Wednesday, June 10, 2015

Teaching Critical Thinking by Studying Research and Development Costs

Invitation:   If you are attending the annual meeting of the American Accounting Association this summer in Chicago, I am participating in two separate panel presentations on teaching on Monday, August 10.  I would love to have you there as several of us chat about the challenges of becoming a better classroom teacher.  To me, that seems like a topic that could produce hours of fascinating conversation.   Grab me after the panel presentations conclude and we can continue the discussion.  
In almost every entry written over the years for this blog, I have addressed topics that I felt were of interest to all college teachers.   Struggles with student preparation, testing, class participation, and the like probably apply to everyone who enters a classroom each day to encourage and enlighten college students.   History teachers, English teachers, science teachers, accounting teachers and all the rest face similar issues as they attempt to broaden the perspective and deepen the knowledge of their students.

However, today’s essay is almost exclusively intended for people who teach accounting.   It is the topic I know the best.   One of the traditional goals of a college education is the development of each student’s critical thinking skills.   Unfortunately, too much of current education focuses on memorization.   In the age of Google, the importance of memorization has faded dramatically.   In colleges, we face the ongoing challenge of moving students away from memorization and toward the development of critical thinking. 

In this blog entry, I want to explain a short exercise that I use each semester to help students make this transition.  

The reporting of research and development costs provides an excellent topic for the discussion of the theoretical structure that underlies official accounting rules because the handling mandated by US GAAP is unambiguous.   As most accounting students learn rather quickly, US GAAP requires virtually all research and development costs to be recorded as expenses when incurred.   Memorization of these few words requires only a few seconds.  Students are likely to feel a sense of euphoria because they have managed to “understand” an important accounting rule.   However, memorization and critical thinking are two different skills.  

The purpose of this class assignment is to encourage students to go beyond the simple memorization of a basic rule.   I want to guide them through the analysis necessary to understand the logic that led to the rule’s designation as “generally accepted” along with the implications of that decision.   By developing a deeper level of understanding, students will be better able to evaluate how other similar types of costs might be handled.    

Here is the assignment that I distribute to the students 48 hours prior to our class discussion which usually takes place near the midpoint of the semester. 

“A pharmaceutical company develops, manufactures, and sells drugs created to cure a wide variety of human health problems.   Company officials are constantly searching for new medicines that can be produced and sold to the public.   Such additions to the approved product line are essential to the ongoing prosperity of all companies in this industry.   Historically, an average of $10 million in revenue is generated from each new medicine that is brought to the market successfully.   Products that fail to reach the market earn no revenue.   Over the previous 8-10 years, the company has been successful in bringing one product to the market for every three projects undertaken.  This average is consistent with the industry as a whole.

“At the start of the current year, the company began working on three potential new products.   Each is being put through the normal testing process which takes 1 to 4 years to complete.   By the end of the year, the company has incurred $1 million in research and development costs in connection with each of these three projects.   Financial statements are to be produced.   Company officials evaluate the likelihood of eventual success for each.   They believe that Project A has a 90 percent chance of being brought to the market, Project B has a 60 percent chance, and Project C has a 30 percent chance.   Officials know that a total of $3 million in research and development costs have been incurred to date.   They expect at least one of these projects to attain success, an event that should bring in future revenue of $10 million.   They are now seeking guidance on the reporting of the $3 million in research and development costs.

“I am not interested at this time in what US GAAP requires for this cost.   Instead, assume you are named ‘Leader of US GAAP,’ a title that makes you the one person in the world responsible for deciding how to account for this $3 million.   First, come up with as many alternative reporting possibilities as you can imagine.   Second, evaluate each of these options and select the one that makes the most sense to you.  Explain why you believe this particular choice should be the required reporting within US GAAP.

“As just a hint, start this exercise by defining the word ‘asset.’”  

In class, I begin our discussion by asking the students whether the problem seems realistic.  I want them to feel that this is a typical situation for company officials to face in the world of business and not an issue contrived for a college class.  Analysis and learning go best when students believe they are dealing with a problem they could encounter after graduation.  If any part of the assignment is thought to be artificial or unreasonable, its inclusion should be discussed and understood before we grapple with the overall accounting issues.  Here, I do not expect students to object to any of the factors that were included.   The situation was created to be realistic.

Students often want to identify the appropriate treatment required by US GAAP.   Hands fly up to provide that answer.   It is the one possible handling of the $3 million cost that they know for certain.   It is spelled out in the textbook.   I refer to this response as a “no-risk answer” because it cannot be incorrect.   However, simply parroting what FASB has mandated does not help develop a student’s critical thinking skills.  For that reason, I forbid them from listing “expense all $3 million” until after every viable alternative has been identified.   In learning accounting beyond memorization, students need to consider all possibilities and not be distracted by current US GAAP.

I continue the class conversation by asking a student to provide the definition of “asset.”  By this point in the semester, they should all have a working knowledge of the definition:  A probable future economic benefit obtained or controlled by a particular entity as a result of past transactions or events.

I next ask why any company chooses to spend $3 million on research and development costs.   Whether Google, Apple, or a pharmaceutical company, this is not a random action.  The obvious answer is that officials expect to create one or more new products that can be brought to market successfully to generate additional revenue of sufficiently more than $3 million in order to compensate for the risk.  

Then, I ask if the probable economic benefit to be derived from the $3 million expenditure is in the past or in the future:   Based on industry averages and the company’s own historical evidence (and the individual evaluations of the three projects in-process), all benefit are expected in the future when one or more of the projects is added to the market.   At this point, none of the three projects has yet generated any revenue.

That leads the students to the essential class question:  How could a company report this $3 million in research and development costs if not restricted by the rules of US GAAP?   Students usually list a number of possibilities without much prompting.

