Favorite Schumpeter columns, Part 2

(I wanted to post this yesterday but I didn't find the time to write the post until now, sorry.)

The tussle for talent: the best companies are obsessed by the "vital few". (January 8, 2011) This article mentions cyclical vs structural attempts to recruit the best and brightest and discusses the book "The Talent Masters" by Bill Conaty and Ram Charan, which "provides a nice mix of portraits of well-known talent factories, such as GE and Procter & Gamble (P&G), along with sketches of more recent converts to the cause," all "proud of their elitism". High-flyers are selected for special training but also on-the-job stretch assignments. Also, "Successful companies make sure that senior managers are involved with “talent development”" and "integrate talent development with their broader strategy."

Built to last: Jim Collins has stayed at the top by practicing what he preaches. (November 26, 2011) Schumpeter applies the principles of management guru Collins to... Collins himself and his remarkable longevity in the management consulting world. Schumpeter comes up with the following reasons: (1) timing, (2) lots of data analysis (and buzzwords). "His central message... is admirably humdrum... After decades of minute observation, he concludes that hard work and perseverance matter more than genius." In his most recent book, "Great by choice", co-authored by Morten Hansen, he argues that turbulent times do not necessarily call for "bold and risk-loving leaders" and innovation is not "the only virtue that counts." But Schumpeter wonders whether his conclusions are really more than "clever hunches".

University challenge: Slim down, focus and embrace technology: American universities need to be more business like. (December 10, 2011) This is a fantastic article and I highly recommend to read it in its entirety. "[E]x-students have debts approaching $1 trillion... [but] America’s universities suffer from many maladies besides cost." Schumpeter includes as factors that have led to the current situation, universities' "inability to say no" (to "more courses for undergraduates, more research students for professors and more rock walls for everybody") and "Ivy League envy."

Here comes my favorite part: "Ivy League envy leads to an obsession with research. This can be a problem even in the best universities: students feel short-changed by professors fixated on crawling along the frontiers of knowledge with a magnifying glass. At lower-level universities it causes dysfunction. American professors of literature crank out 70,000 scholarly publications a year, compared with 13,757 in 1959. Most of these simply moulder: Mark Bauerlein of Emory University points out that, of the 16 research papers produced in 2004 by the University of Vermont’s literature department, a fairly representative institution, 11 have since received between zero and two citations. The time wasted writing articles that will never be read cannot be spent teaching."

The end of the article briefly mentions some institutions' efforts to address these issues.

How to make college cheaper: Better management would allow American universities to do more with less. (July 9, 2011) This is another excellent article that I highly recommend. Here is the lead paragraph: "Derek Bok a former president of Harvard, once observed that “universities share one characteristic with compulsive gamblers and exiled royalty: there is never enough money to satisfy their desires.” This is a bit hard on compulsive gamblers and exiled royals. America’s universities have raised their fees five times as fast as inflation over the past 30 years. Student debt in America exceeds credit-card debt. Yet still the universities keep sending begging letters to alumni and philanthropists."

Please read the full article for a discussion of the experiment of someone named Vance Fried at Oklahoma State University, who asked: "Is it possible to provide a first-class undergraduate education for $6,700 a year rather than the $25,900 charged by public research universities or the $51,500 charged by their private peers?" and his answer, as well as the cost-cutting strategies he proposes.

Building with big data: The data revolution is changing the landscape of business. (May 28, 2011) Excerpt: "Companies are assembling more detailed pictures of their customers than ever before. Tesco, a British retailer, collects 1.5 billion nuggets of data every month and uses them to adjust prices and promotions... Amazon, an online retailer, has claimed that 30% of its sales are generated by its recommendation engine (“you may also like”)." The McKinsey Global Institute argues that "[p]roperly used, big data could save the American health-care system $300 billion a year and the European public sector €250 billion." But Schumpeter also asks: "Will big companies and big governments use big data to trample on the little man? And is this mountain of data really as useful as MGI’s data-heads think?"

Comments

[Ilya Kipnis]

I think all of the concerns of costs of college are a bit of a red herring. Either a college degree allows a graduate to get a job that pays for the costs of the degree, or it doesn't. The real problem is the lack of jobs, and that the entire process is based around a cover letter, as well as brand names and keywords on a resume.

There are very rarely if ever cases when a company allows candidates to show their qualifications as opposed to tell them and then leave the process in the hands of people who are too inept, tired, or otherwise unqualified to assess a candidate's capabilities. And that's without even taking into account the fact that whatever happened to training new hires?

Also, what ever happened to the fact that not everyone is a star out of the gate? Not everyone can be the absolute best and brightest. There's always a bigger fish. And even when there isn't, the entire theory of "a good candidate will eventually be successful" is also in my opinion baloney. Even in the case of objective visual evidence of excellent qualifications, people are constantly overlooked.

Right now, I think the biggest issue isn't costs, but about the availability of jobs to pay for those costs. Especially for my generation.