SEPTEMBER/OCTOBER 2004

Seapower’s Shirley Choi Capitalism and Communism in China Competitions Bring Big Payoffs Advancing Women From B-School to Boardroom ContBiezEdnts 26 SEPTEMBER/OCTOBER 2004 VOLUME III, ISSUE 6

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6 From the Editors 18 No Sleeping Dragon 40 More SteakThan Sizzle Seapower’s Shirley Choi takes risks Business schools create wealth Headlines 8 and delivers results as a young CEO and add value, yet some critics 48 Technology in a 21st-century Chinese economy. view them through a negative lens. Peter Lorenzi counters the 52 Your Turn 26 Winning Ways accusations one by one. 54 Bookshelf Business plan competitions give a boost to student entrepreneurs. Calendar 44 Poised for the Future 58 Doyle Williams, AACSB’s 60 Classifieds 34 Women on Board new board chair, is focused Women have made great strides in on globalization, the doctoral Spotlight 64 business, yet men still dominate most shortage, and the implementation Cover photo: boards. Pat Flynn explores the num- of internationalaccounting Grischa Rüschendorf bers—and what b-schools can do. standards.

BizEd SEPTEMBER/OCTOBER 2004 1 Fromthe Editors

All Aboard I recently received an e-mail from a very distant connection, a friend of my grandmother’s who somehow had me on her distribution list. She announced that she was leaving an institution with which she had long-standing ties because the board had chosen a woman for its new director. It’s hard for me to understand the point of view of my grandmother’s friend—perhaps because we have so little in common. She’s 40 years older than I am; she lives in Hong Kong; she belongs to a Christian denomination that considers women subordinate to men. Myself, I received a gift subscription to Ms. magazine when I was 13; I’ve been a feminist since I could think. I literally can’t comprehend the idea that women should be considered unsuitable for any task. Still, the sad truth is that older, traditional individuals like my grandmother’s friend are not the only ones who favor a secondary status for women. After all the advances in civil rights and changes in social mores, after the onslaught of women in the workforce, in education, in politics, there are still large portions of the worldwide population who cannot entertain the idea of genuine equality between the sexes. This can hardly come as a shock to business educators, who have consistently seen their classrooms weighted toward male students and who have watched some of their most promising female graduates grow disillusioned with the corporate world. In the article “Women on Board,” Pat Flynn and Susan Adams of Bentley College provide a rather grim picture of women’s participation in the higher eche- lons of the workforce. Women hold fewer than 14 percent of the board seats in Fortune 500 companies. Almost 11 percent of U.S. companies have no women directors at all. The numbers are worse in other countries. Corporations with no women on their boards account for half the companies in the U.K., three-quarters of the companies in Spain, and almost 100 percent of the companies in Japan. Against such a discouraging backdrop, however, it’s even more delightful to dis- coverthat somewomenarenot only sitting on theboard, they’rerunning thecom- pany—and they have a great many insights into the way that business should be done. Shirley Choi, CEO of Seapower Manufacturing Hong Kong Ltd., knows that even a relatively small, family-run business must find new partners, cut unprofitable divisions, and stress teamwork across departments. She also believes that top busi- ness leaders must practice corporate social responsibility even as they work to change and improve their own national cultures. Interestingly enough, like my grandmother’s friend, Shirley Choi lives in Hong Kong. So in thesamecity whereonewoman withdraws from institutional power, another one thrives on it. This coincidence gives me renewed hope and leads me to believe that change is not only possible, but fated. It is by turns slow, cumbersome, mocked, argued, denied, celebrated, reversed, encouraged, invisible, blatant, and messy. But it comes. Iz BILL BASCOM

