MIT Sloan Fellows Blog

The MIT Sloan Fellows Program has educated some of the world's most influential leaders. With this blog we look to share the collective wisdom of our global community of alumni and faculty. Stay tuned to find out what's happening on the international frontier of business and industry.

Entrepreneurship: Anatomy of a Dream Team

Surround yourself with like-minded people. Bring in as many different perspectives as you can. Fuel creativity by promoting tensions. It seems that every expert who weighs in on the composition of the perfect management team offers up a different recipe. We polled a number of entrepreneurial gurus and asked them to tell us who should be at your right hand when you’re about to launch a new enterprise.

Emily Reichert

A diverse mix, says Greentown Labs CEO Emily Reichert, PhD, SF ’12. She says the head of a startup needs to entertain a steady stream of different perspectives. If your management team is diverse, she believes, you’ll have a better chance of generating fresh ideas and solutions. “The strongest teams are those that represent multiple cultural and professional perspectives—technical, managerial, marketing. That way, all facets of your business are being addressed during the decision-making process.”

Jag Gill

Jag Gill, SF ’13, founder and CEO of Sundar, a global apparel startup, notes that many investors value CEOs who are outside the industry in which the enterprise operates. Although she had advised clients in the world of apparel and had exposure to the industry, Gill herself had a background in finance before launching Sundar. “One thing that someone from outside the industry brings to the table is an impulse to ask why. They haven’t become comfortable with the status quo, so they don’t just accept things the way they’ve always been. They are always asking, ‘Why do we do things this way?’ That reality check is exactly what a business needs to compete and stay healthy.”

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Stress—a Good or Bad Sign in an Employee?

Will the calm, cool, and collected applicant turn out to be a better employee than the person who exhibits stress? Traditionally, companies have tended to think so. In fact, many industries conduct stress tests with current and prospective employees to see how they perform under pressure. Those who remain calm during the simulations are commonly seen as the best fit for stressful on-the-job situations.

Juan Pablo VielmaMIT Sloan professors Juan Pablo Vielma and Tauhid Zaman and graduate student Carter Mundell beg to differ with the conventional wisdom. By measuring galvanic skin response (GSR) over the course of an increasingly difficult exam, the three researchers came to the conclusion that those who perform best under duress actually exhibit some degree of stress when the stakes are lower.

Lie detector technology predicts success

GSR, which is used in polygraph tests, measures changes in skin resistance owing to sweat—a relatively easy way to measure stress, as the body’s sweat glands are connected to the central nervous system. In their paper “Predicting Performance Under Stressful Conditions Using Galvanic Skin Response” Vielma, Zaman and Mundell note that, in the past, the study of stress has focused on understanding it as opposed to predicting it. “Everyone else was looking at, ‘Why are you stressed now?’ We stumbled on whether they would be stressed in 10 minutes.”

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A robot can drive you to work, but can it advise you on your finances?

The founding father of artificial intelligence Marvin Minsky once said that his ultimate goal was not so much to build a computer he could be proud of as to build one that would be proud of him. MIT Sloan Professor Andrew Lo mentioned this anecdote in a recent piece about financial advisers in The Wall Street Journal. In essence, he poses the question: Can a robot do the job?

Andrew LoLo says that while tech-savvy millennials would be just as happy interacting with an app as with a human adviser, robo advisers can’t take into account the emotion of investors. “When the stock market roils, investors freak out,” Lo explains. “They need comfort and encouragement.” During the recent stock-market rout, he notes that Vanguard Group was so besieged with calls from jittery investors it had to pull staff from across the company to handle the call volume. “Investing is an emotional process,” Lo says, and “robo advisers don’t do emotion.” At least not right now.

Integrating human feeling into the digital advising process is probably the greatest challenge of financial technology. Lo likens the present state of digital financial advising to a rotary phone in an iPhone world. He points out that investing is much more complex and nuanced than tasks like driving, “which is why driverless cars are already more successful than even the best robo advisers.”

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Augmented Reality Summit at MIT Media Lab brings the world’s AR pioneers together on the AR frontier

ARAugmented reality (AR)—a cousin to virtual technology—is quickly making itself indispensable in fields like medicine, architecture, industrial design, and entertainment, especially gaming. For those interested in leveraging the possibilities of AR, MIT’s annual Augmented Reality Summit is the center of the known universe.

AR in Action takes place at the MIT Media Lab January 17 and 18, 2017. The summit convenes the top minds in the augmented reality ecosystem, a diverse group of renowned thought leaders, visionaries, Fortune 100 executives, futurists, technologists, and AR practitioners, including Ethernet inventor Bob Metcalf and personal computer pioneer Alan Kay. Together, they will explore the challenges and opportunities that face inventors, integrators, investors, and other innovators working to bring the benefits of AR to the world.

