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Every beginning is a consequence – every beginning ends some thin.
~ Paul Valery
I kid you not; it is 2:52am according to my computer. I just got home from one of those nights that you wish wouldn’t end. I said goodbye to a lot of close friends who graduated today. We laughed, and danced, and drank the night away.
I know that it has been a while since I wrote, and I did not say anything about Ivey’s elective cycle. What could I say? It was an exhilarating six weeks full of simulations, negotiations, presentations, and genuine business opportunities. I enjoyed it very much, and I would have had much to say if my workdays weren’t 12 hours long. But no matter, it was worth it.
Today was convocation, and Ivey’s MBA graduates crossed the stage. As a JD/MBA student, I could not go with them; the nature of my program is, understandably, that I do not get to receive either degree until I complete both. In one year’s time I will finally have my MBA, but I will always remain a proud member of the class of Spring 2009.
Do you want to know the reason why you should choose Ivey for your MBA? It is this: we care about each other.
As you probably know, Ivey’s main competitive advantage is it’s alumni network, but to say it that way sounds cold, unfeeling, and, well, business-like. The truth is that Ivey’s network runs much deeper: it is about fellowship, friendship, and to a certain extent love. Every member of this graduating class has earned my respect and, more importantly, my trust. To a certain extent, each Ivey alumnus now has my respect as well; after all, Ivey’s admission process is rigorous. It was no coincident that this certain group of students was admitted last year, and it was not coincidence in years past; which students make up the next generation will not be a coincidence, either. If you are offered a spot at Ivey, take it because you will fit in. As the career management team is fond of saying, no one gets into Ivey by accidence.
Last week, Ivey held its biannual semi-formal, and I began chatting with a new student. I told him, give your peers your very best and watch as you receive theirs right back. You can learn something from everyone all of the time.
There is not much more that I can write in this blog, except that it will not be my last. You have another year of me, yet, dear reader. With the exception of a few business electives that I must take at the end of the summer to complete my MBA, the rest of my education lies in the faculty of law at Western. However, I am quite suspicious that the rest of my legal education and apprenticeship will symbiotically tied to my time at Ivey.
Congratulations, Class of Spring 2009.
Flexibility, Please
Blame the current economic crisis on too much debt taken on with too little research.
Nobel Prize winning economist Myron Scholes lectured at the University of Western Ontario’s Faculty of Law on March 19, packing the faculty’s largest classroom to overflowing with students, professors and businesspersons curious to know what the Professor (Emeritus) of Finance from Stanford University had to say about today’s financial doldrums.
Scholes, who won the Nobel Prize in 1997 for work on the Black-Scholes Options Pricing Theory, was speaking as part of the Torys LLP Business and Law Pre-Eminent Scholars Series.
When financing operations, business organizations can choose between raising equity by selling shares, or taking on debt. Often they prefer debt financing because interest on debt is tax deductible.
Leading up to the crisis, financial institutions leveraged debt heavily, which means the outcomes, whether positive or negative, would be magnified.
One of the main problems with the current debt market, Scholes suggested, is the debt rating system. Under the current regime, debt that is considered high quality is low risk for investors. By comparison, debt that is rated lower is considered more risky — and with that weighting comes a greater promised rate of return.
Scholes offered several criticisms of the rating system.
First, he suggested that rating agencies use too little data in making their assumptions. The agencies used data from only the last few years and assumed – incorrectly, as it turned out – that housing prices wouldn’t fall. Had agencies used older data, they would have seen different long-term trends.
Secondly, rating agencies assumed that any losses on housing prices would occur idiosyncratically. In other words, their models did not have a built-in contagion or domino effect.
Thirdly, the current rating system suffers from a “cheapest to deliver” problem. Scholes compared the problem to buying wheat. If wheat vendors are only allowed to put up to X amount of sawdust in their wheat, then those vendors will put exactly X amount of sawdust in their wheat. Likewise, when rating agencies specify precisely what criteria will achieve a high rating of, say, AAA, then companies will do just enough to pass that test and no more. Indeed, they will keep pushing the envelope to get away with doing less.
In the future, Scholes said our economies will need a design with more flexibility. Flexibility refers to the ability to protect oneself with financial reserves.
During prosperous times, keeping reserves, such as money in the bank, instead of investing is seen as costly. However, a policy based on the preservation of some flexibility will signal to people that having options is a part of life. By example, carrying an umbrella when it does not rain is burdensome; not carrying an umbrella when it starts to rain is more burdensome. As people become afraid, they build up excess amounts of reserves and money stops flowing through the economy.
Ultimately, Scholes argued that the cost of being reactive is gigantic. Financial and political leaders should think about developing proactive solutions that build flexibility into our economy.
The Torys LLP Business and Law Pre-Eminent Scholars series is one of Western Law’s most popular courses. Each month one of the world’s top legal and business scholars presents a paper in his or her area of expertise to Western law students.
Cross-posted from the Financial Post Executive Blog and the UWO Law site.
Catching Up
Cross-Posted from the Financial Post Executive Blog
I’m surprised how long it’s been since I last wrote; my life has been a whirlwind of activity for the past several weeks. Let me bring you up to speed.
I’d like to start with ‘Obiter Dicta,’ Western Law’s annual charity talent show. The phrase ‘Obiter Dicta’ originates from the legal term for parts of written judgments that aren’t legally binding: it is Latin for ‘by the way.’ Western Law has a lot of talent, and it was a lot of fun to watch the various musical and comedy acts. Each class also makes a video and displays it to the rest of the school. The night is a lot of fun and always one of the big highlights of the year. I even went up on stage to play my guitar for the audience, and I don’t normally like to do that.
