The Richard Ivey School of Business at the University of Western Ontario has an OR/MS course in all our EMBA programs, and the EMBA audience has proved very receptive to the ideas and concepts that we introduce. Dan Elwing, CEO of ABB Electric, who was sold on the value of OR/MS to his company, provided a senior executive's view when he said that OR/MS "is not a project or a set of techniques; it is a process, a way of thinking and managing" [1]. This article describes our approach to EMBA teaching where we to try to establish the real and immediate value of the OR/MS "way of thinking and managing" to a non-technical EMBA audience.

The benefits to OR/MS of successful penetration of the EMBA marketplace would be substantial. In addition to the obvious benefits to faculty and participants, an OR/MS course can demonstrate the power and commercial value of OR/MS to large numbers of executives who have budgets that could be spent on OR/MS. Unfortunately, the new AACSB guidelines do not apply to most EMBA programs (since most do not award the MBA degree), so OR/MS will have to earn its way into these programs by demonstrating its value to this audience when programs are designed or reengineered. The motivation behind EMBA programs and the needs of the EMBA student are critical factors in EMBA program design.

The EMBA Program


EMBA programs respond to the market for part-time business programs for experienced executives who do not have an MBA. The typical EMBA program offers "MBA"-like instruction to more experienced students who hold more senior management positions, are generally less quantitatively inclined, and who pay higher fees than their MBA counterparts. The programs offered vary considerably, but generally they are much shorter that the typical two-year, full-time MBA, and the reduced time available means that courses are short and compact — half-day or full-day classroom sessions are common.

EMBA programs can be highly profitable for their host institutions if they can attract significant numbers of students. Because of this, the market for potential EMBA students is highly competitive with schools spending millions of dollars on advertising and promotion (check a recent edition of the Economist or almost any business periodical or even your daily newspaper!). Word-of-mouth marketing by current and former students is also vital to attracting new students, and so program managers attach great importance to EMBAs having an excellent educational experience and feeling that they receive value for their (considerable) tuition dollars. The higher the perceived value of the EMBA experience, the more the students will talk up the program and help attract new students. Student fees are often paid by employees who will be more inclined to pay for additional EMBAs if they see valued change in their employee, and if they see the EMBA's new skills directly benefiting the organization.

Some subjects are mandatory in every program (it's hard to offer an attractive EMBA program without marketing, finance, accounting and behavioral courses), but OR/MS is very much an option — there is no "quantitative component" at all in most EMBA programs. One can only speculate as to why OR/MS has been systematically excluded. Perhaps the AACSB de-emphasizing of OR/MS in the early 1990s provided an easy way for schools to keep the length (and cost) of their EMBA programs down; or perhaps there is a perception that an OR/MS course requires quantitative prerequisites and that these would screen out some (profitable) students; or perhaps when an OR/MS course was tried, it was not well received.

Achieving high student satisfaction while requiring a minimum (preferably no) prerequisites is essential to the survival of an OR/MS course in an EMBA program. How is "student satisfaction" measured? We OR/MS people may not like it, but student satisfaction is measured through informal "chat" and formal teaching ratings. A course will be judged successful (and will stay in the program and the instructor will be invited to do it again) if students say good things about it during their coffee and meal breaks, and if the formal ratings are excellent. An added bonus is to have employees see new and useful skills appear in the workplace and specifically recognize the source of these skills as the OR/MS course.

This article was prompted by my own experience. Initially I thought that the EMBA teaching assignment would be a version of our core MBA course compressed into fewer, longer classroom sessions. I thought EMBA students would resist our materials, and would struggle with our concepts, but my experience at Ivey suggests that EMBA students can have an excellent experience with an OR/MS course, and can and do find immediate use for key course concepts at work. Here are some typical student comments reproduced verbatim from Ivey's anonymous open-ended course evaluations:

• "Excellent!!! This is one course that has an immediate impact on my work!!"
• "I was surprised to find that the course was of interest to me and relevant to my business."
• "I can apply what I learned in the course to my job to maximize the returns for the company."
• "Eye-opener for topics we can apply at work"
• "The potential of application in my own company is outstanding."
• "You very quickly see ways to apply the material to the real world."

• "I learned a lot! A totally new thought process."
• The course "opened my eyes to a new way of thinking."
• "Introduced completely new concepts to me in the world of business."
• "Got us thinking."

I would like to see many more OR/MS courses in EMBA programs. This would be a good thing for the EMBA students and also, of course, a good thing for OR/MS. Success in delivering our materials to this audience, however, takes some rethinking of what OR/MS offers of immediate value to the more experienced practicing manager.

Course Design


As always, the key to a successful educational experience lies in what you choose to teach and how you deliver the materials. Understanding the needs of the students is paramount in a short, high-tuition, integrated program. When we look at OR/MS, we often see a set of tools and techniques with familiar names (like "linear programming"). EMBA students, however, do not see themselves as tool users, but more as managers of people. They see themselves as decision-makers, not analysts. There is, therefore, not much point in getting into the details of a particular OR/MS tool unless the underlying basic concept is understood and can be seen to be useful to some task that the EMBA students recognize from their workplace.

