notions.”

The end of the line

Financial Times: “Blyth writes in the tradition of Keynes, slashing away at orthodoxy and the orthodox, emphasising the power of ideas as well as interests in shaping outcomes, ranging widely over the history of economic and political thought, expressing deep scepticism about financial actors, and rejecting the curtailment of spending as the solution to a period of excess.”

Michael Porter’s company, Monitor Group, goes bankrupt: Are his ideas bankrupt too?

I have just finished my classes for the semester in Strategic Management. As I did my fifteen minute wrap up of the course, I announced some interesting news to my students. Just three weeks ago, Michael Porter’s company, the Monitor Group, had declared bankruptcy. It is a rare treat to subdue a group of enthusiastic business students but their stunned silence was fascinating to watch. Read more…

Austerity’s Big Bait-and-Switch

HBR Blog Network: “An interview with Mark Blyth, professor at Brown University and author of Austerity: The History of a Dangerous Idea, I’d like to start with where we are now and the problem we’re currently trying to use austerity to solve, which is debt. Specifically, you have written that the debt crisis in Europe is not really a sovereign debt crisis, even though we’re all calling it that.”

Reviews, debate pile up around Blyth’s “Austerity”

Watson Institute: “Policy Shop, the blog of the public policy organization Demos, praises Blyth’s book for its sweeping and detailed analysis of both historical and current issues around austerity, including the Financial Crisis.”

It Doesn’t Matter Whether It’s Actually Illegal. In Fact, It’s Actually Worse Because It’s Probably Legal.

Academe Blog: “A Senate investigation has revealed that between 2009 and 2012, Apple avoided paying taxes on $44 billion in profits that it earned offshore. Where the corporation did pay taxes on its offshore earnings, it paid at a much reduced rate.”

Despite Flaws, Harvard Economists Stand By Research

NPR: “Two prominent Harvard economists have admitted there are errors in an influential paper they wrote on government debt. This paper was widely cited in recent budget debates. But the economists insist their mistakes do not significantly change their research.”

That Reinhart and Rogoff Committed a Spreadsheet Error Completely Misses the Point

Forbes: “The professors (we’ll call them R&R) acknowledged yesterday that there were “Excel coding errors” in the analysis of the data which impacted their conclusions about the relationship between debt and growth. There appears to be some debate among economists about the significance of the error, hinging on R&R’s interpretations of means and medians and an alleged “unconventional weighting of summary statistics.”

Reinhart-Rogoff one more time: why the 90 percent never should have been taken seriously

Real World Economics Blog: “This is the only reason that the Reinhart-Rogoff 90 percent debt-to-GDP threshold was ever taken seriously to begin with. The point that I have tried to make in the past, apparently with little success, is that debt is an arbitrary number. It is not something that is relatively fixed, like the age composition of the population or the supply of land.”

BOOK REVIEW: “The Art of Choosing” by Dr. Sheena Iyengar

Mark Thomas — Fri, 17 May 2013 10:00:33 +0000

In a magazine interview, Catherine Zeta-Jones, the Welsh actress and wife of Michael Douglas, describes one of her daily chores, which involve making choices.

“It is,” she said, “deciding whether to buy that beautiful little dress she had found while shopping in California, knowing full well that the shoes that she needed to go with it were in one of her homes in the Caribbean or in Europe.”

Pity the rich and famous!

We have more choices today than we have ever had in history and yet making countless decisions each day may be a burden rather than a pleasure. In this excellent book, which brings in scientific research and personal examples, Dr. Sheena Iyengar, Professor at Columbia University, describes just why some of these choices are so difficult.

Key words

Psychology, cognitive psychology, behavioral economics, business, marketing, strategy.

Summary

Having so many choices requires that we give up far more than we gain.

Never in time have humans had so much choice. A grocery store in the US today contains more than ten times as many choices as it did 50 years ago.

“The typical supermarket, which carried 3,750 different items in 1949, now boasts some 45,000 items. Walmart and other “big-box” retailers “offer” smorgasbords of over 100,000 products to Americans.”

Any first time visitor to the US is usually astounded by the number of questions that a waiter will ask you when choosing your meal. However, all this choice doesn’t necessarily make us happy.

Indeed, being given a huge amount of choice in a short space of time can actually be quite difficult to handle. A survey in 2007 shows that 20% of Germans in Berlin would like to see the Wall put back up.

There is even a new word in the German language: Ostalgie (a portmanteau of Ost (east) and Nostalgie (nostalgia.)

Jam: when less is more

Dr. Iyengar’s best known jam experiment.

Dr. Iyengar’s best known experiment is the one with jam. If you’re not familiar with this, it involved giving people the choice of either 6 or 24 jams, and allowing them to try them. Though more people stopped to try the jam when there were 24, only 3% went on to buy them. When 6 jams were offered, fewer people stopped; however, 30% of the people went on to buy the jams on offer, and a far greater number than the ones who had tried the 24. We have today more choice than we have ever had in the past. To some extent, this is cultural. Dr. Iyengar considers that Americans desire personal choice in four times as many domains as Japanese cultures do, for example.

The Magical Number Seven

When we get too much choice, we get overwhelmed and we tend not to choose at all.

Following on to Miller’s 1956 seminal paper, “The Magical Number Seven, Plus or Minus Two,” Iyengar considers that we can only deal with a limited amount of choice. When we get too much choice, we get overwhelmed and then we tend not to choose at all. This has been proved in numerous experiments, from buying insurance, retirement plans, to the famous jam experiment we’ve just described.

Procter & Gamble, for example, having studied this experiment, reduced its varieties of Head & Shoulder shampoo, from 26 to 15, and saw sales increase by 10%.

The consulting group, McKinsey, thought the experiment to be so serious that they introduced the 3 by 3 rule, which means that clients first choose from 3 choices, which then lead to another 3 choices, which then lead to another 3 choices.

The essence of Dr. Iyengar’s argument is that having so many choices requires that we give up far more than we gain. This has a psychological cost, and by increasing the number of choices, we thereby increase the cost. Since there are so many possible outcomes from this, this becomes increasingly difficult to deal with.

Choose Your Own Adventure books teach children how to face the problem of choosing but leave us asking the question: “What if…?”

Choose your own Adventure

As Iyengar points out in the epilogue of her book, all of us who had read the Choose Your Own Adventure books as a child knew that part of the thrill of going through the narrative was to be able to cheat a little bit. You could pick from 3 options of the story, and occasionally take a quick look to see the consequences before making the choice, hoping that you didn’t end up getting eaten by the dragon. In our daily lives of course, we don’t have such luck.

Indeed, it is not just a question of looking forward. As adults we cannot help speculating of on lives of we had made different decisions. “What if I had studied German rather than Spanish? What if I had accepted an offer to a different university?”

In real life though we can’t go to the start of the book and work out the consequences of changes one or two options in out lives. Here is the inherent problem with having too many choices. We know that certain option may never come again, so the psychological pain of giving them up may be very high indeed. It may well be that the fewer choices you have, the happier you might become.

The next time you are in a restaurant, ask your friends to choose your meal for you. You’ll be chuckling from the starter right through to your dessert.

Sheena Iyengar talks about her book

Interesting quotes from the book:

When we speak of choice, what we mean is the ability to exercise control over ourselves and our environment. In order to choose, we must first perceive that control is possible.

The ability to choose well is arguably the most powerful tool for controlling our environment.

Although a CEO’s shouldering of responsibility for his company’s profit is certainly stressful, it turns out that his assistant’s responsibility for, say, collating an endless number of memos is even more stressful. The less control people had over their work, the higher their blood pressure during work hours.

What affected people’s health most is the amount of control they perceived themselves as having.

What affected people’s health most in these studies wasn’t the actual level of control that people had in their jobs, but the amount of control they perceived themselves as having.

The Japanese saying makeru ga kachi (literally “to lose is to win”) expresses the idea that getting one’s way is less desirable than maintaining peace and harmony.

A common view of freedom is that it means “freedom from the political, economic, and spiritual shackles that have bound men. In contrast to this “freedom from,” Fromm identifies an alternate sense of freedom as an ability: the “freedom to” attain certain outcomes and realize our full potential.

United States had a 2008 per capita GDP of $47,000 compared to the $33,400 average of the European Union. Out of the 133 countries for which the Gini coefficient is measured, Sweden has the most equitable distribution of wealth. The United States is ninety-fourth, right below Cameroon and the Ivory Coast.

No longer do young adults embark upon a long-term career, get married, and have children shortly after completing their education. Instead, the years from about 18 to 25 are now characterized by the search for identity.

The Marshmallow tests revealed that we prefer less immediately to higher gains in the future.

The “marshmallow studies,” conducted in the late 1960s by renowned psychologist Walter Mischel, are widely known today for their exploration of how we resist- or give in to- temptation. The trials and tribulations of the four-year-old participants didn’t last long: On average, the children waited only three minutes before ringing the bell.

We tend to have a better memory for things that excite out senses. You might overestimate the number of times your colleague wore a red tie, or underestimate how often he wore a gray one, simply because red is a brighter color.

“Intuition is nothing more and nothing less than recognition.” Herbert Simon

Achieving a world-class expert-level understanding of a single domain, it takes an average of 10,000 hours of practice, or about three hours a day, every day, for ten years straight.

