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Jerusalem Life

| The Making of an MBA Program

Zev Stub    
Thursday, 03 January 10:36 AM

Written by: Prof. Elazar Berkovitch, Head, One Year MBA program

I am often asked how we bring our MBA program up to date in order to accommodate changes that will revolutionize our lives in the very near future. A few days ago I met with two of my research colleagues at IDC to discuss introducing their new findings into our MBA curriculum. Their research could be an excellent way to demonstrate how we are revising our curriculum to adjust to the rapid changes in the industry

My colleagues, Kobby Boudouk and Simon Kogan, both renowned professors in finance, research the effect of information on stock markets. It is well known that positive information, like the success of a product, may cause the stock price to jump on the day of the success announcement. Thus, if you know of it beforehand, you can make a fortune.  That, however, is illegal because it is a trade based on inside information. Kobby and Simon look at a different kind of information- news, the news we receive from newspapers, TV, etc. We receive tons of news every day and it is legal to trade on it. The question is- can we make a profit from it?

It is not easy to profit from news, the reason being is that it’s difficult to understand in real time which news is important and which is "fake news".  Thus, if you look only at “raw” news you don't get much. This result has been well documented for about thirty years. Kobby and Simon were not satisfied with this result and wondered if the invention of new big data technologies could help sort the news better. They spoke to several experts, and they found a Computer Science professor who invented a machine that can quickly scan a huge volume of written English and understand everything, quite an amazing feat!

The machine can quickly read all news, articles, opinions, or communications regarding any piece of information, and sorts it as "good news" "bad news" or "no news" based on what was written.  The result? Now you can trade on the good and bad news that the machine identifies in real time, and make money out of this useful information. That is, sell stocks when news is bad, buy when it is good and ignore when there is no relevant news. Due to the machine, you can now make profit out of news.

How much profit? This depends on the kind of information you happen to receive, and it changes daily. But the value of it is huge. Even if you gain an extra half of a percentage point a week due to this information (this is a very conservative estimate when you have such valuable information), you can achieve an extra 30% annually which is a huge gain. When you out do your competitors with such an amount, you can become a billionaire very quickly. You can’t find any fund manager that can beat his rival continuously by that much. Imagine yourself managing portfolios with this advantage, and now imagine competing with someone who has this knowledge while you don't. That's not a situation you'd want to be in!

What can we learn from this story? As the person in charge of the MBA curriculum, you want your students to be the ones who have the upper advantage. Thus, you have to constantly update the curriculum, and this applies to all areas: finance; marketing; strategy; human resources; etc. Big data and machine learning are changing the way we think and do business. The changes occur so quickly that by the time you finish your degree, the world will be a much different place than when you started.  This is why at IDC we work hard and continually on innovating the curriculum.

Our Year MBA program offers just this type of innovative curriculum. The program, geared towards recent graduates, enables students to study continuously and begin their careers with the added advantage of having an MBA. The One Year MBA offers core courses in finance; accounting; marketing; strategy and management- with an emphasis on innovation, entrepreneurship and coping with challenges fast-growing companies face.


To learn more about the One Year MBA program- click here

         
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