•           The $3 million is reported as an asset because the entire amount is spent with reasonable hopes of generating expected future revenue of at least $10 million.  It is a normal and necessary cost that is expected to lead to a probable future economic benefit.   Available information shows a high likelihood that sufficient revenue will be earned to more than cover the costs incurred to date.  All revenue from these projects will be earned in the future.  Therefore, expense recognition should be deferred until that same future time period.
•           Of the total cost, $2 million is reported as an asset because two projects have greater than a 50 percent likelihood of success whereas the other $1 million is an expense because the final project is thought to have less than a 50 percent chance of success.  Reporting here is based on what is most likely to happen.   Financial statements are created to reflect reality and this is reality.  
•           Of the total cost, $1 million is capitalized as an asset because the company traditionally has been successful on one out of every three projects.   The remaining $2 million is an expense.   This reporting is based on historical evidence which is a common approach in many areas of financial reporting such as the recognition of bad debt expense, sales returns, and depreciation.
•           Of the total cost, $1.8 million is reported as an asset based on a weighted-average determination of the likelihood of success:  90 percent, 60 percent, and 30 percent.  The individual chances of success are included for every project.  The other $1.2 million cost is an expense.
•           And, finally, the entire $3 million is reported as an expense because of the inherent uncertainty of anticipating eventual success in research and development projects.

At this point, critical thinking starts to play a role in the conversation.   Students are asked to select and justify the alternative that makes the most sense to them and, therefore, should be required by US GAAP.  Based on their understanding of the financial reporting process, which alternative is the fairest reflection of the operations and financial condition of the pharmaceutical company?

Student responses vary from class to class but common arguments usually include the following.
                     A popular choice is to capitalize the $3 million as an asset.  Students reason that the entire expenditure is a normal and necessary cost of creating new products to generate revenue.  For a pharmaceutical company, research for and development of new medicines is a required step in maintaining the company’s future.  If officials did not anticipate earning revenue of more than $3 million, they would never have spent this money.   No evidence appears to indicate that the company will fail to recoup its investment.  Therefore, the entire amount is a required sacrifice necessary to develop new products for the market.  
                     Another likely choice is reporting an asset of $2 million with the remaining $1 million shown as an expense.   In judging whether a probable future economic benefit exists, a likelihood of success in excess of 50 percent is compelling.   The first two projects are more likely than not to produce revenue in excess of the cost that has been incurred.   They meet the criterion for asset recognition whereas the third project does not.
                     Some students argue (often vehemently) that capitalizing $1 million is the best reflection of probable future economic benefit with the remaining $2 million recorded as an expense.   The $1 million cost should be recognized as an asset because verifiable historical evidence indicates that, on the average, one in three projects proves successful.  Students like having evidence as proof to under-gird the financial reporting.
                     Other students support a weighted-average approach that leads to a capitalized cost of $1.8 million and an expense of $1.2 million.  They believe that all potential products should be included in the computation of the probable future economic benefit.   A 90 percent chance of success simply means that more cost is capitalized than if the chance of success is only 30 percent.
                     A few students advocate for what I refer to as the “super conservative” approach and expense the entire $3.0 million immediately.   When in doubt, accountants take the approach that makes the company look poorest as a way to shelter outside decision-makers from being overly optimistic.

At the end of the debate, we always take a class vote so we can make a selection.   Recording all costs as an expense as incurred—the approach mandated by US GAAP for more than 40 years—usually receives the least amount of support.   Once alternatives have been considered, automatically expensing costs that are freely spent to arrive at new products likely to generate significant amounts of revenue seems questionable.   Students can memorize the approved method of reporting but that does not mean they understand or agree with it.

After considering the problems with immediately recording research and development costs as expenses, the class is asked two questions to stimulate further discussion:   Did FASB make a theoretical mistake when it passed this authoritative standard?   Were the members of the board just not as smart as a bunch of college freshmen?

Students realize that a logical reason must exist for this handling of research and development costs.  Although a different approach might seem better, FASB will not require a rule that does not exhibit sufficient theoretical merit.   Students are then challenged (often working in teams of two or three) to come up with possible justifications for the Board’s decision.  Here again, their critical thinking skills are called on but, this time, to unravel the logic of the authoritative approach.   With a bit of thought, students usually propose several reasons why recording virtually all research and development costs as an expense is most appropriate.   Their primary suggestions usually include the following.

•           As mentioned, recording all costs as an expense is a conservative approach.   Students have often heard that financial accounting is conservative in nature.  The official reporting of research and development costs fits with that stereotype.   However, this rationale usually does not gain overwhelming support from students because, in studying other topics such as contingencies and bad debts, they have come to realize that financial accounting is not obsessively conservative.    For example, contingent losses are not recognized at all until they become both probable and subject to reasonable estimation.   Potential losses are disclosed (or omitted) rather than recognized if they fail to meet these criteria.   That is different from reporting virtually all research and development costs as expenses (rather than assets) when incurred.    Conservatism might influence this handling but it does not seem to be a sufficient justification.
•           Uncertainty is an inherent problem in all research and development activities.  Students often ask how reliable any estimate of future success can be in such cases as these.  To say that the success of a specific research and development project is 90 percent likely or 30 percent likely might not be considered a reasonable estimate.   Are such figures legitimate judgments or merely wild guesses?   Even if 1/3 of all projects in the past have proven successful, does that necessarily indicate the likely outcome of the current work?   Does a valid connection exist between success on past projects and success in the future for such projects?
•           Manipulation of the reported figures is possible.   Even first-year students quickly realize that assessments of the possible success of a research and development project can be raised or lowered arbitrarily to improve a company’s reported figures.  To illustrate, I typically describe the following hypothetical situation:   “Assume that a company is allowed to capitalize all research and development costs for projects that are more than 50 percent likely to be successful.   The company spends $1 million on a project where future success is judged to be 49 percent likely.   Shortly before financial statements are to be prepared, company officials raise this estimate to 51 percent.   How large is the actual change being made and how large is the reported change in net income?”   A seemingly insignificant 2 percent increase in the possibility of success creates an immediate $1 million jump in reported net income.   Students realize that the possibility of such manipulations must be avoided if decision-makers are to have confidence in reported figures.

Through these discussions, students start to gain an appreciation for the rule-setting process and how specific standards impact a reporting entity’s financial appearance.   While considering the mandated rule, a basic question can be considered:   What do decision-makers really want to know about a company’s research and development activities?   As a basis for this discussion, students are asked to search the Internet for the research and development balances most recently reported by both Apple and Google.  

Within a matter of minutes, students have discovered that Apple’s statement of operations for the year ending September 27, 2014, reports research and development as an expense of $6.041 billion.  They also learn that Google’s statement of income for the year ending December 31, 2014, reports research and development as an expense of $9.832 billion.   Apple’s research and development is approximately 3.3 percent of the company’s net sales number whereas Google’s research and development is 14.9 percent of its reported revenue number.  