An extra 20 minutes in transit is one-fifth as harmful to your well-being as losing your job.

A study by Daniel Kahneman and colleagues found that commuting is by far the most unpleasant part of the average person’s day, and spending even an extra 20 minutes in transit is one-fifth as harmful to your well-being as losing your job.

In 1987, Americans drank 5.7 gallons of bottled water per year on average; 20 years later, that number has nearly quintupled to 27.6 gallons, which is higher than the consumption of milk or beer.

According to Mike Shaw, president of sales and marketing at ABC, the average American now watches four and a half hours of TV per day. A Stanford study found that the average Internet user spends two hours a day online while at home.

The more choice you have, the greater the number of appealing options. At some point, you simply won’t have enough space or money or time to enjoy all those options. So you’ll have to make some sacrifices, and each of these carries a psychological cost.

We attribute harm caused by too much choice to some other cause.

We’re aware of the positive effects of choice but not the negative ones, so we attribute any harm caused by too much choice to some other cause, perhaps even to too little choice.

In America I have seen the freest and best educated of men in circumstances the happiest to be found in the world; yet it seemed to me that a cloud habitually hung on their brow, and they seemed serious and almost sad even in their pleasures… They clutch everything but hold nothing fast, and so lose grip as they hurry after some new delight. Alexis de Tocqueville

Managing our expectations is perhaps the most difficult challenge of choice, but one way to do so is to look to those who have shown how constraints create their own beauty and freedom.

How to make choosing easier?

Sheena Iyengar

Inaugural S.T. Lee Professor of Business, Columbia Business School, Columbia University

Biography

A world renowned expert on the subject of choice, Sheena Iyengar says that choice can provide a sense of freedom and control that is essential to our well-being. In her critically acclaimed book, The Art of Choosing, Iyengar shines a bright light on the many different facets of choice, exposing it in all its mystery, complexity and compelling beauty. Iyengar’s inter-disciplinary research on how and why we choose, and what we need to do to choose better, has surprising and profound implications for our personal and professional lives. The book was a finalist for the 2010 Financial Times & Goldman Sachs Best Business Book of the Year Award, and was ranked #3 on Amazon.com’s Top Ten Business & Investing Books of 2010. Iyengar is the inaugural S.T. Lee Professor of Business at Columbia Business School. She also is director of the Global Leadership Matrix (GLeaM) initiative and research director at the Jerome A. Chazen Institute of International Business at Columbia Business School.

Other Book Reviews

Indecision-Making

NY Times: “Now Iyengar is having her own say about the jam experiment and the many other puzzles and paradoxes of choice. More choice is not always better, she suggests, but neither is less. The optimal amount of choice lies somewhere in between infinity and very little, and that optimum depends on context and culture.”

MIND Reviews: The Art of Choosing

Scientific American: “Ultimately, Iyengar wants us to recognize that our decisions—both the mundane and momentous—are influenced by many factors and that the more we recognize those factors, the more satisfied we will be.”

Pick an Ordeal, Any Ordeal

Wall Street Journal: “In “The Art of Choosing,” Sheena Iyengar, a professor at Columbia Business School, recounts the story of her immigrant parents’ wedding. Her family is Sikh, and the ceremony took place in India according to a strict, traditional script that had been handed down through generations. There was little for the participants to choose between. In fact, the husband and wife were chosen for each other by their families and did not even meet until their wedding day. Nothing like what most American couples go through.”

(PAST IS) PROLOGUE- An Excerpt

From No Snow to Chartreuse! : Mark Silberbauer, a student from the University of Cape Town talks about studying in Grenoble.

Mark Thomas — Wed, 15 May 2013 03:54:19 +0000

Why did Mark select GEM for his exchange? He lists several reasons. He says he was looking for a life experience out of his comfort zone, one that would incorporate a foreign language and culture. He adds, “my decision was completely based on having a new, cool experience that was not an English one.”

However, although Mark did not choose to study in Paris, this did not stop him from visiting the international city of lights during a weekend off.

The city of Grenoble had also been an appealing factor, as its location- at the foot of the Alps- provided opportunities to try skiing and snowboarding, and its specialty- considered the technology and engineering hub of France- also provided him with exposure to industries aligned with his academic background, which is in software engineering. The costs of living in Grenoble were also a predominant factor in choosing Grenoble over an expensive city like Paris.

Having fun on a night out in Grenoble!

However, because it was not deemed as an international city to visit, Mark thought this was the ideal chance to get a real, student experience in a local environment, where he could make good use of his previous year of French studies.

Grenoble was, and is, a city where one can really appreciate the French culture and learn French in a localized environment, versus studying in an international city, where he would have felt less pressure to learn and speak French for instance.

However, out of all these reasons, the pinnacle is the skiing and snowboarding factor. After his friend from Colorado lent him all his snow equipment, Mark set off immediately to try snowboarding. Coming from a warmer place- South Africa- Mark adds, “I had felt snow in my hand four to five times in my life before coming here, and I had never been exposed to weather less than zero degrees before.” Mark certainly has taken advantage of the nearby ski resorts and stations that are numerous throughout the region. When asked which ski station he prefers, he smiles and just says the following: “each ski station has a special place in my heart.”

Clearly, every ski trip, a total of nine trips so far, has been memorable, but unique. One such experience is notably the ski trip in Chartreuse, where, with covoiturage (a popular ridesharing website in France), Mark also visited a monastery that has two monks manage the entire process of brewing the local and well-known Chartreuse liqueur.

He has definitely thrived in Grenoble, doing as locals do, and comments how his experience so far has been a lifestyle one, rather than just solely an academic one.

Speaking of which, Mark reflects on the classes in his Global Technology Entrepreneurship program, noting that the students were much younger than expected and had less working experience as a result. However, this provides an opportunity for an open class environment and discussion, amidst a non-biased perspective, suiting him very well, as his focus is on learning and appreciating his French education, rather than memorizing and regurgitating class lectures. He finds he can immerse himself in the courses from his program and supplement his background, as all the courses are based upon technological developments and applications in the business world, an element that is key for him. The main difference between GEM and Capetown are the amount of group projects here, in contrast to the endless amounts of stressful, individual projects back in South Africa. The group projects, being the norm, are central towards improving one’s team skills and managing deadlines.

Reflecting on the experience at Grenoble so far, Mark highlights the exchange as a lifestyle experience, combining Grenoble student life, academic life, and snowboarding of course.

Mark’s first time skiing ever was in Grenoble.

His main piece of advice for students is to snowboard and ski as much as possible, and to join the Meet & Talk group on the student portal. This online database features students offering to help others with one language, in exchange for help in another language. Mark immediately searched up all French students interested in learning English, who offered to help others like himself in French, and contacted all of them via email. He currently has around three lunches a week of these language exchanges between French and English, serving the interests of both parties. Another final thing he will say to others interested in attending GEM, particularly those from South Africa, is to contact him directly for more details and an account of his own experience on dealing with French administration at the beginning of the exchange. He is open to receiving Skype calls and emails, and also highly suggests for those interested in GEM to get as much feedback as possible from past exchange students.

Skype: marksilberbauer

Email: bowsermail@gmail.com

Interview and article completed by Karicia Quiroz

“It All Works Out In The End”- An Australian’s account of studying in Grenoble

Samuel Armstrong, an Australian from the University of Sydney, is currently studying in the Master’s of Global Management program in GEM. He is certainly enjoying the city, the ski stations, all while maintaining his workout routine, learning about the value of group projects, and really gaining a lot from his French exchange.

From Grenoble to “Skyscrapers and Bricks”: A Bentley University Experience

Two students from GEM, Dyveke and Andrea, are currently studying business at Bentley University for a semester, an experience they both describe as “American, but with European aspects.” They are really enjoying their exchange in the United States, especially living on campus in Waltham, just a half an hour shuttle ride away from Boston.

STUDY ABROAD / INTERNATIONAL EXPERIENCE : United Kingdom, Birmingham

Fiona Devaux, a graduate management student from Grenoble EM, talks about her experience at University of Birmingham. As the second city of England, Birmingham has come a long way from the industrial era! After numerous refurbishment investments, the city has become dynamic and young.

An Indian View of Studying in France: Harshit Didwania

Stepping into the so called ‘developed world’ for the first time definitely felt strange. However, my journey to Grenoble and beyond was filled with unexpected and very memorable experiences.

Grenoble green city

A Year in Europe: “You’re probably wondering why I chose to name it a green city if it is known precisely for mediocre air quality.
Well Grenoble is also home to the first French écoquartier – green neighbourhood – a planning project supposedly abiding by the holy Trinity of sustainable development: equal attention to economical, social and environmental development.”

My First Trip to Paris

Gallivance: “After living in the Sahara Desert for two years, the lush greenery of Paris was positively blinding. The Seine looked nothing like the Nile. The Eiffel Tower dazzled. I walked through my first rainstorm in years – quite different from the desert sandstorms I’d experienced.”

Sunday in Annecy

Grenobloise: “A New Yorker on her way to becoming a “grenobloise”. I moved to Grenoble in June 2011 from Manhattan. I studied Fine Art in NYC and I want to travel, perfect my French, work and make paintings in France. Here I share my experiences.”

Nostalgia

Thoughts and Musings: “My first year of college, I took a semester of conversational French. I got okay – not great, definitely not fluent. But it continued my knowledge of the language. That semester I decided to change my major from English to Biology; at that point, I knew that I would no longer be able to take any further French courses.”

