INFORMS President has Ambitious Agenda

When Don Kleinmuntz took office as president of the Institute for Operations Research and the Management Sciences (INFORMS; see accompanying story) in January, he arrived with a long to-do list. Among the many items on his agenda:

• offer more products and services to the practice community;
  
  
• boost recognition for the profession in the broader world;
  
  
• identify new initiatives to move the profession and the organization forward;
  
  
• launch new publications; and
  
  
• grow membership.

While not exactly of Obama-ian proportions, Kleinmuntz’ agenda is certainly ambitious and optimistic, a reflection of his persona.

“I’m passionate about the organization and the field and what it means to be involved in this business,” Kleinmuntz says. “Very broadly defined, we are about using data and analysis to make better decisions. I felt I could contribute to the organization, keep doing what we’re already doing very well, and build on those strengths by identifying areas for growth and new opportunities.”

As the co-founder of Strata Decision Technology (a software development company) and the holder of a part-time research appointment at the University of Southern California, Kleinmuntz clearly has enough on his plate without the added chore of presiding over an organization composed of 12,000 opinionated analysts and academics from around the world who don’t always see eye to eye. Yet Kleinmuntz, like virtually all of his predecessors in the INFORMS presidentialpost, believes in giving back to an organization that has given so much to him in terms of career development and lifelong mentors, colleagues and friends.

“I made a conscious decision 10 or 12 years ago at an [INFORMS meeting] that I wanted to be very involved,” Kleinmuntz says. “I saw all the things that excited me from a professional perspective, and I was impressed with the people I met through my involvement with this organization. I started looking for ways to contribute to the Institute, and this just seemed to be the next logical step in that continuing process.”

Through his work with Strata Decision Technology (SDT) and USC, Kleinmuntz comfortably straddles the line that too often separates practitioners and academics, in and out of INFORMS. SDT, which was founded in 1996 and now has more than 60 employees in Champaign, Ill., and Chicago, develops software for financial planning and resource allocation, focusing on U.S. not-forprofit healthcare. The company has systems in use at more than 1,400 healthcare-related businesses comprising more than 20 percent of all U.S. hospitals. At USC, Kleinmuntz’ research involves applying risk management to counterterrorism.

Previously, Kleinmuntz served on the faculties of the University of Illinois, M.I.T. and the University of Texas. He holds three degrees from the University of Chicago, including a Ph.D. in Decision Research and Statistics.

As the co-founder of a company that specializes in financial modeling, what is Kleinmuntz’ take on the worldwide economic meltdown which some pundits say was triggered by faulty financial modeling in the home mortgage arena?

“It’s hard to tell from outside,” Kleinmuntz says. “We may never know for sure what happened. Perhaps unwarranted confidence in model results contributed. It may have been greed. Maybe it was just stupidity, or some combination of all of the above.”

“Some of the things I’ve been reading in the press suggest that some inputs to the models, such as credit ratings, were made by third parties who may not have been independent, disengaged participants in the process. If the person who is giving you the credit rating gets some money based on a flow of deals like this happening, that person has a complicated set of incentives that could influence the answers they’re going to give.

“Also, when dealing with mortgage-based securities, a relatively new area, they seemed to have limited data on which to base their models. Smart modeling has to take into account the quality of the data that is going into the model as well as the quality of the model itself.”

Ultimately, Kleinmuntz concludes, “Models don’t make decisions, people do. Any time people are involved in the system, there is the potential for human error.” (For more on Kleinmuntz’ thoughts on the current economic turmoil, see “After the Meltdown” (see page 9).

When he’s not managing his company, researching the application of risk management to counterterrorism at USC or fulfilling his duties as president of INFORMS, Kleinmuntz enjoys traveling with his wife Catherine, who is also his business partner. He also enjoys cooking. “I’m self-taught,” he chuckles, “but I can honestly say that nobody has ever run screaming from the house when I cook dinner.”