Mathematical programming (MP) provides an excellent example of the immediate managerial benefit of knowing some OR/MS. According to the universal decision-making model in EMBA (and most MBA?) programs, complex decision situations can be addressed by decomposing them into a series of sequential decisions. Some understanding of MP leads to the recognition that some decision problems involve complex simultaneous decisions that humans do not solve well intuitively. Further, if you simplify these problems by solving them sequentially, you may reach an implementable solution, but you may also give up a great deal of profit. Almost every manager who becomes aware of simultaneous decision problems will be able to identify such problems within their job responsibilities.

The short time available, coupled with the desirability of minimizing quantitative prerequisites, limits any course to a few key concepts. Our Ivey EMBA course must cover OR/MS and statistics for both engineers and "poets" in just seven half-day sessions, but we seem to have come up with a package that works. One very important element is how we "market" our course. Marketing the course and materials includes the way the materials are presented, the words the instructor uses, and the symbols and notation that are written on the board. An important element of marketing is the statement of the course objective. It is important that the course promise the EMBA student something that they see as immediately relevant to their career. My course objective is "to improve your decision-making skills."

"Improving your decision-making skills" sounds very grand (and perhaps vacuous to many in OR/MS), but we in OR/MS have been learning about "decision-making" for many years and have a unique perspective that the average executive (and EMBA student) does not share. Here are some essential management concepts that will be very familiar to OR/MS professionals that most EMBA students will never know unless they are exposed to them in an OR/MS course. Further, understanding these concepts will improve decision-making:

• A "decision" is not the same thing as an "outcome." Making a good decision requires that the decision-maker follow an appropriate decision-making process (that usually involves data and a model). Achieving a good "outcome" may just be dumb luck.

• When someone suggests an action, a really good set of questions to ask concern how he or she arrived at that decision. For example: What data did you use? What model did you use? What alternatives did you consider? What was your decision criterion?

• Few important numbers are known with certainty, and the fact that a number was derived using GAAP (generally accepted accounting principles) does not make it more or less certain than any other guess (this is often a surprise to accountants). The answer to errors in estimates is not to ignore them, but to learn methods to assess and cope with uncertainty.

• A spreadsheet model of the future is actually a random number generator. The probability that what is modeled in the spreadsheet will actually happen is very small. This does not mean that the model is useless, only that you need to learn how to use it.

• The average value of a function of N random variables does NOT necessarily have the same value as the function evaluated at the average values of the N variables. This is just one statement of what Sam Savage calls the "flaw of averages."

• =RAND() may well be the most useful function that most Excel users have never heard of. But using =RAND() in your spreadsheet model requires some skill.

• Attacking a decision problem sequentially often produces poor results; doing this may leave a large sum of money on the table. "Iterating" a couple of times may improve things, but there is an easier way to take the money off the table, and you can do this with Excel.

• Even simple simultaneous decision problems are hard to solve intuitively. Other such problems are hard to solve at all, even with Excel!

• Simultaneous integer decision problems are common and learning to recognize and solve these types of problems can be both useful and highly profitable.

• Optimizing the supply chain is very challenging, but the potential benefits are huge. A number of very successful companies will help you do this.

• Varying product prices over time and by customer cluster is a common business practice with a host of benefits. With today's technology, this is not too hard to manage.

• Optimizing the supply chain linked with variable (optimized) pricing looks like a really good thing to do, but we are not there yet.

• There is an OR/MS industry out there with lots of useful products to offer that can help you and your firm.

• OR/MS need not be difficult and expensive and only accessed by experts. An introduction to the OR/MS way "of thinking and managing" can reap immediate rewards.

If we can help our students understand some of these concepts, they will start to change the way they make decisions and ultimately the way that they manage. To ensure that students see OR/MS as "real," as opposed to a theoretical exercise, the course is taught using cases. Each case addresses a real problem and is used to illustrate the value of our way of "thinking and managing." Each case starts with students talking about their own experience with the business issue in the case including, if possible, their problem-solving approach. The cases can also have the benefit of stimulating the students to identify similar problems at work. My seven, four-hour classroom sessions are summarized below:

Session 1:

Case 1: Video Mart Inc.

Business issue: Starting a new business. Franchises.

Topics: Models and modeling. Building and using an Excel model. Sensitivity analysis and goal seeking.

 

Case 2: Research and Development at ICI: Anthraquinone

Business issue: R&D project evaluation and management.

Topics: Decisions and decision-making processes. Assessing uncertainty. Structuring (modeling) decisions under uncertainty. Risk.

 

Session 2:

Case 1: Listerine Lozenges

Business issue: New product introduction.

Topics: Sequential decisions under uncertainty. Payoff tables and risk profiles. The value of information. Assessing and managing business risk.

 

Case 2: ICI: Anthraquinone (again).

Topics: Simulating risky situations. Excel =RAND() and data tables. Histograms as risk profiles.

 

Session 3:

Data examples: Students present data they use at work to the class.

Business issues: Many and various.

Topics: Data sources and validity. Samples and populations. Summary statistics (means and standard deviations). Time series and sequence.