Thanks, France

Run Steph Run: “Being in France has taught me something very important about my relationship with running and with myself. Homesickness tends to sneak up on me. It catches me by surprise every time, smothering me, and I’m defenseless against it.”

Pack Light, Feel Better: Seven Travel Tips

QGOSS: “I love traveling light. The lighter, the better. Next month I will be traveling through Europe for a month and a half with nothing but my backpack. Note: I’m a college student, a recent college graduate who enjoys couch surfing and hostels. This isn’t for everyone. So how does one go about traveling light?”

Professors (and other experts) getting it wrong : The Reinhart and Rogoff spreadsheet error

Mark Thomas — Mon, 13 May 2013 01:00:51 +0000

So, two of the most prominent and respected professors of finance in the world got it wrong! There are several interesting aspects to the Reinhart and Rogoff spreadsheet error saga and many commentators have jumped in to criticise their work now that we know they omitted out five countries. Perhaps the one thing that has not been said is that they had the good grace, open mindedness and humility to send their data to a graduate student that they had never met and wasn’t even a student at either of their universities. Professors do get it wrong, as do all human beings, but good ones are open to analysis and criticisms from others.

Thomas Herndon, a graduate student who spotted the mistake.

On Friday 9th May, professors Reinhart and Rogoff announced they had corrected the omission errors on the financial model that urged goverment to stay below a 90% indebtment level for fear of falling off a fiscal and growth cliff. It was this research that led many countries including Greece and the UK to impose draconian cuts in spending. The error was spotted by a graduate student at the University of Massachusettes Amherst who had requested their spreadsheet to resimulate the model.

Commented on the Reinhart and Rogoff affair, Bill Connolly points out in Forbes magazine

“Every spreadsheet contains an error.”

A few weeks ago I was preparing an interview for the CEO of one of the most important European companies. I had prepared a two page document with a short introduction and a list of questions. I carefully read it through several times, but just to play on the safe side I asked a young intern if she would proof read it for me « just in case. » She found no less than 4 typing errors including one in the very first line. So much for my precision ! If every spreadsheet has an error, so does every word document. Of course, half of the Western world has not based their financial policies on the basis of anything I have written unlike Ms. Reinhart and Mr. Rogoff.

Professors getting it wrong

So professors don’t always get it right. The famous Yale professor of economics, Irving Fisher once stated confidently that stock prices in the USA had “reached a permanently high plateau.” This claim was made in early October 1929 just tend days before the bottom fell out of the Wall Street Stock Exchange. They would not reach the same levels again (inflation adjusted) until 1954.

This brings us back to the famous saying from another economist, J.K. Galbraith that:

“The only function of economic forecasting is to make astrology look respectable.”

Identifying future talent

Predicting future talent is not much easier either. One of Albert Einstein’s now long forgotten professors was reputed to have said that the young Austrian would « never amount to very much!»

Similarly, the Paul McCartney recounts that he met fellow Beatle George Harrison at school and that both of them got extremely bad marks (grades) during their music lessons. Think about that for a second. Back in the 1950s one music teacher in Liverpool had half of the world’s most successful group in his class…and he missed it !

Signing qualities of Elvis Presley were misjudged at first.

And while we are on the subject of schools, have you ever heard of L. C. Humes High School located in Memphis, Tennessee? Probably not. However, you may have heard of one of its pupils who was refused by its Glee Club on the basis that he wasn’t good enough even to sing….in the choir. His name was Elvis Presley. Apparently, despite that rebuff he went on to sell quite a few records. Well, 300 million or so.

Companies getting it wrong

Errors of this nature are not limited to academic spheres. Companies too can and do get it spectaculary wrong. In 1933, Coca Cola had the opportunity to buy a near bankrupt soft drinks company for one dollar. They refused the offer on the basis that the company had little to offer to their own businesS. The name of that rival ? Pepsi !

IBM dug their own grave in the early 1980s by outsourcing work on operating systems to a little known company named Microsoft. Around the same time, General Electric found it was unable to meet the growing demand for microwave ovens and choose a medium sized Korean firm to help them. That company became the giant we know as Samsung today.

The NASA error proved that even when two smartest people count the same thing, the result may be significantly different.

These errors of judgement are all based on our inability to predict the future.

Renihart’s and Rogoff’s error was omitting data that they had.

Even this though can be done by the smartest people in the room. NASA would probably rate as the organisation with the highest IQ per capita ratio in the world. They were therefore somewhat surpised when despite all their careful planning, the unmanned Mars orbiter crashed and burned into the Red Planet in 1999. They looked into the sophisticated mathematical models they had been using and found that they were all quite sound. There was just one slight problem. One part of the team had based their calculations using miles and the other part had used kilometers. Shame !

Edward Weiler, NASA’s Associate Administrator for Space Science brushed off criticism saying :

« People sometimes make errors. »

Fortunately, most of us never get the chance to make a $125 million mistake. If you have just flunked your statistics exam, that might help you put things into perspective.

Getting it wrong but carrying on

Conrad Hilton, founder of Hilton hotel chain, elaborated on mistakes.

So, we all get it wrong sometimes and Conrad Hilton was fond of saying that the real mark of successful people was that they made lots of mistakes but keep going nevertheless. The two professors seem to have done just that.

In fact, this error came to light because the two professors were sufficiently open minded to send the data they had spent time collecting to an unknown graduate student. This should be lauded. If you want proof of just how intelligent they are, you have it right there.

Make 2013 “A Year of Failure.” It may be the quickest road to success.

13 is an unlucky number in many cultures. If you are of the superstitious disposition, then 2013 may not seem like the best possible year for you. Rather than spending twelve whole months avoiding black cats or trying not to walk under ladders why not accept that you will get you share of bad luck in the coming year. Indeed, it might even be better to take a proactive approach. Go looking for as many failures as possible. This could be the fastest route to success. Ask Michael Jordan.

“The opposite of ‘success’ is not ‘failure’, but ‘mediocrity’”

I am very grateful to one of my international students for sharing this wonderful quote from a New Zealand business woman. It was during a class a fortnight ago and we were discussing entrepreneurship and why only 1% of European business school graduates create their own company immediately upon graduating. One of the reasons, said some of the class members, was the obsession with competitive exams and rankings and thus the overall fear of failing. The quote makes you reassess what exactly “success” and “failure” really are.

Michael Porter’s company, Monitor Group, goes bankrupt: Are his ideas bankrupt too?

Does management work and does it have a future?

Reinhart-Rogoff one more time: why the 90 percent never should have been taken seriously


Despite the current discussion about the spreadsheet error, this book gives a excellent insight in to why financial crises occur again and again.	A fun book that show why humans don’t always behave in a rational manner.	If you only ever read one personal development book in your life, read this.

BOOK REVIEW : “This Time is Different: Eight Centuries of Financial Folly” by Carmen M. Reinhart & Kenneth S. Rogoff (2011)

Mark Thomas — Thu, 09 May 2013 21:02:46 +0000

A few weeks ago this book would have been read quickly, given an A+ with a little gold star and a request from the teacher for a “Show and Tell” from two of her best pupils. Thomas Herdon, a graduate student at the University of Massachusetts, Amherst has dented the myth though by identifying the errors in their calculation. This has coincided with increasing criticisms of the current policies even in academic circles. Mark Blyth at Brown University has just published “Austerity: The History of a Dangerous Idea.” In this context, “This Time is Different” is certainly worth another critical read.

Key words

Finance, history of finance, financial crisis, economics

Summary

Professors Kenneth S. Rogoff & Carmen M. Reinhart

“The essence of the this-time-is-different syndrome is simple.” say Professors Reinhart and Rogoff. “It is rooted in the firmly held belief that financial crises are things that happen to other people in other countries at other times; crises do not happen to us, here and now.” This Time is Different certainly shows their expertise in analyzing financial data despite any errors.

Perhaps it should be said from the outset that as Bill Connolly points out in Forbes magazine “Every spreadsheet contains an error.” Collecting data of this nature is not easy. The authors point out that “export data are subject to chronic misinvoicing problems because exporters aim to evade taxes, capital controls, and currency restrictions.” (Indeed, today Reinhart and Rogoff announced that this error had been corrected.)

The book is not an easy read if you do not have an economics or finance background. It is packed full of data and the tables at the end make up more than half of the entire book. As Thomas Herdon has shown, unless you have the time and the skill to redo the models that have been produced, you will have to accept them on face value.

Check the book review of The Ascent of Money

That said, This Time is Different gives an excellent understanding of the working of international finance. To begin with, the authors take us back to the Middle Ages to understand the origins of finance itself and how debt was dealt with. In fact, even for the most autocratic of kings (who could borrow and default with little fear of impunity) there was an incentive to honour debts where “A king’s promise to “repay” could often be removed as easily as the lender’s head.” However, this might have an adverse long term effect on trade and the political stability of the country. “Fourteenth-century England depended on selling wool to Italian weavers, and Italy was the center of the trade in spices, which England desired to import. Default implied making future trade with and through Italy difficult, and surely this would have been costly.” Surprisingly, given their ability to reproduce the same errors, there are times when financial markets can have rather long memories. In 1918 the Bolsheviks defaulted on their external debts but Russia was still required to repay a token amount of this after the fall of the communism regime in the 1990s.