Students are asked several key questions.
•           Is this information hard to locate?
•           How understandable is the research and development figures reported by these two companies?   Is a decision-maker forced to consult the notes to the financial statements to gain a clearer explanation?
•           What do decision-makers now know about these two companies?

Students have little trouble answering these questions.   Information for each company is evident on the face of the income statement.  Because virtually all research and development costs are put to expense as incurred, decision-makers should not be confused by the available figures.   With an adequate knowledge of US GAAP, they will understand the meaning of each reported number.  They know the amount that these two companies spent on research and development activities during the reporting period.   No estimations of success were involved.   No uncertainty exists.  No manipulation is likely.  

That is likely why this rule has remained a part of US GAAP for over four decades:  It meets the needs of financial statement users.  Many decision makers are wary of guesses made about success.   Instead, they are interested in knowing the portion of a company’s financial resources that company officials chose to invest in research and development activities.   Because of the requirement of US GAAP, this amount is easy to ascertain and also to compare between companies.

My students often decide that the best justification for recording virtually all research and development costs as expenses is that this approach provides users of financial statements with the information they desire.  Judging a company’s research and development activities based on each new product’s chance for success is too uncertain and open to manipulation.   Reporting the amount of financial resources allocated to this essential activity is less problematic and allows for immediate and valid comparisons to be drawn between companies such as Apple and Google.  

As class conversation comes to a close, students can be warned that most accounting rules come with their own inherent limitations.  That is another important part of the learning process.   Transactions and other financial events are often complicated.   Accounting standards rarely provide perfect answers.  For example, any company that spends significant amounts of money on research and development is likely to report a balance sheet that undervalues its total assets by a considerable amount when US GAAP is applied.  Pharmaceutical companies, technology companies and the like control scores of valuable patents that represent significant probable future economic benefits.   However, virtually all of the research and development costs spent by the company to create these products are omitted from related asset balances.   Those costs were expensed as incurred and never capitalized.   Consequently, reported asset figures found on the balance sheet are likely to be out of line with any reasonable approximation of actual value. 

I usually end this discussion of the balance sheet by reminding students that the auditor’s report does not state that financial statements are presented fairly.  No one ever makes that claim.  Instead, if unmodified, the report specifies that the statements are presented fairly in conformity with US generally accepted accounting principles.   For research and development activities, US GAAP requires that virtually all such costs are expensed when incurred so that the capitalized cost reported for valuable patents and other legal rights will frequently be less than fair value.   However, the financial information is still being presented fairly in conformity with US GAAP.   And, hopefully, that provides decision makers with information they actually want.

For more advanced classes, this entire discussion can be extended into a deeper analysis in a couple of ways.  
•           Students can be asked to compare IFRS reporting of research and development costs with that of US GAAP.  This discussion requires an additional explanation of research costs as separate from development costs but that distinction is not especially complicated.   As one possible approach, students can be divided into two teams to argue in favor of the US GAAP handling or in favor of the IFRS handling of these costs.   Such evaluations are also essential steps in the development of critical thinking skills.  
•           Students can be asked to consider the proper reporting process when one company buys another that currently has research and development activities in process.   That is a common occurrence.   A portion of the cost of the acquisition is allocated to the research and development activity.   The acquiring company is paying for the results of the work done to date.   Is this amount of the acquisition price appropriately reported as a capitalized asset or as a research and development expense?

The discussion of accounting for research and development can be used at the introductory level or expanded for use in upper-level courses.   In either case, students are asked to do more than simply memorize a mandated accounting rule.   They come up with alternatives and discuss the reasons why a particular method might be the best possible presentation.  They finish up by looking at related problems that arise from the approach required by US GAAP.

Tuesday, May 26, 2015

Prime the Pump (What Does It Take to Become a Great Student?)

This website recently went over 146,000 total page views.  That is about 145,000 more than I ever expected when I began.    I want to take a moment this morning to thank everyone who reads these postings and shares them with other teachers.  Obviously, there is no real marketing of this site.  People tend to learn about it from other teachers.   Word-of-mouth.   So, thanks for sharing!!!  I sincerely believe that most teachers want to think more deeply about the art of teaching.   I hope this website serves as an occasional prompt for such thoughts.

This will be my 211th posting.   Several of these essays over the years have gathered more interest than others.   In terms of readership, here are the Top Ten in case you would like to check out some of the more popular postings.

--What Do We Add?  (July 22, 2010)
--What Is the Purpose of A Final Exam? (May 12, 2010)
--Introduction—Teaching Financial Accounting (January 7, 2010)
--Great Teaching—What I Learned from My Students (March 5, 2015)
--If I Challenge You to Become a Better Teacher, What Is Your First Response? (July 30, 2013)
--Fourteen Characteristics of Great Teaching (April 23, 2015)
--Conversation with Bob Jensen (October 8, 2013)
--What the Catcher Tells the Pitcher (August 21, 2011)
--A Good Suggestion (June 1, 2013)
--What Do You Really Want to Accomplish? (August 28, 2010)

Several of my most recent posts have dealt with becoming a great teacher.   I have always been fascinated by that jump from “good” to “great.”   I believe there are ways to make that jump successfully and I am not sure enough of us have that as our goal (in teaching as well as in other aspects of life).   Why stop at good?   Why not try for great?

But, today, I want to tell you something that you already know:   If you have great students, then becoming a great teacher is a much more manageable challenge.   Bright, energetic, and curious students are just easier to teach.   

Recently, I have been thinking about how I might get more great students.   I have almost no control over the quality of the students who show up in my class.   I cannot put a minimum SAT score limitation or a required GPA as a prerequisite for my classes.   I am responsible for teaching everyone who enrolls.   How can I turn more of them into great students?

I decided I would try to get my students for the fall to start thinking well in advance about what it means to be a great student.   I bet that few, if any, of them have ever really considered what it takes to be a great student.   If I can get them to consider the question, will that alone improve the chances that more of them will be great students during my course?  

Luckily, my students register in April for next fall and I have access to their email addresses.   I decided to try an experiment.   I wanted to encourage them to focus over the summer on what it really means to be great students.   I figured it could not hurt and it might have a positive effect on some of them.  

Below is an email that I sent a few weeks back to all of the students (I think it was roughly 60 in total) who have signed up for my class in the fall.   I have already heard back from a couple who seemed to be intrigued by the experiment.   Will this help?   I don’t know—that is why I am trying it.   If you’ve read this blog previously, you probably know that one of my teaching mottoes is:   Experiment, Evaluate, Evolve.

