I was featured on the front page of this week’s “Bottom Line,” published by Columbia Business School, about Grantham University’s renaming its business school “The Mark Skousen School of Business.” In the interview, I talk about the dramatic growth in online education, how the Skousen School is different from the hundreds of MBA programs out there, and how investors can profit. Here is the full interview….
An Interview with Professor Mark Skousen
By Gabriella Barufi, Editor, BottomLine, Columbia Business School, September 15, 2005
Earlier this year Prof. Mark Skousen was surprised to hear that Grantham University, one of the country’s fastest growing online universities, decided to rename their business school “The Mark Skousen School of Business.” Prof. Skousen has taught at Columbia Business School and at Barnard College. He has authored twenty books, and is now working on a new textbook, “Economic Logic” and also on a new book, “The Compleated Autobiography of Benjamin Franklin,” to be published this fall by Regnery (www.regnery.com). Grantham University (www.grantham.edu) currently has over six thousand enrolled students in graduate and undergraduate course, including business, criminal justice and computer science. Prof. Skousen will play a key role in further developing the business school curriculum, as he explained in an interview with the BottomLine.
1. Can you describe your reaction to having a business school named after you? Also, could you speak about your role in developing The Skousen School’s curriculum?
I must say that I was rather surprised by this honor. As one friend said, “Only billionaires and dead people have schools named after them” — unless the honoree has discovered a new model of business management and decision-making. I’d like to think I’ve created a new business paradigm, which incorporates “market-based management,” based largely on “Austrian” and “Chicago” schools of economics and finance. The term “market-based management” is an invention of Charles Koch of Koch Industries, the second largest private company in the United States. Grantham, the nation’s fastest growing on-line/distance learning university, has asked me to develop such a program in their undergraduate business and MBA programs, course work that will be very different from what is taught at most schools. They will use my “market-based” textbooks such as Economic Logic.
2. Still on the new curriculum, how do you and Grantham University intend to set it apart from the existing tens or perhaps hundreds of business school programs?
As far as I know, The Skousen B School at Grantham will be the only one in the country to teach explicitly the “market-based” business technique, based on the concepts and tools created by such “Austrian” giants as Peter Drucker, Joseph Schumpeter, Ludwig von Mises, and Friedrich Hayek, and now being adopted by many of the fastest growing businesses in the country, such as Whole Foods Market and Koch Industries. Most business students have heard of Drucker, but his breakthrough ideas are not always discussed in depth. Few MBA students have heard of Mises and Hayek. In the finance world, I also rely on the work of Gary Becker, Milton Friedman, Richard Thaler and other “Chicago” economists to create my unique brand of behaviorial economics, tools I’ve used to build a successful financial advising service.
My “Austrian/Chicago” business model emphasizes marketplace disequilibrium, uncertainty, decentralized decision making, opportunity costs, and a theory of business errors. Our case studies include two of the fastest growing businesses in the world that use this unique “market-based management” system: Whole Foods Market, run by CEO John Mackey (who was 2004 Entrepreneur of the Year), and Koch Industries.
The Skousen B School will do two things differently:
First, it will emphasize applied economics and finance in the management world. For example, we will apply the “Austrian” theory of the business cycle to show how businesses can survive and prosper during the boom-bust cycle. We show students how to use “opportunity cost” in accounting by adopting Economic Value Added (EVA). More and more companies are using EVA effectively to control costs and create profit centers, so successful business students must be familiar with this tool. Both Whole Foods Markets and Koch Industries use EVA. Joel Stern, one of its creators, is an adjunct here at CBS.
Second, the Skousen School of Business will take an historical, evolutionary approach to business and finance, with heavy emphasis on how business and financial markets have developed over the years. In my investment courses, I always integrate the history of business and finance, with lots of story telling and case studies, both past and present. Unfortunately, many of today’s MBAs are taught very little history, and therefore, in my judgment, are vulnerable to making mistakes when history repeats itself. They know modern theory and modern business strategies and modern accounting, but may not know how these disciplines developed historically. They should be aware of “the plungers and the peacocks,” as one historian calls them, and the models that worked and didn’t work over time. In the Skousen B school, we will explore the history of great American and foreign businesses, and the biographies of Rockefeller, Carnegie, J. P. Morgan, Alfred Sloan, Joe Kennedy, Ben Graham, J. P. Morgan, and modern giants such as Sam Walton and Warren Buffett.