There is an interesting discussion as to what extent a country can actually go bust in a way that an individual can. Individuals can have their assets seized by angry creditors; the same does not apply to countries. “During Russia’s financial crisis in 1998, no one contemplated for a moment the possibility that Moscow might part with art from the Hermitage museum simply to appease Western creditors.”

Countries that slip into defaulting they often maintain high and levels of debt and graduating to the status of a non-defaulter can be long and arduous. This is often achieved only through the aid of an external stimulus. Again, history is not kind with the two Harvard scholars as they then cite help that the European Union had given to Portugal and Greece to enable them to break out of this cycle. Of course, this was written before Greece found itself in its current situation.

Carmen M. Reinhart on A Decade of Debt

From here Reinhart and Rogoff go on to discuss banking crises which no developing country has ever avoided.

“In effect, for the advanced economies during 1800-2008, the picture that emerges is one of serial banking crises.”

Here the reader will get some useful insights into the current policies as one of the most influential studies of the 1980s was written by Bernard Bernanke, the now Chairman of the US Federal Bank. Bernanke claimed that it was the collapse of the financial system in the 1930s that led to the Great Depression being prolonged. Given this, the Federal Bank invested huge amounts of money post 2008 to ensure that this did not occur again. Indeed, the authors suggest that it is the very assurance that the Federal Reserve gave to the financial industry in the famous “Greenspan Put” that led them to take the extraordinary risks.

Their final message despite any errors in their spreadsheets still seems a relevant one.

“Technology has changed, the height of humans has changed, and fashions have changed. Yet the ability of governments and investors to delude themselves, giving rise to periodic bouts of euphoria that usually end in tears, seems to have remained a constant.”

Financial crises will occur again as they have done repeatedly in the place. From there, the question remains as how to deal with them.

Kenneth S. Rogoff on This Time is Different

Interesting Quotes

The buildup to the emerging market defaults of the 1930s: Why was this time different? The thinking at the time: There will never again be another world war; greater political stability and strong global growth will be sustained indefinitely; and debt burdens in developing countries are low.

Ultimately, default often occurs at levels of debt well below the 60 percent ratio of debt to GDP enshrined in Europe’s Maastricht Treaty. Safe debt thresholds turn out to depend heavily on a country’s record of default and inflation.

Inflation became the modern-day version of ancient currency “debasement”.

Following the rise of fiat (paper) currency, inflation became the modern-day version of currency “debasement,” the systematic degradation of metallic coins that was a favored method of monarchs for seizing resources before the development of the printing press.

Former Citibank chairman (1967-1984) Walter Wriston famously said, “Countries don’t go bust.” In hindsight, Wriston’s comment sounded foolish, coming just before the great wave of sovereign defaults in the 1980s. Yet, in a sense, the Citibank chairman was right. Countries do not go broke in the same sense that a firm or company might. First, countries do not usually go out of business. Second, country default is often the result of a complex cost-benefit calculus involving political and social considerations, not just economic and financial ones. Most country defaults happen long before a nation literally runs out of resources.

More than half of defaults by middle-income countries occur at levels of external debt relative to GDP below 60 percent, when, under normal circumstances, real interest payments of only a few percent of income would be required to maintain a constant level of debt relative to GDP, an ability that is usually viewed as an important indicator of sustainability.

North and Weingast argue that a government’s ability to establish political institutions that sustain large amounts of debt repayment constitutes an enormous strategic advantage by allowing a country to marshal vast resources, especially in wartime. They argue that one of the most important outcomes of England’s “glorious revolution” of the late 1600s was precisely a framework to promote the honoring of debt contracts, thereby conferring on England a distinct advantage over rival France.

Banking crises in advanced economies significantly drag down world growth. The slowing, or outright contraction, of economic activity tends to hit exports especially hard, limiting the availability of hard currency to the governments of emerging markets and making it more difficult to service their external debt.

Today’s emerging markets can hardly claim credit for inventing serial default.

Spain’s defaults established a record that remains unbroken.

Spain’s defaults established a record that as yet remains unbroken. Indeed, Spain managed to default seven times in the nineteenth century alone after having defaulted six times in the preceding three centuries.

The French finance minister Abbe Terray, who served from 1768 to 1774, even opined that governments should default at least once every hundred years in order to restore equilibrium.

Only China, India, Indonesia, and the Philippines spent more than 10 percent of their independent lives in default (though of course on a population weighted basis, those countries make up most of the region). Africa’s record is far worse, with several countries having spent roughly half their time in default.

The average length of time a country spends in a state of sovereign default is far greater than the average amount of time spent in financial crisis. A country can circumvent its external creditors for an extended period. It is far more costly to leave a domestic banking crisis hanging, however, presumably due to the crippling effects on trade and investment.

The world’s financial centers—the United Kingdom, the United States, and France—stand out in this regard, with 12, 13, and 15 episodes of banking crisis since 1800, respectively. The frequency of banking crises dropped off markedly for the advanced economies and the larger emerging market alike after World War II. However, all except Portugal experienced at least one postwar crisis prior to the recent episode.

Periods of high international capital mobility have repeatedly produced international banking crises, not only famously, as they did in the 1990s, but historically.

The this-time-is-different syndrome has been alive and well in the United States, where it first took the form of a widespread belief that sharp productivity gains stemming from the IT industry justified price-earnings ratios in the equity market that far exceeded any historical norm. That delusion ended with the bursting of the IT bubble in 2001.

Winkler gives a particularly entertaining history of early default, beginning with Dionysius of Syracuse in Greece of the fourth century B.C. Dionysius, who had borrowed from his subjects in the form of promissory notes, issued a decree that all money in circulation was to be turned over to the government, with those refusing subject to the pain of death. After he collected all the coins, he stamped each one drachma coin with a two-drachma mark and use the proceeds to pay off his debts.

No emerging market country in history, including the United States (whose inflation rate in 1779 approached 200 percent) has managed to escape bouts of high inflation.

The top employees of the five largest investment banks divided a bonus pool of over $36 billion in 2007. Leaders in the financial sector argued that in fact their high returns were the result of innovation and genuine value-added products, and they tended to grossly understate the latent risks their firms were taking.

Bankers with genuine value-added – funny

In the case of the United States, the ratio of household debt to household income soared by 30 percent in less than a decade.

Multiyear recessions usually occur only in economies that require deep restructuring, such as that of Britain in the 1970s (prior to the advent of Prime Minister Margaret Thatcher), Switzerland in the 1990s, and Japan after 1992 (the last due not only to its financial collapse but also to the need to reorient its economy in light of China’s rise). Banking crises, of course, usually require painful restructuring of the financial system and so are an important example of this general principle.

The United States, France, and Austria took 10 years to rebuild their output to its initial pre-Depression level, whereas Canada, Mexico, Chile, and Argentina took 12.

False signal flares from the equity market are, of course, familiar. As Samuelson famously noted, “The stock market has predicted nine of the last five recessions.”

The famous “Greenspan put” (named after Federal Reserve Chairman Alan Greenspan) was based on the (empirically well-founded) belief that the U.S central bank would resist raising interest rates in response to a sharp upward spike in asset prices (and therefore not undo them) but would react vigorously to any sharp fall in asset prices by cutting interest rates to prop them up. Thus markets believed, the Federal Reserve provided investors with a one-way bet. That the Federal Reserve would resort to extraordinary measures once a collapse started has now been proven to be a fact.

The lesson of history, then, is that even as institutions and policy makers improve, there will always be a temptation to stretch the limits. Just as an individual can go bankrupt no matter how rich she starts out, a financial system can collapse under the pressure of greed, politics, and profits no matter how well regulated it seems to be.

There is nothing new except what is forgotten –Rose Bertin

Other Book Reviews

Book Review: This Time Is Different: Eight Centuries of Financial Folly

IEEE Spectrum: “Reinhart and Rogoff break new ground in providing a quantitative study of financial crises. And by collecting information on a world scale, and over centuries, they show conclusively that such crises have occurred with high frequency.“

Recession, You Look Familiar

NY Times: “The essence of their book is that while financial crises come in different varieties, they are not mysteriously born of undersea earthquakes, but frequently occurring events that can be spotted and even controlled if politicians and regulators know what to look for.”

This Time Is Different: Eight Centuries of Financial Folly

Seeking Alpha: “Unfortunately, it is a very incomplete book because it does not attempt to find the default rate of countries. It’s as if I said that there were 7 homicides in city X last year. A good question would be, ‘how many people live in town X?’, because we really want to know the rate, not the number.”

Despite Flaws, Harvard Economists Stand By Research

That Reinhart and Rogoff Committed a Spreadsheet Error Completely Misses the Point

Austerity’s Big Bait-and-Switch

Reinhart-Rogoff one more time: why the 90 percent never should have been taken seriously

“It All Works Out In The End”- An Australian’s account of studying in Grenoble

Mark Thomas — Tue, 07 May 2013 11:36:42 +0000

Grenoble, being a top-ranked business school in France, definitely attracted Sam, but it was also because of the city’s skiing and mountain environment that he selected this school as a top choice. However, the location of the school campus exceeded his expectations when he realized just how close it is to the city center of Victor Hugo. Although initially disappointed that there was not as much of a campus/housing community at first, it became a positive as it provided more of an incentive for Sam to socialize with GEM students outside of campus and get exposure to the Grenoble city itself.

