Faculty Spotlight – David Tan

Foster School of Business faculty David Tan was recently honored by Poets & Quants as one of the best 40 under 40 professors. In this in depth feature, David shares about his background, pedagogy and advice for current and incoming MBA students.

 

Please tell us a bit about your background.

I grew up in Southern California. I used to run cross-country and still enjoy running, but since moving to WA, my new favorite hobby is cross-country (skate) skiing.

A lot of my memories from my early adult years revolved around graduate school. I took the GMAT when I was 18 and entered the PhD program at Emory University at 19. I was 24 when I started my first job as an assistant professor teaching strategy at Georgetown University.

As a result of the unique opportunities I have had since joining Foster, I have had the honor of being selected for Poets and Quants’ Best 40 under 40 MBA Professors, appointed as Senior Editor for a top academic journal, Organization Science, and recognized with Best Paper awards from the Strategic Management Society. 

 

What excites you about your subject area and what are some of your research interests?

Competition makes strategic decisions complicated. In the presence of competition, things frequently behave in counter intuitive ways. Doing things that seem on the surface to be in one’s own best interest may turn out to be unproductive or even self-destructive under certain competitive conditions. I think an important role of formal MBA education is to give students tools for thinking systematically about complex scenarios where one cannot rely on gut intuition.

My current research interest is in the social impact of business. For example, in a study of prescription opioid marketing, I examine how competitive dynamics make it difficult to stamp out socially questionable business activities. Even if one firm is forced to decrease its engagement in a socially questionable activity, competitors may step in to fill the void. This is what happened following a lawsuit against Purdue Pharma. Using data on pharmaceutical sales representative visits to doctors, I found that, after the lawsuit, Purdue significantly decreased its promotion of its controversial OxyContin product. However, rather than attempt to distance themselves from the stigma associated with Purdue, other competing prescription opioid firms significantly increased their promotion of competing opioids—to the same physicians previously targeted by Purdue, including in counties where the opioid epidemic was well-known to be severe.

In another study, I found that secrecy shielded the prescription opioid industry from litigation over its role in the opioid epidemic.

In another stream of research, I examine how firms and industry associations attempt to influence the US Dietary Guidelines by influencing beliefs about scientific evidence regarding diet and health. 

 

Which factors influenced your decision to join UW Foster?

Foster is the leading educational institution in one of the world’s leading technology ecosystems, attracting students and faculty who work in some of today’s most exciting fields. I knew that the opportunity to work with the students and faculty at Foster would shape my thinking and my growth as a researcher and teacher in new directions.

 

Any favorite memory from your experience with Full-time MBAs/evening MBAs? 

I really enjoyed seeing everyone at this year’s C4C Auction. The students put on a wonderful event for great causes. And I’m always happy when I get to see Dubs.

David Tan with Dubs

How have you supported students outside the classroom? 

I really enjoyed my experience mentoring a team of my students for the PNC case competition in the fall. It was a really unique and challenging case that required students to understand the complexities of the banking system and to think both critically and creatively to come up with a new product idea. I found it especially interesting to work with my students on this case because in addition to using concepts from our strategy class, I was able to share insights from two other aspects of my work at Foster outside of the MBA program. I taught a PhD class where we covered the risk-return profile of small businesses, and I worked with finance colleagues to analyze data on peer-to-peer lending. The team went on to win the PNC case competition. 

 

How do you maximize learning and keep students engaged?

I try to make my class a dynamic experience, especially the case discussions. This includes trying to set up the flow of case discussions in such a way that students feel a bit of the sensation of uncertainty and ambiguity that real decision-makers would have felt at the time of the cases. At a cognitive level, the most significant learning occurs when our brains are confronted with a sensation of surprise and forced to rewire mental connections representing previously held beliefs about how the world works.

Eliciting a true sensation of surprise at a cognitive level is much more challenging than simply telling students at the outset what the outcome was in a case and what lesson we should take away from it. It is especially challenging because for real-world companies, it is easy for students to look up what happened to those companies after the end of a case. So one of the things I try to do beyond published cases is my own background research to find lesser known facts and ideally historical quotes and company documents from the time of the case to try to recreate for students what people believed and expected at the time without the bias of hindsight. I believe that experiencing a genuine sensation of uncertainty and surprise is important for students to truly internalize a lesson and be capable of applying it in a forward-looking scenario where they don’t know yet what the actual outcome will be.

