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August 2010

Best Of

Since I'm busy preparing for the upcoming semester and won't have time to write anything new for a few more days, I thought I'd provide links to some of my most viewed posts:

Enjoy!

On Smart Pens

(Updated March 2011: if you are interested in innovative tech gadgets, please consider supporting the following project by a Lehigh U young alum, who needs $1,100 in pledges by March 10 for a wall mount for iPods iPhones etc http://kck.st/hBxLUi A $15 pledge gets you a pre-order on his product called the Dockem, if a total of $10,000 or more is raised by the deadline. For more info on the Dockem and entrepreneurship at Lehigh, also check out http://bit.ly/gZhNki )

I was at a BestBuy in Bethlehem, Pa a few days ago when I noticed, prominently displayed near the entrance, a shelf of "smart pens" - those pens that can record what is being said around you and create a PDF file of your notes, all this for the relatively small price tag of $199 (I believe this was the product being sold). This surprised me because, as my department chair explained last year when it emerged a student might have been using a smart pen in class, taping conversations without the consent of all parties is illegal in Pennsylvania. Not only is it illegal, but it is a third-degree felony.

While I doubt lawmakers intended to target students trying new ways to better understand the material, this could land them in a lot of trouble. I wrote a post about it last year; the main idea is that Pennsylvania is a "two-party consent state" (so named for the days where electronic conversations were made by phone, with only two parties involved), while some other states are "one-party consent states", which means people can record conversations without the knowledge or consent of the other parties involved.

I now warn students every year that they cannot use smart pens unless everyone in class consents to being recorded, and really, if there is something they don't understand, they are better off dropping by during office hours and asking me questions directly anyway. The website of the Reporters' Committee for the Freedom of the Press indicates that the Pennsylvania statute was set to expire in December 2008, but this page from the website of Pennsylvania's Attorney General suggests the statute remains fully in force.

The product at BestBuy was clearly labeled as a smart pen with, on the piece of cardboard giving the product name and price, a two-line description emphasizing the benefits of being able to tape meetings and organize one's notes. (I don't remember the exact words, but if you are local and want to check for yourself, I'm talking about the BestBuy at the Southmont Shopping Center.) I guess maybe BestBuy's central marketing office doesn't know about the rules in Pennsylvania, but I thought it not completely appropriate to advertise a product for a use that is not legal in the area where it is being sold, without warning about the legal issues. (I would hope that there is a warning in the user's guide, but people will only read it once they've bought the product and opened the box.)

Let's face it: if you feel the need to play back to someone a conversation between the two of you that you have taped, you are probably not on the best of terms with that person to begin with - so imagine his glee if you committed a felony without knowing it, simply by trying to document his untrustworthiness; that kind of person would be delighted to get you in trouble with the law. (This would beg for a Dilbert comic strip if the issue wasn't so fraught with consequences for the unwitting offender.) Such pens may be "smart", but in Pennsylvania, using them could be rather dumb.


Dell's OptiPlex Problem

I've been following with interest the media coverage of the lawsuit Dell faces about faulty OptiPlex computers, not only because I use an OptiPlex at work, but because it suffered from the exact problem Dell is now getting sued over. (See for instance Suit over faulty computers highlights Dell's decline from the New York Times, June 2010, Management's Disaster Clock from The Atlantic and Dell accused of concealing evidence in PC suit, from the New York Times, August 2010).

I - using funds from my Lehigh start-up package - purchased a Dell OptiPlex in late August or early September 2004, and returned from a week-long trip in May 2006 to find my dear computer with what we call in the business "the blue screen of death". (If you've ever seen the BSOD, you know exactly what I'm talking about. If you're lucky enough not to have ever faced the BSOD, let me describe it as a primary-color blue background with DOS-type white characters that remind you of an earlier age of computing and announce in fancy technological jargon that there is a massive problem with your computer.)

The computer was still under extended warranty, so Lehigh's Technology Services specialists came to pick it up. (Under some kind of agreement, LTS is accredited to repair Dell's computers on-site rather than shipping them elsewhere, thus saving considerable time to the staff and faculty whose computers broke down and who want them back as fast as possible. They're great.) Later, the tech specialist returned with the news that none of the files could be salvaged because of a leaking capacitator, which had required a new hard drive and motherboard to be installed. Oh, and when I asked if that was something that happened often, he said that the problem was well known and Dell was discontinuing that model (or that production process - I don't remember his exact words; it was four years ago). Since I had only backed up the handful of files that were really, really important for my research, and not the many files I used in my courses or even in smaller research projects, I ended up losing a lot of files and wasted a lot of time the following year rewriting documents from scratch. I was a little peeved that no one had bothered to tell Dell OptiPlex users of the problem, if it was so well-known.

