Faculty Q&As

Ten Questions: Faculty report from the frontier of management

Stuart Madnick

1. Why are aggregators such a big deal right now.
Aggregators extract relevant information from Web sites and then compile it for the consumer who's asked for it. Shopbots are one kind of aggregator. Another kind is a travel site like Travelocity or Expedia. Aggregatees are those sites that have information that aggregators will draw on to do their work. Every Web site should take into consideration the existence of aggregators. For example, say a new IT bookstore is going online. It cannot ignore the fact that shopbots are going to be comparing its prices to Barnes & Noble and amazon.com and informing the consumer of the best deal. Are they prepared for that? They’d better be.

2. You're one of the pioneers in the world of aggregation. What are you working on?
For one thing, the strategic use of aggregators and how aggregatees should incorporate the work of aggregators into their tech strategy. On the rise right now are financial sites that collate all your financial information from different sites, pull it together into one document, then analyze it for you and make recommendations. Financial account aggregation has become the ATM machine of the 21st century. If you don’t offer it, your customers go elsewhere. I am working with the Center for eBusiness on a variety of projects, such as the Total Merrill campaign for Merrill Lynch. The company is using high-end aggregators in providing financial services to support HNWI (high net-worth individuals). More and more, these people have their funds very diversified.

3. Where are aggregators going in the future?
Certainly they're going global. For all the work being done in aggregators, little of it is now global. In Sweden, the cheapest Sony IP-5 camcorder might be $1700, but in the Netherlands, you can get the same machine for $700. Global aggregators need to be able to take into consideration VAT tax, currency conversion, shipping, and describing products and services in many languages when they are making comparisons. When it is done right, you will be able to gain incredible value from global aggregation. We just built a prototype of an aggregator for certain electronic consumer products.

4. What do you see as the problems of global aggregation?
Right now, one of the challenges is that the United States and the European Union are seeing aggregators in very different ways. The U.S. seems to be adopting a hands-off, wait-and-see attitude. The E.U. is leaning toward regulating. One of the sticky issues is that sites with a lot of global influence are protesting the aggregators.

5. Are lobbyists getting into the act?
Yes. Of course, there are both anti- and pro-aggregation lobbyists. Because many forms of aggregation are consumer-based and consumers don’t, as a rule, have powerful lobbyists the way corporations do, the anti-aggregation lobbyist might be more vocal. The sites that aggregators mine from are often large, established organizations like Reuters.

6. Can you explain your paper, “The Misguided Silver Bullet?”
We're looking at the semantics of data. In my paper, I talk about how eXtensible Markup Language (XML) might offer many important improvements over HTML, but its benefits have been highly exaggerated. In fact, it faces many of the same problems as previous program languages. Tim Berners-Lee is heading the quest for a more semantic Web. As the Internet mushrooms, it has become increasingly difficult to find anything. This is because most search engines read format languages such as HTML or SGML and the search results reflect formatting tags more than actual page content. Berners-Lee is exploring an exciting new type of hierarchy and standardization that will replace the current “web of links” with a “web of meaning.” We are addressing certain aspects of data semantics working with 10-12 grad students from all parts of MIT-from Sloan to the School of Engineering to Technology and Public Policy.

7. Would you say that the Internet is getting smarter?
Yes, we're at the intersection right now of a more intelligent Web. Context mediation, which is what we call our work, is an important step — that's the ability to understand that prices coming from Sweden do include Value Added Tax (VAT), but don’t include Massachusetts sales tax. If you are comparing cars, the Web should be able to inform you of the state excise tax on that vehicle as well. In other words, what is the true meaning of the information you are getting? Is it complete? Is it meaningful to you in your specific context?

8. Is research like this getting to be increasingly interdisciplinary?
Definitely. I work with faculty members across MIT. I’m working with Sharon Gillett, director of the Center for Technology, Policy, and Industry and in many other interdisciplinary environments, like the Center for eBusiness and the Center for Transportation Studies. And I’m working outside MIT with research sponsored by many different organizations, such as Merrill Lynch, Suruga Bank (of Japan), the Singapore/MIT Alliance, the MIT/Malaysian University of Technology.

Much of research at MIT and at MIT Sloan is interdisciplinary now. The MIT Engineering Systems Division is an example. A professor in the engineering systems division might be physically housed in engineering, but this is a pan-MIT activity. ESD is an interdisciplinary organization uniting faculty and students from engineering, management, and the humanities who will focus on complex, technology-based products and systems like automobiles, airplanes, transportation, telecommunications, and energy. Technology is a fundamental part of these systems, but so, too, are management issues and societal interactions. The ESD will look at things from a systems perspective, will look at policy implications, and so on. Interdisciplinary programs like this and Leaders for Manufacturing Program would be extremely difficult at other schools, but close collaborative relationships are part of the MIT culture.

9. And students are a pivotal part of the mix as well?
My theory is that one of the ways we give our students an edge is to introduce them to things they're not likely to be introduced to elsewhere. Give them an indicator of where their industries are moving. Give them an edge. The Black-Scholes financial model, for example, was first developed at MIT Sloan.

I am also heavily involved in the MIT Technology and Policy program, working with students in that program to analyze both the policy and legal aspects of aggregation. I’m working on a paper with these students on the fact that Europe and the United States are going in opposite directions on aggregators. My students are examining the legalities across nations — if you're using a Web service, which laws apply? If you are an aggregator in the U.S. and you are using data from a site in Sweden, are you beholden to follow the U.S. or the Swedish or E.U. laws?

10. This must be a good learning experience for budding entrepreneurs..
True. A significant portion of our students are entrepreneurs, drawn to the famously entrepreneurial atmosphere of MIT, the Entrepreneurship Center, et cetera. It's important that they get these essential real-world lessons. At MIT Sloan, we are always looking for more systematic ways to facilitate entrepreneurship, to prepare entrepreneurs to build successful businesses.

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