Inventing New Fields at MIT Sloan

Inventing New Fields at MIT Sloan and MIT MBA

MIT Sloan began with Alfred P. Sloan’s innovative idea that there was a close correlation between complex problems in business and those of science and engineering. Sloan, then chairman of General Motors, thought that the sort of research applied to the more technical fields could be applied to management as well.

That same innovation and thought leadership that formed the School continues to thrive today. A constant stream of new ideas, theories, and practices that have stood the test of time flow out of MIT Sloan. Many have become commonly accepted practices.

Organizational Development

Douglas McGregor, who joined the Institute in 1937 as its first faculty member in the field of social psychology, compared managers' assumptions of human nature and the effectiveness of those managers. His Theory of X and Y has become a standard. McGregor, along with Professors Edgar Schein and the late Richard Beckhard, went on to create the field of Organizational Development during the late 1950s and early 1960s.

Schein credits Professor of Management Lotte Bailyn and John Van Maanen, Erwin H. Schell Professor of Management, with helping him to create the work-family-career development movement. 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

The late Professor Franco Modigliani explained household savings-consumption behavior. Then, in the late 1950s, with Merton Miller, he also developed two theorems (the Modigliani-Miller theorems on corporate financing and valuation) for options pricing that provide analytical frameworks for understanding firms' capital structures. He won the Nobel Prize in Economic Sciences in 1985.

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. As its basic methodology was extended to create other financial instruments, the billion-dollar financial engineering industry was born.

Jerome and Dorothy Lemelson Professor of Management and Economics Emeritus and former MIT Sloan Dean Lester Thurow, a visible economic pundit and commentator for more than 30 years and an early proponent of cross-cultural educational efforts, focuses on the impact of knowledge industries on the global economy.

Physiology of Trading

Andrew Lo, Charles E. and Susan T. Harris Professor of Finance, is analyzing the physiological and emotional characteristics that influence the financial decision-making process and exploring how these factors affect trading outcomes. Beginning with monitoring of vital signs of traders on the floor, Lo, working with Tomaso Poggio in MIT's Brain and Cognitive Sciences group, plans to monitor the brainwaves of traders as they transact deals.

System Dynamics

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

Marketing Science

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.

Building on the need for marketing data, in 1983 Little 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 graduate student created, which could predict future purchasing behavior based on past buying patterns.

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

G-LAB: INTERGRUPO, COLOMBIA Growing a business by cultivating relationships

"After we gave our recommendations, the great part was that the very next day the CEO was in the boardroom implementing them with his top vice presidents."

Ramy Hakim
G-LAB: MERCY CORPS, INDONESIA Using business principles to address malnutrition

“The conditions in the neighborhoods we were visiting were different than what we realized before getting there. Beyond that, what was surprising was that there weren’t surprises!”

Libby Putman
INDIA LAB: EDUCATIONAL ENHANCEMENT Creating employable workers to boost the economy

“I knew about American business, but not enough about what’s really become a global economy. … You can read about it all you want, but there’s no substitute for being there and seeing the context and seeing how completely different these [other countries] are.”

Ted Chan
S-LAB: JAKARTA WATERSHED Combating a clean water crisis

“I came to Sloan because of its high rankings within the sustainability community, specifically the professors. The S-Lab class itself is part of what drew me to Sloan. And the reason I came to business school was to learn the business speak that really is what connects with people."

Ian Lavery
G-LAB, RAS RESORT, INDIA Marketing in Mumbai
"The network of alumni was helpful because our team had a lot of experience in consulting, but not in private equity."
Gerardo Guzman
COURAGE AND STRENGTH Supporting a student with breast cancer
"The Sloan community really rallied around me in a way that I totally didn’t anticipate. … It was just really nice to be a part of a community that I was totally comfortable in and felt completely supported by."
Kyle Maner
G-LAB: WARMBATHS HOSPITAL, SOUTH AFRICA Improving staffing at a maternity ward

“The assistant to the CEO was like our host mom while we were there. She arranged our housing for us, she took us out to her friend’s game farm, and we got driven around in 4x4s. She was just wonderful to meet, and we developed a personal as well as professional relationship with her.”

