MIT Sloan’s Action Learning projects and accomplishments have garnered the attention of media outlets across the globe.
The China Post
“For many years, we spent most of our time carrying out charity projects,” said Albert Ting (丁廣欽), the director of Lawrence S. Ting Memorial Fund (LSTF, 丁善理紀念基金). “Now we realize that sharing that experience is equally as important.”
Every week, a business school professor, an expert in his or her field, defines key terms on FT Lexicon, our online economics, business and finance glossary.
David Schmittlein has been the dean of MIT Sloan School of Management since 2007.
Esra Unluaslan, MBA student, MIT Sloan, tells Diptiman Dewan that a hands-on experience is critical to gain competitive edge
The Times of India
Esra Unluaslan, Livia Lisker, Noam Bernstein, and Damien Peters, students of MIT Sloan School of Management, US and a part of a team, were in India recently through the annual India Laboratory at MIT Sloan.
The India laboratory is a part of MIT Sloan's initiative that combines classroom-based instruction with project-based learning under which a team of MIT students work with companies in India for two weeks.
"Our team of four students worked with One97 Communications and its subsidiaries that focus on telecom applications for cloud computing, on the growth strategy, including new market entry and marketing plans that will take the companies to the next level," says Unluaslan, a joint student of MBA at MIT Sloan and Master of public administration in international development at Harvard Kennedy School, US.
Unluaslan believes that working with a company allows students to learn directly from entrepreneurs and managers who are experiencing real-world issues in real-time—an experience that produces systemic change for the organization as well as helps in the personal growth for students.
"I learnt how businesses run in India compared to other countries and environments, which is key in a job market that looks for experience in the field in addition to education. Companies question students fresh out of school if they have the ability to apply their newfound practical knowledge into use, which is where this practical experience will be of great help," she says.
"Every company and situation is unique, and a real-time exposure through hands-on training and implementation of what a student learns in the classroom is what helps in the integration of theory and practice and helps gain a competitive advantage," believes Unluaslan.
Government supports the growth of the private sector as one of the key pillars that promotes social economic development, Clare Akamanzi, the Chief Operations Officer at Rwanda Development Board (RDB) told Massachusetts Institute of Technology (MIT) students.
MBA students point the way for Chinese firms
The Master of Business Administration (MBA) candidates from Tsinghua University and the Massachusetts Institute of Technology (MIT) yesterday (Mar. 30) presented the tables and graphics that they had spent weeks designing to senior consultants and clients at Tsinghua University's School of Economics and Management.
The presentations comprised four groups, each made up of four students from the two schools, renowned for their common pursuit of science and rationalism.
The presentation was, in fact a competition held by MIT-Tsinghua China Lab. The competition, which is collaboration between the two prestigious schools, aims to offer business students a taste of real-life experience beyond the rather more sheltered academic world. As the competition developed, it became clear that students were indeed broadening their horizons and sharpening their business antennae.
Vivien Xiong, the Chief Executive Officer from AE&E, a Geo-Microbial technology company based in Beijing, joked that, as a result of the students' presentations, her company's research costs had been cut.On a more serious note, Xiong, a two-time China Lab client, was struck by the students' research and analytical abilities.
She was mesmerized when the students compared AE&E's bacteria oil exploration technology with an improved X-ray machine which enables observers to see both the skeleton and muscles. They commented that the technology had a bright future, especially as a result of its ability to substantially cut oil exploration costs. The students also suggested that the company turn to a joint-venture model to leverage liability and reduce costs.
Despite its amicable and harmonious nature, the contest attracts its fair share of critics-some of whom focus their criticisms on the very amicability and harmoniousness of the contest. Fan Bin, a senior management consultant at IBM, and one of the contest's judges, commented that Xiong would get a completely different perspective if she hired a professional consulting company.
"The world of business consulting is different to what we see here [at the contest]," said Fan. "It's not such a friendly environment. You may be confronted by many challenges, in front of your customers, colleagues, and especially your competitors. But this is a good place to start."
Commenting on the benefits of the project, Laila Zemrani, a student from the Sloan School of Management who will graduate next year, said: "We get a very interesting project, a project that is actually a mixture of the knowledge we might bring, from outside of China, from the U.S."
For their competition entry, Zemrani and her teammates worked on remodeling the Tsinghua Business Review, an academic publication. They won the competition as a result of both their research and the spontaneous communication skills they demonstrated during their presentation. Their work on the magazine focused on increasing its popularity and profitability. Zemrani said that, her group devised a range of suggestions, including, using digital media, online media, and interactive communication techniques. They also raised the importance of coming up with new business models.
Michael Shafrir, Zemrani's teammate and schoolmate, suggested that the magazine should make itself less esoteric by shortening and simplifying its contents.
