Category Archives: Business as unusual

Practicing what you preach (The business school edition)

I am a board member of Masterstudies.com (prior description here) a startup company that offers a recruitment service for universities, primarily those offering master programs in business or related fields. The company now has a number of universities and business schools signed up, and we have begun to  learn something about the market that we (or, at least, I) did not know before, even though I have worked for a large, private business school for many years.

The thing is, it seems (many) business schools do not practice what they preach – i.e., many of them fail to apply some rather basic strategies, sales practices and web practices. Here are a few observations I have made so far:

1. Business schools say they differentiate, but they don’t

The classic. Porteresque view of competitive strategy says that there are only three generic strategies you can apply: Cost leadership, differentiation (i.e., being unique in some way), or segmentation (i.e., addressing specific sub-markets based on attributes of the customer). The latter, of course, is merely a more granular and partially combined version of the two first ones. Even though business schools should know competitive strategy well (it is, after all, one of their most important subjects), most of them do not pursue any one of these strategies. Or, rather, they say that they pursue a differentiation strategy but don’t. In that sense, they are neither strategic nor different.

The test for whether you have a strategy that truly is strategic is that you have chosen not to do something that you could have done. The test for whether you are differentiated is whether you can take away the school name (and things the school cannot change easily, such as nationality and location) from its description and then see whether you can determine which school it is based on its marketing material.

The reason I say this is that I have played around with the course and school descriptions found in our database, and been struck by how similar they look. Do the test yourself – go into the Masterstudies database, look up a few schools, and ask yourself: Which student segments are this school deliberately not trying to get – and what part of its offering is sufficiently different that you can see to what extent they are doing this in practice or just in Powerpoint.

Most of them are looking for the future leaders who see the challenges of  globalization, new technology and a constantly changing marketplace as opportunity to employ innovative strategies to build flexible learning companies that create value for their customers, shareholders and employees while displaying a sense of diversity and social responsibility. Hmmmm…. I wonder how large that segment really is – and to what extent the school really can serve this mythological student once he or she shows up?

The net result, of course, is a power law distribution of interest, with about 10 schools, the Harvards and Stanfords and MITs and Kelloggs of the world, getting all the attention; a near-first tier that is deadly afraid of doing something that the best schools do not, lest they be criticized for it; and a medium body and eventually long tail of schools that really do some differentiation but dare not talk about what it really consists of – for instance, explicitly targeting those who did not make it into the first tier schools but still are good students.

2. Business schools talk about market analysis, but many don’t do it well, or at all

Recruiting a student of sufficient quality and interest is a complicated process: You have to create enough awareness so you get enough applications so you can send out enough qualified to get enough accepts. To do this, you have to track

a) the number of leads (expressions of interests) you get

b) how many who actually send in an application (conversion rate)

c) how many of these are qualified and will get an offer (acceptance rate)

d) how many who accept the offer when they get it (yield)

My thoughts were that every Dean of Admission in the world eagerly tracked these numbers (they are, after all, also pretty good for measuring the level of effort of the sales team) but no, there are some indications that a number of schools, in fact, do not even know them. Depending on where in the distribution of schools you are, you ought to track different numbers: If you are top-ten, you track yield rate; if you are new, you track earlier in the process. (Incidentally, what Masterstudies offer is a filtered version of the first one, where schools can set up criteria for what kind of leads they want, thereby filtering out the clearly unqualified and enable some geographical or gender balancing – the difference between carpet-bombing and surgical strikes, as it were).

These numbers are not hard to get, but fewer schools than I thought actively manage them. (Not that I have formal statistics or would share them if I had them.).

Schools differ widely in their attitude to prospective students as well. We tested the response rate of schools and found that it varied widely – some schools did not respond at all, whereas some schools were on the phone with our prospective students in less than 30 minutes. That makes a difference as to whether the students will send in an application or not. (And no, there was no quality difference between these schools in terms of rankings and so on – we could not detect any pattern at all.)

3. Business schools know little about why they don’t get the students they want

There is a classical study by Abraham Wald of the location of bullet holes in bomb planes to find out where to add armor. Wald looked at where the airplanes were shot up and then concluded (not in the referenced paper, though) that more armor should be in the places with no bullet holes. The reason was simple enough: The planes that returned were the survivors, with bullet holes in places that could take the damage.

