Saturday, March 29, 2008

Something I'll be thinking about a lot over the next year

Do I want to go to business school? (HBS turns 100 in April and this article made me think of it) I never thought I would want to. I always thought it was a degree where you didn't learn a ton, and what you did learn you could learn elsewhere. But now my consulting experience is making me at least consider it.

I've known since I was very little that I would want to go to grad school. When I was younger, I thought I might want to be a doctor. But starting in high school and then accelerating in college, I became more and more interested in economics. A PhD in economics started sounding appealing, and I even took grad courses in econ to test it out. I love the logical approach that economics takes, and a PhD lets you practice that at the highest level. But I needed to experience the real world approach first. Hence my current consulting gig.

Now I am seeing the differences in the academic vs. real-world approach. The academic approach focuses on getting the 100% answer and proving it beyond a doubt. When I worked on my research paper, this even became quite annoying, as I found the mathematical rigor required to be excessive.

Now turn to consulting, where the opposite is the case. You want to get the 80% answer as soon as possible (in 20% of the time, as consultants famously say), and then you want to make the most of the insights.

It was simply liberating early on my first study here. One event opened my eyes. We noticed an opportunity in the way trains were built. As you build a train, you link cars full of cargo and then you put locomotives at the front. The number and strength of the locomotives you need depends on the total tonnage, and there are specific thresholds that, once you pass, will necessitate an extra locomotive. 10,000 tons is one such threshold. So a train that is 10,000 tons will require 3 locomotives, but a train that is 10,100 will require 4. Locomotives are very expensive (think $2 million each). So if you're about to go over a threshold, you should do 1 of 2 things - either not pass that threshold, or pass it so far you butt up against the next threshold to maximize the use of the locomotive. But the railroad wasn't paying enough attention to the tonnages, which meant it wasn't getting the most of its locomotives.

So in an academic setting, this would require mounds of data, extensive documentation, extensive statistics, and then endless discussion. Instead, I gathered basic data for 300 trains and made a slide. The whole process took a few hours. We put that in front of the executives, and the next week the railroad changed what it was doing.

The bias towards action here is palpable and refreshing. It has me thinking if I would really enjoy being an academic. Academics spend a ton of energy on getting the conclusion, but then rely on others to make the most of it. On the other hand, I really enjoy making the most of insights.

I still don't think you particularly learn a ton at B School. The primary purpose as I understand it is to network and meet recruiters, as well as be a signal. But there are other benefits. For people who just spent 2 or 3 years in intense consulting gigs, it's a break from the hectic life. They pack it full of vacations and enjoy themselves. You can pursue side passions, read more, develop new interests. And two years really isn't that long, as where 5 certainly is.....

So we'll see. Who knows, I might end up at B School at some point, all of my criticisms be damned.


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