Grenoble is a small city, he finds, but one that is vibrant, with a handful of bars. Even though Grenoble is not like other bigger European cities, it is thoroughly enjoyable and is a fun, student environment. Plus, there is the skiing to be done! Although there are lots of student clubs at GEM, the value for joining any of them wasn’t as high a priority for Sam- except for the student ski club. It made economic sense to join that club, as Sam discovered that it provided discounts for round-trip transport and ski passes for ski stations in the area. The ski trips have certainly been a highlight for Sam, as the centrality of Grenoble within the Alps region allows for day trips proximity to Grenoble, as well as longer, weekend trips.

Enjoying the sun out in the Alps.

For the day trips, he prefers to go skiing in Alpes d’Huez, one and a half hours from the city by bus, and Sept Laux, a 45 minute bus ride away, but only at a cost of 10 euros with the ski club membership. His ideal ski station for a weekend away would be La Clusaz, as one could explore Annecy for a day and then go skiing afterwards.

However, besides Grenoble’s proximity to ski stations, Sam has his haunts within the city as well. Le Tord-Boyaux is a popular bar amongst many GEM students, and he goes there often with his group of friends- a key hub for Grenoble locals. However, one of the best opportunities to meet new people, he finds, is surprisingly at the gym. While maintaining his workout routine at Espace Viking, the most affordable gym in Grenoble, at 117 euros per three months, he has met many other international and exchange students, as well as French students.

Speaking of students, Sam has really liked working with his classmates at GEM in the numerous team projects and presentations in his classes. He says, “it is nice how it is the same class, thus same group, for every subject in group work, which simulates a project and team environment. This enhances interpersonal project teams and work groups, a reality for working in multinational corporations.” Sam clearly is thriving from the academic experience in his Master of Management program.

As for the rest of his routine compared to Sydney, GEM has one notable difference. Although the lively, student environment is pretty similar to his home university, he misses being able to sit outside in the sun and enjoy a light, casual beer on the patio. This is not a problem though, as he certainly plans on doing this when the weather gets sunnier!

Enjoying a drink outside on the patio at a ski resort!

When culminating the entire experience, Sam would have to say that his time at GEM so far has been a “great, launching pad to explore Europe whilst advancing my career.” He definitely plans on coming back in the future after the exchange, but not as a student. It will be neat to see the city with a different income (he sincerely hopes six figures- one can envision) and through a different lens. “I’m sure that would be a vastly different experience,” he concludes.

Sam stresses how potential exchange students interested in attending GEM should not let roadblocks, such as administrative processes to fill out and sign for instance, deter them from applying. “It may seem daunting at first, but just submit stuff, because it all works out in the end.” He also adds that, no matter where one goes for one’s exchange, the location of an exchange is not ultimately critical, as one can meet interesting people and great friends in any location with the right mindset. However, it is this mindset that has really brought forth a good experience from GEM for Sam, and he will certainly carry this on for the next two months left of his exchange.

From Grenoble to “Skyscrapers and Bricks”: A Bentley University Experience

STUDY ABROAD / INTERNATIONAL EXPERIECE : Australia, Brisbane

Charlène Daubenfeld, a graduate management student from Grenoble EM, talks about her experiences at Queensland University of Technology.

An American View of Studying in France

Anuja Parikh, a student from University of Florida talks about her international exchange at Grenoble EM

Thanks, France

Grenoble green city

Sunday in Annecy

My First Trip to Paris

Pack Light, Feel Better: Seven Travel Tips

BOOK REVIEW: “The Art of the Sale” by Philip Delves Broughton (2013)

Mark Thomas — Tue, 30 Apr 2013 16:55:16 +0000

Philip Delves Broughton made quite a name for himself by writing a book, which was highly critical of Harvard Business School and the MBA system in general. During his time at HBS, he was surprised that sales was not part of the curriculum. He expected it to be very present in MBA programs and yet found that, in general, they looked down upon such mercantile procedures.

Key words

Higher education, psychology, business, sales, communication, marketing, leadership, strategy.

Summary

Philip Delves Broughton

Mr. Delves Broughton considers that sales is fundamental to the workings of business, and decided therefore to write a book on the subject. Sales, according to Delves Broughton, is everywhere, and he goes on to prove this by giving a whole host of anecdotes and stories from different walks of life. There is the story of Steve Wynn, the billionaire hotel and casino owner, that says he wishes that employees would relate to people not as customers with an employee, but as two human beings talking to one another. Then there is Ben Feldman, repeatedly the greatest life insurance salesman of all time, who sold over 1 billion dollars of life insurance in his 50 year career. He says that the key to a sale is to ask the disturbing question. “Don’t sell life insurance,” says Feldman, “sell what life insurance can do.”

Nelson Mandela successfully negotiated with his captors for better conditions.

Sales, in general, has always had a bad reputation. In 1961, the Harvard Business Review published an article by Robert McMurry, an industrial psychologist from Chicago, titled The Mystique of Super Salesmanship. In the article, McMurry suggests that the typical salesperson is a habitual wooer, who, as an individual, has a compulsive need to win and hold the affection of others, and that he is characterized by the conviction that he is really unloved and unwanted- hardly a positive image. However, good sales can come from all walks of life. It is said that Nelson Mandela, who was imprisoned on the Robben Island, began to speak to his captors in Afrikaans, and started talking to them about rugby, a sport adored by white South Africans but loathed by blacks. Having talked in depth for several times on the subject, he then began asking for gentle improvements to his conditions in prison, and immediately got them. “By treating sales with disdain,” says Delves Broughton, “business schools prove themselves both foolish and elitist. Without selling, there is no business. It is also the greatest leveler in business.” Delves Broughton concludes that business schools should teach more sales, and it should be the starting point of business education. According to his HBS professor, Howard Anderson, the most useful film a modern salesperson can watch is Lawrence of Arabia, which is a constant to-and-through of persuasion and resistance under very difficult circumstances.

Sales anxiety is estimated to affect 40% of salespeople.

Of course, all sales people, however good they are, will be subject to what Delves Broughton calls the “psychological battle” between the need to sell and the need to be liked. This he tested in Bloomingdales, where several sales assistants were happy to talk and chat to him, but did very little to persuade him to actually buy some goods. Indeed, sales anxiety is estimated to affect 40% of salespeople within their careers, and is based upon the anticipation of rejection when you ask for commitment in the closing of a sale. “Sales success,” says Delves Broughton, “entails the ability to step away from one’s ego. Easy to say of course, not always easy to do.”

Interesting quotes from the book:

I imagined when I went to Harvard Business School to study for my MBA that sales would be part of the curriculum. But it wasn’t. In fact, the subject is absent from most MBA programs.

When Hunter S. Thompson described America as a “nation of two hundred million used car salesmen,” it’s hard to know if he meant it as a jibe or a compliment.

Clotaire Rapaille, a French psychologist who has worked for many of the world’s largest corporations, describes successful salespeople as “happy losers.” They see each rejection as a step on the way to a win.

When firms hire salespeople, Rapaille recommends, they should be looking for this willingness to fail rather than a track record of successful selling. They should ask, “How many things did you try in your life that you failed at?”

At sales meetings, he suggests awarding “the gold medal of rejection: Jonathan sold 500,000 computers last month, but he was rejected 5 million times!”

Philip Delves Broughton talks about his book

In 1961, the Harvard Business Review published an article by Robert McMurry. An industrial psychologist from Chicago, titled “The Mystique of Super-Salesmanship.”

McMurry wrote that for all advances in modern industry, from automation to organizational theory, “salesmanship- as an art applied at a face-to-face level- remains just as primitive today as it was applied 100 years ago.

Successful salesmen must have two qualities, empathy and ego.

Successful salesmen must have two qualities, empathy and ego drive: enough empathy to listen and understand what is in the customer’s head, and enough ego to close the sale.

Hair loss, for example, used to be just hair loss. Now it is a medical problem. The British Medical Journal reported in 2002 that in order to sell its hair-loss treatment, finasteride, in Australia, Merck hired the public relations firm Edelman to arrange for experts to contribute articles on the dire consequences of hair loss. These experts explained that when losing their hair, men underwent all kinds of emotional problems. Their job prospects and mental well-being collapsed. Newspapers reported that an international Hair Study Institute had been set up to consider this awful epidemic.

Sales is to the socially phobic what the subway car is to the claustrophobic. Researchers estimate that anxiety about sales calls affect 40 percent of salespeople in the course of their careers. I suspect that this is a conservative estimate.

Errors in logic, Schulman wrote, include “personalization,” or assuming everything is about you. Your boss passes you in the hall without acknowledging you and you immediately assume you have done something wrong, when in fact he may have just learned his dog has died.

Warren Buffett, the investor, credits Carnegie with changing his life. One of Buffett’s biographers wrote: “Unlike most people who read Carnegie’s book and thought, gee, that makes sense, then set the book aside and forgot about it, Warren worked at this project with unusual concentration; he kept coming back to these ideas and using them.

Warren Buffet talks about influence of Dale Carnegie’s book

Martin Nowak, a professor of mathematical biology at Harvard, believes that humans are more cooperative than we think.