I wonder if not some of the same bias comes through with business schools. I wonder how many of them systematically interview or otherwise try to elicit responses from those students that did not chose their offering – at any point in the process. There are some schools that are clever – for instance, one school makes sure that the lack of a GMAT is not a hindrance to start studying if your grades and other academic performance indicators are good, by allowing the student to start and having time and resources set aside for GMAT certification. But I wonder how many take the time to find out whether it is lack of awareness, interest, timing, geography, content, structure, reputation or finance that makes promising student choose a different school. For those that interview candidates, I assume some of this comes out in discussions, but I have my doubts as to how well defined and executed these processes are.

I also have a sneaking suspicion that many students choose a business school for more mundane reasons that they tell school officials. It sounds better to say you chose this particular program because you like its specific focus on subjects or teaching philosophy (differentiation again – see point 1 above) than because the school is conveniently situated or your friends go there.

4. Business Schools make their web sites viewable, but not findable

Findability refers to the degree to which your web site or specific page can be found  by a search engine. As search technology more and more becomes the preferred interface to information, having a findable web site becomes very important. But more and more schools are finding that when you Google their specific master programs, the description of the the program found at Masterstudies.com comes up higher than their own description.

This is because schools spend a lot of money creating nice-looking web sites, but not much on making them findable. I think this is because the school has an understanding of how to create nice exclusive-looking brochures, but don’t know much about search engine optimization. The visual design of a site is outsourced to an ad agency, and the maintenance of it done through some content management package that does not use descriptive directory and file names, instead hiding new and interesting programs behind cryptic URLs. Perhaps each business school thinks their brand equity is so strong that students will know about them and come in the front door (i.e., the home page) like they used to do 10 years ago?

I have always wondered why business school web sites are done in such an overadministered and cumbersome fashion – for instance, few business schools set up ways for faculty to have blogs, instead requiring them to have official-looking web pages that are pain to maintain and leaving blogging to those who either set up their own blog outside school premises or have the technical gumption and political power to install the software on school infrastructure themselves. There are simple and cheap solutions around – Drupal, for instance – that allow descriptive directories and simple, shared content management. And when it comes to content – why not just use Movable Type or WordPress and the underlying software for faculty and other writers? In that way, the content would be plugged into what is beginning to look like the Semantic Web almost by default.

Conclusion

Given that I am on the Board of a company that tries to help business schools recruit internationally, I personally think this is just swell: Lots of business extension possibilities for us. But there is low-hanging fruit here: Simple, effective strategies and practices that business schools ought to execute on, with or without our help.

As marketing and recruiting increasingly goes on line (and, after that, into communities such as LinkedIn and Facebook), business schools will have to understand and change their marketing to make themselves much more differentiated and findable. In the meantime, there is room for first (or, rather, fast second) movers.

May your school be one of them.

And now for the good news…

I don’t, as a rule, read the HBS Alumni Magazine too closely, but here is an interesting perspective on the decline of the newspaper industry from Roben Farzad, MBA ’05  and business journalist, who paints a bleak picture of the newspaper industry, declining in revenues and importance as the barbarians digitally storm in with their click-counters and lack of respect for the sanctity of the fourth estate and its industrious acolytes. There is little hope, he says, as the fundamentals of the industry are disappearing so fast that not even patient money taking over to run newspapers as museums would help much.

I would like to point Roben to the case, developed after he finished HBS, of Schibsted ASA, a Norwegian media company that, so far, is one of the few media houses that successfully has managed the transition to the web. As one executive at monster.com said to me recently: We dominate everywhere in Europe, except Norway and Spain, where Schibsted dominate. Schibsted was early onto the Internet, and managed to have a long term view (15 years) on their investments and the luck of selling out a few of their early investments before the dot-com boom, so that their portfolio did not look totally hopeless even in 2002. It helps, of course, that its top management (particularly Kjell Aamot) was convinced, very early, that the Internet was here to stay and fundamentally would change the newspaper business.

Now, their Internet revenues exceed those from their newspapers (partially because they dominate classifieds in Norway with finn.no), more people get their news from their web sites than from their (large) newspapers. VG.no, the largest news web site, gets half as many hits as Nytimes.com (and we are less than 5m people here in Norway). VG.no breaks every rule of good web design and, precisely because of that (according to Torry Pedersen, its editor) encourages browsing. Incidentally, Torry recently became editor of both the web site and the newspaper (which, at some point in the not-too-distant future, may become free).