6 BizEd SEPTEMBER/OCTOBER 2004 Headlines

Emphasis on Ethics Bringing in a well-known political figure can have both a chilling and Business schools need to renew and reinvig- an encouraging effect on alumni orate their emphasis on ethics—and giving, the survey found. Thirty- AACSB International should help five percent of graduates said they them. These two conclusions, drawn would be less likely to make a dona- by the Ethics Education Task Force tion if George Bush spoke at their as it studied ethics education at busi- commencement, while 14 percent ness schools, are presented in the would be more likely. Similarly, 31 committee’s report to AACSB’s percent would be less likely to con- board of directors. tribute after a John Kerry speech, The committee recommends that and 13 percent would be more schools revitalize their commitment likely to make an alumni gift. The to ethical responsibility at both the complete survey is available online individual and organizational levels at www.opiniondynamics.com/ through academic programs, assess- alumni.pdf. ment processes, research agendas, and outreach activities. The commit- chusetts, which released an inde- Romanian Business tee identifies four broad themes that pendent survey on trends among should be addressed in business alumni of higher education institu- Fifteen undergraduate business students school curricula: the responsibility of tions. The organization questioned from the University of South business in society, ethical leadership, 669 college graduates last spring. Carolina traveled this summer to ethical decision making, and corpo- According to the survey, 90 per- Cluj-Napoca, Romania, to lead a rate governance. cent of college graduates view their Business English Immersion Camp The committee believes AACSB alma maters as charities of last resort. for high schoolers. The project was can best support schools in four Asked where they would donate the first of its kind for the Moore ways: by developing the Ethics $1,000 if they had it to give, 42 per- School of Business in Columbia, Education Resource Center, which cent of respondents said a local chari- South Carolina. is now online at www.aacsb.edu; ty, 25 percent said a medical charity, The project took shape as two stu- by offering training to accreditation and 22 percent said a religious insti- dents volunteering at the Columbia- teams; by increasing emphasis on tution. An additional five percent based World Affairs Council discov- ethics in AACSB publications and said they couldn’t decide what they ered the revival of a sister-cities proj- events; and by holding ongoing would do with the money, while only ect between Columbia and Cluj. discussions on curriculum develop- five percent said they would give the Carolyn Jones, assistant dean for the ment. To obtain a copy of the full money to their college or university. undergraduate division, visited Cluj report, contact Roxanna Strawn at On the other hand, if the school in February as she considered the [email protected]. makes a good case for why it needs idea of taking a group of students to the money, 30 percent say they Romania. Students who signed on for Why Alumni Give would give, or give more. Thirty- the project comprised a diverse group four percent say they would like to from the U.S., Germany, Singapore, If you’re a dean hoping to raise funds from give more, but can’t; just 24 percent Thailand, and Moldova. Romanian your alumni, you might need to offer say they will never give to their alma student Florin Stoian offered back- a good reason for why you need the maters. Of those who have con- ground information about weather, money. Otherwise, spare cash is likely tributed to their alma maters in the shopping, food, and money in Cluj. to be donated almost anywhere else. last year, 42 percent said they felt The students developed an inten- That’s one of the intriguing patterns well-informed about the school’s sive one-week program of study cov- uncovered by Opinion Dynamics current priorities and goals, while 17 ering cross-cultural communication, Corporation of Cambridge, Massa- percent did not. globalization, and entrepreneurship.

8 BizEd SEPTEMBER/OCTOBER 2004 ARBITRAGE—CAPITALIZING ON CULTURAL DIFFERENCES—IS ESPECIALLY CRUCIAL WHEN MORE THAN 60 PERCENT OF MANAGERS ARE DISSATISFIED WITH THE PERFORMANCE OF THEIR COMPANIES INTERNATIONALLY.