Email to students who are enrolled in my class for the fall semester:

Okay, I have your first assignment for the fall semester.   And, I dearly hope that you won’t go running away in horror and panic simply because I am giving you an assignment four months before the first class.   I actually think you will enjoy this assignment.   More importantly, it might make you a bit better as a student going into the fall semester.  That is a good goal.

In addition, I don’t want you to start trembling over the upcoming fall semester like some scared and frightened cat.   About two weeks ago, I gave the keynote speech at the Richmond College Senior Recognition Dinner.   One of my comments to the group was that Richmond would become a better educational institution when more of the students stopped being so timid.   At your age, a bold challenge should bring out the very best in you and not send you fleeing to drop-add.

That is one thing that you should demand of all your professors:   “Bring out the best in me!!!”

There are three steps to this assignment.

(1) – For many years, I have written a blog about teaching, primarily about how I teach here at the University of Richmond.   Over the years, the blog has had more than 140,000 page views.   A few days ago I wrote about the characteristics of great teaching.   I want you to read that blog entry because it will explain why I do some of the weird things that I do.   Reading should take you under five minutes.   I want you to read the whole thing but I want you to focus on 4, 5, 6, 7, 8, 9, and 12.   Those are the ones that will impact you the most in my class in the fall.

Here is the URL for the blog entry:

(2) – I want you to spend some time over the summer talking with someone (your parents, a trusted high school teacher, a friend, a co-worker, a stranger on a bus) about the topic:   What is the purpose of a college course?   At the University of Richmond, you have to take at least 35 of these courses.   What are they supposed to accomplish?  Surely, it is not so that you will memorize a bunch of trivia just so that you can pass a test.  Given the cost of the University of Richmond, that would be a darn expensive test.   Surely, it is not so that you can get a first job that you might well quit within the first year.   The goal has to be longer than the first few months after you walk across the stage at graduation. 

It is very hard to put a lot of work into a college course if you are not sure why anyone even takes a college course.   You are going to be stuck with me for a semester.   What am I supposed to do for you?   What do you want me to do for you?   In many cases, your parents are paying a lot of money for you to be in my class – why are they doing that?   What do they believe is the purpose of a college course?   You ought to ask them. 

(3) – Some time before the first class in the fall, I want you to write a short essay and email it to me.    Be sure to put your name on it and which class you are in.   In one paragraph (or more, if you wish), I want you to tell me what you believe are the characteristics of a great student.   You might well be a great student but, if you are not, you surely have known great students here at Richmond or in your high school classes. 

For you, what are the characteristics of a great student?

You’ve got four months.   I hope all three steps in this assignment intrigue you a bit.   I hope they tickle your curiosity. 

I am not sure what I am going to get from them.   I am not sure how I will use those essays.   But we will do something and maybe, just maybe, it will push a few more of my students to become great.   That would be fabulous.   I guess I will just have to wait and see what happens.

Wednesday, May 13, 2015


Now and then, I come across some thoughts on teaching that I think are worth sharing.   That happened yesterday here at the Robins School of Business.   My email to our faculty and staff is below.   No matter what the individual jobs are here at Richmond, we are all in the education business.  This place exists, at least in large part, to maximize the knowledge, wisdom, and understanding of our students.   Passing information like this along to others can help keep teaching (and the thinking about teaching) alive as an important part of our culture.  

You can do the same thing in your building.   Whenever you learn something about teaching that you feel might also help others who face similar challenges, then pass it along.   Don't be timid.   Don't be shy.   

Email Note:

A friend of mine here at the University of Richmond passed along the following URL of a recent NPR discussion with Ken Bain.   Everything Dr. Bain says about teaching seems worth a few moments of consideration so I thought I would pass it along to everyone. 

As some of you might remember, Dr. Bain spoke on campus to the Richmond faculty about 8-10 years ago.   Several of us had the great pleasure of taking Dr. Bain and his wife out to dinner that evening (at the old Peking Restaurant) before his talk to the faculty.

As a true southerner, I try to have one story about everything.   Here is my one story about Ken Bain (which I have repeated countless times).   That evening, he spoke to about 50-70 faculty members.   About halfway through his talk, someone in the back asked:   “How can a person become a great teacher?”   Bain stopped immediately and responded:   “Oh, is that what you want to know?   Well, that is an easy question to answer.   I can tell anyone how to become a great teacher in just one sentence.   All you have to do is get your students to care about what you are trying to teach them.”   I continue to believe that is one of the most fabulous pieces of teaching advice that I have ever heard. 

Here is what he had to say recently on NPR:

As is often the case on the Internet, the comments after the article are random, amusing, and—at time—insightful.   

Thursday, April 23, 2015


In a March 5, 2015, blog entry, I posted the results of a survey that I had conducted.   I have 76 students this semester and they were each asked to identify the characteristics they believed exemplified great teaching.  I read and classified each of their responses.   I then ranked the various response categories by frequency.  

This essay generated heavy traffic.   It quickly jumped onto my all-time top five list in terms of the number of page views.   Readers of my blog apparently have a genuine interest in what students say about great teaching.   I hope you will consider doing a similar survey with your students just to see if the results are consistent.

Although I was fascinated by what my students had to say, they were clearly thinking about teaching from a student perspective.   That is hardly surprising.   However, having taught in college now for 44 years, the characteristics that I associate with great teaching are often different than what a student might believe. 

For the past several weeks, I have been working on my own list of characteristics that I connect with great teaching.  I started out to identify 8 essential attributes.   As I wrote, the number quickly jumped first to 10 and then to 12.   I have now settled on 14.  The more you think about the idea of great teaching, the longer the list seems to get.

I doubt that any teacher is able to hit the target on all of these characteristics.   For me, that is the point.  This is a target list of attributes that you and I can work on as we seek to grow better as teachers.   “Always be moving forward” is a good motto.   Work hard every day to get better as a teacher.  Ultimately, the goal is not to become great.   The goal is to become better each day, each week, each semester.   Strive to get better and, eventually, you will become great.

Here is my own personal list that serves as my target for greatness.

