There is a new section coming to the GMAT. “Integrated Reasoning” is a 30-minute mini-section that will take the place of one of the AWA essays and have its own distinct score. The Integrated Reasoning section requires manipulation of spreadsheet data, and allows there to be multiple correct answers for certain questions. It is a question type that could only be offered on a computer-based test.

Integrated Reasoning Sample Question

Hot off the presses, here’s a sample question from the new Integrated Reasoning Section written by David Yourdon and John Davies on our crack team here at Knewton:

The table and graph below display data on a select group of 2009 Clean Air Choice Vehicles. Select the statements that are false based solely on the information given.

Click to enlarge:

1. Of the models with Gasoline Engine Type, the model with the greatest ratio of City MPG to Highway MPG is also the model with the greatest difference between Highway MPG and City MPG.
2. The minimum City MPG for a Toyota make is less than the maximum City MPG for a Volkswagen make.
3. A model chosen at random from those models with a Highway MPG greater than 30 miles per gallon has a 50% chance of being a Toyota.
4. The median carbon footprint for all models is greater than the mode carbon footprint for all models.
5. The standard deviation of the Highway MPG values for all BMW models is lower than the standard deviation of the Highway MPG values for all Toyota models.

See answer to Integrated Reasoning question below

Jose Ferreira Shares His View on the GMAT’s New Integrated Reasoning Format

Basically, Integrated Reasoning is what the Graduate Management Admissions Council (GMAC) wishes the Critical Reasoning question type could have been, except the technology wasn’t available back when CR was created. To put it even more simply, Integrated Reasoning is Critical Reasoning meets MBA math. What’s MBA math? Stats, data analysis, and probability, all three of which MBA programs have long emphasized in the first semester curriculum. MBA programs have also long complained that many matriculating students lack basic competence in each. (The new Integrated Reasoning section came about in part from the results of 4 years of surveys given to business school faculty members.) In the past, schools have addressed these deficiencies by instituting mandatory math camps for incoming students, and/or offering first semester courses with names like “Decision-Making Under Uncertainty.” (At least, that was its name when I was a student at HBS.) These crash courses cover—you guessed it—stats, data analysis, and probability.

A few years ago, the GMAT began testing simple probability and statistics. But it’s hard to test these concepts out of context. Integrated Reasoning uses innovations in technology and testing to add the context, thereby testing probability and statistics in a more real-world setting.

I wonder how MBA programs and the GMAC will address the fact that many students who apply to business school have little or no experience with these kinds of tasks—and little to no knowledge of how to use spreadsheets. (Although finance and consulting types will find these questions quite easy.) Perhaps admissions boards will still primarily rely on the 200 – 800 score as their admissions criterion, and use the separate Integrated Reasoning score as a flagging mechanism for students who need extra help—kind of like a mini “AP Test” for MBA math, so students who do well can place out of math camp. Or perhaps it will be weighted along with the 200 – 800 in the decision-making process. If so, awkward questions of how much to weight each score are inevitable, and schools will inevitably vary in their approaches. (Just what the process needs – less transparency!)

As for how to prepare for Integrated Reasoning – well, let me just say that I’m looking forward to taking a crack at it! I’ve had my fair share of experience “cracking” test questions, and my experience is that the more highly structured a question type, the more amenable it is to strategic destruction. Any system with formulaic rules in it can be beaten using the weak spots and omissions in those rules. In the ‘90s, I forced ETS to abandon a new test section called Pattern ID due to my strategies. They admitted that I “broke the code, so we are removing the questions from the test.”  Pattern ID’s undoing was the fact that it was highly structured and formula-driven. Integrated Reasoning is much the same—I look forward to finding some pretty fun strategies to “break the code” on this section as well.

Integrated Reasoning Answers: Statements 1 and 4 are FALSE; Statements 2, 3, and 5 are TRUE.

Jose Ferreira is the Founder and CEO of Knewton

When the EU formed in 1998, I was the crazy guy in the corner of the pub ranting to all my friends that it would one day come a cropper. Since there seems to be little appetite in Europe to fully integrate and become a “United States of Europe,” the risk was high that the EU would inevitably fracture—that a member state would one day have to leave. Now former Fed Chairman Paul Volcker seems to agree. As the EU charter stands, it’s unclear how this would occur: the charter has pages upon pages about what it takes to get in, but not a single word about what it takes to get out.
So, under what set of circumstances would a member withdraw? One likely culprit would be a localized recession—like the one happening in Greece right now.

When a recession hits a localized area in America such as, say, Ohio, it might be because the local economy has a dearth of large industries, and those that it does have are suffering. Or perhaps local officials have made a series of poor economic policy choices over a number of years. Often, there’s also a larger downturn affecting the entire country or region. In the case of Greece, all of the above is true.

The EU, against its charter, is bailing Greece out. Much has been written about the similarities between the current financial meltdown in Greece and the one that rocked the U.S. at the end of the 2008. America certainly shares some of Greece’s weaknesses: bitter partisanship, overly influential interest groups, and a spoiled populace that chronically spends beyond its means.
Nevertheless, the respective crises in America and Greece differ significantly—in ways fundamental to the differences between the U.S. and the EU. When the EU was formed and the Euro was adopted, Euro-cheerleaders applauded the efficiency of a unified market for goods and services (including labor). But economic size confers both plusses and minuses. While there was much back-slapping over the desirable effects of European Union, there was little thought given to the negative consequences.

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The San Francisco Bay Area has more VC firms and dollars invested than all East Coast cities combined. But the NY scene has recently been getting uppity. Chris Dixon wrote a story, the NY Times wrote a story, now Silicon Alley Insider. I tweeted that it was all embarrassing provincialism. So who’s right?

Both cities attract the very best and brightest. But NYC has 20 times more.