 

Case: Firestone: "Pay no dough if it doesn't snow"

Business issues: Marketing seasonal products. Quantifying risk, and the use of insurance as a way of managing risk.

Topics: Summary statistics (means and standard deviations). Normal distribution approximation.

 

Session 4:

Case 1: Mutual Fund Performance Statistics

Business issue: Portfolio analysis. Mutual funds and portfolio performance measurement.

Topics: Linear regression and regression statistics. Alphas and Betas.

 

Case 2: Brent-Harbridge Developments

Business issues: Bidding and auctions. Real estate development and valuation.

Topics: Multiple regression including category variables. Bidding models.

 

Session 5:

Case 1: Red Brand Canners

Business issues: Production scheduling and supply chain optimization.

Topics: Simultaneous decision problems. Solver and shadow prices. The supply chain and supply chain optimization.

 

Case 2: Agr-Evo International Inc.

Business issues: R&D project selection and management.

Topics: Integer programming, simultaneous selection problems.

 

Session 6:

Case 1: Four Star Motorsports

Business issue: Revenue management of a manufactured product.

Topics: Price optimization and demand models. Planned prices and implemented prices.

 

Case 2: National Car Rental

Business issues: Implementing revenue management as a turnaround strategy, and strategic OR/MS.

Topics: RM pricing, overbooking, trading up, discount allocation (length of rental controls). The integrated RM system. RM suppliers, and the strategic value of RM.

 

Session 7:

In-class exam

Student project presentations.

The student projects are a key part of demonstrating the immediate value of OR/MS. Students are required to address a problem at work using one of the tools covered in class. Some of these EMBA student projects have saved the EMBA's company several million dollars. A few examples:

• A company was buying packaging by auction but required each supplier to win between 80 percent and 130 percent of the total dollar value of that supplier's contracts last year. After purchasing had chosen the winning bidders intuitively starting from low bid by item wins, the EMBA solved the problem using integer programming (IP). The IP solution was about $2 million cheaper than the solution derived by purchasing, and there were no implementation difficulties.

• A manufacturing company had a centralized testing facility where all units had to be transported for testing. The EMBA project used MP to show that splitting the testing department into two different locations of the plant would save between one and two million dollars annually with enhanced throughput.

• A major bus manufacturing company sold most of its units through bidding. An EMBA student built a regression-based bidding model that is now part of a bidding process that was entirely heuristic. The company now has much better control of the trade-off between business volumes and margins.

Student projects have the added benefit of producing cases for use in future classes.

Student Reaction


Ivey's open-ended, post-course evaluation form asks students, "Which aspect of the course did you like most? Why?" Ideally, every student would recognize the real value of OR/MS. Here are a few responses that seem to be on the right track:

• "Knowledge of new decision-making tools. We are now using them at work."
• "Showing real business examples brought OR/MS to life for me."
• "Everything — I got a lot out of it."
• "A new way of thinking about decision-making."
• "The concepts in general — it was fascinating learning about optimization etc. Revenue management is really neat stuff."
• "Revenue management was great! It showed me a new way to look at and evaluate competition that I was totally unaware of."
• "Solver!! What a great tool."
• "The course material is great."

Students are also asked: "Which aspects of the course would you like to see changed?" The most common response reflects the fact that a great deal of material that some students find conceptually challenging is packed into a short time frame:

• "I would like to see the course lengthened. We were just getting to the interesting stuff."
• "Longer! Great course."
• "This course could be carried on for an additional term."

I am convinced that the response to this course comes mostly from the intrinsic value of OR/MS in improving decision-making and hence enhancing the career prospects of our students. We have a "product" that is both exciting and very valuable to people who have to make daily decisions. When we present our materials to this audience in a way designed to illustrate this real value, then the response is bound to be very positive. The stumbling block that we have to overcome is a general view that OR/MS is too quantitative and not useful. Some EMBA students have even had an earlier unsuccessful experience with OR/MS and so winning them over presents a particular challenge. As one student noted in the student evaluations, "This could be a very dry topic but I enjoyed every class. It was very well organized. I always felt I knew where we were and how things fit together." Another added, "I have taken stats/decision analysis before. I finally understand it!"

Summary


There is a great deal of OR/MS that is immediately relevant to improving the decision-making of those responsible for making decisions. Unfortunately, most of the world has not yet recognized this fact, and so we have to keep demonstrating this at every opportunity. Luckily, this is not hard to do. Constructing a course around a set of cases that describe recognizable real applications is one easy way to engage the students and to ensure that the course material is seen as having real value. The OR/MS way of "thinking and managing" is new to EMBA students and other practicing managers, and has much to offer them and their employees. Bringing more rigor and a stronger factual base to their decision-making will be both novel and immediately valuable, and provides a great opportunity for OR/MS. If we do not do this, no one else will. To use a phrase that I have heard Gene Woolsey use often, EMBA students are a "target rich opportunity" area for OR/MS.

References

1. Gensch, D.H., Aversa, N. and Moore, S.P., 1994, "A choice-modeling market information system that enabled ABB Electric to expand its market," Interfaces, Vol. 20, No. 1, pp. 6-25.

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