And yes, they have different journalists working on the net and the paper. Only 10% of the material is cross-posted, because Torry wants it that way. No mixing – these are different media and need different kinds of people.

Schibsted is by no means out of the woods yet – but they have a far better chance than any other media group I know of. I think they should focus more on their considerable capability in search technology to create more targeted and specialized, "automated" web sites, as well as get their hand more firmly in search-based advertising. And there is still work to do on integration of their activities across their various media outlets. But Schibsted did something while the rest of the media industry (and most of its journalists) lamented the coming of this vulgarity called the Internet. And that is the beauty and the fear of disruptive technologies – that by the time you understand their impact, it is too late for the majority of companies. And those who work there.

The funny thing is, if you ask journalism students, the majority of them want to work for paper papers, not this vulgar web thing, where you have to publish right away, write quickly, and instantly know whether you are being read or not. A paper journalist files one item per day. A web journalist, according to figures floating around among journalists here in Oslo, posts, on average, six.

I recently heard an anecdote about a rock singer who no longer can make money selling records, so he had to do many more concerts to maintain his income. That forced him to lay of cocaine, since he now had to go to work much more often.

A few years ago, the Oslo press club had to close for lack of customers. Presumably, they were at work. What a loss….

Why can’t the Treasury act like Buffett?

Posner argues that the government should behave like Warren Buffett, who made a $5b investment in Goldman Sachs in return for a guaranteed 10% dividend. (One surmises that the government may have to settle for less ambitious returns, though). Becker disagrees, arguing that government ownership introduces risk of political considerations overriding economical ones.

I side with Posner, if for nothing else that economic considerations – that is, economic from the view of each failing bank – has disappeared a long time ago. Government seats on boards is a small price to pay for a bailout. And as the markets rebounds, the government stake can be sold again.

Here in Norway, this actually happened – the government took over failing banks in 1987, at one point owning almost all of them, then selling them out again. Worked reasonably well, except for the bank shareholders, of course. But that is the point of shares – you can claim ownership to all the assets and all of the residual return. If the assets disappear, so does your claim.

Update:  Check out Tom Evslin’s nice little demonstration of how we got into this mess in the first place.

countercyclical and entrepreneurial

Just what I want for the garden – cut it short and paint it. Preferably with insecticide mixed in.

A simplistic answer…

Becker and Posner discusses the financial crisis, and for once I feel a little disappointed, for they somehow miss the international side of things. The financial crisis has been possible because the American people have been on an enormous consuming binge, thanks to cheap stuff from China financed by credit from, yes, China, channeled through mortgages based on ever escalating house prices.

Anyway, I was at an HBS alumni conference last week, and the topic, of all things, was technology trends and financial crises, with speakers such as Martin Wolf, Carlotta Perez and Erik Reinert. One interesting point which was brought up was the US curious insistence on always having cheap energy: Not only is there no tax on gasoline (which would have brought down consumption and emissions, given the national coffers some badly needed cash without having to sell Treasury bonds, and reduced dependence on foreign oil), but the US, according to another speaker, subsidizes coal production to the tune of $50b per year. Stop doing that, and you would help the environment and could buy yourself an investment bank every year….

Carlota Perez on how to understand global technology trends

image Carlota Perez: Global Technology Trends: Challenges to national strategies and policies

HBS 100th Anniversary

Soria Moria Hotel, Oslo

Only one of Schumpeter’s ideas accepted: Technical change is the driver of economic growth. But it is not totally random, it has continuities and discontinuities.

1970: Low cost microelectronics, sw, computers, internet, digital telecommunications….

1907: Mass production, low cost petroleum fuels, universal highways and electricity networks

Success may depend on anticipating the future, which you can do by looking at the past. There are powerful regularities and identifiable specificities in technological revolutions: Comes every 40 to 60 years, at the end of maturity of the previous technology, and has a similar sequence of diffusion in two periods of 20 to 30 years, with a financial crisis in between.

Tech revolution and techno-economic paradigms

Five revolutions: 1771 Industrial revolution, 1829: age of steam and coal, iron and railways. 1875 age of steel and heavy engineering (electrical, chemical, civil and naval); 1908 Age of the automobile: 1971 Age of the information technology and telecommunications. Next one may be biotech, bioelectronics, nanotech and new materials.

We are only halfway in the IT revolution. And each revolution takes about half a century to spread around the world.