He said: "Our survey of readers and potential readers revealed that there is always a desire for short form content." Shafrir recognized the challenge of switching the academic magazine to online media platforms, as the Harvard Business Review has done.
According to Shafrir, the average length of an article in the print version of the Harvard Business Review is usually 5,000 words, whereas the online version would be trimmed to 500 or 700.
"We do see the forces of smart phone penetration," he said. "If Tsinghua Business Review was to provide content to optimize smart phones, not only computers, they would increase distribution, and bring academically-oriented content to an entirely new group of readers," he said.
The ideas and inspirations generated by the presentations cast a nostalgic air over many who, having previously graduated from MBA schools, now sat in the classroom as contest judges. Contest judge and Harvard Business School alumnus James Chang, now the Risk Consulting Partner of PricewaterhouseCoopers Consultants (Shenzhen Ltd), Beijing Branch, was one who was struck by the mood of nostalgia.
"[It] brings back memories of when I was at Harvard Business School," said Chang. "I just want to say that the Harvard Business Review is fantastic, I do want to see Tsinghua come up."
Market movements: Indonesia and its payment industry opportunities
Cards Now! Magazine (Indonesia)
In January 2012, a team of graduate students from the prestigious Massachusetts Institute of Technology Sloan School of Management's Global Entrepreneurship Lab (MIT Sloan G-Lab) worked with PrimaVista to study the payment industry in Indonesia.
Established in 2002, we are now the dominant player in this industry, providing innovative solutions, including credit card, debit card, bill payment, microbanking and contactless payment via VeriFone EDC terminals and customised services in Indonesia. The e-Banking and payment industry in Indonesia is ripe for explosive growth. Huge base of population needs secure and convenient means of conducting cashless transaction. PrimaVista has the required assets to bring this industry forward. The question that MIT Sloan helps to answer is - what's the best strategic approach to produce an end result that is beneficial for Indonesian market at large? We believe that the positive energy and expertise brought by the MIT Sloan G-Lab team will greatly impact the participating companies in gearing up, to spearhead the period of explosive growth of Indonesia. For the benefit of CardsNow! readers, PrimaVista and MIT Sloan jointly share a concise version of the macroeconomic findings and analysis.
Understanding Indonesia And The Opportunities
Indonesia is a true South East Asian melting pot, with five acknowledged religions, over 300 ethnic groups scattered over 17,000 islands. Indonesia has come a long way since post-Suharto era in the late 90s. The economic recovery triggered a major shift with rapid urbanisation, doubling the urban population in two decades from 40 million people to around 80 million. The urban population is growing at 4.4% per year as compared to national population growth of 1.7% per year. This urbanisation represents huge potential consumer spending and increased domestic consumption in the next 25 years.
The question remains - how did Indonesia get to the point where it is widely considered to the "next big thing"? While the Western world was entering a recession, Indonesia's economic growth has been hovering around 6% in the past five years. This GDP growth has led to a decline in poverty and helped ensure that the country is making progress towards a full-employment economy. The reason for this strong performance amid a global slowdown is that over two-thirds of GDP continues to be as a result of domestic consumption. The government took a number of measures including strengthening banking sector balance sheets and reducing bank vulnerabilities through higher capitalisation and better supervision.
When payment cards were introduced in Indonesia in the 80s, the vast majority of consumer transactions were cash-based. Card payment offers convenience as consumers can pay for goods or services without stopping to visit an ATM. This is especially important in developing countries such as Indonesia where there are only 1.3 ATMs per 100sqkm and only 22 per 100,000 of the population. Contrast this with Hong Kong where there are over 80 ATMs per 100,000 of its population.
Card Payment As National Development
The benefits of payment cards can be quantified. Moody's Analytics indicates that increases in private consumption that are attributable to card usage can help drive in GDP growth. Their study of 51 countries noted that card usage increased consumption by an average of 0.79% from 2003 to 2008. (For Indonesia this figure was 0.35% over the period but was from a base of 0% in 2003. In 2008 the impact was 0.65 %.) This increased consumer spending has a positive impact on GDP such that 1% more card usage translates to an average of 0.024% increase in GDP. As card usage is increasing rapidly in Indonesia, this could have a profoundly positive impact on the country's GDP.
For a developing country like Indonesia, card payment contributes to national development by expanding the customer market. Increasing the existing share of e-Payments in a country by 10% will generate an increase of 0.5% in consumer spending. Card usage broadens the access of greater population to the banking system. Cards are a gateway to the financial system for the 70% of the world's population which is currently unbanked (which is also in line with estimates for Indonesia). They also offer a source of working capital for start-ups. The small and medium-size enterprise sector in emerging countries can face difficulty accessing financing given the lack of angel investors and other forms of seed capital - credit cards can be an alternative financing source.
