Practicing professionals are rarely presented with problems as neat and clean as those in the classroom. Real-world problems are often incompletely understood, vaguely specified, and connected to a variety of other issues in ways that only become apparent when one tries to solve the problem. Or to put it differently, the tools of the classroom are not sufficient to solve complex real-life problems.
As educators, we hope what we teach is helpful, but we recognize that much of the wisdom of practicing professionals is acquired "in the field." In the field, professionals learn how to improvise workable solutions to client's problems in the presence of competing priorities, and the accumulated experience of such improvisational problem solving is what turns wet-behind-the-ear students into seasoned professionals capable of innovative leadership.
At MIT Sloan, we believe it is possible to give students an early taste of professional, client-focused problem solving through what we call "action learning." Our Master of Finance students do this through our Finance Research Practicum in which they work in teams on research questions posed by businesses and other organizations.
Because the research questions derive from actual business problems, they are often only partially defined. For example, one sponsor recently asked a student team this question: How has the European credit crisis affected the pricing relationships between credit default swaps and the underlying bonds on which the credit default swaps are written? Although this appears to be a fairly clear question, there are so many ways a student could begin to explore it that additional definition is necessary.
This is the type of question that we want for action learning--one that has enough focus to define the general topic area, but that also requires students to "wrestle" with it to make it more specific. This wrestling is a key part of the practicum and an integral part of the learning process. Students need to impose a structure on an unstructured problem; this is very different from what occurs in the classroom where structure is readily provided. Finding the right structure for the problem requires creativity and also requires dialogue with the client, as a key test of a project's success is whether or not the students produce something useful for the client.
It's not uncommon for students to begin a project thinking they are assigned to answer one question, but a week later have a different definition of the project. For our purposes, this is a good result. After all, most real-life projects don't come with instructions for problem solving and the original question often leads to even more questions. In the case mentioned above regarding credit default swap pricing, the question morphed into: How should we price credit default swaps when the markets for both swaps and the underlying bonds have stopped trading?
Reflection on and communication of their experiences is also critical to solidify the learning gained from bridging this gap. While working on their projects throughout the winter, students are encouraged to talk to assigned mentors when they need help. We also suggest that they keep a journal about the different steps involved in their project as well as their own learning process. They may be stumped for several days on an issue or they may face a client relationship challenge so we ask them to track all of those ups and downs in a journal. The journal is part of the learning phase involving reflection; students need to take a step back and reflect on what they are learning on a regular basis.
The end result includes a deliverable for the client as well as a class presentation on their question and their overall learning experience. It's important for students to crystalize and articulate their new knowledge, and to hear how other teams addressed different challenges.
By the end of the practicum, students have gained content knowledge, technical expertise with various tools, and client relationship skills. More than that, they've experienced what it's like to bridge the gap between classroom knowledge and use of that knowledge to solve a complex and nuanced problem for a client. This requires creativity and improvisation and a thorough understanding of what the client is trying to accomplish. In short, to succeed with the practicum, students must learn to act as professionals. This is one of the ways we develop innovative financial leaders who will improve the world.
John Minahan is a Senior Lecturer in the Finance Group and Instructor for the Finance Research Practicum at MIT's Sloan School of Management.