Pioneered at MIT Sloan

The legacy of innovation and thought leadership established in the School's early days is alive and well today, as is evident by the constant stream of new theories, new initiatives, and new programs springing up across campus. Established just two years ago, the Entrepreneurship and Innovation program has become one of the most popular among students. The new Sustainability Initiative — and associated S-Lab — is pioneering new ways to think about the science and the business of sustainability.

Theory X and Y; Organizational Development

Early in its existence, MIT Sloan attracted top academics and began developing theories and practices that put the School on the world stage.

One of the most famous theories, Theory X and Y, was developed by Douglas McGregor, who came to the Institute in 1937 as MIT's first faculty member in the field of social psychology. According to McGregor's observations, effective managers basically have an optimistic view of human nature, which he called Theory Y. Ineffective managers, by contrast, tend to assume that people are lazy and unreliable. Consequently, these managers feel the need to put in all kinds of control systems and time clocks — all the paraphernalia of bureaucracy at its worst — and McGregor called that Theory X. Today, it's widely accepted that good management requires a Theory Y orientation.

McGregor, along with Professors Ed Schein and the late Richard Beckhard, went on to create the field of Organizational Development during the late 1950s and early 1960s. In 1965, Schein published one of the first textbooks on Organizational Psychology, whose third edition is still being used. "At the time, the field was called industrial psychology," he recalls. "So this term 'organizational' was quite an innovation, too."

Schein credits Professor of Management Lotte Bailyn and John Van Maanen, Erwin H. Schell Professor of Management, with creating the work/family/career development movement with him. While Bailyn has gone on to make work/life balance a specialty, Van Maanen has done much to legitimize the study of organizational culture.

Finance and Economics

MIT Sloan boasts several luminaries in the area of finance and economics. The late Professor Franco Modigliani is best known for having won the Nobel Prize in Economic Sciences in 1985. His contributions include the life-cycle hypothesis, which explains household savings-consumption behavior, and two theorems developed with Merton Miller in the late 1950s (the Modigliani-Miller theorems on corporate financing and valuation) for options pricing that provide analytical frameworks for understanding firms' capital structures.

The Black-Scholes-Merton derivatives pricing model was developed by the late Professor Fischer Black and Nobelists Myron Scholes and Robert Merton. When the model was published in 1972, it fueled an explosion of activity in derivatives markets. When its basic methodology was extended to create other financial instruments, the billion-dollar financial engineering industry was born.

Jerome and Dorothy Lemelson Professor and former MIT Sloan Dean Lester Thurow has been a visible economic pundit and commentator for more than 30 years. Thurow was one of the first proponents of cross-cultural educational efforts, resulting in MIT Sloan's key partnerships with some of China's leading universities. He has focused on the impact of knowledge industries on the global economy and what it will take for individuals, firms, and nations to succeed in the new economy and has written eight books on macroeconomic topics, including the well-known Building Wealth.

System Dynamics

Jay Forrester, now Germeshausen Professor of Management Emeritus, created the field of System Dynamics, which incorporates human behavior components into multivariable economic models. Forrester founded the System Dynamics Group in the early 1960s. He also invented random-access magnetic-core memory during the first wave of modern computers.

Marketing Science

MIT Sloan has made significant contributions to what has come to be called Marketing Science, which aims at producing more effective marketing strategies and decisions.

In the 1960s, Institute Professor John D.C. Little, built models of marketing phenomena to help managers make better marketing decisions. “The first online marketing model was called a Geographic Model of the Urban Automobile Market, programmed by one of our master's students and published in 1964,” he says.

Little cites others who shared his vision and model-building practice, including David Austin Professor in Management and former MIT Sloan Dean Glen Urban, Kirin Professor of Marketing John Hauser, and former Professor Al Silk. “We were the first to build marketing models with decision variables built right in, and were both praised and put down for that,” recalls Little.

Little was also involved in the early days of scanner data, those omnipresent bar codes that appear on almost everything sold today. In 1983, he published what turned out to be a seminal paper on the importance of scanner data to manufacturers, based on a model that he and a grad student created, which could predict future purchasing behavior based on past buying patterns.

In the mid 1970s, Urban launched his Assessor model, which predicted sales for packaged goods. More than 5,000 new products from giant companies like Gillette and Lever Bros. have been tested using the Assessor model. Urban was also a pioneer in information acceleration, using computer technology to predict new product success in future marketplaces.

Information Technology

John Rockart, Senior Lecturer, Emeritus, of Information Technology, is cited frequently by his colleagues for his innovations in the field of computing and Information Technology. Rockart also served as director of MIT Sloan's Center for Information Systems Research (CISR), which brings together corporate sponsors and IT faculty and research staff to study real-world issues in the management of IT. CISR is recognized for pioneering research in areas such as critical success factors, database architecture, decision support systems, and end-user computing, largely because of Rockart's leadership.

Alfred P. Sloan
MIT Sloan's initial benefactor, Alfred P. Sloan was an innovator. As chairman of General Motors, he invented the multidivisional company regarded as the management model for the corporate world. Mr. Sloan was committed to developing a close association between science and industry.