This aspect of my class is inspired by my research on the cognitive psychology of human reasoning, specifically on hindsight bias and the distinction between forward and backward reasoning. When we’re engaged in passive learning, such as listening to lectures or reading textbooks, the cognitive process that we are probably using is backward reasoning. This is extremely common, for example, when reading popular press or news articles about business events. We begin with the ending of a story and work backwards to figure out how we got there.

However, for the purpose of teaching students how to make decisions, backward reasoning has a tendency to result in oversimplified learning. This is because things tend not to seem surprising in hindsight. Knowing the ending of a story biases our minds towards seeing only reasons why that ending was inevitable and away from seeing reasons why different endings might also have been plausible.

In contrast, when our brains engage in forward reasoning, i.e. trying to predict how a story will end, our brains experience a cognitive sensation of surprise when the ending turns out differently from how we predicted. This sensation of surprise triggers a realization of ways that our earlier mental models may have been insufficient and triggers the formation of more complex mental models. This cognitive process is the kind of learning I try to elicit in my class. 

 

How have your relationships with industry experts influenced what happens in your class? 

In addition to the Full-time MBA program, I teach strategy in the Technology Management MBA program, which consists of students currently working full-time in more senior managerial positions in the top tech companies in the area. Every year, I learn new insights about real-world issues that these managers are dealing with, and I use these to update my course content. 

 

Any tips for incoming MBAs on how they can brush up on skills/knowledge over the summer?

No need to do too much. Maybe brush up on basic economic concepts. What is a fixed vs variable cost? What is the difference between a marginal cost and a fixed or variable cost?

Avoid spending time before the start of the program reading popular press books consisting of mostly business jargon. 

 

Please tell us briefly about the structure of your course – what can students expect to master by the end of it?

My course covers the core frameworks for corporate-, firm-, and industry-level strategic analysis. My course is also intended to give Foster students an edge by going beyond the standard strategy curriculum taught in most MBA programs. In addition to providing standard instruction about how to apply standard strategy frameworks, my course is designed to help students “think strategically” in a broader and more fundamental sense.

Most decision-making considers “local” marginal profit implications of a course of action, where “local” refers to short-run, direct, intended implications that are operationally proximal to a course of action. By the end of my course, students will ideally be capable of considering not only “local” but also “global” implications, where “global” refers to long-run implications that might be unintended, indirect, or operationally distal to a course of action.

 

What advice do you have for first year students to ace your course?

The most important thing is to be mentally engaged in class. Strategy is not just a set of concepts but a way of thinking. There is no textbook. Concepts and frameworks can be understood at a surface level through reading and passive listening alone, but the most serious learning occurs actively through the process of attempting to make sense of complex and ambiguous scenarios during in-class case discussions. As I mentioned, at a cognitive level, the most significant learning occurs when our brains are confronted with a sensation of surprise and forced to make more complex mental connections. This is not something that we can simply ‘will’ our brains to do through conscious thought. It has to be genuinely experienced because the rewiring occurs on a subconscious level. I have structured my case discussions to try to elicit the cognitive sensation of surprise. But for the process to work, students must be mentally engaged.

Moreover, cases will become increasingly complex over the course. This is important because after students have absorbed lessons from earlier cases, subsequent cases must be increasingly complex in order to keep eliciting new sensations of surprise. However, this means that if one has not absorbed the lessons from earlier cases, the increasing complexity will simply make subsequent cases seem increasingly random. At a cognitive level, things that the brain perceives as random do not trigger learning. As a result, it can become difficult to follow later cases if one has not been consistently engaged in earlier cases. For all of these reasons, the most important thing in this course is to stay mentally engaged. 

 

How will students apply the knowledge and skills they gain in your classroom in their careers?

The corporate and competitive strategy course is probably most relevant to product management and consulting career tracks (including for interviews in these career tracks). The course deals with decisions at the intersection of external market conditions and internal operations. The way I teach the course is heavily case-based and designed to provide an opportunity to practice decision-structuring skills. Students must confront complex and ambiguous scenarios and try to come up with structured ways of making sense of these scenarios so that decisions can be made in a systematic (as opposed to haphazard) way. My case discussions are also designed to help students think about complex interdependencies across different facets of a business and therefore help them think about broader, less obvious implications of decisions, including unintended implications. These skills are important for careers that require individuals to confront open-ended problems and/or take responsibility for outcomes at more holistic levels.