By the way, I should tell you that I taught my “market-based management” course in Austrian/Chicago economics & finance at CBS last year, following in the footsteps of CBS professor John Whitney, who developed the course originally (he is now emeritus status). As part of the course, I invited John Mackey of Whole Foods Market to speak at CBS to a packed audience of nearly 300 MBA students. Students here seem eager to learn about Mackey’s new “market based” approach to business. My course, “Free Market Strategies for Managers” was well received, with a 4.6 student rating. I hope to be able to teach this course again this year.
3. Could you share with us your views on online education, both from the academic and investor points of view?
Online education has been one of the most surprising growth industries since the early 1990s, and demand is growing 35-40% a year. It caters to the non-traditional student, those over 25 who want to finish up their college education, or earn additional degrees, often while working full time. Major corporations and the US armed forces are making online degrees a top priority, because it allows their employees to advance their education and skills while remaining on the job. It attracts adults of all ages who want an affordable education that accommodates their schedule. And online is very cheap, maybe a tenth of what it costs to go to Columbia or another top academic school.
The University of Phoenix pioneered the concept, and its stock is up 10,000% since going public in 1994, one of the best performing IPOs in history. Grantham University’s annual enrollment and revenues are growing at 100%, with profit margins of over 25%. As a business and investment, it’s hard to beat.
4. How do you expect online teaching to evolve and do you foresee an impact on traditional education?
I’ve seen how online technology has dramatically affected my business as an investment writer and advisor. My publisher, Eagle Publishing, no longer depends solely on a printed version (www.markskousen.com). In order to stay competitive and update to date, we now offer an online investment letter. The internet has also allowed us to expand into three trading services where we give short-term buy and sell recommendations over the internet. In addition, I’ve just been made chairman of Investment U, published by Agora Inc., which has 350,000 e-subscribers (www.investmentu.com). This service aims to educate individual investors around the world with a twice-weekly e-letter that focuses on core investment principles and indicators, and how to apply them to current trends and events. It’s one of the world’s fastest growing investment services, and with the popularity of the internet and search engines, this kind of educational service can reach out to millions of investors around the world almost instantly.
I am convinced that the same kind of revolution is happening in degree-seeking education. Top establishment institutions are going to face serious competition from the online schools in the near future. Many studies have shown that success in the business world is uncorrelated to where students earn their degree. And given the flexibility and low cost of an online degree, more and more students are choosing this option.
5. Over the past few years of rapid technological advancement, we at Columbia Business School have witnessed a growing presence of the Internet and online tools on campus, including systems for course selection, online polls and posting of lectures and additional reading materials. How do you think traditional universities can further leverage on online tools that could improve both teaching and the learning experience?
Eventually, Columbia and other B schools will have to start offering online courses.
Many major universities have already recognized the natural advantages of going online and are offering more and more online courses. Harvard University’s Harvard Extension School, for example, offers several dozen online courses that qualify for a undergraduate and graduate degrees, and you can take the online courses from anywhere in the world. Chinese students can start getting a Harvard degree from China! Or American soldier can continue their degree from Iraq. Grantham is already doing this, and has a strong degree-seeking program geared to the US armed forces and corporate clients.
6. Your world travels and international experience seem to have contributed greatly and are often imprinted in much of your published work. Likewise, U.S. business schools including Columbia pursue international diversity through the curriculum, faculty and student body. In your view, what are the benefits of this approach and how (if at all) can it be further expanded?
Located in New York City, the center of global capitalism, Columbia University has done a great job in attracting a worldwide faculty and student body. I enjoyed very much the interaction with the foreign students, who had broad business experience around the world. Teaching them was a tremendous learning experience for me.
The online universities offer greater flexibility and less cost to the international student….They can start and even finish their degree without the cost of moving to and living in New York. The online universities also offer good personal contact with the professors, who are required to make themselves available by telephone and e-mail to help the students. No closed door policy and limited office hours as there are at brick-and-mortar universities! Of course, many students thrive better in the traditional classroom with its structured schedule and interaction with classmates. I’m sure both kinds of education will continue, but there’s no reason to expect the status quo.
If CBS opened its doors to students both here and abroad via online coursework, they would be ahead of the establishment crowd.