(1) - Great teachers are ambitious; they truly want to become great.   I do not think anyone ever becomes great at anything by accident.   To be great, people need deep desire burning in their stomachs.   This desire pushes them constantly to do the (often tedious) work that is necessary.   Great teaching requires a lot of time and energy.   It is hard for anyone to expend all that effort unless they are driven and passionate about becoming great.   If you are happy being average, you will never be good.   If you are satisfied being good, you will never be great.   A former student once told me:  “Most people care more about the success of their favorite sports team than about their own success.”   No wonder the world has so many problems.

(2) – Great teachers work to evolve.    No matter how much you love it, teaching can become repetitious.  Even the best lesson plans eventually start to feel stale.   Over the years, it is easy to slip into complacency where you start settling for “good enough.”   I often write that teaching should have an underlying rhythm:   experiment, evaluate, evolve, experiment, evaluate, evolve.   Don’t be afraid to try new things.   Peter Drucker once wrote:   “People who don't take risks generally make about two big mistakes a year. People who do take risks generally make about two big mistakes a year.”

(3) - Great teachers spend an awful lot of time on their teaching.   As mentioned above, I have taught now for many years.   I always assumed the job would get easier over time as I came to understand more about teaching.   It actually gets harder as I see more ways that I can help my students to learn.   If you are looking for short cuts, you will probably never be a great teacher.   You might become a popular teacher but, if you are not willing to invest a lot of serious time, you are unlikely to reach your potential as a great teacher.   Someone once told me “Great teaching is not about the number of years you do it.   Great teaching is about the amount of time you spend thinking about it.”   If you want to become a great teacher, break the process down into its smallest component parts and then think about how each one of them might be improved.   That takes time.  

(4) - Great teachers manage to convince students to be prepared for class.   In some ways, I have no better suggestion than this.   If you want the quickest way to improve your teaching, this is the way to do it.   From my point of view, student preparation is the idea that underlies the flipped classroom.  If students prepare adequately prior to class, the teacher can create a wondrous level of education during the classroom experience.   Without preparation, students can do little but sit and copy down notes.   That is not education.   That is stenography.  Students are often reluctant to do any work in advance for fear that it might be a waste of time.   I once had a student tell me quite openly “I never saw any reason to prepare before class if the teacher was simply going to tell me what I needed to know.”   I believe you have to show students exactly what you want them to do in advance and then make sure they understand how that work is beneficial to them.   Required preparation has to have a payoff in class.   The better the student understands the payoff, the better the preparation will become.

(5) - Great teachers test students in such a way as to emphasize critical thinking rather than memorization.   I often argue that the weakest part of our educational system is the testing.   As I have asserted frequently on this blog, how a teacher tests is how students will learn.   If you rely on a test bank that asks for memorization, students have no reason to do any higher level of thinking or learning.   They simply assume you want them to memorize if that is how you test them.   In an age where Google can answer millions of questions almost instantaneously, recall has become less important.   More college-level questions need to ask “why?”   I sometimes refer to that as "21st century questioning."    In recent years, I have started allowing students to bring a page or two of notes with them to each test.   The main reason is that this technique forces me to write questions that go beyond memorization.   With notes available to the students during the test, I have to come up with better questions in order to test their critical thinking skills.   Yes, writing good test questions takes practice but have some faith in yourself—you will get better and better at it over time and that alone will make you a better teacher.   Your students deserve questions that you write and not questions pulled from a test bank created by an anonymous party who might well know nothing about good education.

(6) - Great teachers engage students during class.   Students love to day dream.   They will stare around the room as if those walls and windows are just fascinating.  Students need to be actively engaged in the learning process or they mentally drift away.   Whether you ask them questions or have them use clickers or have them break out into small groups or do free writing, you need some method every day to bring their attention into their own learning.   Too much education is:   (a) teacher lectures, (b) students copy down the material obsessively, and (c) students desperately try to memorize it all on the night before the test.   No thinking is needed anywhere in that entire process.   Great teachers get the students involved each day in every class.

(7) - Great teachers challenge students and then are available to help and encourage.   When I was a student in college, I had teachers who bragged that they were going to give bone-crushingly complex examinations.   And, then, many of them were never available to help me come to understand the material.  I often say “don’t challenge a student to leap tall buildings in a single bound if you are not going to help them learn how to fly.”    We have all heard of the non-aggression pact in college teaching:   The teacher will not be too demanding of the students if the students, in turn, are not too demanding of the teacher.   I think great teaching requires the exact opposite philosophy:   If the teacher is going to push students to achieve great outcomes, the teacher needs to provide the assistance needed to attain those results.  Last week, the senior class at the Robins School of Business named me the school’s “Most Challenging Professor.”   Is that a compliment or is that a put-down?   I think it is an opportunity.   If I can challenge the students AND then help the students conquer those challenges, that is what I want to accomplish.

(8) - Great teachers are effective at communications.   Great teachers always have something to say to students:   look closely at this material, think about this problem, be careful with this issue, don’t get fooled by this question, make sure you have studied this case before class, etc.   How does all of that information get conveyed to the students?   Although there are many ways to communicate to students, I make extensive use of emails.   I start the process two months before the semester begins in order to set the tone for the class.   I like to explain how I teach and why.   I want to “sell” the students on the importance of the material even before the semester begins.   As part of this process, I tell my students that they will need to check their emails every day.   I usually email them once a day on the average and I fully expect them to have read those emails.   That certainly might seem obsessive but my students usually walk into class each day already knowing what I expect of them and with all the background information that I think is necessary for their success.   I am trying to stack the deck in favor of success.

(9) - Great teachers help students fill in the holes in their knowledge.   As I have said previously in this blog, students do not know what they do not know.   They usually over estimate what they understand.   I occasionally laugh about their “head nodding disease.”   If I explain a complicated concept in class and do a good job, I can look out into the classroom and every student head will be nodding up and down in agreement.   They are able to follow what I am doing and believe that is adequate.   However, I sometimes point out that they have “Swiss-cheese knowledge.”   Their understanding looks solid but it actually is riddled with holes.   Because they followed the conversation in class, they don’t realize the weaknesses that exist in their knowledge.   Many days after I leave class, I will send my students a question to answer or a problem to solve and it always starts the same way “if you understood what we covered today, you will be able to work this problem and get my answer.   If you don’t get my answer, you still have work left to do before your understanding is solid.”   Students are often amazed to discover that they cannot work a problem that looks simple.   Those holes in their knowledge get in the way.   My goal is to help them find those holes and then fill them in.

