MIT's contributions to business and economics
The spreadsheetDan Bricklin was sitting in a classroom at Harvard Business School when he had this idea to create an electronic spreadsheet or Calcu-ledger a way for managers to do complex accounting using a computer or project how their revenues might grow under different scenarios. Bricklin, a 1973 MIT graduate, and fellow MIT alum Bob Frankston rented time late at night on an MIT mainframe computer (it cost $1 an hour to use) to write the program that would become VisiCalc. It led to programs like Lotus 1-2-3 and
Executive branchAlfred P. Sloan Jr., the chief executive of General Motors Co., had a problem. He saw many promising would-be executives in his company but didnt know how to train them. So in the early 1930s, he came to MIT, his alma mater, and asked for help. MIT accepted the challenge and devised an experiment in executive education, inviting a small group of fellows from various companies to spend an intensive year of business and leadership training on campus. Now called the MIT Sloan Fellows Program in Innovation and Global Leadership, it has been copied elsewhere and many of its most famous graduates are on this list for their achievements in business.
Urban legendKevin Lynch, an MIT urban design professor, wrote the 1960 book, The Image of the City, which helped launch the argument against major government urban-renewal programs by encouraging greater citizen participation.
William A. Porter, who helped revolutionize digital stock trading with the founding of E*Trade, graduated from MITs Sloan Fellows Program.
Anything but littleArthur D. Little, an MIT chemist in the 1880s, founded the nations first management consulting firm in 1886.
Win $100,000!The $100K Entrepreneurship Competition starts with $5,000 to the team that best summarizes its business idea in 60 seconds or less. It finishes when the team with the best business plan takes home $100,000. The competition isnt about starting a company at all, says Joost Bonsen, an MIT lecturer who was part of the first contest as a student, in 1990. Its about educating people about being entrepreneurial. It has led to the founding of more than 150 companies, including Akamai Technologies Inc., which today has 2,200 employees, and insulin developer SmartCells Inc., which
Taking stockMIT economists Myron Scholes and Robert Merton were two primary contributors (along with Fischer Black) in 1973 to whats known as the Black-Scholes Model. Its still used to determine the fair price of call options in a stock market or stock options given to employees of a public company. MIT professor Peter Diamond says Black-Scholes helped lead to the creation of more complex derivatives, which played a role in the recent financial crisis. But Scholes has said there is a positive side, as well, to the model: It can be used to measure risk and transfer risk.
Guessing gamesMIT professor Paul Samuelson said that todays price of a given stock really is the best estimate of its actual value and that money managers hunting for undervalued or overvalued securities are usually wrong. Samuelson was the first American to receive the Nobel Prize in Economics. He was also an economics adviser to several presidents, starting with Kennedy. Paul Samuelson was one of the first people to realize that maybe there wasnt any predictability of stock prices, says MIT professor James Poterba.
Understanding unemploymentHow can employees be looking for jobs while job openings that suit them exist at the same time? MIT professor Peter Diamonds work tries to answer that question. It takes time to find a job and for a company to find a worker, says Diamond, who received a Nobel Prize, but the second thing, which is terribly important, is that as a worker, you dont know all of your options, and you dont know what vacancies are going to open up the next month or the month after. Diamond helped explain why the unemployment rate wont budge when some companies have vacancies theyre trying to fill.
Can we all agree?The Washington Consensus was a term coined by MIT-educated economist John Williamson in 1989 to cover a set of 10 policy positions that D.C.-based institutions like the World Bank and the International Monetary Fund pursued in the 1980s and 90s toward developing countries. Among them: competitive exchange rates, less protectionist trade policies, and the privatization of state-run businesses.
Idea + money = ?Even the best research universities sometimes run into brick walls trying to turn laboratory science into usable products. At MIT, the Deshpande Center for Technological Innovation, funded with an initial gift of $20 million from a philanthropist, specifically focuses on connecting researchers with entrepreneurs and venture capitalists. The center has backed more than 80 projects, and 23 have developed into commercial opportunities, from Internet search engines to new solar cells.
The Life CycleFrancisco Modigliani, MIT economist (and 1985 Nobel recipient), contributed to what we know as the life-cycle model, which helps predict where a countrys economy might be headed, given its demographic composition.
Big BenBen Bernanke, economist and chairman of the Federal Reserve, received his PhD from MIT in 1979.
Google himShuman Ghosemajumder, a graduate of MITs Sloan School of Management, is the former chief of click fraud at Google. He helped protect advertisers in a $20 billion industry from fraud.
Thats progressRobert Solow is one of the worlds leading economists and a 1987 Nobel recipient. His Solow-Swan growth model explained how technical progress and innovation are critical for any economys productivity.
StatesmanGeorge P. Shultz, MIT class of 1949 and later a professor of economics at the school, served as Secretary of the Treasury and labor under President Nixon and Secretary of State under President Reagan.
Work in progressIn 1960, Douglas McGregor, a professor at the MIT Sloan School of Management, split corporate thought into two camps. Theory X held that employees were inherently disinclined to work and needed to be strictly controlled. Theory Y held that employees should be trusted and empowered. McGregor showed, at a time when labor-management relations were becoming more adversarial, that there was another way to see workers.
Big thinkerPaul Krugman, New York Times columnist and American economist, earned his Ph.D. from MIT in 1977. In 2008, he received the Nobel Prize for Economics for, according to the prize committee, his analysis of trade patterns and location of economic activity.
© Copyright 2011 Globe Newspaper Company.