Other notable benefits of less cash and more cards usage include the reduction in the gray economy - cash payments are sometimes left undeclared as income, there is risk of replica bank notes and theft. Furthermore, cards can increase taxable income by creating an electronic audit trail. With an electronic audit trail comes a reduction in the risk of fraud - inherent in many e-Payment networks is the guarantee of payment for merchants and liability protection for cardholders in the case of fraud. These protections bolster confidence in the economic system, which can lead to greater overall consumption, particularly for high-value transactions.
Understanding the positive link between payment cards and economic development is reflected in the global penetration rates, as shown in the chart below. It shows the positive and sizable relationship between credit card penetration and economic development, as measured by per capita income. That is, countries with higher levels of economic development also have more credit card usage. The link between card usage and GDP per person is a correlation with a two-way causal relationship where higher economic growth encourages greater electronic payments usage which in turn, offer substantial micro and macroeconomic benefits that promote further economic development.
Indonesian Card Payment - Today And Tomorrow
When considering the conditions necessary for a truly successful card payments network, it appears that Indonesia is a country where there is high, but as yet unrealised, potential. We have seen that penetration is low. In 2010 there were only 13.6 million credit cards (around 5% of the working population) and 46 million ATM/debit cards (20% of the working population). The low penetration of the Indonesian market stands in contrast with many of its Asian peers. Indeed, at a growth rate of 20%, penetration will only be equivalent to one card per person in 2020 and a further five years before the equivalence to Hong Kong is achieved.
However, as is often the case with critical technological adoption, the uptake can be much quicker than the steady increase. When such a boom may occur is unpredictable. What is predictable though is that there will be very strong growth in the next few years, fuelled by a combination of growing purchasing power, greater availability and use, as well as governmental encouragement given their role in economic development.
Analysing the growth factors of nationwide card payment infrastructure, Indonesia is ripe for a period of rapid adoption. These factors include supporting regulatory framework from Bank Indonesia, the establishment of a National Credit Bureau, increasingly better telecommunication network coverage, and improving consumer education. However, looking at the card acceptance infrastructure, such as POS terminals, ATMs, bank branches, the Internet, mail order or telephone merchants, Indonesia still has a vast room to grow. Its 250,000 payment terminals (estimated as at end of 2011) is equivalent to slightly over 100 per 100,000 people. Hong Kong has over 10 times the penetration density, and the US around 3,250 terminals per 100,000 people. Applying an aggressive 20% annual growth rate of penetration in Indonesia, and only 5% in the more mature Asian countries, it will take two decades to reach a comparable density network, at approximately the maturity of the current US market.
Therefore, in order to enable mass adoption of cashless payment, which will support Indonesia's national development initiatives, the country needs concerted effort to rapidly establish a nationwide acceptance network. Only when the acceptance network and cashless payment adoption are reaching a certain point of maturity, then new payment technology advancements may create meaningful impact in a macroeconomic level. For example, NFC technology is already changing the way millions of people make payments. Leading payment providers such as VeriFone has started pushing NFC-enabled payment terminals. Approximately 10% of POS terminals shipped worldwide in 2010 had the NFC function. Growth is expected to be fast with NFC expected to increase to 33% by 2012 and 85% by 2016, with the growth driver being terminals that are integrated with smartphones. With NFC, the use of virtual card payment will become increasingly casual with micropayments - small transactions further replacing and reducing the use of cash in the society.
Practicing professionals are rarely presented with problems as neat and clean as those in the classroom. Real-world problems are often incompletely understood, vaguely specified, and connected to a variety of other issues in ways that only become apparent when one tries to solve the problem. Or to put it differently, the tools of the classroom are not sufficient to solve complex real-life problems.
Mens et Manus – mind and hand is the motto for MIT Sloan School of Management and something that is taken particularly seriously at the schools' Global Entrepreneurship Lab. "Students aren't thinking so much about getting a job in a big company, they are thinking about how to apply the skills they are learning" says Michellana Jester, manager of the action learning programmes at MIT, and they are able to do this to great effect through the G-lab.
The first steps to the internationalization process
The first contact that Kimberlit had with the Global Entrepreneurship Laboratory from the Massachusetts Institute of Technology, or G-Lab, was by Endeavor, an international nonprofit and that encourages new business.
"Endeavor gave us advice and told us about the program," says Antonio Carlos de Gissi Junior, CEO of Kimberlit, which operates in fertilizers market.
With its new product, which uses a lower quantity of product with an increase in its effectiveness, the goal for Gissi Junior was to enter the Chinese market, a large consumer of fertilizers.
The company has been in business for 22 years, but thought about the idea of going international until last year. With the help of four students, Gissi could develop three potential business models: export, in-country factory or a joint venture with a Chinese company. "In the beginning the most appropriate option would be starting to export and setting up an office in China," said the CEO.
