I have been apart of
many organizations on campus ranging from groups focused on investments to
non-profit work. Some of these
organizations are over a hundred years old and others I have personally founded
and structured based on other successful organizations. My business fraternity
and social fraternity have strict guidelines, internal chain of command and
decision-making processes that have been passed down for decades. I recently
co-funded the investment management academy (IMA) through the college of
business, which is designed to help students learn about portfolio management
and ultimately break into the asset management industry. Still in the early
stages, there is a lot of flexibility to change policies and direction as
needed. Starting this organization was not easy and required a lot of “Social
capital”, one might say the initial transaction costs revolved around
politically motivating the necessary channels to issue support and approval for
the group. As time has gone on and traction has increased the transaction costs
have decreased as we find it easier to set up events, recruit new members and
take on new initiatives. In contrast, my business fraternity has extremely low
transaction costs as economies of scale and time has helped make the
organization more efficient. I’ve found that transaction costs, or using social
capital, is very similar when describing how businesses operate externally in
terms of dollars and cents. I am interested to see how we expand upon this
topic in class.
This post is pretty skimpy on content. I understand from the email thread we had that there were extenuating circumstances. But those don't exempt you for doing the work. In future posts I'd like to see more evidence of your effort and a greater volume of prose.
ReplyDeleteFor instance, here you went so far as to describe the goal of IMA (answer the Why question). But you didn't discuss whether students can also learn these things from classes they might take or from reading some self-help books. If they can learn in these other ways, then it is less obvious that IMA should exist. If they can't learn in these other ways, does this represent some sort of market failure, where there is a demand for the thing but the market is not providing it? Or is something else going on?
Then you also might have spent some time on how IMA would deliver on the goal. Having a club goal is not sufficient for the club to exist. There needs to be some sense that the goal can be reached. I gather from your brief discussion of transaction costs that there is still learning by doing on this. But you still should have discussed your early intuition on how IMA would reach its goal.
On a different matter, you are of course free to use your real name, if you want. But you have your alias precisely so you don't have to do that. If on reconsideration you prefer not to use your real name, just edit it out from the bottom of your post.
Professor,
ReplyDeleteI will be sure to to add greater detail in the posts going forward. Hopefully I can shed some more light on the IMA and my experiences within organization here, in this comment.
As mentioned above the goal of the IMA is to give students the investment management skills required to secure an entry-level job in the industry. In addition to those skills, we also will provide them the opportunity to network with future employers to help with the recruitment process and also gain a deeper industry perspective on career paths/day to day life. Right now, students are able to study using online resources, network at career fairs and create their own online brokerage accounts. However, simply put, these traditional strategies are not "good enough". Other schools in the big 10, our direct competitors for these jobs, provide their students with far better resources then students here at UIUC have access to.
The goals of IMA are extremely realistic and will likely surpass expectations. The organization will not only tie all the necessary learning elements into one collective mission, but will also benefit from several sponsors who have strong enough clout to bring in the 3rd party professionals the University does not have access too. The finance department here at UIUC certainly represents a market failure. The students are extremely interested to take part in the IMA and dedicate their time to achieving their personal goals, but up until this point, there has been a lack of support from the University to provide resources to such a group. It is much easier to maintain the status qou and say “no” to change rather than having University members back a new initiative that might take more effort than the beaten path. Luckily, we presented our case and built up momentum. In the past 20 years 3 separate groups of students have attempted to create an organization like the IMA, but faced red tape at the University level. One huge element to our success was articulating the benefits the University will receive with increased alumni support and reconnecting with lost alum in the investment management industry. To my knowledge, the business development office has had trouble connecting with some of these individuals in recent years. To further the point – 20% of the University of Wisconsin's total yearly alumni donations comes from students who participated in their on campus investment management organization. The opportunity cost of not creating such an organization here was far too great for the university to ignore.
The organization reaches a far larger goal for University initiatives. Create more organizations that tie real world learning, professors and alumni together. This strengthens school spirit and ultimately encourages alumni to stay active and donate. This type of culture is slowly building in the college of business from the finance perspective. The investment-banking academy is another initiative that has proven to be wildly successful with a 100% job placement rate and regular visits from “lost” alum.