Yesterday Darden had more news about rankings. The changes in these metrics are always a point of wonder. In the Economist poll, Darden maintained its 10th place among U.S. schools and rose one notch to 13th worldwide. In the Economist’s detailed categories, Darden ranked 8th for personal development, the educational experience, increase in salary and potential to network. In the BusinessWeek results, Darden’s place fell to 15 from 12 two years ago.
Including the latest news, since August, 2005, Darden has risen in five rankings, held even in two, and fallen in two. What are we to make of this action?
My first piece of advice is to think critically about what the rankings truly say. The rankings are based on average scores for the various schools. None of these publications divulge an equally-important statistic, the standard deviation—without this, we cannot tell whether the changes in position or differences between schools are statistically significant. Therefore it is hard to say whether the rankings or changes in rankings are really meaningful. Without a test of significance, you can’t distinguish signal from noise.
Second, in a noisy world you must have your own “view.” In the Berkshire Hathaway 1987 annual report, Warren Buffett repeated a story told to him by one of the godfathers of investing, Benjamin Graham. “Mr. Market” was a nervous person who showed up every day to deal in the stock of your company. Some days he wanted to buy; some days he wanted to sell. There was little constancy or method in his behavior. Buffett has generally argued that traders who try to imitate or anticipate the actions of Mr. Market typically go broke. The traders who survive and prosper rely on their own view as to the intrinsic value of the stocks they are trading. Buffett said, “Mr. Market is there to serve you, not to guide you.” Buffett’s message is simple and profound: you must do your own homework and develop your own view as to the worth of an asset as a basis for dealing with a noisy and possibly irrational world.
I and my colleagues pay attention to rankings because we know they influence prospective applicants, faculty hires, corporate recruiters, alumni, and donors. Our brand matters. And with each new ranking we will listen for opportunities to improve. But as the story of Mr. Market suggests, the rankings are there to serve us, not to guide us. We will respond to the information in rankings from the perspective of our deep and rigorous view of Darden and its place in the field of management education. We don’t change strategy with every fresh piece of rankings news. We will execute with constancy our strategy and initiatives aimed at achieving and sustaining a commanding position in the field of management education.
Posted by Robert Bruner at 10/13/2006 09:25:49 AM