[TDL]

This article was a bit odd. My b-school experience was almost the opposite. IRR was presented as inferior because it could put you in situations where you are giving up a lot of profit in dollar terms for a smaller dollar profit that had a higher rate of return.

In the end, one metric was not used as the be all and end all. Using multiple metrics to help inform an investment decision was the ultimate goal. The problems with American business are multiple and complex; it's not a matter of a simple financial metric.

[ShabbyDoo]

My MBA is circa 1997, and I shared your experience. A friend with a much "better" MBA than me (his from Harvard) once remarked, "Modeling is a great way to determine if a business idea is awful, but it's not going to tell you if you have a good one." I might argue even further that modeling can lead one to dismiss profound ideas through the erroneous presumption of a static future. It was said that the original business justification for Xerox counted the number of typists in America and multiplied by the number of mimeograph copies produced from each document. Obviously, the copy machine found many more purposes once introduced into offices -- a much more dynamic effect than most could even imagine.

Perhaps Dell's artificially static future was the presumption that shipping a laptop or desktop with a pre-installed OS would continue to be a viable business model? What if Steve Jobs had been forced at gunpoint fifteen years ago to lead Dell? What would the outcome have been? He likely would have spoken harshly about the elephant in the room -- Dell produces a commodity, and its future depends on Microsoft's continued prowess. With such an admission out in the open, what actions could have been taken which would have been nearly impossible to quantify via traditional B-School modeling techniques?

[eftpotrm]

What if Steve Jobs had been forced at gunpoint fifteen years ago to lead Dell? What would the outcome have been? He likely would have spoken harshly about the elephant in the room -- Dell produces a commodity, and its future depends on Microsoft's continued prowess.

What if Michael Dell had been forced at gunpoint fifteen years ago to lead Apple (and not liquidate it)? What would the outcome have been? He likely would have spoken harshly about the elephant in the room -- Apple produces bespoke designs to compete against commodities with bigger economies of scale and network effects, and its future depends on its (arguably not then demonstrated) ability to, by itself, out innovate both a larger software provider and several hundred hardware vendors.

(Which is a slightly artificial way to make the point, but I don't for one minute think Apple's past - or indeed future - success was even slightly guaranteed. Their position is remarkably precarious, IMHO.)

[glimcat]

That's pretty much the rule for modeling in any domain. It can tell you with good confidence if an idea is bad and with fair confidence whether an idea might be viable, but it can't do more than guess and it won't tell you whether you're asking a stupid question.

[NyxWulf]

My experience was more like yours as well. Here are some metrics you can use to evaluate certain things, but here are the 50 problems with using this metric in isolation.

Generally I think the curriculum taught in my school was fantastic, but I think there is a segment of my peers who failed to grasp the underlying meaning and walked away with simple metrics and formulas. Just like cut and paste programmers or those in my CS curricula who learned a few things but did not grok fully, they give everyone a bad name when they egregiously misapply concepts.

Just like those people who shallowly apply metrics, labeling an MBA as basing all decisions on IRR and then painting all MBA's as alike is shallow and overly broad. For example while accounting and finance were covered, there is also economics, operations, strategy, negotiation, leadership, communications, marketing, managerial accounting, and more. All of which look at things as much more than a collection of financial metrics.

The world is a very complex place. Simple sentiments, arguments or sound bytes rarely capture the essence of even the simplest underlying systems. Sweeping generalizations claiming to explain all of the problems of an extremely complex dynamic environment set all kinds of alarm bells ringing in my head.

[yuhong]

That is why I distinguish between "legacy" and "modern" MBAs.

[TDL]

I never thought of this distinction. Excellent point.

[SkyMarshal]

For those of us without MBAs, which is which?

[ShabbyDoo]

I regarded my MBA classes as semester-long courses in applied critical thinking. There were few right answers although there were those which clearly were wrong. At no point did any professor say, "Make business decisions based on the values of these metrics."

A good analogy might be found in some software I'm working on now. Part of it is a specialized serialization scheme designed to produce small serialized forms of large numbers of similar tree graphs. It is easy to quantify the size of the serialized form of N million trees, and it is easy to measure the CPU/IO time required to produce this form. However, when making design decisions, I only use these metrics as one input into my thought process. If I do X, how easy will it be for others to maintain after I leave (I'm a contractor)? Does a proposed design decision limit future opportunities for this module's use? Does "brittleness" increase? Does this decision move the design further away from using Mongo/HBase/whatever in the future, or does it lessen the current impedance mismatch? The easy metrics are time and space, but the might not be the most important ones.

[mahmud]

I really enjoyed that. I am no MBA but a programmer who found himself as lead dev for a retail chain. Boss, owner, is MBA and we're pretty much learning off of each other.