The second New York Times article gives the following description of the issue: "The problems with Dell’s OptiPlex business PCs were part of an industrywide dilemma caused by so-called bulging capacitors. The capacitors cost just a fraction of a penny each and helped control the flow of electricity to various computer components. Bad batches of these capacitors burst at their seams when they overheated, leaking fluid that caused further problems with electronic components."

Four years later, my Dell OptiPlex has not crashed again and, while it has become really slow and I am about to get a new desktop, I've got to say I've been very happy with it. It does annoy me to read things in the latest New York Times article such as: "[The vice president for investor relations, Lynn Tyson] told the executives [in an August 2005 email] that the public would hear that “the problem poses no risk of safety or data loss for our customers,” that “we have been working with our customers to resolve problems in the most effective manner possible” and that “we’re committed to fixing any systems that fail.” "

Again, my computer crashed almost a year after that email, and I never heard about any potential problem with my OptiPlex until I lost all my data and the tech specialist mentioned the issue was well-known. I ordered my computer directly from Dell using Lehigh's page and my order included my contact information. It's not really that difficult to alert customers who purchased an OptiPlex that there might be a problem - I remember that when Dell came under the spotlight for its laptop batteries that could catch fire, I did receive an email from LTS about it. Dell could have offered to replace the leaking capacitator before any breakdown, a move definitely cheaper than having to pay for a motherboard and hard drive and LTS's labor costs.

So I do hope that the lawsuit will shed some light onto what Dell executives and employees really knew about what was going on, and that Dell will treat its customers better in the future. But as I get ready to order a new desktop before the new academic year starts, I do believe I'll buy a Dell OptiPlex again. Mine has been a workhorse, in spite of the many programs that I've installed on it and that I often run simultaneously. I've also owned two Dell Latitude laptops, which are just as sturdy and reliable as the desktop, although I've used them heavily. I do believe people should get an extended warranty on their computers, Dell or otherwise, because you never know what might happen. But as far as business computers go, I still think the Dell OptiPlex is a great choice.


Revenue management: Met vs MoMA

I wanted to title this post "Revenue Management: Mets vs MOMA", in reference to the Metropolitan Museum and the Metropolitan Opera, but didn't want to disappoint the baseball fans in the revenue management community. Anyway, I was at MoMA recently for a Matisse exhibition, and enjoyed viewing the show before the museum opened to the general public - this is a new perk all members, not just the big donors, get to enjoy, and a very worthwhile one: on the day I visited, I found only a few people in the Matisse galleries with me, while crowds of museum-goers quickly filled the space at 10.30am sharp. At $75 a year for individuals, MoMA membership pays for itself with only one visit every three months. (Regular admission is $20.) In addition, all museum-goers can pick up an audio guide for free. One complaint I have about MoMA is that it doesn't rehang paintings very often, so that visitors who come back within a few months see the same paintings on view on the fourth and fifth floors; that does not exactly encourage repeat visits. On the other hand, access to the museum is free on Friday evenings after 4pm, thanks to funding provided by the Target company.

In contrast, the Metropolitan Museum does not let its members visit special exhibitions for free outside the museum's regular hours, or at least not the individuals who only pay $100 a year for unlimited admission - the lowest level of membership (as an aside, I believe it increased recently from $95). In its defense, the Metropolitan already opens at 9.30am, rather than 10.30am like MoMA, but I'm sure members would be willing to show up on Fifth Avenue by 8.30am to see Picasso with smaller crowds. (For Picasso, you could probably make that 5am, but I digress.) What I find aggravating is that the museum charges everyone for audio guides. The rates used to be $7 for non-members, $6 for members. I believe a new program lets you have one free audio guide for four or five paid ones; maybe I'm supposed to find this exciting. In contrast with MoMA though, the Metropolitan Museum only suggests that people pay $20 for admission. Of course, the Metropolitan is far bigger than MoMA and benefits from a much more extensive and wide-ranging collection, so MoMA's admission price is very steep compared to the number of works of art on view and the Metropolitan is a bargain. Individual membership at the Metropolitan will pay for itself with five visits a year, and the museum provides enough art on display to make all five trips worthwhile. I find these two distinct implementations of revenue management just fascinating, although I can't decide whether one is superior to the other.

To finish, I'll mention the new revenue management strategy of the Metropolitan Opera, which has hiked ticket prices up for the 2010-11 season - admittedly, the prices had not changed for four years - and also redefined sections on the floor plan (for instance, the first row used to be Orchestra Prime and has become Orchestra Premium.) From the press release: "After four years without any across-the-board increases, ticket prices for the Met’s 2010-11 season will go up an average of 6% for subscription tickets and 11% for individual tickets." Since this is only an average, I would be curious to know the percentages by category. Orchestra Premium tickets now cost $330 a piece, Orchestra Prime and Prime Side $245 each; imagine paying that much money to find a very tall opera-goer or unruly kid in front of you. This will make the Met's wonderful Live in HD program - a real bargain in any circumstances - even more enticing to opera-lovers.