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MIT Sloan’s Jay Forrester, change-maker and inventor of system dynamics, dies at 98

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Jay Forrester “standing on top of the fruits of his many careers. He’s standing on a device that integrates servomechanisms, digital controllers, and a sophisticated feedback control system.” MIT Sloan Professor John Sterman

“From the air traffic control system to 3-D printers, from the software that companies use to manage their supply chains to the simulations nations use to understand climate change, the world in which we live today was made possible by Jay’s work.” MIT Sloan Professor John Sterman is talking about legendary system dynamics pioneer Jay Forrester, who died November 16 at the age of 98. [Read the full tribute in MIT News.]

A mid-century invention, system dynamics (SD) is the analysis and redesign of any interdependent social, managerial, economic, or ecological system. SD has gained legions of adherents over the decades, and Forrester worked to develop new iterations almost up to the time of his death.

The dynamic Midwesterner arrived at MIT in 1939 with a degree in electrical engineering from the University of Nebraska and quickly grew to become a key actor in the development of digital computing and the national air defense system. He also led Project Whirlwind, a pivotal digital computing project, which led him to invent magnetic core memory, an early form of RAM. Forrester joined MIT Sloan in 1956 with the goal of applying his background in science and engineering to the essential issues that determine the success or failure of organizations.

“To me, Jay was MIT,” MIT Sloan Professor Nelson Repenning observed in a recent MIT Sloan tribute to Forrester. “He showed up to work on gunsights and radar mounts for the U.S. military, ended up playing a pioneering role in digital computing, and suddenly became a social scientist. I can’t imagine that happening anywhere else. It was the perfect match of a unique person [and institution].”

Forrester’s initial SD investigations were calculated by hand. He assembled a team of graduate students to interview employees in a company about how they made decisions at their individual operating points. “By tapping the wealth of information people possessed in their heads,” Forrester said, “we were able to build a model that revealed overall organization behaviors that resulted from the interconnected actions of many local decision-making individuals.”

In the late 50s and early 60s, Forrester and his students began building their simulation models with computers. By translating the policies, information flows, and interconnections of a company into computer instructions, they were able to create a model that could act out individual roles at each decision point. The computer would then feed the results of those actions into other connected decision points, allowing the model to generate the basis for its next round of simulated decision-making. The technology enabled the team to create a laboratory replica of a company that could be used to observe the behavioral consequences of company policies. “What we showed,” explained Forrester, “was that the policies believed to be the solution to the company’s problems were, instead, the cause of those problems.”

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Thomas Kochan offers a new way of working in Shaping the Future of Work

ThomasKochanThe working models that made sense for post-World War II employees do not necessarily work for the employees of today, and MIT Sloan Professor Thomas A. Kochan believes it’s about time those models were updated to fit a dramatically altered world. In his latest book, Shaping the Future of Work, Kochan outlines the steps that business, government, and academic leaders must take so that workers can perform their best work and prosper. These steps, he contends, are necessary for companies to realize positive outcomes and national economies to thrive.

Kochan’s goal is to inspire the creation of more productive businesses that provide good jobs and successful careers, resulting in a more inclusive economy and more broadly shared prosperity. But to revamp the system, he says, workers must acquire new sources of bargaining power and business, labor, government, and educational leaders must work together to meet the challenges and opportunities facing the next generation workforce.

In a recent interview with MIT Sloan News, Kochan raised the example of the Market Basket grocery store chain, where workers staged a successful walkout two years ago after the pro-worker CEO was fired. “It’s going to require a massive effort on the part of the public to do what we saw at Market Basket—to say, ‘This is the kind of company we expect to have competing here in the United States.’”

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The Engine: When you realize you can change the world—but that it may take awhile

Venture capitalists and entrepreneurs lean toward immediate gratification. So does the pharmaceutical industry and, for that matter, society as a whole. Unfortunately, inventions that require a long lead time to develop are often overlooked in favor of projects that promise a quicker pay-off—a phenomenon that may well be holding back disease cures and energy solutions. MIT is stepping up to address this issue with a pioneering new enterprise called The Engine, which will provide funding, expertise, and physical space to innovators studying breakthroughs that may take a bit longer to commercialize.

Picture1MIT President L. Rafael Reif announced the initiative in late October 2016 at The Engine’s headquarters in Central Square, Cambridge. He noted that many innovations never leave the lab because companies have difficulty finding financing. The Engine, he said, will power a grid of innovation networks, supporting startup companies working on scientific and technological breakthroughs that have the potential for transformative societal impact.

