Selected 3rd & 4th Quarter Books

It seems that with each new quarter I have a new favorite Darden class. Given my engineering background, I expected that the quantitative courses such as finance, accounting, and operations would be my favorites. And indeed, this was the case during my first couple quarters at Darden. It was also no surprise that I earned better grades in these quantitative courses.

By the first quarter of my second year it was becoming clear that despite my lower grades in the leadership and strategy courses, I was learning far more in these ‘softer’ courses. I have since embraced the leadership and strategy classes and am taking some of the most demanding offerings. The photo above shows a subset of the books I am reading in the 3rd and 4th quarter of my second year for these ‘soft’ classes. I have now read about two thirds of these books from cover to cover and will finish the rest before graduating in May. There are five additional books for class that I have read on my Kindle (love the Kindle). My pace of reading has increased from about two books per year prior to attending Darden to my current rate of a little over two books per week.

Some of my favorite Darden classes include:

Business Ethics Through Literature – in this course we read modern literature and discuss the underlying ethical business implications in class. Some of our reading included: The Great Gatsby, A Thousand Splendid Suns, Never Let Me Go, and Things Fall Apart.

Managerial Psychology – this course covers 14 books on psychology. Thus far, the books have focused on core psychological principals rather than the best selling ‘pop’ culture type books. Some notable readings during my third quarter included: TA Today, You Are What You Say, The Evolving Self, Mans Search for Meaning, and Social Intelligence. I’ll probably write another blog entry on my key leanings after finishing the course.

Readings in Sustainable Business and Creative Capitalism – the term ‘sustainability’ is a buzzword (again) and whenever this happens some of the meaning behind the concept is lost. The idea of sustaining business performance or investment returns is age old. This course begins with a historical review of how business and societies have failed. We then discuss ways to structure businesses with sustainability in mind. Some of our readings include: Collapse, Hot Flat and Crowded, and The World Without Us.

First, in most instances a school can improve its rank and quality of education with the same action.  Take the IT department as an example.  By providing students with excellent service, the students will provide favorable feedback on the BusinessWeek survey which will in turn improve the school’s rank.  The tough decisions come about when an effort to improve a school’s rank has negative consequences on the school’s quality of education.  Below is a list of such practices that I have observed at different business schools.  To the best of my knowledge, most of these methods are not being aggressively pursued at Darden.

Increase marketing - this is an easy way to improve a school’s selectivity metric, which is a key component for several rankings.  With an effective marketing effort many schools are able to increase the number of applicants.  One school has had recent success with a targeted marketing campaign in India.  My understanding is that the school received significantly more applications from the country yet still accepted the same number of applicants – thus improving selectivity.  The downside of this approach is that by spending more money on marketing there is less money available for other uses.

Increase scholarship money - offering scholarships is an effective way to increase yield.  In addition to the direct rankings improvement from a higher yield, there is a secondary effect from the increase in selectively necessary to maintain a specific class size.  Spending more money on scholarships is one way to increase yield.  Another consideration is how to distribute scholarships.  One top ranked business school provides around 90% of accepted students with a small scholarship of around $5k to $10k.  This is well received by applicants and gives them an additional reason to attend the school.  Another top 25 school has been known to bid for students by increasing the value of scholarship offers as the decision deadline approaches.

Increase focus on research - well published research faculty can significantly improve a schools ranking.  Unfortunately, excellent teaching ability and excellent research ability don’t often go together, and there are very few professors with both skills.  Thus, schools with a strong emphasis on research sometimes suffer in teaching quality.  Some schools relieve their best researchers of the teaching ‘burden’ by providing teaching assistants for use both inside and outside the classroom.

Train students to answer surveys - all rankings use surveys and in some cases they survey current students and recent alumni.  It’s generally against the rules for schools to directly advise students on how to complete these surveys.  However, schools can influence the surveys by helping student groups ‘teach’ other students how to best respond to questions.

Modify class demographics - most rankings consider elements of the class demographics and these elements can be easily altered by admissions.  Some approaches that come to mind include 1) increasing average GMAT, 2) increasing international diversity, and 3) increasing share of students interested in consulting.  While these measures are easy to change, there is often a subsequent negative effect from each initial improvement.  For example, a school might reject a ‘well rounded’ applicant in order to accept an applicant with a higher GMAT score.  This decision may come back to haunt the school if the high GMAT student has trouble finding employment and thus negatively affects the placement statistics at gradation.  Increasing the share of students interested in consulting is an interesting opportunity because this is one of the highest salary industries (bankers have lower salaries and higher bonuses) and the rankings do not adjust for differences in industry preferences between schools.  (I’ve written more on this topic in my MBA starting salary post.)

