OR/MS Today - June 2000 - President's Desk

June 2000

President's Desk

The New College Major: Pre-CEO

By John Birge
jrbirge@nwu.edu

"Is there a pre-CEO major?" a student at my university asked recently. She was contemplating her various degree options and was not too enthusiastic about any specific discipline. She did not think she would enjoy traditional pre-professional options, such as pre-law or pre-med, but saw the rapid rise of many young entrepreneurs and felt that was her calling.

My eighth-grade son had a similar comment in listening to his classmates, many of whose parents have benefited from recent IPOs. "A lot of the kids' parents are CEOs. That sounds like a really good job. What should I study to be a CEO?" he asked.

These apparently are not isolated incidents. According to the career planning and placement director at Northwestern University, the young CEO has replaced the rock star as the hot new career ambition among teens and college students. Instead of following their parents' generation and learning how to play guitar to be the next Eric Clapton, they are searching for skills to prepare them to be the next Bill Gates.

The Fundamentals

Operations research can be the foundation for these skills and even the core of a pre-CEO major. The chances of ultimate success for the budding pre-CEO are probably no higher than that of the would-be-rock-stars of the past, but certain fundamentals are evident and can help in any career. The list is probably not as easy as the three or so chords that enable a novice guitarist to limp through most rock songs, but understanding a few OR principles can be almost as necessary as those chords for at least starting on the CEO path. In analogy to the guitar chords, I will give three principles of OR that seem indispensable for the successful CEO.

My first requisite OR skill for the aspiring CEO is the ability to define measurable objectives. Without clear objectives or a means of measuring progress toward those goals, the CEO cannot lead and direct an organization. As Larry Bossidy, AlliedSignal CEO, says in "Lessons from the Top," "leadership is about vision," which is all about setting objectives.

From the operations research perspective, defining objectives and their measurement is always among the first concepts taught in any OR curriculum. While OR is the science of decision-making, an objective guides the decision and determines how it can be reached. Choosing objectives and their measurement is one of the keys to successful OR and a necessary part of the OR toolkit.

My second fundamental in the pre-CEO curriculum is the skill to identify alternative actions, a key function of a new business. The CEO needs to know what options are available and often how to think of options that go "out of the box" to gain a competitive advantage over rival organizations. As Charles Wang, CEO of Computer Associates, says to emphasize innovation and small-business thinking in "Lessons from the Top": "I always tell my people the biggest challenge we have is to continue to think like a small company. If we lose that and start thinking like a bureaucracy, then we are in trouble."

In operations research, identifying available actions, how they relate to one another, and how they impact available resources is another of the first concepts in any OR curriculum. These concepts lead to a powerful OR methodology with the inherent ability to go "out of the box" by breaking down actions to elementary choices representing a multitude of individual decisions that can be combined in an infinite number of ways. This solution methodology then can yield "out-of-the-box" responses by unveiling solutions that reach beyond what can be conceived without OR.

The ability to manage and understand the role of risk and uncertainty is my third fundamental OR tool for the pre-CEO. Taking and identifying acceptable risks is a key to success as a CEO. As Candice Carpenter, chief executive of iVillage, notes in The New York Times (Nov. 21, 1999), "The risk of walking away from what's known and guaranteed ... looks like no big deal. But when you do it, you're taking a big risk. Our culture happens to reward that behavior, which is one reason it's a great country," and why some CEOs find great success in taking those risks.

Understanding Uncertainty

Understanding the role of uncertainty in decisions and the analysis of outcomes is another essential OR skill introduced at the beginning of a curriculum. The fundamentals of decision-making must incorporate the consideration of risk and various ways to describe relative tradeoffs among outcomes with varying levels of uncertainty. This skill can provide the essential information to distinguish acceptable from unacceptable risks.

The building blocks of defining objectives, identifying alternatives and managing risk are fundamentals that can serve any CEO. Together they incorporate much of what we think of as the science of decision-making. They also are the basic ingredients in formulating a corporate strategy. OR can indeed form the cornerstone of a new curriculum for the pre-CEO, even those who never get beyond the corporate equivalent of the basement band.

I would like to hear your thoughts on the fundamentals of the CEO and how they may or may not relate to operations research skills. Please e-mail any comments to me at jrbirge@northwestern.edu.

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