The project ended in February and will be deployed in 2013, after many months of research and planning by Kimberlit, "They've understood the company's culture and the consultancy exceeded our expectations," says Junior Gissi.
Boo-Box is over the "hands" at MIT on two occasions: in 2009 and again this year. Mark Tanaka, CEO of the startup which specializes in advertising on social networks, says that MIT's program is extremely important for small and medium enterprises, not only because of the quality of the service offered, but because of the inability of companies to hire consultants. "A strategic consulting project for three months may come at a cost of millions of dollars," explains Tanaka.
The project developed this year is still a secret strategy for the company, but in 2009 the project was focused on an international plan for Latin America in countries like Chile, Mexico and Colombia. They started working from a new office in Argentina last July. "In 2009 it was only a dream, we had no way to do the internationalization," says Tanaka. "It was a job well done. It's the kind of consulting that companies need in markets that are complex and require deliberation before making the decision," he says.
For years, MIT's Sloan School of Management offered no degree to rival the master of finance programs at Princeton, Columbia, and Carnegie Mellon. That changed in 2008, when the university made finance its first new one-year master's program in more than 25 years. (It previously offered a finance certificate.)
MIT Students in Turkey
Global Entrepreneurship Lab (G-Lab) was launched by Massachusetts Institute of Technology (MIT) in the late 1990s. Providing groups of management, engineering and science students to meet business needs and gain experience on different business models, G-Lab is being led by Endeavor in Turkey this year.
MIT Sloan MBA students enrolled in the MIT Global Entrepreneurship Lab (G-Lab) program gain experience working on different business models in companies outside the U.S.A. and especially in developing countries. Projects are taking place at 36 different businesses in 17 countries during the 2011-2012 semesters.
Within the scope of the project led by Endeavor Turkey, four MBA students from MIT Sloan have been working with Endeavor Turkey’s Human Resources Management/Development Department. The study, based on Endeavor Turkey’s pilot programme, “Endeavor Exchange Programme”, will be carried out between Brazil and Turkey.
Roberta Pittore, Professor and Consultant at MIT Sloan Management School, stated that G-Lab is one of the global learning courses at MIT Sloan and explained G-Lab projects with these words: “It provides hands on consulting experience for second year MBA students by enabling teams to work closely with top management of international startups in solving real world problems. In this process, the students gain hands on experience in creating and running a new enterprise outside the U.S.A., often in emerging markets with challenging economic infrastructures.”
Who can attend the project?
All second-year MIT Sloan students are eligible for the project. Every company throughout the world who wants to participate must fill out an in-depth G-Lab questionnaire to be considered. Students review every company according to these questionnaires. Faculty and students then choose who will take part on their teams of four. Roberta Pittore states that a team needs one student with a firm grasp of the technology being used by the company and another who understands the country’s culture and infrastructure. The team whose skill set best matches the project secures the assignment. Through their exposure to new countries and companies, G-Lab may influence some students’ future career paths, says Pittore: “Many graduates of the program have found jobs or created their own businesses in emerging markets. Through the process, our students improve their skill sets as well as developing great networks that will help them after they graduate.”
Media: Sabah Daily (national daily newspaper; circulation 390,000)
MIT analyzed the business model in Trujillo
MBA students from MIT Sloan School of Management, one of 10 most important educational institutions in the world, went to the valley of Chao in the south of Trujillo, to analyze the business model developed by Fairtrasa and about 1,000 farmers in the area.
This visit was part of the agreement signed between the MIT Sloan and Fairtrasa. They want to see how to replicate the successful model in other parts of Peru and Latin America.
The agreement runs through the international internship "Global Entrepreneurship Lab (G-Lab)" which brings together students from different careers like management, engineering and science with emerging market producers, so they can share experiences and help them to meet the challenges of international trade, financing and negotiation.
Fairtrasa started operations in our country in 2009 and in 2011 they have reached about U.S. $ 10 million in sales. Currently, they are working in Trujillo with two small producer associations, which operate within the standards of Organic and Fair Trade Certification.
Patrick Struebi, Fairtrasa's founder, says that in Mexico, where production began, the gain of small producers has not been as high as in Peru. "The producers told us that they used to sell their avocados for S/. 1 per kilo and we could pay S/. 4. This is a significant increase," said Struebi.
The students came with the teacher in charge of G-Lab, Caroline Flammer, PhD in Economics from the University of ST.Gallen. They will analyze the Fairtrasa system to see what is the best way to replicate this model in other cities of Peru and other countries in Latin American.
MIT's Sloan School of Management is launching a capstone course for its Executive MBA programme that involves on-site, experiential learning at an overseas company, a class that school officials say is an attempt to redefine the standard "business school junket".