Each revolution has a double nature: the create new industries that function as engines of growth, but there is also a new techno-economic paradigm. The first creates an explosive growth, the second modernizes and rejuvenates the mature industries.

The diffusion of each technological revolution confronts enormous resistance from institutions deeply adapted to the previous paradigm. Therefore, each technological propagates in two different periods: Installation and deployment. The first half sets up the infrastructure, usually with over-investment, but the infrastructure stays. It is a period of creative destruction, of unlearning, lead by financial capital, ends in a stock-market crash. The second is one of creative construction, led by production capital, applying the paradigm to innovate across all sectors and to spread the social benefits more widely – until maturity and exhaustion.

Why the bubble?

The capitalist economy is shaped by two different and functionally separate agents: Production capital (agent of accumulating wealth-making capacity) and financial capital (agent for reallocating and redistributing). Production capital has a long-term bias, financial capital has a short-term bias. Financial capital is better at massively redirecting resources and force new paradigm diffusion. Production capital is better for carrying growth and expansion within an established paradigm.

The role of the state changes: In installation period – the gilded age – the market does it all. In the deployment stage – the golden age – the state has an intelligent come-back, promoting long term growth.

Three investment paths for assuring long-term growth

Financial wealth and production wealth can both be destroyed, but for financial wealth you normally cannot influence it.

The best investment for the future is the capacity for technical change. Short-term, this means fostering innovation and entrepreneurship in the current paradigm. In the medium-term it means betting on the gestation of the next revolution. Insuring the long-term future means favoring open-ended science increasing the quality of human capital.

The current techno-economic paradigm shift is from the logic of cheap energy to the logic of abundant information. The new paradigm is still wrapped in the old, because cheap oil and cheap Asian labor favored stretching the old paradigm. But rising material and oil prices will lead to rising packaging and freight costs. Every little thing is wrapped in energy, such as cardboard or plastic. The visible effects of increasing global warming, with a rising climate risk (more Katrinas). There will be a change in the production, transport and distribution of tangible goods, leading to changes in business strategies and government policies.

The major transformations to expect (or to participate in): [lots of things], two being changes in lifestyle and urban planning towards activities and foot transportation.

Long-term funding: In the knowledge society, redistribution is not enough. Open-ended science works like a rich genetic pool. Investing in science, technology, education and entrepreneurship counteracts inflation by increasing average productivity. It is time to abandon market fundamentalism and agree ton a shared strategy to put order in finance and to collectively promote innovation to insure the future.

Martin Wolf on the Financial crisis

image Notes from

Martin Wolf: Challenges of globalization
HBS 100th Anniversary
Soria Moria Hotel, Oslo

Timing of this conference is very prescient….

This financial crisis is more interesting than the Depression, since it is taking out the core of Wall Street.

"Let China sleep, for when she wakes, she will shake the world." — Napoleon Bonaparte

"The current financial crisis in the US is likely to be judged in retrospect as the most wrenching since the end of the second world war." Alan Greenspan, FT, March 16th, 2008

"Simply stated, the bright new financial system – for all its talented participants, for all its rich rewards – failed the test of the market place." Paul Volcker, April 8, 2008

Three of the five biggest investment banks have disappeared since he said that….and the others may not be around for another week or so.

What is driving the world economy?

It is the biggest globalization and convergence story of all time (last 20 years). There is a global move to the market, with liberalization of barriers to trade and capital flows, declining costs of transport and communications (half the world’s population has access to mobile phone in 2010), entry of countries containing billions of people into the world economy (China, India and former Soviet Union has doubled the world’s labor force) and the growth of those economies

What is upsetting the world economy?

Hyman Minsky: Success leads to excess. A world of low inflation and strong growth generates confidence.

Global imbalances also lead to monetary excess, asset price booms and credit explosions. The US was the target for global excess savings, but if a country spends more than its income, so must its citizens. US Households did most of that spending. Surplus of capital everywhere, 70% of it going to the US. UK, Spain and Australia also large importers of capital. The problem continues: China’s surplus is $400b annually already, and rising. This ultimately leads to revulsion, house prices collapse. What makes it worse is that inflationary pressures have risen, too, largely because of rising commodity prices due to more demand from China – the one-off impact of globalization has weakened.

(One reason for the housing boom is that the stock market has been depressed since 2000.)

The striking feature of this from the capital exporting side (aside from Germany and Japan, which accumulate capital and the waste it, mainly abroad), 5,5 trillion in foreign currency, mainly in the US, by China, Japan, Asia, oil exporters and Russia.