Nowak defines five basic mechanisms of cooperation: direct reciprocity, you scratch my back and I’ll scratch yours; indirect reciprocity, in which decent acts enhance your reputation and benefit you in the future; spatial games, the idea that it pays to be good to those who live near you; group selection, the power of the tribe; and kin selection, or the old idea that blood is thicker than water.

This psychological battle inside the salesperson’s head: the need to sell and the need to be liked.

What’s the economic value of adding the elevator? Eliminating the need to climb the stairs, she said. The salesman envisions and creates value where previously there was none. Because he is by nature an optimist, he can make the best of everything.

Business schools prefer to teach less brutal vision of business life.

Augie Turak told me “the best salespeople are every insecure. They passionately want success because they think it’ll make them a different person. Then they achieve success and it dawns on them they haven’t changed at all. What drives salespeople is a need to celebrity. This hard truth may help explain why business schools, which prefer to paint a less brutal vision of business life, are so loath to teach it.

By treating sales with such disdain, business schools prove themselves both foolish and elitist. Without selling, there is no business. It is also the greatest leveler in business. Done well, selling frees people from the oppression of corporate culture and allows them to define their own personalities and destinies. Not only should business schools and companies teach more sales, but it should be the starting point of a business education.

Other Book Reviews

Have We Got a Review for You

The Wall Street Journal: “Mr. Delves Broughton knows that as customers we have all had terrible sales experiences, but he reminds us of an American tradition—stretching from Benjamin Franklin to Sam Walton—that considers sales the great leveler. “It holds that in a properly functioning democracy, no matter the condition of your birth, if you can sell, you can slice through any obstacles of class, status, or upbringing in a way inconceivable in more hidebound societies.”

The Art of the Sale/Life’s a Pitch - Interview with the Author

Philipdelvesbroughton: “Q: Were there some universal qualities you found in great sales people? - A: resilience, persistence and optimism are the fundamental traits of good salespeople. They have high degrees of emotional intelligence and empathy, but also sufficient ego to deal with endless rejection and to push through a sale against the odds.”

The Art of the Sale

Jack Malcolm: “The book is useful for sales professionals and non-salespeople alike. I wish everyone in business who is not in sales would read this book, because it explains why nothing in business would happen without the special talents, tenacity and hard work of salespeople.”

BOOK REVIEW: “Reorganize for Resilience” by Ranjay Gulati (2010)

Mark Thomas — Fri, 26 Apr 2013 00:05:11 +0000

Back in the carefree days before 2007, companies looked at growth as their major challenge. In those days, obtaining a 15% increase on yearly growth seemed to be the most important thing for them to achieve, to keep their stockholders happy. Since then, with the collapse of firms such as Bear Stearns and Lehman Brothers, survival has become the key element to business. In Reorganize for Resilience, Ranjay Gulati shows some of the things that resilient companies do, both in good times and in bad, to ensure that they don’t end up being a case study on what companies shouldn’t have done.

Key words

Management, leadership, strategy, strategic management, corporate strategy, customer centricity, customer service, strategic business unit, sustainable competitive advantage, product innovation, corporate culture.

Summary

Ranjay Gulati

The book shows that one of the main things companies should do is to break through the internal barriers that often impede action, and also ensure that there are no warring divisions within the company, so that they are fighting more against themselves, rather than the competition. The book is based on over ten years of research. It has the usual companies, such as Starbucks, Best Buy, and Cisco, but it is also refreshing to see French companies, like Lafarge, are also quoted as well.

According to Gulati, only 60% of companies survive through deep depression or drastic downturns. The ones that do survive have built what the author calls an “outside in” mindset. Rather than making products and then pushing them onto the marketplace, they begin with the consumer and try to decide what they actually really need and what they really want, in terms of products or services. This sounds good in theory, but in practice, of course, it is quite difficult to do.

“Of course,” says the author, “most managers realize that they need to be resilient and they need to adapt to the customer. However, most of them don’t realize the huge organizational barriers that stop them from doing so.”

The book looks at 9 companies: 3 in B2C – Harley-Davidson, Starbucks, and Target; 3 in B2C and B2B- Tribune, Best Buy, and Cisco; and 3 in B2B- Jones Lang LaSalle, Lafarge, and GE Healthcare. This gives a broader, overall perspective on different types of businesses.

The work is also interesting in that it generally deals with one particular aspect of company organization and one company per chapter. Of course, this may seem a little more complex in the real world of business, but it allows the reader to get hold of the main theme that is being developed. The author himself is quite clear about some of the difficulties. “Outside in” thinking does not blindly mean following what the customer tells you to do.

In fact, Steve Jobs once said, “customers don’t know what they really want, until you actually give it to them.”

It does give one very good example of how a company, by working with its customers, totally changed its business model. Best Buy, an electronics store, realized that in fact they had different types of customers. Until they started working with them, they thought that most purchases were made by men. In fact, they found, women purchased 55% of all consumer

electronics, and also influenced approximately 75% of all purchases. Best Buy changed its policy, towards talking to its customers. Having worked with the customer, the company also needs to develop cooperation. Cisco is seen as being a good example of this, in that it has broken down all the barriers and silos that exist within the company. Employees, when they are hired, are expected to embrace the no-technology religion approach and be agnostic to all forms of platforms and standards, and keep an open mindset. Annual bonuses are then based on the level of customer satisfaction, revealed in one question: “What is your overall satisfaction with Cisco?”

Having established cooperation, then it isn’t necessary to build what the author calls clout or power structures within the company. Companies should raise the visibility in recognition of people who work across boundaries, and in different departments, and it should strengthen their influence. From there, greater capabilities will be made, through coordination and a stronger corporate culture. Building a powerful set of capabilities can be a critical aspect of an “outside-in” company model. Since they are not going to arise spontaneously, they must be developed in a systematic fashion. Once this has been done, a company must actively seek to create connections, both inside and outside the company. The author gives the example of Apple, which offers only a small number of applications for itself, simply because its partners can offer thousands more. Indeed, an IndustryWeek survey of manufacturers showed that 80% of companies say they have made significant progress towards world-class operations, and thereby operate with a significant number of partners. The book even gives one excellent example of Bharti Airtel, in his leading wireless phone company, that did reverse outsourcing by signing off its telecommunications network to Ericcson, Siemens, and Nokia. It was a difficult process, but was a very successful one in the end for the Indian company.

Reorganize for Resilience, emphasizes the need to create a journey towards the integration of different best practices that will help a company create an “outside in” mentality. It is not, as the author said, something that can be plotted on a MapQuest. Since markets, competition, and technologies will change, customer needs will change as well and, to stay in business, companies will need to reinvent themselves and the way they organize within.

Why Ranjay Gulati wrote the book?

Interesting quotes from the book:

Managers everywhere face the most turbulent market conditions since the Great Depression. Global competition has accelerated, and excess capacity worldwide will likely persist as desperate competitors slug it out for increasingly demanding customers who treat goods and services as commodities where price is the only differentiator.

Customer-driven companies were significantly more successful than shareholder-driven ones.

Customer-driven companies were significantly more successful than shareholder-driven ones, providing a 36 percent advantage in shareholder returns, compared with their industry median; shareholder aligned organizations provided only a 17 percent advantage.

Most managers understand why they need to be resilient, and many have figured out what customers want and what their companies should offer, but few appreciate the huge organizational barriers that prevent them from delivering on the suppleness they so fervently desire.

Since the 1980s, bagged salad—that staple of every grocery store’s produce section—has risen from nonexistence to a $2.5 billion-a-year industry.

The question is not how much the customers will pay and what kind of lettuce they like, but rather how the making and consumption of salad relates to their busy lifestyle. Answers like that one are almost impossible to uncover when the inquiry is inside-out—when the questions start with the product and then move to the customer.

Action requires overcoming internal organizational barriers—moving from the what of customer empathy to the how of organizational integration.

Outside-in thinking does not mean blindly following what customers tell a company to do. Customers themselves may not be able to articulate their needs precisely.

Cisco’s success would be built not solely on cutting-edge technology but on making technology suited to the customer and a consistent willingness to alter its organizational architecture.

Coordination is about the organization’s architecture; cooperation is about its people’s behavior. Coordination entails alignment of activities and information; cooperation concerns the alignment of goals and human behavior. Thus, coordination is what leaders do; cooperation is what workers do. Coordination is about mechanics. Cooperation is about motivations.

Once hired, employees are expected to embrace the Cisco ‘no-technology-religion’ approach: Cisco is ‘agnostic’ about platforms and standards rather than clinging rigidly to a unit or system mind-set.

Customer issues are in Cisco priviliged even to the board meetings.

CEO of Cisco John Chambers will keep anyone waiting for an internal meeting, even the board, if he is working with a customer to resolve an issue.

Effective cross-silo collaboration almost invariably involves modifying the power structure by assigning formal authority, bottom-line accountability, and valuable resources to existing business units and newly formed silo-busting or –bridging divisions or roles.

How to bridge and bust organizational silos

Empowering key individuals and groups to take actions – including encouraging disparate silos to make mutual customer-focused internal adjustments even at their own or others’ expense – creates the company – customer synergies that characterize truly outside-in organizations.

One service-provider executive told me a story about a manager who measured everything by how much she controlled and by how many people worked for her. The manager “could not get her head around the idea of influence versus command and control.” She ultimately left the firm.

