05 Feb 2019 21:47 IST

‘Business analytics complex as rules are changing constantly’

Most other disciplines have static rules, says John FO Bilson, Dean, Stuart School of Business, Chicago

Dr John FO Bilson, Dean, Stuart School of Business, of the Illinois Institute of Technology (IIT) Chicago, was recently in Chennai at the Great Lakes Institute of Management. In association with Great Lakes, Stuart School has launched an international MBA programme in business analytics at the Great Lakes city campus. Dr Bala V Balachandran, Founder, Dean & Chairman, Great Lakes Institute of Management and Dr Bilson announced the collaboration.

In this interview, Dr Bilson, who is also a professor of finance and programme director of the MS Finance graduate programme, explained the contours of the new MBA the two schools will offer and spoke about the role of business analytics in the corporate world.

Dr Bilson, an Australian, studied at Monash University and earned a Ph.D in economics from the University of Chicago. Excerpts from an interview.

What is the new international MBA at Great Lakes in a tie-up with Stuart School of Business all about?

The programme is an MBA with a concentration in business analytics, which comes across through many different perspectives. Analytics can be in engineering, computer science or statistics. But business analytics is different and the reason for that is the business environment is constantly changing. Most other disciplines have static rules.

How did business analytics as a discipline evolve?

Business analytics started with the battle between IBM’s Big Blue and Gary Kasparov playing chess. And, to the surprise of everyone Big Blue won. Last year, they created an ETF using Big Blue to pick stocks. That ETF is called (artificial intelligence) AI Equities. And AIEQ is trading for the past year but it has not beaten the S&P 500. The big issue in analytics is how we we have a computer that beat Kasparov in chess but cannot beat the stock market! In the business world, the rules are always changing, but in chess, the rules have been the same for the past 200 years or so. Business rules change continuously. So, how do you play the game in which the rules are constantly changing and we don’t know what the rules are tomorrow?

In the traditional game we are looking for the single best move; in the modern game we diversify across a large number of strategies, so the difference between business analytics and conventional analytics is to adopt 10-12 feasible strategies and go with the one that works.

An MBA in business analytics is really all about training the people who stand between the bosses at the top and the worker bees at the bottom. They have to have the ability to understand what is going on at the technical level of the corporation and explain that to the boss.



In which industries do you see analytics playing a key role?

Analytics is useful in virtually every industry. In my university we use a software called Salesforce to manage our enrolment. We have 20,000 students who apply to our university. What shall we do with all those records of people who applied? Now, with business analytics, we can wait for three years and then go back and look at the students who applied three years ago, and see if they went on to some other graduate school. We have their test scores; they know our university since they already applied. We can then select students with the background we want. We can select high-quality students for our graduate programme; we are using the same analytics that we are teaching our MBA students.

I was talking to an automobile company and they said they have the same problem; every year a million people come in and see their cars, and they sell a 100,000 of them. So, they said, they go through the data of three years and find out if they are happy with the cars they bought (from the competition) and ask them if they want to come back to them again. Every company has data; in the past they didn’t realise the value of that data, but now realise that information can be used to create a better business.

What is your advice to Indian students aspiring to do an MBA in the US?

The most important point when we talk to Indian students is that it is very expensive and I try to convince them that this is not a consumption item but an investment. An MBA student coming out from an Indian university gets $43,000 a year but a student coming out from an American university earns in the $85,000 range. That makes up for the difference in costs. Most graduates from the US, if they go back to India, are employed by American companies operating in India. I had dinner with my alumni in Bangalore recently; one works for Nasdaq, another for Goldman Sachs and the third for a VC.

The hostile environment created by Trump; will that impact Indian students?

I would think so, yes, particularly with the visa situation. So, what we are doing with this new MBA is in three segments. The first segment will be taught by Great Lakes, the second segment by us, and the students will spend only four weeks in Chicago in summer as a capstone course; so they will get a US MBA a lot cheaper, because of lower living costs. On the other hand, that degree is not eligible for the optional practical training (OPT), an opportunity to work with a US company after graduation. For most graduates a year’s training is offered. However, for STEM, it’s up to three years, and that was the big attraction of coming to the US, though people are not attracted any more as they feel Trump is anti-immigration. We find this surprising as we in the US need these legal immigrants to do graduate work.

How is the MBA being redefined?

Well, so, the move is away from an MBA degree. In the old days, we would call this MBA with a concentration on business analytics ‘management science’. But it’s a business degree with a large technical component; so we have optimisation, prediction, forecasting, risk management, those sorts of skills. Normally, we would teach that in a management science programme. At Stuart, we have an MBA and an MS in management science, which is part of a doctoral programme; so one can get a PhD in management science and a PhD in business. What we find is that enrolment in the MBA programmes is going down while in management science it is going up as it’s part of a STEM course and gets three years of OPT.

But, clearly, second-tier business schools have trouble attracting students for the MBA. We are a technical university and we are in the business of training technical people with business skills. Our model is STEM + Business = CEO. If you take a STEM UG degree, and a business degree, then you are preparing yourself for an executive position. In the modern corporation, the troops typically have technical degrees, the bosses at the top have MBA degrees, but people in between who have both skills can understand what the troops are doing too.