Hyman Minsky: when times are good, investors take on risk, the longer times are good, the more risk they take on. Ultimately, they take on too much risk, asset prices overshoot, and then fall, debt is called in, and the system collapses.

We are at the early end of this disaster….

What is the future of global capital markets?

This is a fundamental shift. The savings-surplus countries have with massive capital funds, much of it in sovereign wealth funds (larger than hedge funds and private equity already, 5% of global capital). The countries that need investments don’t have reliable capital markets.

Conclusion

Globalization itself is an immensely powerful political, economic and technologic process, though it is not by any means guaranteed to continue. Capital market integration has proved to be highly unstable. governments are going to be much bigger players in global capital markets form now on.

Brad Feld on history and future of computing

Good talk at MIT – the good stuff comes towards the end, where he starts to talk about the future. The rest is useful for my students….

One danger of search-collected newspapers

United Airlines’ share price dropped 76% when Google News erroneously picked up a six-year old story about UAL filing for bankruptcy and pushed it to the front page.

Not that this couldn’t happen in any newspaper, but Google News is automatically generated. This opens for interesting possibilities in pump-and-dump….

WSJ Cucumber season

George Will describes how beer was essential as a water purifier and human selection mechanism as the world urbanized and industrialized. This, of course, is different from Clay Shirky’s theory that rising alcohol consumption came because people had too much time on their hands and needed to burn off surplus synapses.

Personally I think it was the more mundane effect of lower unit cost due to more centralized production to serve a denser urban market, but who am I to spoil an interesting theory during cucumber season….

(Via Volokh. Who adds that wine, not beer, founded our civilization. I am tempted to quote Gandhi, who, when asked what he thought of Western civilization, replied that he thought it was a good idea.)

I need a beer. Need to feel more civilized….

A dose of tail reality

The long tail doesn’t work, according to Anita Eberle. Chris Anderson, rather sportingly, likes the article but begs to differ when it comes to determining how long that tail should be.

Maybe it is a tall tail?

Sort of simulated

This interesting article in the Economist shows how American politics is becoming increasingly polarized partially because when people move, they locate in areas with similar cultural preferences – be it granola or shotguns. When I lived in the States, I was always fascinated by the difference between Vermont (Birkenstock and yogurt country) and New Hampshire (main business: roadside hubcap emporiums). As it turns out, this split between liberal and conservative is happening all over the country, and you end up with the curious situation where the United States from the melting pot evolves into a salad, with rather few ingredients.

All this is interesting, but hardly relevant for technology, no? As a matter of fact, not: I am currently working on a research project with nGenera, called BST: Putting Business Simulation Technologies to Work. Simulation allows us to see the aggregate effect of many small decisions.

One of the early books showing the importance of this is Mitchell Resnick‘s Turtles, Termites and Traffic Jams. In this book, Resnick demonstrates a number of simulations programmed in StarLogo (a parallel version of Logo, a programming language originally created for children.)

One simulation in particular (caveat: this is from memory, my numbers may be wrong here) is pertinent to the polarization of America: The effect of weak preferences on clustering. Resnick constructs a 100 x 100 matrix where each cell is inhabited by either a black or white dot. Each dot can “think” (i.e., have preferences) for itself, and the simple preference each dot has is the unless it is living in a neighborhood with at least two of its own kind (“neighborhood” defined as the 8 cells sharing a side its own cell) it will move, randomly, to somewhere else. Note that this is not a strong preference: A dot of one kind will happily inhabit a cell where 6 of its neighbors are different, as long as two are the same. (A more thorough description, with images, is here.)

In a surprisingly short time, the initially well distributed matrix transforms into clear clusters (even bands) of white or black. Importantly, this process, when viewed from a distance, seem to be conscious, yet the relatively mild preference exhibited by each individual dot seems rather harmless. It may be tempting to ascribe the segregation to some conscious plot, failed policy or other single cause. It is a very powerful demonstration of the aggregate and cumulative effect of small decisions and weak preferences – and simulation is the only way to make it apparent.

Resnick’s book shows similar uses of simulations to understand ant foraging strategies and traffic jam formation – and some of the insights have been put into use in real life. For instance, traffic lights at on-ramps that introduces cars into traffic flow in an even stream rather than random groups is, as far as I know, a direct result of simulations of traffic jam formation.