“If we hope for serious solutions to the world’s great challenges,” Reif said, “we need to make sure the innovators working on those problems see a realistic pathway to the marketplace. The Engine can provide that pathway by prioritizing breakthrough ideas over early profit, helping to shorten the time it takes these startups to become ‘VC-ready,’ providing comprehensive support in the meantime, and creating an enthusiastic community of inventors and supporters who share a focus on making a better world. We believe this approach can offer exponential growth to regions that pursue it successfully — and we want Greater Boston to lead the way.”

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What bumps in the road lie ahead for autonomous vehicles?

Rubber bumpers, airbags, shatterproof windshields—such were the hallmarks of vehicular safety before the advent of the driverless vehicle. For the passenger in a driverless car, however, it’s the software, first and foremost, that must be crash-proof. In a recent editorial in Xconomy, Lou Shipley, a lecturer at the Martin Trust Center for Entrepreneurship at MIT Sloan, cautions that in the production of autonomous vehicles, the management of software supply chains must be as reliable as the rigorously tested supply chains for mechanical parts.

Lou Shipley“Beyond being efficient, software providers for driverless cars will surely face requirements to certify that the code they deliver is free of security vulnerabilities that, if exploited, could enable a hacker to seize control of the vehicle,” Shipley says. “A faulty spark plug is one thing. Suddenly having your steering, acceleration, and braking hijacked is quite another.” He points out that many software fixes will take place remotely, the way that an Apple technician in Cupertino can now patch an iPhone in Sri Lanka—via cyberspace.

Bottom line, Shipley says, the success of autonomous vehicles will depend on whether drivers feel comfortable giving up the wheel. “Motorists’ willingness to hand over that control to software will depend largely on carmakers’ ability to gain their trust.” He notes that consumers have already shown some comfort with automated transportation. “Airline passengers today don’t seem to worry about automatic pilots guiding airplanes through the sky and even landing them when visibility is poor.”

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Entrepreneurial Wisdom from UBER CEO Travis Kalanick

For every startup that rises to stardom, many thousands of enterprises go bust. What are the X-factors that determine whether a great idea succeeds the commercialization gauntlet or bottoms out? The Leadership Blog will be investigating that “million-dollar question,” over the next few months. Watch this space for late-breaking wisdom from faculty and MIT Sloan Fellows entrepreneurs around the world.

Uber CEO Travis Kalanick,We’ll kick off this series of posts by looking at the insights of Uber CEO Travis Kalanick, who visited MIT recently. He talked about the traits of indomitable entrepreneurs (of course, he himself can be counted among them).

One of Kalanick’s first nuggets of advice was about reinvention. He pointed out that Uber delivers magic to consumers, affording customers relaxed, dependable, and magical rides. Unfortunately, he said, “We get used to magic. There was a time when running water was magic.” Indeed, he noted, customers’ expectations are perpetually rising, and any enduring company or entrepreneur must continually rise to the occasion and meet those expectations.

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How much is a living wage? MIT Sloan faculty experts weigh in

Arguably, a living wage is the goal of all civilized societies—that is, the amount of money a person needs to maintain a basic standard of living. But what exactly is a sufficient wage? And will increasing the minimum wage create a knee-jerk effect among employers to hit the brakes on hiring?

At present, the hourly minimum wage in the United States is $7.25, and the Democratic Party platform is advocating more than doubling that rate to $15. MIT Sloan asked three of the School’s top economic and labor experts to weigh in on the idea of raising the minimum wage. Here’s what they had to say:

ErikErik Brynjolfsson
MIT Sloan Professor of Information Technology
Director, MIT Initiative on the Digital Economy

Having more people working and earning good wages is good not just for the people we help, but for all of us: People who work are more engaged in community, creating a virtuous cycle. If we do these three things, we’ll be on track to becoming a richer, more engaged, and more dynamic nation.

#1 Expand the Earned Income Tax Credit
Suppose that someone is earning $12 per hour, and we’d like them to earn $15. With an Earned Income Tax Credit (EITC) they’d get an additional $3 per hour worked from the government. The money to pay for this would come from general tax revenue including income taxes, or ideally increased taxes on carbon dioxide emissions, congestion, and other things we’d like to discourage.

#2 Reinvent Education
The wage gap between the most and least educated workers has grown enormously since the 1980s, and better-educated workers also have much lower unemployment rates and higher rates of workforce participation. But it’s not enough to simply do more of the same. We need to reinvent education for an age where machines are increasingly doing cognitive tasks—the second machine age. That means a greater emphasis on skills like teamwork, project management, persuasion, leadership, coaching, and creativity.

#3 Reduce unnecessary occupational licensing
Over 25 percent of workers now require a license to do their jobs, a five-fold increase since the 1950s. While some licenses are important for safety or other reasons, research has shown that excessive licensing requirements reduce employment and mobility.

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