PhDs Make the Worst Teachers

Justin Spencer-Young
3 min readMay 20, 2022


The weighted Average Cost of Capital (WACC) is the go-to number representing the expected returns of the capital providers to a business. It is also a proxy for the “riskiness” of a business.

In academia, WACC is a subject taught in every business school finance class and is covered in tremendous detail in the literature. Harvard business cases will require students to calculate WACC to two decimal places. Concepts like Market Premium and Beta are known to take up hours of lecture time despite their well-documented failure to capture shareholders’ expected returns.

This is a case of academics teaching what they like to teach rather than using empirical data to describe what is true in the real world. This is not only true for finance. It is true for economics too.

Economics textbooks teach that interest rate differentials between countries are the primary reason for changes in exchange rates. Capital flows towards the higher yields, creating supply and demand imbalances in the currencies that cause appreciation or depreciation over time.

Empirical evidence based on Euro and USD exchange rates consistently shows little evidence that what the textbooks suggest is true (Listen to Eurodollar University Ep 234 for more on this).

There is an unhealthy acceptance that the “Professor” is the purveyor of knowledge and truth.

It is well established that a PhD is required to be able to teach at a university. The theory is that one who has studied their speciality area for several years and done the appropriate research is qualified to teach their subject matter. That sounds entirely rational.

The problem is that there is often a significant divergence between what an academic has studied and what an experienced business practitioner applies in their daily lives. Traditionally the tension between academia and business has been described as “town versus gown”. This tension is particularly evident in the context of business schools.

There is a deep irony embedded in the management of business schools and the certification of standards. Certification bodies encourage business schools to use PhDs as lecturers. A business school scores higher “marks” if a Professor of Strategy teaches the MBA. Unfortunately, it then outsources its strategy development to Boston Consulting Group. Most business schools wouldn’t dare use the services of the professor that it thrust upon their students, yet they will publish how many PhDs teach in their programmes.

The most comical demonstration of this point is found in the Masters of Entrepreneurship. The lead academic being a professor of entrepreneurship is the biggest oxymoron possible.

The problem here is the real experts are not the professors hanging out at business schools and teaching in MBA classrooms. Real experts are in business applying their knowledge in the field.

When considering your next step in your learning journey, ask yourself who it would be better to learn from. Is it the guru who brings empirical knowledge and expertise or the professor who ticks the box but never worked a day in the world outside of the halls of academia? The answer to this question depends on if you want to learn real skills or if you want a certificate.

Justin Spencer-Young



Justin Spencer-Young

Daily content creator at Fast Forward Business. Chief Valueologist. Fast Forward Business Podcast…look out for my daily podcast…a shot of value in your day