In science, business and politics, we are moving from isolating single factors and varying them to understanding interaction patterns between many small components. Simulation allows us to understand this – the challenge lies in understanding where and how this very powerful tool can give insights.

And there you have Vermont and New Hampshire, Virginia and Maryland: The results of weak preferences over time. Perhaps we could simulate some real political discussion at some point?

The last days of eBay

Interesting article in the London Review of Books by Thomas Jones. I always thought eBay’s competitive advantage (aside from the obvious network effects) lay in its payment system (i.e., PayPal). But proprietary platforms will over time be out-competed by open and modular ones – about time selling something vent from platform to protocol.

Technorati Tags: ,,,,

Formula for spying

Mark Seal has a great article in Wired about how McLaren got hold of Ferrari’s designs and the twists and turns that followed.

What blows my mind is the size of the budgets these guys are willing to throw away. A company like McLaren spends a lot of money and develops technology that eventually goes into production cars (at least, that’s the theory), but with the hundreds of millions spent here, how can anyone recuperate it? Ferrari, at least, has a brand of car to sell, McLaren cooperates with Mercedes, but it still looks like rich man’s game to me.

Anyway, an entertaining story, showing that you better treat your employees right (how could Ferrari management not react before their chief mechanic had spilled the beans?) and do your own scanning if you are hoping to avoid betrayal or getting caught betraying.

From Concours to BSG Alliance to nGenera

As can be seen from this press release, BSG Alliance (and all subsidiaries) has changed its name to nGenera Corporation. BSG Alliance acquired Concours Group last year, as well as New Paradigm and various, more technology-based companies such as Iconixx. The name nGenera represents a consolidation of the various acquired companies and signals a focus on the "next generation enterprise" – companies that use collaborative and Internet technology as an internal, native and natural arena for innovation and growth.

Consulting companies are fascinating – forever splitting and forming, driven by changes in content, business conditions and (to a rather large extent) by people chemistry. Though companies may change, the people very often remain the same – in a sense, even if you leave, you never really leave, but keep in touch (and use each other, if need be.) Modern technology underscores this sense of a cloud of people that know about each other and draw on each other when necessary, clustering around companies and ideas as need and economics dictate.

I started working in research-based consulting with Index, which was acquired by CSC, in 1994. I then moved on to work with Concours (which was formed by ex-CSC Index people plus some of their friends.) That relationship has lasted since 1999, and now it is time for nGenera, with an increased focus on collaboration technology (both in theory and practice) and an emphasis on what the future will be as well as how we will get there.

Stay tuned – a company that spans from Wikinomics to simulation technology promises exciting ideas and much to learn, while keeping a basis of solid IT management models and practices and a deep knowledge in talent acquisition and development. Stay tuned.

Cellphones against poverty

Excellent article about how cellphones reduce poverty from New York Times Magazines.

Masterstudies at Hawaii

I have just (well, last Friday) come back from the AACSB conference in Hawaii. As previously noted, I am on the board of a small but quickly growing company called Masterstudies.com, and this was our first “in the flesh” meeting with customers and partners. I tagged along on the theory that since I am an academic, I probably know how to talk to academics as well.

I am no stranger to academic conferences, but attending it as a vendor, not a regular participant or speaker, was new to me. I usually walk through the vendor section of a conference with downcast eyes, trying to not be cornered and pitched to. It was very interesting to stand there and see other people trying to avoid you – as a result, I have resolved to be much nicer to salespeople from now on.

That being said, the conference was a resounding success for us as a company – we talked to more than 60 universities and many of the other vendors and conference partners came over to our booth to congratulate us on the high interest and many compliments we got for our product. And I found it rather fun to market something – especially when it turned out we had a service that addressed a real need for many of these universities.

Recruiting blues
The problem with recruiting students is selectivity and quality control – you want students that are both good (in the sense that they have good grades and other qualifications) and also are environmentally compatible (for lack of a better term) with the other students. The first criterion is pretty easy to test for – grades and GMAT scores provide good indicators. Ensuring a proper mix of students for a program is harder.

For the prospective students, finding a school can also be very hard, since few students (at least outside the US) know more than a few business schools’ names and nothing about their quality. The result is a power law of prestige: At the top (“the fat head”), you find a few extremely well known schools (such as Harvard, MIT, Stanford, Wharton, INSEAD, LBS and IMD) with thousands of extremely well qualified people applying and very few getting in. Harvard, for instance, tend to receive 10 times as many applications as they have spaces, and of those people applying at least half of the people are good enough to make it through the program, if they only got in. At the top, finding students is not the problem – selecting them is.