Teaching grads vs undergrads

I teach a lot of seniors and Master's students, in two optimization-related courses, and while I expected at first that students would perform very similarly (how much of a difference can a few extra months make?), it turns out that the reality is much more complicated than that.

I've been told - and I'm not sure about the types of courses the statement applies to, but it makes sense - that instructors often receive better grades for graduate-level courses. A possible reason could be that courses in the graduate curriculum are much more closely related to the main field of study than at the undergraduate level, so a student pursuing an advanced degree will (hopefully) be much more interested in the courses he has to take. In contrast, engineering undergraduates must put up with a wide range of courses, including required credits in humanities and social sciences to fulfill "breadth" requirements. The graduate curriculum goes in more depth than the undergraduate one and is narrower too - engineering graduate students don't have to study English or economics; even the courses they take outside their home department are relevant to their training. So students' interest in any given course is probably superior at the graduate level than the undergraduate one. This might explain the higher grades in the evaluations.

Another possible reason is that a lot of engineering graduate students come from abroad on student visas, while undergraduates are mostly Americans or permanent residents. Asian countries in particular send many students to the US to further their studies; the prevalent attitude in those countries is often that students should treat their teachers with respect. (To give an example, Thai students bow to their teachers as a way of greeting them. It takes some time getting used to.) Such students are unlikely to be very harsh on their teachers when they fill the evaluation forms. Domestic students tend to view themselves more as customers, because of the tuition costs, and evaluate accordingly.

Interestingly, until this year, my evaluations didn't fit this trend at all: I consistently received better grades for my undergraduate course than my Master's one. I was lucky enough to develop early on a senior elective that was well-received and that I liked, so the course came close to "steady state" after only one iteration. I still add new problems to the handouts and change all the assignments and quizzes every time, but the material we cover is similar to what I presented two, three, four years ago. The Master's level course has proved more challenging. I've only come within sight of steady state this semester, and there are still many things I want to change. (You can see the Spring 2010 summary for my Master's level course, Financial Optimization, here, and, as an example, the Fall 2007 summary for my senior-level course, Optimization Models & Applications, there.)

I think the biggest challenge in teaching Master's students is that their backgrounds are so diverse. When you teach undergraduates (in their field of major), you know what your colleagues have taught them and they end up a fairly homogeneous group. It's a lot more difficult to evaluate Master's students, especially in the Analytical Finance program where I teach, which attracts a wide range of applicants - some students might have excelled as business majors in college but their exposure to optimization problems has been limited, others have been out of school for a few years before coming back for their degree, some have outstanding modeling and computing skills but struggle because of the language barrier. The course is also open to non-Analytical Finance students in our department, which adds a layer of complexity since many of those students aren't familiar with the financial terminology, which the others are used to and don't necessarily want to waste time reviewing. It's very difficult to create a course that all students find of value despite the disparity in their training, and I'm glad it seems that (after five tries) I've finally found a way to do that, although I still have many ideas to improve the course.

What my experiences teaching Master's students and seniors have in common, and what makes them so rewarding, is that both courses are geared toward real-life applications of optimization models; I like thinking that they help students perform better in the workforce. But maybe my courses get high evaluations because my handouts provide such prime material for origami. 


"Switch" by Chip Heath and Dan Heath

I recently read Switch: How to change when change is hard, by Chip Heath and Dan Heath. Here is my one-sentence review: The book is so good I feel sorry the authors have to sell it at the same price as the other hardcovers out there. If that's enough to convince you to give it a try, great. Otherwise, read on.

Some of you might have heard of the Heath brothers already: we owe them another bestseller, Made to Stick: Why some ideas survive and others die, which I haven't read but has received very positive media coverage; Chip Heath is a professor at the Graduate School of Business at Stanford University and Dan Heath is a senior fellow at Duke University's Center for the Advancement of Social Entrepreneurship. Switch is said to have debuted at #1 on the New York Times and Wall Street Journal best-seller lists, and deserves all the acclaim heaped on it.

The book builds upon an idea found in The Happiness Hypothesis by Jonathan Haidt (another bestseller), specifically, that "[t]he mind is divided in many ways, but the division that really matters is between conscious/reasoned processes and automatic/implicit processes. These two parts are like a rider on the back of an elephant. The rider’s inability to control the elephant by force explains many puzzles about our mental life, particularly why we have such trouble with weakness of will. Learning how to train the elephant is the secret of self-improvement." (This quote is from the chapter-by-chapter summary on the Happiness Hypothesis website.)