Schools that focus on rankings management may use these and other techniques to improve the school’s position.  One area worth consideration is how each of these techniques aligns with ones’ goals for an MBA program.  There may be vastly different consequences for someone interested in a top ranked MBA degree compared to someone interested in the quality of their education.

Old Rag is a 10 mile circuit hike located about 30 miles northwest of Charlottesville.  We left for the hike at 9:30am and arrived just in time to grab the last parking space at the trail head.  Apparently we weren’t the only people thinking this was a good weekend to enjoy the colors.  It took us about three hours to hike the four miles leading up to the summit and another two hours to hike the six miles back to our car.  The summit approach was fairly slow going  as the last mile is a rock scramble and we frequently had to wait for other people at points where hand-over-hand climbing was required.

Our weather was perfect and the hike provided some much needed exercise.  We all returned to Charlottesville physically tired and mentally refreshed.

Now don’t throw the baby out with the bath water.  In the right context, salary data can be useful in selecting a business school.  To help build this context, you may want to consider the following elements when analyzing salary data:

Compare salaries at the industry level – average salaries vary across industries and the mix of industry placement varies by school.  Consider a student interested in investment banking who is deciding between Darden and Harvard.  At first glance, the average overall salary at Darden is $100K (data) compared with $115K at Harvard (data), indicating that the student may prefer Harvard.  However, the average salary for investment banking jobs is the same for both schools: Darden – $95K, Harvard – $95K.  One contributor to the difference in overall salaries is the larger portion of students who enter into investment banking at Darden than at Harvard (15% vs. 11%), which effectively lowers Darden’s average overall salary.  Therefore, salaries should always be compared at the industry level to factor out the effect of dissimilar industry mixes between schools.

Account for geographic trends – in much the same way that a student body’s industry mix will affect average salary, the geographic mix of jobs will impact a schools average salary.  For example, international jobs tend to have a lower salary and can pull down the overall average.  While probably not a major factor, looking at where students accept jobs will provide a better understanding of the schools’ salary data.

Consider student demographics – a student’s work experience can significantly influence their starting salary.  For example, someone who worked in consulting for 5 years before returning to business school will probably secure a higher starting salary than someone with 3 years experience in an unrelated industry.  Business school can help equalize differences in past experience; however, employers will still offer higher salaries to candidates with more relevant experience.  Thus, attempts should be made to identify the impact of a student body’s work experience on the schools’ average salary.  In light of the qualitative nature of work experience, reviewing a school’s class profile and thinking in terms of directional influences might be the most practical approach.

In consideration of these factors, it seems that marginal differences between businesses schools in average starting salaries (less than $10K) could be fully attributed to differences in student body demographics.  Perhaps a research study could attempt to isolate and quantify the impact of ‘MBA brand value’ on starting salary.  In the meantime, we seem to have overemphasized the importance of business school selection in determining an individual’s starting salary.

The big focus of this event was the Class V rapids on Friday.  If you are not familiar with Whitewater Rafting, rapids are classified according to difficulty level.  Wikipedia defines Class V as follows:

Class 5: Whitewater, large waves, large rocks and hazards, maybe a large drop, precise maneuvering (Skill Level: Advanced Whitewater Experience) (link)

Since about two thirds of our group had never been rafting before, many of us were a bit apprehensive Thursday evening and we all talked about what to expect the next day.  The predominate term used to describe the coming experience was ‘intense’.  Despite the build up, no one backed out and we were all in good spirits during breakfast on Friday (expect for Kristy who was white as a ghost).

After breakfast we rented wet suites, signed some crazy waiver, and hopped on a bus.  On the way to the dam one of the guides gave a lecture on whitewater safety.  Kristy and I were at the back of the bus and had trouble hearing, but caught some of the important elements like, ‘if you get caught under the raft and can’t breath you need to get out from under the raft’.  There were also some tips such as, ‘hold on to your paddle so it doesn’t hit someone in the face’.

At the dam we formed groups of eight, picked our raft, and received more instruction from our guide.  My group had the pleasure of being led down the river by Joe.  During the winter Joe rents snowmobiles in Denver and in the fall he tells dirty jokes while leading groups on rafting trips down the Gauley River.  Most of his jokes were amusing enough that we are still talking about them a week later.  At the moment I can’t think of one that is fit for reprinting.

For all the hype the rapids didn’t seem too perilous.  As you can see from the photo above, I was in high spirits after running our first Class V rapid.  Shortly after this rapid, we ‘surfed’ a rapid, which is pretty much like what you would imagine.  Our raft came close to flipping and everyone fell out except for Kristy, me, and our guide.  I think Joe was a little disappointed with this outcome, compared to his most desired outcome of being the only person left in the raft.  He later referred to our situation as a lack of team spirit, since we didn’t all fall out of the raft together as a team.  At the end of the trip this was rectified when Joe flipped our raft – we all went in together.