A total of 72 sophomores and juniors tural differences rather than viewing Chapel Hill taught by Kenan-Flagler from Romanian high schools attend- them as inconveniences. He noted marketing professor Steve Hoeffler. ed the camp, which was held in mid- that arbitrage is especially crucial at a The course combines lecture and July. The U.S. group also visited time when more than 60 percent of experiential activities with guest pre- local industries in Cluj and spent a managers say they are dissatisfied with sentations by social cause organiza- final day sharing cultural traditions the performance of their companies tions, sports organizations, and spon- with the Romanian students. internationally. “Arbitrage is not the soring companies such as Nextel, “I think this experience could be only strategy to create value through Blue Cross Blue Shield, the Carolina life-altering for all the students global operations, but it is an impor- Hurricanes, and Habitat for involved,” Jones says. She hopes to tant lever to make differences work Humanity. Among other activities, make the Business English Immersion for you,” the professor noted. students will attend a race in the camp a long-term project and bring it Other speakers offered presenta- Nextel Cup series and volunteer for to other countries as well. tions on global marketing, ethics, school-sponsored events such as the and the rise of China as an economic Habitat for Humanity Golf Diversity Matters power. The reunion weekend coin- Tournament. They will also interview cided with the Universal Forum of reps at large commercial organiza- Diversity is a source of value in the work- Cultures in Barcelona, which also force, not a constraint on value cre- aimed to open up dialogue on cul- ation. That was the message deliv- tural diversity to promote progress ered by Pankaj Ghemawat, professor in society. of business administration at Har- vard Business School, speaking to Studying Sponsorship more than 2,000 alumni and other attendees from five continents. They What motivated Nextel to sponsor NASCAR were gathered at IESE in Barcelona to the tune of $750 million over the to explore the opportunities of next ten years? Why does any corpo- tions to examine the strategic impli- “Globalization and Diversity in the ration sponsor sports events and cations of sponsorship activities. Corporate World” at the school’s other activities? Those are the ques- Hoeffler believes marketers spon- reunion weekend. tions students will attempt to answer sor events for a variety of reasons, Ghemawat also promoted the idea in a new elective course at the among them to identify with a spe- of “arbitrage”—capitalizing on cul- University of North Carolina in cific target market; increase aware- ness of a brand; enhance corporate image; express commitment to License to Brag social issues; and enhance promo- tional opportunities. “As with any When dean John Wholihan drives around the Los Angeles other strategic decision that man- campus of Loyola Marymount University, everyone agers face, there are trade-offs. For knows he’s proud of his association with AACSB every dollar you spend on sponsor- International. The faculty first gave him this specialized ships, there’s a dollar you can’t license plate in 1987 to celebrate accreditation of the spend on another activity,” Hoeffler school’s MBA program. These days it’s attached to his says. “You need to think of it very 1994 Buick. “Each renewal costs, but I decided that the strategically and determine how you faculty would like me to keep the plate indefinitely,” Wholihan says. measure ROI for the company. New faculty often question the significance of the plate, so Wholihan happily explains “how important How do you assess the effectiveness it was to all of us to achieve accreditation” and how much he enjoyed the faculty’s enthusiasm for the feat. of your sponsorship activities?” He holds a dinner or special event every time the school achieves re-accreditation. This allows the faculty to Students interested in nontradi- celebrate as a group and reward themselves for the effort required to maintain a high level of excellence. tional and event marketing are drawn to the course. According to