The Heath brothers augment this framework by contributing a step-by-step, concrete approach to change based on the concepts of the rider and the elephant. The one-page summary is available at the end of the book and on the website after registration to the authors' email list; registration provides access to a significant amount of free resources for both Made to Stick and Switch. Here is the framework in a nutshell (the one-page summary has more details and explains the terminology):

  • Direct the rider: follow the bright spots, script the critical moves, point to the destination.
  • Motivate the elephant: find the feeling, shrink the change, grow your people.
  • Shape the path: tweak the environment, build habits, rally the herd.  

If you haven't read the book, those expressions won't make a lot of sense. (For instance, "script the critical moves" refers to the fact that you have to remove ambiguity in order to get people to act. The authors use the example of a weight-loss campaign in West Virginia. Instead of just telling residents to lose weight, which would have been confusing and counter-productive because the goal can be achieved in so many different ways, researchers at West Virginia University orchestrated a media campaign with the message that Americans should drink low-fat milk instead of whole milk. [Apparently there is as much saturated fat in a glass of whole milk as in five strips of bacon.] The instructions were simple, easy to remember and truly impacted the residents' buying habits at the grocery store. Buy low-fat instead of whole milk; no grey area allowed.)

But the fact is, if the book could be summarized in one page, it would make for a good magazine article but not a very interesting book. Switch's appeal lies not in its quick three-step formula, but in the abundance of real-life stories the authors share to make their point. It wouldn't do justice to the examples, and the extended treatment they receive in the book, to try to summarize them in a sentence or two here, so I'll just enumerate a few with page numbers, for those of you who are interested: how scripting critical parenting moves helped reform 80% of child abusers taking part in a study - twice as much as traditional anger management classes (p.63-67), how a Teach for America teacher turned a class of underperforming first-graders, who were lacking basic kindergarten skills when the school year began, into thriving "third-graders" by the time it ended (p.73-76), how returning to a drug-free environment helped almost all Vietnam war veterans who had become addicted during their tour quit using drugs, so that the epidemic the US government feared did not happen (p.203-207).  

The field of operations research and management science is even mentioned briefly when the authors describe the prowess of Gerard Cachon, then editor-in-chief of the Manufacturing and Service Operations Management journal, as he "rallied the herd" and succeeded in having most referees hand in their reviews substantially faster than before (p.229-32). 

(As a side note, thanks to the book, I learned about Clocky, "a clock for people who have trouble getting out of bed. When the snooze bar is pressed, Clocky rolls off the table and finds a hiding spot, a new one every day." I loved the idea, and it came as no surprise that the inventor, a fellow MIT alumna, had studied at the Media Lab. You can see pictures of Clocky by following the link above.)

Switch is extremely well-researched and draws anecdotes from many fields, from social services to health care to management, which will make it appealing to a wide range of readers. It is, without a doubt, one of the best business books of 2010 so far.


More highlights from HBR

Here is the second part of my post on the July/August 2010 issue of HBR. (First part is here.)

  • The Execution Trap, by Roger Martin, the dean of the Rotman School of Management at the University of Toronto. "Drawing a line between strategy and execution almost guarantees failure." The author suggests that, instead of viewing top management as the "brain" and low-level executives as the "hands", companies should envision a "white-water river, where choices cascade from the top to the bottom." Upstream decisions are broader and more abstract, while downstream employees "are empowered to make choices that best fit the situation at hand."
  • Power Play, by Jeffrey Pfeffer, the Thomas D Dee II Professor of Organizational Behavior at Stanford University's Graduate School of Business. "Any new strategy worth implementing has some controversy surrounding it and someone with a counteragenda fighting it. When push comes to shove, you need more than logic to carry the day. You need power."
  • An interview of Starbucks CEO Howard Schultz by Adi Ignatius. (For more information about Starbucks's revival, Economist subscribers can read this February 2009 article, about the company's foray into instant coffee, and this positive September 2009 article on the turnaround.)
  • Are You Ignoring Trends That Could Shake Up Your Business?, by Elie Ofek, TJ Dermot Dunphy Professor of Business Administration at Harvard Business School and Luc Wathieu, currently holding the Ferrero Chair in International Marketing at the European School of Management and Technology in Berlin. The authors present three strategies to address the impact of trends: (1) "infuse and augment" (e.g., Coach introducing lower-priced handbags), (2) "combine and transcend" (e.g., Nike with the Nike+ sports kit and web service), and (3) "counteract and reaffirm" (e.g., iToys when it developed a video game encouraging children to be physically active).
  • Innovation's Holy Grail, by the late CK Prahalad, who was the Paul and Ruth McCracken Distinguished University Professor of Strategy at the University of Michigan's Ross School of Business, and RA Mashelkar, a former director general of India's Council of Scientific and Industrial Research. "Affordability and sustainability are replacing premium pricing and abundance as innovation's drivers, but few executives know how to cope with the shift." The authors argue that, while Western executives struggle with this challenge, some companies in developing countries such as India are leading the way "by practicing three types of 'Gandhian innovation.' "