Kelsey McCarty
INSTITUTE FOR WORK AND EMPLOYMENT RESEARCH Adapting to the changing nature of work

“We’re very interdisciplinary. Among the faculty in the group are an economist, a political scientist, a sociologist, and an industrial relations specialist. We’ve always made a big effort to be open to a variety of perspectives, but also to go beyond being open to them, to want to bring them in, because it makes for a richer environment.”

Thomas Kochan
Co-director, IWER
SLOAN FELLOW Getting serious about going global
"This year we were so fortunate to have 26 nationalities. So it was amazing exposure. I feel much more well rounded as a global business maker than I was before."
Abner Oliviera
INDIA LAB: BANGALORE Working toward market expansion

“[The India Lab] program is one of the reasons I came to Sloan. ... The hands-on learning that MIT offers was a huge differentiator.”

Katie Baron
G-LAB: PRIVATE HEALTH CARE IN AFRICA Defining growth at a for-profit clinic

“At MIT Sloan you have a lot of opportunities to explore entrepreneurship. Especially in a place like Kampala where you have a lot of development, entrepreneurship can be very exciting.”

Anne Reilly
MIT LEADERSHIP CENTER Changing views of leadership

“Our mission, along with the mission of MIT Sloan, is to both develop leaders who make a difference in the world, and also to make a contribution to thinking about the topic of leadership.”

Deborah Ancona
Faculty Director, MIT Leadership Center
SWITZER FELLOWSHIP WINNER JASON JAY Focusing on environmental research and leadership

 “I love being in a place that is such a nexus of people and ideas — people coming to learn something new and to define themselves. Being a part of that process is a real honor and a real gift.”

Jason Jay
Lecturer, Sustainability, MIT Sloan
G-LAB, KUALA LUMPUR Assessing the future of the Smart Card
"You have to manage what you can deliver for the company and what the company is expecting. The bottom line is that the CEOs of those companies want results. Even though we have to work five months in a row with the project, we have to deliver. This experience is more pragmatic than academic. It's a good opportunity to match those two worlds."
Camilo Syllos
RETAIL AND CONSUMER GOODS Luxury beauty and the multicultural consumer
"The goal of the Retail and Consumer Goods Club is to provide networking opportunities for students at MIT Sloan, and to educate students about different functions within the retail and CPG space. We bring in executive-level speakers to educate our community on this topic."
Nga Phan
MBA, co-president of Retail and Consumer Goods Club
G-LAB: NAM MEE BOOKS, THAILAND Helping a book publisher mature

“It was really rewarding that they wanted to know what we thought. We left there being fairly certain that they will do some of the things that we suggested.”

Lia Cavalcante
SLOAN FELLOW Merging disciplines for climate change
"I needed to get a better understanding of the interaction of management and technology. And I think MIT is an obvious place for that. There’s probably no better place in the world [for learning] how technology and management interact."
Pascal Marmier
CENTER FOR INFORMATION SYSTEMS RESEARCH Bringing people and machines together

 “For 35 years, we’ve been studying how companies get value from information. … We try to help organizations take a more holistic view of what they are trying to do.”

Jeanne W. Ross
Director and Principal Research Scientist, CISR
$100K WINNERS: C-CRETE TECHNOLOGIES Reducing the environmental impact of concrete

“One of the reasons I came to Sloan was because I wanted to be at a top MBA institution worldwide. But I also wanted access to working with the latest innovations and the highest technology that was coming out of the MIT labs.”

Natanel Barookhian
LEADERS FOR GLOBAL OPERATIONS Connecting management and technology
“We are preparing leaders to run the world’s operations companies. And those leaders are at the cutting edge of both management and technology.”
Don Rosenfield
senior lecturer and director of the Leaders for Global Operations
G-LAB: AIDS IN TANZANIA Striving for economic empowerment

“Because of the diversity of our backgrounds, when we hit the ground in Tanzania it almost was a natural play where different people assume different roles.”

Krishna Venugopalan

“As for the faculty, you'll quickly find that your professors – whether Nobel laureates or past presidents of the American Finance Association – are as passionate about teaching as you are about learning from them. MIT Sloan finance professors see you as their partners in shaping the future of finance.”

- Leonid Kogan
Nippon Telegraph and Telephone Professor of Management