For the students, another problem is avoiding the very bottom of universities: The outright frauds and degree mills that will sell you a certificate for a fee and an overview of your “life experiences”. (See this list for some suspects, but they tend to pop up like mushrooms after a rainy night.) A degree from a very weak place is not something you want to attach to your CV at all.

Most schools and most students fall somewhere in the middle, though: Decent schools providing good programs, and reasonably smart students prepared to do the required work to obtain a degree.  Masterstudies.com provides a service here by maintaining a database of quality-controlled schools which prospective students can search without having to go to each school’s web site, and quickly submit requests for information to interesting schools.

Selective international recruiting
If this was all we did, we wouldn’t provide much value, however. Most students can search in Google for business schools, and listings abound. The problem for schools trying to recruit internationally is not that they don’t get responses when they advertise on the Internet – it is that they get hundreds or thousands of “leads” from people who clearly are not qualified to be admitted, either because they don’t have the background or the finances.

In certain countries, such as a large African country beginning with N, most of the requests for information have nothing to do with getting an education: Enterprising men request glossy business school brochures to show women, saying that they are applying to a prestigious school and thus are attractive partners. Given the cost of an information package, this is clearly not a service most schools would want to provide.

To avoid this, we have the students put in their characteristics (education, work experience, managerial experience, age, desired industry they want to work in, etc.) and then match them to schools where they have a chance of getting admitted. The schools can filter the incoming leads so that they only get students they want, doing things such as selectively market in certain countries – say, perhaps they have enough people from Northern Europe or India, but want more from China or Southern Europe. Since we track where the prospective students log in, we can filter based on geography as well.

It works surprisingly well, which is why I am willing to be on the board. It is also very cost-effective: We charge the industry standard price for a lead (i.e., a prospective student), but the lead is qualified, meaning that every reference that comes from us has passed the hurdles the schools have set up themselves. That means that information packets go out only to students that actually a) have the requisite quality, and b) are in target markets the school want to serve.

(Of course, since I have read Shapiro and Varian, we also have a Pro package, where schools can pay a little extra and get promoted on the front page and so on – perfect for that newly launched MBA with a special twist that you secretly worry filling up.) As we start to build up good logs (we have had more than 100,000 unique visitors and growing per month since the new site launched in January) we should also be able to provide some pretty good and detailed overall statistics. For my own research, I am thinking about doing text analysis on the language in the program descriptions, to see what the main differentiating strategies of the schools are.

Check it out for yourself – though if you are a school, you should probably contact Linus, our Irish CEO (a former professional racing biker),  or Bernt, our VP of Business Development (who tried to teach me to surf in Hawaii, with decidedly mixed results) to get a peek under the hood, at the statistics and filtering pages which allow schools to select carefully and measure the results of their marketing.

And now, back to our regular programming….

Aloha

This is written from a 747 somewhere over the Rocky Mountains. I am on my way to the AACSB Annual conference in Honolulu, Hawaii. It is a conference on business school management, which is interesting in itself, and Hawaii, of course, is a new destination for me.

But the real reason I am on my way is because I am on the board of Masterstudies.com, and startup company offering a Web-based search-and-match service for business schools and prospective business school students. (Check our the website – and for all my colleagues out there – we are getting good reviews, send me an email if you think this might be a good way to generate leads for your school.)

Anyway, the VP of Business Development is going over to sell our services, and I am tagging along to translate between academese and marketing and (I suspect) as a guarantee that this is a serious business. I am quite looking forward to it – it will be interesting to see how other business school are competing for students in an increasingly global market. It will also be interesting to see which way the market moves – I suspect a movement towards more and more franchising of well-known schools, more tailored education (tied to knowledge profiles and career tracks in large corporations) and, of course, more use of technology both in marketing and execution.

Paperlessly so

Messy officeI have an essay in ACM Ubiquity called Time to Get Serious about the Paperless Office, borne out of endless frustration with the communicative and legal aspects of paper. I think we are slowly getting into the situation where paper is the exception rather than the rule. As I stress in the essay, we will not get rid of paper until we get rid of it as metaphor.

I just can’t wait…

(And no, the picture you see here is not from my office, but from a company that apparently specializes in helping people tidy up….)