Scott DeRue, dean of Michigan’s Ross School of Business, doesn’t shy away from soothsaying. He offers several forecasts for business schools in general. Not shockingly, the first is related to tech. But DeRue foresees other changes, too: among them, new cross-disciplinary partnerships and program consolidation.
“I predict the technology and social responsibility conversations will come together in more intentional and powerful ways,” DeRue tells P&Q. “Topics such as responsible artificial intelligence will become mainstream in business schools, and companies will be asked by faculty and students alike to articulate how they are ensuring technological advances to promote a more transparent, safe, and equitable society.
“Second, I expect new types of partnerships will emerge between business and engineering schools, and companies focused on innovation, entrepreneurship, and regional economic development. Schools offer the one thing that every company wants and needs — talent. Through growth and innovation, talented university graduates will help companies excel and stimulate the economy. With aligned goals, I expect companies and universities will discover new and different types of partnership that are mutually beneficial.
“Third, I predict further consolidation of business schools. Business education is a mature market with an oversupply of programs. Top business schools offer students an excellent return on their investment, but schools that cannot offer a strong return will either adapt or die.”
THOUGHTS ON HEALTHCARE IN THE NEW YEAR
Elsewhere in Ann Arbor, several profs offered predictions on everything from entrepreneurship to climate change to Brexit and trade to the gig economy. Sarah Miller’s focus is on one public policy issue in particular as the calendar flips to a new year: An assistant professor of business economics and public policy at the Ross School, Miller’s research focuses on the effects of healthcare policy on consumer credit and financial outcomes. She says the main factors behind the recent dip in insurance enrollments through the Affordable Care Act are a cause for concern — but she expects the healthcare law to persist and cost increases to remain low.
“Two concerning drivers of low enrollment are the Trump administration’s decision to expand short-term plans that are cheaper but not required to cover pre-existing conditions, and the repeal of the individual mandate,” Miller says. “Both of these changes will likely lead healthier consumers to not enroll in marketplace plans, which could in turn increase the average cost of marketplace enrollees and lead to higher premiums in the future. On the other hand, a stronger labor market means at least some of the dip in enrollments may be coming from greater access to employer-sponsored insurance as fewer people are unemployed — which is always a good thing!”
She adds that she expects the recently announced slowdown in 2017 to roughly the same rate as the overall economy to persist in the 2018 numbers. And prescription drug prices, at least in the short term, are likely to stay low.
“In the short run, I expect them to stay low as generics hold a big fraction of the market. But the United States has an almost endless appetite for new technologies, and over the next few years, I would not be surprised if a new generation of blockbuster drugs hit the market, especially given all of the recent scientific advances in gene therapy.”
Miller also doesn’t expect much to come this year of the lawsuit in which 20 states are challenging parts of the ACA. And she likewise doesn’t expect new efforts — either legislative, legal, or administrative — to undermine or repeal the ACA in 2019.
“The Republicans enjoyed campaigning on repealing the ACA when they lacked the power to do so, but now they are grappling with the fact that major changes to the law’s core structure would result in a very politically unpopular drop in insurance coverage,” Miller says. “If they were going to enact major changes, they would have already done so. If anything, the Republicans’ bluster against the law has made it more popular than ever! I suspect they are secretly hoping nothing comes of these new lawsuits.”
Will some sort of “Medicare for All” plan get serious consideration during 2019? “It may become a popular campaign slogan, but I seriously doubt it will get serious play as an actual public policy unless the Democrats take power in a big way,” Miller says.
A KEY QUESTION IN 2019: HOW TO HANDLE ALL THE DATA
Mitchell Petersen, professor of finance at Northwestern University’s Kellogg School of Management, says the automation of decision making will create new quandaries in 2019 and beyond that will require B-schools to adjust how they teach students in MBA and other programs.
“The data available to business leaders has exploded,” Petersen tells P&Q. “The dramatic growth in raw data means knowing how to use data to ask and answer important questions is becoming increasingly important. Technology allows us to make decisions quicker and with greater precision but not always with greater accuracy.
“The growth of data raises two issues. The first is the ability to use the data efficiently. In both education and practice, business professionals need to use their discipline based knowledge combined with their institutional knowledge, to form and test hypothesis. The data then allows us to reject or update our hypothesis. This iterative pattern recognition is how we understand how our business works (why customers come into our stores, why loans default, why products are returned).
“The second issue is the nature of the data has evolved. Historically data was collected and decisions were made by a given individual or group (soft information). Now the collection of the data and the decisions are often separated. This increases efficiency and expands the geographic and time scope across which data can be used. This automation of decisions creates new problems.
“As we saw in the financial crisis, and may see with some applications of FinTech, any discreet and transparent method for transforming data into decisions is susceptible to manipulation of the data. Thus firms which remove the human element from decisions to make them more efficient need to understand how the data environment changes in response to the way the firms make decisions.”