The best programmers and internet entrepreneurs are in the Bay Area. Don’t kid yourself about that, not even for a second. To paraphrase Reservoir Dogs, NYers who even dream we’re in the same league ought to wake up and apologize. Looking for a young SEO or SEM wiz? Want to have a deep discussion about network effects vs. viral effects? Go west, young entrepreneur. The practical experience and intellectual capital in the Bay Area is light years beyond that of NYC — or anywhere else. Even East Coast VCs — never mind entrepreneurs — barely know what network effects are. They routinely confuse them with viral effects and/or switching costs, or they confuse viral effects with word of mouth. It’s pitiful. It’s only critical to your success, people; no reason to master the fundamentals…

What NYC does attract, year in and year out, is the very best general talent from around the world. The absolute smartest, neurons-just-fire-faster, can-bend-spoons-with-their-mind talent. What MBA types call “athletes.” The Bay Area gets the best of the web. NYC gets the best of everything else. And NYC gets 10-20 times more.

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I’ve been writing more on the Huffington Post recently, and my latest piece is a history of the standardized test prep industry. What started with one man became a massive, international business, and my experience in that business is what motivated me to found Knewton.

Here’s the full story:

The test prep industry began in Stanley Kaplan’s Brooklyn basement just after World War II. The son of Jewish immigrants, Stanley believed standardized tests were some kind of elitist plot to keep minorities out of the Ivy Leagues. His philosophy was that anybody could improve at standardized tests. The testing industry and larger education establishment loudly proclaimed that idea to be wrong, foolish, and practically immoral. But Stanley, standing alone for a long time, was proven right.

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Starting this week, Jose is a featured blogger on The Huffington Post.  Here’s his first piece on the Google-China showdown.

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Google is playing hardball.  After last week’s ultimatum, the search giant appears to have left itself no way out: either China allows Google to operate uncensored or Google leaves China.  Why would Google posture like that?  Surely it’s not serious about leaving China.  What would be the point? Why would a company like Google make feeble idealistic gestures that will hurt its business and ultimately help no one else?

There must be a missing fact that makes this puzzle come together. My guess is that Google can prove that the Chinese government was behind the recent cyber-attack.  There probably isn’t any real proof yet, but all Google needs is enough proof to sentence China in the court of public opinion.

Google’s real threat to China is not that it will leave the country. It’s that it will embarrass China and damage its national reputation as a place to do business.  On the other hand, if Google can convince China to end or reduce the censorship restrictions on its search engine, then Google will have a significant competitive advantage over market leader Baidu.

The way I figure it, Google believes it can pressure to China to loosen, though not lift, restrictions on Google’s searches while keeping them firm on Baidu’s – presumably China can be counted on to do the minimum loosening possible. Such asymmetric loosening would be a significant competitive advantage for Google in the world’s biggest Internet market (and one where Google is lagging behind Baidu by a margin of 2:1).

This is the only sense I can make of Google’s actions. Of course, perhaps they’re just being stupid…

Jose Ferreira is the Founder and CEO of Knewton.

You may have heard that some business schools* have started accepting GRE scores in place of GMAT scores. And you may be thinking: “Awesome! I hear the GRE is easier. I’m taking that!”

After all—there’s no Data Sufficiency on the GRE. Sounds great, right?

The problem is: There’s no Data Sufficiency on the GRE.

The GMAT has been designed and perfected for business school students. GMAT questions mirror the tasks you will perform every day in business school. Reading Comprehension—because you’ll be reading 50 -100 pages in case studies every day. And Data Sufficiency—because you’ll be skimming each case’s exhibits and financials to determine which numbers are key to cracking the case and which are irrelevant. What about Critical Reasoning? Well, every day in class you will comment on other students’ arguments. And they will comment on yours, sometimes in pretty snarky ways. So you need some facility in arguments, if only to protect yourself from that loudmouth ex-banker in the Skydeck.

In fact, the GMAT is a great test. By that I don’t mean that it will bring peace to the world, or spiritual enlightenment, or that a good time will be had by all. I mean it’s extremely well-constructed, with very high scoring consistency. In short, the GMAT does an excellent job of testing the skills you need to excel in business school.

In contrast, the GRE General Test is, well, general. It is designed to provide a sense of the fitness of a student for graduate-level work, whether one is interested in pursuing a PhD in English or a Masters in Psych. But the aptitudes needed to succeed in one discipline are very different from those of other disciplines, and no single test can measure them all well. Success in business, and success in business school, requires very specific skills that the GRE measures poorly, and the GMAT measures very well.

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I wanted to take some time to dispel a fascinating—but unhealthy—rumor about the GMAT. This rumor is best summarized by a concerned Knewton student who wrote me the following:

I was speaking to someone in India in the test prep industry about the GMAT and that person seemed very confident that the database of questions for the GMAT test in India is different from the database of questions in the US and Canada (the pool of questions in India being harder). Have you heard anything like this?

And here is how I responded:

You’ve touched upon some topics that interest me a great deal, so let me give you a longer answer.

The test-makers have always used multiple question pools at any one time, even within the United States. This is done for security reasons, so questions can’t be pirated—something I know quite a lot about. (I once reverse-engineered the computerized test and proved the question pool at the time was much too small, and hence susceptible to cheating. The test-makers pulled the exam for months and implemented the changes I and others recommended—adding more questions, rotating pools, etc.) Question pools rotate every few months. Pools used internationally either just came from and/or will soon head back to North America. These pools are all (almost) perfectly calibrated with each other so that your score on one continent will be—within the margin of error—your score on another.

My suspicion is that you’ve heard some kind of urban myth that has its roots in:

• paranoia that U.S. schools are too full of Indians and want to restrict their numbers
• chauvinism that Indians are smarter/better at math

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