BizEd SEPTEMBER/OCTOBER 2004 9 Headlines

student Brett Hoffman, “NASCAR Governance and Ethics Regulations can encourage indi- fans and drivers are loyal to the viduals to find a way around them. brands that sponsor their team. I If U.S. investors are to regain their trust in Today’s corporate leaders would do saw a news clip on CNN, and the big business, corporate directors must better to act on sound principles. driver of the Tide car said, ‘I view raise the bar on ethical behavior. The “Boards are run based on principles my job as twofold: to drive my car Sarbanes-Oxley act of 2002 is a start, shared by both directors and senior first across the finish line and to sell but it doesn’t go far enough, say management,” says Eric Pillmore, as much Tide as possible.’” members of the Goizueta Directors senior vice president for Corporate Institute at Emory University in Governance at Tyco International. Hong Kong Schools Atlanta. They discussed the topic at “The principles come first; after that FormAlliance the Institute’s annual summit, you ensure that your principles ulti- “Creating a New Culture: Balancing mately satisfy the regulations. The business schools of two major universi- Director Oversight and Management Otherwise you just start with a ties in Hong Kong have announced Entrepreneurship,” that was attended checklist that has no real spirit.” plans to form an alliance that may by nearly 100 individuals represent- Executive compensation remains eventually see them merge to be- ing 85 corporate boards. one of the hottest corporate gover- come a top business school in Asia. Truly responsible behavior must nance issues. Excessive pay is often The University of Hong Kong come through systematic changes to the result of a poor plan of succes- (HKU) and the Hong Kong Univer- the corporate culture—which will sion, says Patrick McGurn, senior sity of Science and Technology occur through evolution, not revolu- vice president and special counsel for (HKUST) are creating a single tion, say these attendees. According Institutional Shareholder Services. brand that will provide students with to Mike Eskew, CEO and chair of “You pay a steep price if you don’t access to expanded teaching and event sponsor UPS Corporation, develop talent within the company,” research resources. “The most pressing issues facing cor- he says. “You’re almost always going Richard Wong, dean of Business porations are the same things that to have to pay more if you’re forced and Economics at HKU, and Chan face individuals—trust, values, open- to hire a new CEO from outside.” Ka-keung, dean of Business and ness. Laws and regulations cannot GDI will publish findings of the Management at HKUST, say the substitute for a strong, ethical culture summit this summer. More informa- alliance may eventually result in the that encourages board members and tion about the Goizueta Directors merger of the two schools into a sin- management to ask the right ques- Institute can be found on the Web gle institution, although there is no tions and do the right thing.” at http://www.emoryexeced.com. timetable yet for such a merger. A joint working group, composed of Wong, Chan, and faculty and stu- Collins Headlines AACSB Conference dents from both schools, is expected Jim Collins, author of books such as Good to Great and Built to Last, will to produce its first report by the end address attendees at AACSB International’s Learning from the Leaders of this year. Conference, scheduled for September 26 through 28 in Denver, Colorado. The Officials from both schools hope conference, which builds and expands on the former Continuous Improvement an alliance will give them a more Symposium, emphasizes the value and processes involved in accreditation. international scope. Currently, fewer Collins began his research and teaching career as a faculty member at than five percent of undergraduates Stanford Graduate School of Business, where he received the Distinguished at both schools come from outside Teaching Award in 1992. In 1995, he founded a management laboratory in Hong Kong; among undergraduates, Boulder, Colorado, where he now conducts research and teaches executives the number is closer to 50 percent. from the corporate and social sectors. “I hope to increase the ratio to 20 More information about Collins is available on his Web site (www.jim percent for the undergraduates and collins.com). Visit the AACSB Web site (www.aacsb.edu) for more information to two-thirds for the postgraduates,” about the conference. Wong said.

10 BizEd SEPTEMBER/OCTOBER 2004 The person Promoting Globalization chosen to What is the best way to develop a new generation of responsible global busi- create America’s first ness leaders? That question was debated at the efmd Annual Con- ference in Madrid, hosted by the public auditing standards Instituto de Empresa. This year, with the support of the U.N. Global Com- comes from a place pact, efmd and a group of leading business schools and corporations are participating in a project to address that’s been setting the challenges of globalization. “Globalization is here to stay,” standards for years. said Gerard van Schaik, president of efmd and former CEO of Heineken. “If you want to make sure that you get globally responsible managers, you start with the educational ele- Baruch. ment. The time to make a lasting impression on future leaders is in the context of their academic education and business training.” Participating schools and compa- It was no surprise to us that Douglas Carmichael was nies include these organizations: from the U.K., Aviva and the chosen to be chief auditor of the Public Company London Business School; from Accounting Oversight Board. We chose him first. This France, Bordeaux Business School, award-winning author had been a professor at Baruch ESSEC, INSEAD, and Groupe for over twenty years, the kind of world-class professor Caisse d’Epargne; from Spain, IESE, Instituto de Empresa, and we actively seek. Because, at Baruch, we believe a great Telefonica; from China, China- education begins with great faculty. Europe International Business School; from Australia, Curtin Business School; from the U.S., IBM; from Brazil, Fundação Dom Cabral; and from South Africa, Barloworld and the University of South Africa Centre for Corporate Citizenship. Additional participants will be confirmed over the summer. According to Eric Cornuel, direc- tor general of efmd, “Our long-term 646-312-1300 G http://zicklin.baruch.cuny.edu goal for this project is that one day business schools will teach issues in THE AMERICAN DREAM STILL WORKS. this field just as naturally as they now teach business plans and good accounting practices.”

