Rotman Dean to Government: Give the basic research funding to business schools not scientists

Dean Roger Martin’s remarks in the Globe and Mail yesterday threaten Canada’s intellectual infrastructure and therefore merit the attention of all Canadians, especially policymakers planning the upcoming federal budget and researchers in Canada’s universities. Amazingly, he asserts:

“What makes a country prosperous is not investment in science and technology. It is businesses producing high paying jobs by having unique products and processes that a customer needs.”

Who does he think creates those products and processes? Business majors? His observation will come as a shock to the Chinese, who are working hard to build a competitive modern economy by investing heavily their research resources in the basic sciences and engineering in their universities, not in business schools. They know these investments will create the industries of the future, just as they have for the west in the past.

What is amazing about Martin’s claim is that virtually all of the “high paying jobs” in industries with “unique products and processes” – those leading edge industries like communications technology, pharmaceuticals, bio-technology, etc. that Martin so casually dismisses, have products that are the result of investment in university-based research in science and technology.
In the United States, Silicon Valley, which houses many of the companies he says are now led by CEOs with business degrees, was created by scientists and engineers from Stanford and the University of California.
Indeed, it would be difficult to identify a single industry today that was not based on a scientific or technological innovation of the past.
Business does not create business; creative innovation creates business.

After claiming that Canadian business schools are broke ($200M Campaign, New building), Martin cites statistics comparing the percentage of students in a discipline versus the percentage of tri-council research funding given to that discipline. Martin argues that the percentage of students in a discipline should equal (or at least influence) the percentage of tri-council funding given to that discipline. This is a terrible idea. Martin appeals here to the value of fairness (“In business….it’s a 10 to 1 cut”). If taken seriously, Martin’s reallocation plan restricts policymakers from defining the government’s research investment portfolio; it prevents them from making targeted investment decisions. The plan potentially forces money to be poured into disciplines which happen to be popular with undergraduates at the time (whether frivolous or not). Science policy should not be determined by a popularity contest among undergraduate major choices. I prefer the old ways to think: scientifically, strategically.

Roger Martin’s viewpoint will hurt Canada in the short and long term if taken seriously now. Basic scientific research has produced (among other things):

• electricity (why you aren't in the dark, can take an elevator in a high rise, and have clean laundry)
• vaccines (partly why you are not already dead)
• transistors (performing the basic functions on which computers are built, enabling the internet)
• encryption (why you can safely make financial transactions online and make other secure communications)
• combustion engines (how your car generates power for motion)
• financial derivatives (so that insurance companies and banks can prepare for risks)
• search engines (how we manage information overload on the internet)

What percentage of the workforce relies on these developments? In contrast, what basic elements of the modern economy can be attributed to MBAs? (Perhaps MBAs can claim to have invented mortgage backed securities and credit default swaps leading to to the financial meltdown of 2008- 2009?)

Martin highlights a list of technology companies (Hewlett-Packard, IBM, Microsoft, Apple, Cisco and Intel) and reports that many of their CEOs have MBAs. Look up the history of these companies and you will find:

• Bill Hewlett and David Packard were electrical engineers.
• Microsoft
  • Bill Gates was a math major/computer scientist at Harvard before founding Microsoft.
  • Paul Allen also studied computer science.
  • Steve Ballmer majored in mathematics and economics.
• Apple
  • Steve Wozniak is a computer scientist and an electrical engineer.
• Cisco
  • Len Bosack started as a computer scientist.
  • Sandra Lerner has a Bachelor’s degree in political science, a master’s degree in econometrics and a master’s degree in statistics and computer science.
• Intel
  • Gordon Moore PhD in Chemistry and minor in Physics.
  • Robert Noyce Ph.D. in physics
• Same story for google (Sergey Brin is a computer scientist/mathematician, Larry Page is a computer scientist).
• Same for facebook.
• Same for Research in Motion, ….

MBA CEOs may find efficient ways to bring widgets to the market and make a profit in the process. But the widgets are invented by scientists and engineers through basic research targeting science and engineering, not business education or business research. Business majors and MBAs are important in the operations of businesses that create new products, so business education is important. But to suggest that it is primarily responsible for new products and innovations creating business is just plain wrong. Misconceptions about the impact and role of basic research funding by business leaders may be one of the largest obstructions currently contributing to Canada’s innovation gap.

The challenges we face in Canada, and as human beings on earth, require new ideas. The long research lines of science (pioneered by Galileo, Newton, Gauss, Euler, Darwin, Riemann, Einstein, Curie, Schrödinger,…,Banting, Polanyi,…) have consistently produced innovation and prosperity, and therefore merit vigorous and consistent government funding.