Building a powerful set of capabilities among your people is thus an absolutely critical aspect of an aligned, outside-in company model. New capabilities are not going to arise spontaneously or through a general mandate; rather, organizations must develop them systematically.

Apple alone offers a small number of applications for its iPhone, but because of its partners, it can offer thousands of applications! At the same time, this model of cross-leveraging assets gives Apple flexibility to move into and out of activities much faster than if the firm owned those itself – a significant advantage in a shifting economy. It is no surprise that well over a billion applications have been downloaded since Apple launched its applications store.

It’s a rare one that’s performed completely in-house anymore – from logistics and procurement (an estimated $179 billion global outsourcing business), to information technology ($90 billion), customer care ($41 billion), and human resources ($13 billion).

From 1996 to 2001, U.S. companies announced fifty seven thousand alliances, a rate of over one partnership per hour.

Starbucks increasingly looks to periphery-expanding partners for innovation. Barnes & Noble challenged Starbucks to develop an automated espresso machine that would allow B&N to train its employees faster and provide more consistency and faster service. The machine has since been rolled out into all Starbucks retail stores.

Honda provides top management at its suppliers with a monthly report card that details the supplier’s performance based on Honda’s metric targets.

P&G rewards sales managers for enhancing the profits of both P&G and its retailer partners like Wal-Mart.

The gap between transaction costs of GM and Toyota is truly giant.

One researcher found that Toyota, the most highly trusted auto manufacturer, had transaction costs that were about 20 percent of those at GM, the least trusted automaker.

Mastering the elements of systemic integration is not an end in itself. This is not a journey that can be plotted on MapQuest – so many hours to get there, so many miles to go. As long as markets, competition, and technologies shift, so will customer needs, and the faster they shift, the more resilience you will need to get out in front of wherever the customer is going next.

Other Book Reviews

Book Review: (Re)Organize for Resilience by Ranjay Gulati

John Clements: “According to Ranjay Gulati, a professor at Harvard Business School and author of the book (Re)Organize for Resilience, the problem does not lie in being aware of the need to focus on the customer, but rather in taking the necessary steps towards solving the customers’ problems.”

Inside Best Buy’s Customer-Centric Strategy – the author’s blog

Ranjay Gulati blog: “Becoming customer-centric means looking at an enterprise from the outside-in rather than the inside-out — that is, through the lens of the customer rather than the producer. It’s about understanding what problems customers face in their lives and then providing mutually advantageous solutions.”

Business school performance culture. Are we targeting the right things?

Mark Thomas — Wed, 24 Apr 2013 11:10:32 +0000

A target driven culture

Consequences of management failings at a NHS hospital in Mid Staffordshire were severe.

At the start of February a report was published on a series of terrible management failings at a National Health Service hospital in Mid Staffordshire in England. The report’s conclusion was that the hospital’s management board and all the senior staff were focussed on managerial targets (relating to financial performance and the number of waiting to be treated). As a result they lost site of the primary aim of the hospital, to treat and care for sick people. Over the few years that this culture continued, hundreds of patients died unnecessarily.

Hopefully no one will die as a result of Business Schools being focussed on managerially imposed targets, but I believe there are some questions to ask about whether Schools are focussing on appropriate targets. Given that many are spending funding it might be better to ask these questions now rather than waiting for a public outcry.

Martin Parker: ranking of business schools by the amount of academic publishing is dysfunctional.

At the end of February I attended a seminar given by Professor Martin Parker of the University of Leicester Management School. He argued that the ranking of Business Schools by the number of articles that their academics published in prestigious peer reviewed academic journals was dysfunctional. It was putting too much pressure on management academics to publish in these journals (as their main and sometimes only task). This was diverting business schools away from their primary task of teaching and disseminating knowledge. As Professor Parker pointed out – who actually reads these articles?

Most academic journals are in the hands of a very small number of publishers.

He also took aim at the publishing industry which perpetuates this system. A handful of large publishing houses have acquired most of the smaller publishers and in so doing have created an unwelcome standardisation of academic output and have concentrated the ownership of most academic journals in the hands of a very small number of publishers. At the same time they are making significant profits (and depleting higher education budgets) by charging university and business school libraries inflated prices for online subscription packages. It was powerful stuff!

Global businesses need to recruit flexible managers rather than rigorous academics.

Similar arguments have been made in the past about the gap between what global business wants and what MBA and other business school programmes deliver. For example, Warren Bennis and James O’Toole wrote about How Business Schools Lost Their Way in the Harvard Business Review in May 2005. They complained that the model of academic excellence in Business Schools is based on the academic rigour of the research, rather than on understanding how businesses work. They argued that global businesses need to recruit flexible managers who are comfortable working in international and cross-cultural teams in a range of geographical and cultural settings. These managers need to be culturally aware and culturally tolerant, skills that cannot be obtained by reading academic journals or listening to an academic who has hardly ever stepped into a real world organisation.

It won´t take long until business schools´ stakeholders start to question the scope of academic research.

At some stage, in the near or medium term future, funding bodies and other stakeholders are going to take a look at the way business schools are operating. It is to be expected they will be concerned by the apparent focus on academic rigour rather than the applicability of their research. I imagine they will also question a target orientated culture that values academic publications over teaching competence; a track record of research publications over business competence over experience and the study of management over study for management. This will be particularly the case where it can be seen that academics have been encouraged to write papers rather than teach undergraduate students, where teaching staff with business experience and/or good student feedback have been placed on short term contracts while academics with limited teaching ability but a long list of publications have been awarded permanent contracts or if the curriculum fails to equip students with the skills for working in the global business environment as a result of a lack of staff expertise.

Management target for research output does little for the quality of teaching.

By requiring business school academics to publish or perish we are detracting from the primary goals of business schools which must be to prepare our students for the world of work and to help our MBAs to become better managers. The consequences will not be as dire as they were for the patients of the Mid-Staffordshire Hospital but there are bound to be some students that have been disadvantaged by a management target for research output that does little if anything for the quality of teaching.

Philip Warwick

Senior Teaching Fellow
Durham University Business School

Prior to entering academic life Philip spent 17 years working as a manager in the National Health Service (NHS) in Yorkshire and the north east of England. While still a manager in the NHS he studied for a part-time MBA at Durham Business School. In 2000, he joined the University of York, where he stayed until moving to Durham in autumn 2012.

Philip has two main areas of research interest and activity, public sector strategy and internationalisation and the scholarship of teaching and learning. His public sector strategy interest encompasses health service management and university management, in particular the international business in higher education, which is the subject of his doctoral research. Much of his work in the field of teaching and learning also relates to internationalising teaching and learning, making teaching and learning more appropriate and relevant to an international audience.

The Internationalisation of UK Universities – a progress report

This week, Philip Warwick, Senior Teaching Fellow at Durham University Business School, UK, writes at guest blog on the state of internationalisation in British universities. Professor Warwick has been studying the international strategies of a number of universities in the UK and in other countries. He has found that approaches vary across countries. Within the UK he has identified four specific strategies to international development within the group of universities he studied.

Does management work and does it have a future?

AACSB Associate Deans Conference: Leadership Skills and Strategies (David Logan: CultureSync & USC Marshall School of Business)

At the AACSB Associate Deans Conference 2012 David Logan, Senior Partner, CultureSync and Lecturer, Marshall School of Business, University of Southern California, gave a highly entertaining talk about dealing with ‘tribes’ in organizations. The title of the talk was “Leadership Skills and Strategies: Techniques and Tools on Leveraging Group Dynamics” and it gave some useful advice on how we can teach groups to develop a more positive attitude to their work.

From Harvard to GEM: Co-teaching on Strategic Management and Leadership

It was a great pleasure during the last semester to share a class at Grenoble EM with Dr. Gregg Glover. Gregg has been a good friend for many years (though he might deny this!) and I am delighted he accepted our invitation.

He did his doctorate in organization change at Harvard University and has worked there for over 25 years. He was able to bring his vast teaching and professional experience to the class and share some of the things he has learned and studied while working for the world’s most known university. Read more…

AACSB Associate Deans Conference 2012: Lessons from Change in Business Schools

One of the opening sessions of the AACSB Conference for Associate Deans Conference brought together panelists from 4 business schools; Latha Ramchand, Dean at the University of Houston, Lynne Richardson, Dean at the University of Mary Washington, Deborah Spake, Associate Dean at the University of Alabama and Kristie Oglivie, Interim Associate Dean at California State University. The Panel was chaired by Susan McTiernan, Associate Dean at Quinnipiac University and Vice Chair of the Associate Deans Affinity Group.

Higher education facts and figures 2012

Universities UK Blog: “Every year, Universities UK produces an annual collection of facts and figures on UK higher education institutions. This publication always proves very popular, as it presents a vast range of information in bite size chunks, providing readers with an overview of higher education in the UK, covering the student population, staff population and finances.”

Are home students being rejected in place of wealthy international students?

Universities UK Blog: “It is true that higher education is becoming increasingly global; there are growing numbers of overseas students who choose to study in the UK. This is hardly surprising given the UK’s leading reputation for higher education and the global rise in the numbers of tertiary students wanting to study outside of their home nation.”

Rising student expectations? University international offices know all about it.

UniversitiesUK: “Don’t you just hate it when university and student leaders say: ‘Now that students are paying high fees…’? Where have these people been for the last 30 years? It seems too easy to forget that international students studying in British universities have been paying fees since the 1980s.”