Running the river was a great experience.  We used Class VI as our outfitters and they were awesome.  The guides were fun and safe, and the food was great.  Also, going with my classmates was much more fun than this trip would have been outherwise.  Thanks go out to Andy Shipley and the rest of the Outdoor Club officers that made this event possible.

The business elements taught at Darden naturally break down into two groups, as follows:

Technical skills – this includes elements such as creating an income statement, performing a discounted cash flow valuation, or analyzing the effectiveness of a marketing campaign. Most people first think of the case method in terms of technical skills and wonder how these skills can be effectively taught with class discussion. Generally, most technical learning takes place before class and we use our discussion time to review the material and learn from our mistakes. (see my Case Method post for an example)

Business background - this includes the broad knowledge and the general skills required for effective management. Examples include teamwork skills, industry knowledge, communication skills, and concepts like business acumen.

Both of these groups are taught throughout the Darden program. Naturally, some settings are better suited for building specific competencies. Below is my analysis of how Darden students learn these elements:

In addition to learning from the formal curriculum, I have developed my business background through involvement in co-curricular and extra-curricular activities at Darden.

Our group met at 10am on the Darden grounds and then carpooled to the trail head off Skyline Drive.  The hike to the Blackrock summit took about an hour.  We then spent another hour at the summit on a rock scramble and completed a short loop hike before heading back down to our cars.  The total trip took about 5 hours during which we got some good exercise and nice views of Virginia.  We also kept to our plan of completing an outdoor hike every weekend.

This hike was one of many optional events planned for first year students during orientation week.  Another group of second year students organized a community service event for the same time on Saturday morning and 20 first year students showed up to help.  Saturday evening there was a Darden Community picnic for all students, faculty, and staff.  Kristy and I had fun catching up with our friends at the picnic and watching a performance by the Darden faculty band (BluesJam).

Last weekend we hiked part of the Riprap trail off Skyline Drive.  After driving 45 minutes from Charlottesville, we parked and started our hike around 9:30am.  About one mile into the hike we passed a group of four that were running along the trail, which made us feel a little athletically inferior.  Thirty minutes further into our hike we heard lots of rustling and thought there was another group coming along the trail.  After pausing to look, we found ourselves staring at a big black bear about 30-40 yards away.  Maybe it’s because the bear didn’t look right at us, but for whatever reason neither of us were scared.  We just took a couple seconds, slowly turned around, and started walking back to our car while making quite a bit of noise along the way.

The picture of me above was taken about 5 minutes after seeing the bear.  We didn’t think to get a photo of the bear, which was probably the right decision anyway.  The photo on the right was taken along Skyline Drive.

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1. If you are interested in seeing a full list of outdoor activities in Charlottesville, the UVA Outdoor Club is a good place to start. There is also an Outdoor Club at Darden.

My first project was based in South Africa and lasted about one month. Since my wife arrived in London the day I left for South Africa, we arranged for her to travel with me for the first part of the project (see photo with elephant above). While she was touring South Africa, I was working with my project team to support the formation of an international joint venture. Specifically, my role was to perform an operational capabilities assessment of a South African company. Having completed similar projects with PRTM as a pre-MBA associate, it is clear to me that the first year Darden program did a great job of preparing me for this project. In particular, the following capabilities that I developed over the last 8 months at Darden significantly improved my effectiveness on this project.

Communication skills - for this project I participated in dozens of executive level meetings. The case method of teaching was good preparation for these meetings and during the first year program I participated in around 300 case discussions. These discussions were in many ways similar to executive meetings as both environments require that I make clear, concise, and helpful points at the appropriate time.

Broadened business background - the general management curriculum at Darden provided me with a broad background in understanding businesses. This proved extremely useful for a capabilities assessment project, where the real work is not in determining the company’s capabilities but in determining the level of capabilities required for success in the context of the specific business and industry. This is another area where the case method was very helpful; instead of diving into the derivation of particular formula (e.g., Little’s law), we broadened our understanding of business situations and industries by reading case after case during the first year.

Technical competence - being able to drill into the technical details of a business situation was another important skill for this project. In several instances I identified the relevant inputs of a specific business formula (e.g., inventory optimization) in the context of this particular company. Then, during interviews I would assess the company’s capabilities for managing these inputs. Darden helped me develop this technical competency by introducing concepts in technical notes, providing an environment to practice these concepts (learning team), and then reviewing these concepts during classroom discussion.

Increased confidence - the Darden program increased my confidence in assessing and managing business situations. Because of this increased confidence I pushed others a little harder then I would have otherwise, and ended up generating better results for our team. I attribute this increased confidence to the rigorous first year program coupled with the support provided by the Darden faculty and staff, my classmates, and my learning team.