(10) - Great teachers teach all the students.   I think this is one of the hardest challenges that any teacher faces.   It is one that I struggle to attain.   How do you push the top 1/3 of the students to achieve great things without leaving the bottom 1/3 lagging far behind?   How do you focus enough time on helping the bottom 1/3 of the students without boring the top 1/3 and holding them back?   Every student is a human being who deserves a legitimate shot at a great education.   How do you maximize the learning of every student?   For me this is especially difficult because I have 76 students this semester and I truly want all 76 to have a wonderful educational experience despite a wide range of abilities and interests.

(11) - Great teachers know what they really want to accomplish.   It is easy to say “I want to teach the subject matter to my students” but is that really what you want to accomplish?   On the last day of the semester, how do you want your students to be different than they were at the beginning?    For the last few years, I have said that I want my students to walk out of the last class of the semester saying “I never knew I could think so deeply; I never knew I could learn so much; I never knew I could work so hard; and it has been a lot of fun.”   That is a goal that seems to work for me and guides every action I take each day.   But every teacher has to come up with a goal that works for them.

(12) - Great teachers teach beyond the topic.  I know I will have people who disagree with me on this one but I think a college class needs to be about more than the subject matter.   I want all of my students to have fulfilled and meaningful adult lives.   For me, that goes beyond teaching accounting.   During the semester, my students write essays on the best book they have ever read.   They get extra points for going to the theater or to the opera.   I want them to remember my class as more than just an accounting class.  I recently read a Wall Street Journal review of a movie titled Seymour:  An Introduction.   The movie is about the concert pianist and teacher Seymour Bernstein.   In the review Bernstein is quoted as saying (and you can substitute your subject for the word “music” here):   “The most important thing that music teachers can do for their pupils is to inspire and encourage an emotional response—not just for music but, more importantly, for all aspects of life.”   I could not agree more.

(13) - Great teachers set high standards but also encourage the students who are struggling.   One of the hardest but most important things a teacher can do is to challenge a student to be great but also encourage them whenever they stumble.   When faced with difficult problems, it is easy for students to become discouraged and lose confidence.   But if they do not stumble now and then, they are probably not being pushed to maximize their potential.   I always think about this when I return the first test of each semester.   In my classes, approximately 80-85 percent of the students do not make an A on that first test.   How can I keep that 80-85 percent from thinking of themselves as stupid and not capable of success in my class?   How do I convince them that they can do better?   We all have a self-image that is very fragile.   How do I help a student turn a 67 into a 94?   Or, in different words, how do I keep students who make 67 on that first test from simply giving up on themselves?   I cannot think of a more important and personal aspect of great teaching.

(14) - Great teachers realize that each teacher must develop his or her own individual style.   No one wants teachers who are clones of other teachers.   Each person must be willing to explore ideas and figure out what works best in their classrooms.   In other words, take everything that I say and everything else that you hear about teaching with a bit of skepticism.   Teaching is a path where each person must find their own best way.   Ten great teachers will have ten entirely different styles.   Go find the path that works best for you.

Okay, what should I have added to this list?   What should I have left off the list?   What should I have changed?   Great teaching—how does a person get to that goal?  

Tuesday, April 7, 2015


As I have mentioned on my last two postings, I will be part of a panel discussion on April 17, 2015, in Asheville, NC, at the Southeast Regional Meeting of the American Accounting Association.   I am thrilled to be joined by three great teachers:   Lynn Clements of Florida Southern, Eric Bostwick of the University of West Florida, and Scott Showalter of North Carolina State.  

We are planning to have a simple conversation about some of the most basic issues in teaching.   I am very much interested in knowing how other teachers deal with the challenges that I seem to face every day in my classroom.   I have long believed that we need a more open exchange of ideas if college education is going to improve as it must.

I am not sure what questions we will end up discussing in Asheville but here are ten that we are considering.  

How would you answer each of these questions?   There are no right or wrong answers here but these are wonderful questions for each of us to consider as we work to help more of our students become better educated and more deeply thinking individuals.

(1) – (This first question here is directed toward accounting education but it probably applies to almost any academic area from history to Shakespeare to philosophy.)   Any time there is a student comment about an accounting course, the initial response is that the topic is extremely dry.  Many students seem to walk into accounting classes on the first day with the firm belief that they are going to be painfully bored by the material (which can become a self-fulfilling prophecy).   ("Accounting is going to be sooooo dull.")   How do you make your classes interesting and enjoyable for your students?  

(2) – I write a blog about teaching and I recently reported that I had surveyed my students on the characteristics of great teaching.   The number one characteristic according to my students was:  “Great teachers motivate and inspire students.   They set high standards and challenge their students to reach those goals.”   One student wrote “Any teacher with a degree can teach, but it takes a great teacher to get into the hearts of his or her students and inspire them.   Great teachers inspire their students to do great things.”   Okay, how do you motivate and inspire your students?

(3) – Every book on teaching will tell you that the best learning comes about when students are actively engaged.   However, many students seem to prefer to sit very quietly and take notes (or daydream).   I sometimes refer to them as stenographer students.   How do you get students to be engaged and interactive in class?

(4) – I once wrote an essay titled “What do you want on your tombstone?”   In this essay, I asked teachers how they wanted to be remembered by their students.    How do you want to be remembered?  

(5) – What is your biggest challenge as a teacher?

(6) – I am a big believer that a teacher should always know what he or she wants to achieve in a class or the class will tend to drift around in a random fashion.   Think of your favorite course to teach.   How do you want your students to be different on the last day of the semester?  What impact do you want to have on your students?

(7) – I obsessively believe that one of the most important keys to a great class is student preparation.   If students walk in unprepared (as they often seem to want to do), there is only a limited amount that they can add to class discussion.   Almost by definition, they are limited to being quiet and taking notes because they don’t come in with the knowledge needed to make a legitimate contribution.   How do you get students to prepare before arriving at class?  

(8) – I have often said that "the way you test is the way students will learn."   For them, every day is preparation for the next test.   Schools often claim that their primary goal is to help students develop critical thinking skills.   But, testing is often based on memorization so students tend to focus on memorization.   Some of the students probably learned this strategy in middle school and high school.   In this age of Google, memorization has few benefits.  How do you test your students?   Is your testing geared toward critical thinking skills?

(9) – In every aspect of life, good communication is important so that everyone is on the same page.   Do you have any particular ways that you communicate with your students?