Cause for concern? The Bologna Process and the UK’s international student market

GlobalHigherEd: “A report by the Higher Education Policy Institute (HEPI) questioning the implications of the Bologna Process on the UK’s international student market set of alarm bells in the UK media last week. For example, the Guardian (May 22) declared, “UK universities at risk of losing foreign students as a result of the Bologna process.”

How dependent on foreign (non-EU) student fees is the UK (2010-2011)?

GlobalHigherEd: Income from HE course fees by country of HE institution 2010/11 – table

Sets out some of the challenges and external pressures on business schools today and the impact that may have for the coming years.

Great book. Advocates the creation of a learning organization as a way of achieving sustainable competitive advantage over your competitors.

A collection of the ten most read articles that have been published by HBR on strategy.

AACSB Annual ICAM Conference 2013: Emerging Markets and Business School Strategies

Mark Thomas — Fri, 19 Apr 2013 00:30:29 +0000

One of the last sessions at the AACSB ICAM 2013 was a panel discussion moderated by David A. Wilson, President of GMAC on the role of emerging markets and their strategic impact on business schools. The panelists were Edward A. Snyder, Dean and William S. Beinecke Professor, Economics and Management, School of Management, Yale University, Richard K. Lyons, Dean, Haas School of Business, University of California, Berkeley and Kathleen A. Getz, Dean, School of Business, Loyola University Chicago.

The mission based perspective

According to Richard Lyons, UC Berkeley primary concerns are “place, people and culture.” They remind their students constantly of four guiding principles.

Question the status quo
Confidence without attitude
Students always
Beyond yourself

All international development at Berkeley is therefore founded around these three principles. Groups are taken on study trips to places such as China with the specific mission of finding examples of how such principles are put into practice.

However, international development does bring some questions that need to be addressed. In an industry that generates 5% margins at best, having branch campuses may pull away resources from the main campus. The strategic nature of this development has to be understood therefore.

Berkeley is now relying more on the use of MOOC for teaching. Fifty percent of future courses will be online. But ask Dr. Lyons:

“How do you define ‘place, people and culture’ in an online world?”

Also MOOCs don’t get participants the same access to networks which are vital in today’s business world.

The historical and economic perspective

Edward Snyder: Major challenge for BS was to interact with people in the Post-Cold War era.

Edward Snyder, Dean at Yale University, took a more historical perspective of the international development of business schools. In his opinion, 1990 saw the end of the economic and political triad between the USA, Japan and the USSR. Business schools found themselves having to ask how they could react and work with the three billion people that were not connected to the world. This was a major challenge.

The last two decades has also seen the spiraling of costs in business schools. In 1990 and MBA in the USA cost on average $17 000. By 2013, this had increased to $57 000. The consumer price index increased by 2.5% per year during this period where as the cost in US business schools increased 5.7% per annum.

“If you increase you price every year by one percent above inflation,” joked Dr. Synder “You eventually get to a very high price!”

More seriously, the effect of this was to put many school in a really difficult position with their prices.

He went on: “If you believe in the flat world view and you raise your prices about inflation you will not get students from the emerging world.”

“This system is now dead and there is a need to find something more innovative.” he added. Competition is now coming from emerging markets and place like Ghana where the $3000 MBA is only a fraction of the cost of some US MBAs.

The student perspective

Richard Lyons and Kathleen Getz sharing their thoughts on business schools´ strategy.

For Kathy Getz, Dean at Loyola University, Chicago, the key was to think about what is good for the students. Loyola has been able to piggy back on initiatives done by the central university in Vietnam and Beijing. Indeed, students returning from China had a much greater appreciation of the enforcement of corporate laws in general, IP in particular and the benefits of a free market economy.

Until now Loyola has shied away from starting new campuses because of the costs involved and the competition this could generate.

Richard Lyons on developing innovative leaders at Berkeley-Haas

Ending the 2013 AACSB Annual ICAM Conference

This was an excellent session that dealt with some serious ideas that dealt with in a light hearted and down to earth manner. The panelists were very honest and were even prepared to talk about the failures they had had in their initiatives in emerging market. For example, Loyola had had issues with pricing in Vietnam which had made the creation of a sustainable program were difficult. As they stated from the outset “emerging markets are not only key to the growth and viability of international business, but also critical to the future of global business schools.” Discussing such issues then is vital to learning for future initiatives.

Panel discussion participants:

Session Moderator) David A. Wilson, President and Chief Executive Officer, Graduate Management Admission Council
Kathleen A. Getz, Dean, School of Business, Loyola University Chicago
Richard K. Lyons, Dean, Haas School of Business, University of California, Berkeley
Edward A. Snyder, Dean and William S. Beinecke Professor, Economics and Management, School of Management, Yale University

For Associate Deans of AACSB Member schools you can join the AACSB Affinity Group by Clicking Here

AACSB Annual Meeting (ICAM 2013): The European Affinity Group and the challenges of accreditation for European schools

At the AACSB Annual ICAM Conference 2013, the European Affinity Group organized a session on the special challenges for European business schools in obtaining accreditation. This began with Rachael Weiss, Head of Student Experience and Accreditation at the University of Sheffield, entitled “QAA and UK challenges with Assurance of Learning” This was then followed by a discussion between different regions of Europe with some proposals on how continue with the work that has already been done.

AACSB Annual Meeting (ICAM 2013): Learning, Leading, and Teaching in the 21st Century (Tony Wagner, Technology & Entrepreneurship Center at Harvard)

AACSB Annual Meeting (ICAM 2013): Lead by Choice: Lessons for the B-School (Sheena Iyengar, Columbia Business School)

AACSB Annual Meeting (ICAM 2013): 5 Essential Social Media Practices for Academic Leaders (Dr. Michael Williams, Pepperdine University)

AACSB Annual Meeting (ICAM 2013): Building Your School’s Brand Through Executive Education


AACSB Associate Deans Conference: Leadership Skills and Strategies (David Logan: CultureSync & USC Marshall School of Business)	AACSB Associate Deans Conference 2012: Millennials Incorporated: Our Student Cohort	AACSB Associate Deans Conference: Executive Education: Developing Non-Degree Education for the Future (Brent Smith)s


Sets out some of the challenges and external pressures on business schools today and the impact that may have for the coming years.	A collection of the ten most read articles that have been published by HBR on strategy.	One of the great man’s last works. Contains the concept of N=1; R=G.

kkk


*Learn about The IKEA Effect, The Baby Jessica Effect* and why large bonuses make CEOS less effective.**	A fun book that show why humans don’t always behave in a rational manner.	Oh my God ! Possibly the worst biography ever written!


Steve Jobs’ favourite book. Any more questions?	600 pages and excellent from start to finish. Learn about the man and his strategy.	The story of the ups and downs of Starbucks and why Howard Schultz decided to return as CEO.


Why would somebody who pays fifty or sixty thousand pounds for a car want to save 50 cents on a liter of milk? The answer was, of course, that they were ‘trading up.’	Most people think of dealmaking as being about negotiating. This book brings in not only the concept of auctioneering (getting several potential buyers to participate at the same time) but also shows how the two are compatible with each other.	Sets out some of the challenges and external pressures on business schools today and the impact that may have for the coming years.


A fun book that show why humans don’t always behave in a rational manner.	An excellent outline of some of the fundamental issues in strategic management. The book is short and generally to the point.	*Learn about The IKEA Effect, The Baby Jessica Effect* and why large bonuses make CEOs less effective.**

GlobalEd

BOOK REVIEW: “Austerity: The History of a Dangerous Idea” by Mark Blyth (2013)

Mr. Blyth on Austerity

CNN: The Austerity Debate

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Other Book Reviews

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BOOK REVIEW: “The Art of Choosing” by Dr. Sheena Iyengar

Sheena Iyengar talks about her book

How to make choosing easier?

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(PAST IS) PROLOGUE- An Excerpt

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From No Snow to Chartreuse! : Mark Silberbauer, a student from the University of Cape Town talks about studying in Grenoble.

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Professors (and other experts) getting it wrong : The Reinhart and Rogoff spreadsheet error

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BOOK REVIEW : “This Time is Different: Eight Centuries of Financial Folly” by Carmen M. Reinhart & Kenneth S. Rogoff (2011)

Carmen M. Reinhart on A Decade of Debt

Kenneth S. Rogoff on This Time is Different

Bankers with genuine value-added – funny

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“It All Works Out In The End”- An Australian’s account of studying in Grenoble

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BOOK REVIEW: “The Art of the Sale” by Philip Delves Broughton (2013)

Philip Delves Broughton talks about his book

Warren Buffet talks about influence of Dale Carnegie’s book

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BOOK REVIEW: “Reorganize for Resilience” by Ranjay Gulati (2010)

Why Ranjay Gulati wrote the book?

How to bridge and bust organizational silos

See also:

Other Book Reviews

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Business school performance culture. Are we targeting the right things?

See also:

AACSB Annual ICAM Conference 2013: Emerging Markets and Business School Strategies

Richard Lyons on developing innovative leaders at Berkeley-Haas

Panel discussion participants:

For Associate Deans of AACSB Member schools you can join the AACSB Affinity Group by Clicking Here

See also:

AACSB Annual Meeting (ICAM 2013): Building Your School’s Brand Through Executive Education