What I noticed most during the show were the third year students. For them, the night marked the very last ‘Obiter Dicta’ that they would attend. Near the end of the night, there was a great sense of nostalgia in the air, especially as the student council president got up and blew the audience away with his own law-school cover of Vanilla Ice’s Ice, Ice Baby. Not long ago, I asked a friend of mine who is articling in Toronto whether he’s enjoying working. He looked away for just a moment and responded, “Yes, I really am. But at the same time, my advice to you is to enjoy every moment of law school. It just won’t happen again.” I am sure that at the talent show, the third years were thinking something similar, just as I am sure that those words will be on my mind next year, at my last ‘Obiter Dicta.’
I didn’t have too much time to think about it because I had final exams shortly after. I think I may have mentioned this in a previous blog, but at Western, a joint-degree student’s second year is split between the faculty of law and the Richard Ivey School of Business. I took one night off to attend “Obiter Dicta,” and then I went back to studying for my business exams: marketing, operations, and information technology. Business exams at Ivey all have a very large strategy component to them. In some ways, it is frustrating because as a student you spend so much time studying concepts, only to spend half an exam discussing strategy. On the other hand, I get it: Ivey’s director of recruitment told me once that they try to admit students who seem like they would make good CEOs. The underlying philosophy is clear: Ivey wants its grads not only to understand business concepts, but also to have the ability to apply those concepts to a certain set of facts and make a well-informed decision. I wrote the exams while doing my best to keep that idea in mind.
Exams weren’t the end of the module, either. The next week – last week – my class took part in a marketing simulation, done through a computer program. Teams of students made decisions about what attributes to give products and how best to market those products. The teams were then pitted against each other to grab market share in two hypothetical target segments: one mature, and one new. The simulation required a great amount of decision-making, and an even greater amount of teamwork. It was a lot of fun, a lot of stress, and ultimately (in my opinion) a significant part of the learning experience at Ivey.
Speaking of marketing let me tell you about ICP. All Ivey students are required to work in teams on a pro-bono Ivey Consulting Project (ICP) for a real client; my team developed a marketing plan for a local London business. It was a project that we had been working on since the fall of 2008, but in the last few weeks the work really picked up. On Monday, we handed in our final report. I am pretty satisfied with the results; when we began the project I thought I knew what our recommendations would be. As the project continued, it was incredible to see which ideas were wrong, which ones were right, and which ones were right but for the wrong reasons.
Around the time that SABRE happened, I got an email saying that I was accepted to study abroad next fall at the University of Limerick, in Ireland. I was very happy when I got the news because Ireland was my first choice for exchange. I had visited Dublin before, and had a fantastic time. Did you know that Guinness tastes better over there? Also, going on exchange to Ireland means a great opportunity to spend a few weekends visiting the rest of Europe. I’m really looking forward to the fall semester.
And now I am on reading week. To be honest, I needed the break, but I’m already getting a little restless. I’ve been so busy recently that I didn’t notice how much fun I had. As I tread ever closer to the end of my life as a student, I know that I will remember my friend’s words more. So far, at least, I’m enjoying every moment.
My Brand (As a Joint Student)
Cross-posted from the Financial Post
When I was an undergrad, Western law had the reputation for being the “business” law school. Indeed, Western makes an effort to distinguish itself through this brand; in fact, one of the criticisms levied against the school is that it is too focused on business law and not enough on other concentrations, like family and criminal law. I don’t mind. It is the corporate law brand that I’m interested in.
It was never clear to me exactly how Western law got its reputation, until a friend of mine pointed out to me that Western itself, had always been known as the “business” university, thanks to Ivey. Rankings notwithstanding, Western has always been home to the oldest business school in the country. Ivey places great emphasis on alumni relations, who spread the reputation through their words and deeds, and the business reputation continues. As far back as anyone can remember it has always had a great reputation. The entire university benefits from that brand, including the law school.
In this blog, I have often sung the praises of Ivey, without giving the faculty of law its due. I chose Western based on a number of factors, including its reputation, and I haven’t questioned my decision since. Midway through my degree, I am still in awe of many Western’s law students whether they are in the joint program or not. They are more than just smart: Western law students are smart in a way that’s useful.
Just the same, I confess that I feel a special connection when I meet joint-degree students, whether HBA/JD or JD/MBA. I think that every joint student here does. In fact, it’s the same feeling I get when I meet someone who graduated from McGill (my undergraduate alma mater). It’s the feeling of sameness, that feeling of association. Anyone who has ever been involved in the Greek system of fraternities and sororities probably knows what I’m talking about. If you’ve ever traveled to another country and randomly met someone from your hometown, you probably know what I’m talking about too.
A handful of students have just received offers of admission into the JD/MBA program. The way the program is designed, they apply before or during first year, and begin the program the following spring after their law school final exams are done. The new class starts business school this May, just as I started last May. Knowing what I now know about the program, I am very excited for them all. I am also excited for the long-term future of the program. The more time I spent in the program, the stronger the bond I felt to the program’s brand, and the more important it became to me that next year’s class succeed.
Today I received an email from one of the new students in the class, who wants to organize a clothing sale for the group. Last summer I organized one, so when I read the e-mail I smiled. The surest sign that any academic or social group will succeed is when the next generation wants to become actively involved.
Growing up, my father always told me: you’re only as good as your next sale. In other words, always try to do better. If you didn’t do great last time, you’ll get better; if you did great last time, there is no reason to be arrogant and become complacent. Western law wasn’t complacent: it matured its business law brand by recruiting the top business law academics in the country. Ivey matured its MBA brand by restructuring the program to stay competitive in a world that emphasizes a one-year degree. The three-year JD/MBA brand at Western/Ivey is still very young, so it’s hard to see how exactly it will mature; but if every generation going forward brings in students who want to get involved, then I can only foresee success for my program and my brand.