(10) – Students often leave class each day thinking they know the material.   I recently read a book that stated that students almost always over value what they know.   I tell my students that they actually leave class each day with “Swiss-cheese” knowledge.   It looks solid but it is really full of holes.   How do you help students realize their knowledge has holes and then how do you help them plug those holes?

Would love to see you in the audience in Asheville helping us come up with answers to these ten essential questions.   

Thursday, March 5, 2015


How do we ever get better as college teachers?   Albert Einstein has been quoted as defining insanity as "doing the same thing over and over again and expecting different results."   What can we do differently as teachers in order to improve our results?   How can a college teacher go from being average to being good and then move from good to absolutely great?   

I think that is a legitimate goal for any professor.   From my own observations, not enough teachers make significant improvements over time.   Average teachers tend to stay average while good teachers tend to stay good.   I believe every teacher should push toward greatness.   I often tell my students that the secret to success is to experiment, evaluate, and evolve.   The same, I believe, is true of college professors.   Try something new and see how it works.   Experiment frequently.   You CAN get better in the classroom.   With continued improvement, before you know it, people around your campus will start pointing you out as a great teacher.  

When I give teaching presentations around the country, faculty members often come up to me seeking some type of secret key to unlock the mysteries of excellent teaching.   They truly want to be better teachers but they seem mystified by how that goal can be achieved.   They sometimes seem to be looking too hard.   They often appear to be trying to spot a tiny sparrow in a huge forest.   I really do not think the characteristics that lead to great teaching are that mysterious.    Perhaps it is not the complexity of great teaching that is the problem but rather its simplicity.  

To provide a new perspective for my thinking, I recently asked my students to identify characteristics that they associate with great teaching.   I was curious.   They have been in school for most of their lives.   They have surely had great teachers as well as some awful teachers.   What were the differences?   What makes one teacher so wonderful while the next person struggles every day?   Perhaps if I can identify those differences, I will know where to put my efforts in the future.

I have 77 students this semester (about 2/3 of them are juniors and the rest are freshmen).   I received a fascinating variety of responses to my query, almost all of which were well considered and explained.   Here is the actual assignment that I gave.   Then, below, is a catalog of the responses that I received.  

What do you think?   Do you agree with my students or do you think other attributes need to be considered?   Can anyone become a great teacher by following the advice of my students or does some other talent come in to play?   Hopefully, I will soon provide my own list of teacher characteristics that can help guide a person to greatness.

And, if you surveyed your students as I did, what would they say?   Why not try it?


I have a very short assignment coming up that I want you to spend some time thinking about in advance.  

Yesterday in class, I mentioned that learning to lead and direct other people in an organization is one of the skills that often helps people succeed in the world after graduation.  I have seen many B students over the years do especially well after graduation because they had both deep understanding AND great leadership/guidance skills.  

Most of you have not yet been in too many organizations for long periods of time so you probably have not picked up too much directly about leadership/guidance skills.  As you move on, that is an observation talent that you should stress.   Figure out who knows how to lead and try to determine how they do it so well.  

However, there is one type of leader/guide/mentor that you do have years and years of direct experience watching:   your teachers.   Since kindergarten, you have been in a group of students each year led by teachers who take those individuals and guide and lead and teach.   My guess is that some of your teachers were great – everyone in class seemed to move forward with rapid speed and enthusiasm.   Other teachers were probably pretty bad and just confused and bored the class.  Nothing much was ever accomplished.

When I was in high school and college, I studied my teachers carefully.   I was fascinated by how some of them managed to convince 30 kids to become so interested and excited in things like chemistry and Shakespeare while others seemed to have the reverse effect.   In fact, in college, I gave each of my teachers a grade when the semester was over.   They gave me a grade so I figured it was only fair to award them a grade.   I had just two teachers in college that I truly believed deserved an A (I was a tough grader, even back then).  One was in Business Strategy and the other was in American History After 1900.   They were completely different types of teachers and they were both magnificent.

I think you can learn a lot about leadership by considering all of the teachers you have had over the past 15-16 years.  I think that type of thinking is good for you and your future.  

So, at some time in the next couple of weeks, I am going to ask you to write a short paragraph (1-5 sentences, let’s say) on the question:   What are the characteristics of a great teacher?   I want you to think about that now so that when I give the assignment, it will only take a few moments to actually write down your answer.    Consider the teachers you have had who were great – a 4th grade teacher, for example, or a high school math teacher.   What made them truly great?   And, just in case you are wondering, this is NOT about me.   You can (and probably should) grade me if you want but you need to wait until the semester is over to figure out whether I am an A or an F.  

I also hope to use your thoughts as I get ready for a teaching panel discussion that I will be leading in April.   The group wants to talk about becoming a better teacher and your thoughts should be helpful.

I think this is a super assignment and I hope you will take it seriously.   You will be in leadership roles before you know it and I want you to think about how YOU can be the best leader since George Washington.  

So, start thinking now and I’ll ask for your answers in a week or two.



I read all 77 responses carefully.   Some students wrote a few sentences while others wrote pages.   Some picked one specific quality to discuss.   Others wrote about 4 or 5 individual characteristics.   I tried to categorize each quality that a student mentioned.   Many talked personally about teachers they had experienced over the years in glowing terms.   The essays were often touching.  

The results are listed below.   I realize that some of the categories could have been reconfigured.   Because of the open nature of the question, clear cut distinctions were not always possible.   Some categories could have been merged.   Others could have been separated.  However, I do not think that really affects the overall information value.   If you read the categories and a few of the comments that I have included, you should get a good picture of the results.

Maybe most importantly, does any of this surprise you?   Are you shocked by how students describe great teachers?   A teacher cannot be all things to all students but working on these characteristics is not an impossible mission.   I might not be able to play basketball like LeBron James but I can probably teach my classes with a little more passion for the subject.

(1) - Great teachers motivate and inspire students.   They set high standards and challenge their students to reach those goals.  (33 of my students mentioned this characteristic in their essays.   Below are a couple of typical examples.)
--A great teacher is one who aims to inspire—inspire students to feel passionate about learning.
--I love being challenged in the classroom, and feel rewarded at the end of the year every time I have excelled in classes that took a lot of work and effort.
--Any teacher with a degree can teach, but it takes a great teacher to get into the hearts of his or her students and inspire them.   Great teachers inspire their students to do great things.
--As someone who is very competitive, I get the most out of classes in which teachers put some pressure on me to do well.
--They are tough, and challenge their students without bullying them. Great teachers push students to think for themselves and come at problems in new ways.
--If I am willing to explore relevant knowledge by myself after the class, 95 percent of the time it is because the teacher makes the topic so attractive that I desperately want to know more.

(2) – Great teachers are passionate and enthusiastic about the material they are teaching. (26 of my students mentioned this characteristic)
--My most inspirational professors here at Richmond have demonstrated why they love the subject that they teach and conveyed this love for the subject to me.
--Great teachers are those who are enthusiastic and passionate about the material that they are teaching, and exhibit this passion to their students.
--A teacher can never be great if they do not show their passion for whatever they are teaching.
--The teachers that I remember as having an impact on my life were the ones who were excited about the subject.   Not the kind of excited where they made up games to make the subject interesting, but the excited where they felt the subject was truly worth the time to learn.  
--Passionate teachers are great teachers because they aren’t just teaching for a salary,
--When a professor is enthusiastic about a subject, students suddenly get excited and actually want to learn the material.
--A great teacher is someone who can communicate a passion about a subject and, in turn, can inspire the student to care about the subject.   I desire to be inspired, not to be lectured.

(3) – Great teachers engage their students in the learning process.  (25 of my students mentioned this characteristic)
--When a teacher can thoroughly engross and maintain the focus of the class, I have found that it can be more impactful to a great learning experience than even a deep knowledge of the subject.
--Their ability to transfer their knowledge to their students in ways that are interesting, intriguing, and easy for students to understand.
--I cannot think of a single time where I enjoyed or became impassioned by the subject of a class where all the teacher did was lecture the students every class via Power Point slides or other means.
--They are able to create a fun, engaging, yet challenging environment and inspire students to want to learn more.
--They find ways to get the class engaged and interested.   They don’t just read off of Power Points and lecture you, they grab your attention, make you think, and find ways to relate the material to your everyday life.
--A great teacher will not only give students the tools and the fire to explore a subject on their own, but the teacher will then keep the students engaged in class.

(4) – Great teachers have effective teaching styles.   They are organized and well prepared for class.  (20 of my students mentioned this characteristic)
--Laying out information and sequencing lessons in a unified and coherent manner not only improves learning but also helps students retain what they learn much better.
--What comes out of his mouth makes sense
--Using an effective structure, no class time will be wasted to repeat any knowledge and students will be able to observe the logic of his thinking. 
--Relying on a textbook is lazy.   It shows no deeper understanding of the material that would qualify someone to teach.  
--They are clear with their explanation, and if a student asks them a question, they will explain in a way the student may understand better.
--Those teachers who make their classes seem like conversations or story telling do their job the best.
--Great teachers push their students to find answers and evoke curiosity rather than simply telling them.  

(5) – Great teachers are invested in the success of their students (16 of my students mentioned this characteristic)
--The professor ran a study session every Tuesday evening from 6:30 until everybody had left.
--The ones who have the ability to leave an imprint in our hearts and minds forever -- those types of teachers are the ones that truly care about their students.
--Some of my best teachers have been ones who have been invested in my work in their classes as well as in me as a person.   I love when teachers want to get to know me outside the classroom, and who really do seem to care whether I do well or not.
--Knowing all of our names and calling on us during class, and being friendly with us but not being our friend.
--A good teacher will truly be vested in their students’ performance and will want to see their students actually succeed.
--The best teachers were the ones who were truly devoted to my learning inside and outside of the classroom.   They were dedicated to my growth as a person.  

(6) – Great teachers take an interest in their students and care for them as people (14 of my students mentioned this characteristic)
--I specifically remember him helping me before our first test at 2 a.m. when most teachers would have been long gone from campus.
--A good teacher truly cares about the student.
--They cared about students and would do whatever they could to ensure their students receive a good education.
--First and foremost, I believe that a great teacher is someone who truly has the best interests of their students at heart.

(7) – Great teachers are able to connect with students personally. (7 of my students mentioned this characteristic)
--It is important for a great teacher to have close connections with students both in class and after class.
--I think a great teacher is someone who tries to relate to his or her students and connect to them on a deeper level than mere surface conversation.
--She created a community in which everyone in the classroom belonged.

(8) – Great teachers are able to adapt their class style to teach all of the students.   (6 of my students mentioned this characteristic)
--I had had a lot of teachers, especially at a young age, who seemed to only teach to the ‘smart’ kids.
--A good teacher treats different students with different abilities with different methods, just as Confucius did.
--Great teachers change their lesson plans according to their current class.   Great teacher prepare different modes of learning for their students.  

(8) – Great teachers are able to communication with their students. (6 of my students mentioned this characteristic)
--Excellent and effective communication is everything.
--They communicate exactly what is expected of students on both a daily basis and semester basis.  
--Great teachers are good at communication skills.

(8) – Great teachers are approachable. (6 of my students mentioned this characteristic)
--These teachers made it known that their students could approach them any time with any problem, and they were genuine about it.
--Knowing that a teacher truly wants you to seek their advice further encourages students to do so.
--My favorite teachers have been available for help and questions, supportive of success, and encouraging of further education.

(11) – Great teachers have patience. (5 of my students mentioned this characteristic)
--A great teacher should have patience to teach students and explain stuff to students, instead of ignoring students’ confusion. 
--A great teacher has patience.
--He should be patient when students are asking questions.  

(12) – Great teachers have empathy for students and understand the importance of encouragement.  (4 of my students mentioned this characteristic)
--It is still important that a teacher encourages students despite a poor grade and shows them they still believe in their success.
--A great teacher recognizes true effort when he or she sees it and makes sure that it is rewarded.

(13) – Other characteristics that were mentioned by my students.
--Great teachers require students to participate and allow them to make mistakes.   (3 mentioned) 
--Great teachers are willing to do the necessary hard work.  (2 mentioned)
--Great teachers teach students how to learn.  (2 mentioned)
--Great teachers are honest with their students.   (1 mentioned)
--Great teachers focus on reinforcement.   (1 mentioned)
--Great teachers are knowledgeable about their subject.   (1 mentioned)
--Great teachers have years of teaching experience.   (1 mentioned)
--Great teachers teach others to become great teachers.   (1 mentioned)
--Great teachers like to be challenged.   (1 mentioned)