BizEd SEPTEMBER/OCTOBER 2004 11 Headlines

SHORT TAKES I Retired stockbroker of her late husband, Robert Freeman, John Gourlay an alumnus. The money will go to- DONATIONS AND GRANTS and his wife, ward endowing four named I The Moore School of Business at Louise, have estab- professorships at the college. the University of South Carolina in Co- lished a $2.5 million trust fund Associate professor of management lumbia has received a $45 million gift for Trinity College at the University of Mel- systems Faizul Huq and assistant pro- from alumna and financier Darla bourne in Australia. The fund will be fessor of marketing Chris Moberg Moore. When combined with used to bring an internationally dis- were each awarded a Freeman Profes- Moore’s previous gift of $25 million, tinguished lecturer to teach ethics in sorship. Two more Freeman Profes- this makes her $70 million total con- business jointly at Trinity College and sorships will be named as the school tribution one of the largest to a U.S. the Melbourne Business School. The recruits new faculty. school of business. Moore is chal- Gourlay Visiting Professor of Ethics lenging the university to match the in Business will teach business ethics I The Fisher College of Business at $45 million, and the school has com- to MBA students at Melbourne Busi- The Ohio State University in Columbus mitted to doing so through private ness School, speak at public functions has received a $937,500 donation support and public funds. The money and seminars at Trinity College and from alumni Martin and Andrew will go toward a major renovation of the University of Melbourne, and in- Murrer to endow the Martin and the school’s facilities and will also be teract with students and academic Andrew Murrer Professorship of Fi- used to support scholarships and en- staff at all these institutions. nance. Part of the brothers’ gift will dowed professorships. be used to support the professorship, I Tri-State University in Angola, Indi- while the remainder will be placed in I The L.R. Wilson/R.J. Currie Chair ana, has received a $1.5 million gift an endowment. in Canadian Business History has been from the estate of Emily W. Whitney, established at the University of Toronto’s spouse of alumnus W. Thatcher I Kevin Grant, assistant professor of Rotman School of Management. The Whitney. One million will go toward management in the College of Busi- $3 million chair, which was funded by construction of the school’s new stu- ness at the University of Texas at a consortium of prominent business dent union, $350,000 has been des- San Antonio, has received a $74,831 leaders, will fund courses and research ignated for endowed scholarships, grant from the NASA Center for exploring the evolution of the com- and the remaining $150,000 will be Program/ Project Management Re- merce industry in Canada. designated for the annual fund. search. The grant will fund a I The Ewing Marion Kauffman I A $1 million gift from Compass collaborative ef- Foundation has awarded $300,000 Bank has been used to create the fort between re- to the University of North Carolina at Charles E. McMahen Endowed searchers at Chapel Hill to fund a three-day Chair in Accountancy & Taxation at UTSA and the “boot camp” for junior the Bauer College of Business, Univer- Challenger Learning Center (CLC) faculty interested in sity of Houston, Texas. McMahen is an at Brooks City-Base to teach team- research on minority accounting alumnus and veteran building skills to young NASA pro- and women’s entrepre- Texas banker and rancher who re- fessionals who are likely to become neurship. Co-directed by cently retired from Compass Bank as project managers. Seven other insti- Kenan Flagler management vice chairman and head of corporate tutions have been awarded grants to professor James H. Johnson Jr. and development and corporate banking. study this issue: Georgetown, MIT, Timothy Bates of Wayne State Uni- Stevens Institute of Technology, versity, the boot camp will bring to- I The Ohio University College of Busi- University of California at Berkeley, gether junior faculty with senior ness in Athens has received more University of Central Florida, the scholars in minority and women’s than $1 million from Frances Shool- University of Colorado and the Uni- entrepreneurship. roy and other members of the family versity of Southern California.

12 BizEd SEPTEMBER/OCTOBER 2004 NEW APPOINTMENTS Former dean Stanley E. Harrison re- Stephen Stumpf, who resumed his I Jean-Pierre Helfer has been named tired at the end of the 2003-2004 ac- role as professor of management and dean of the Audencia Nantes School ademic year. Prior to coming to Shen- the Fred J. Springer Chair in Business of Management in andoah, Boxx served as dean of the Leadership at the business school. France. Helfer is a Else School of Management at Mill- doctor of economic saps College in Jackson, Mississippi. I Daniel Short, former dean and profes- sciences and an ap- sor of accounting for the Richard T. proved professor of I Case Western Reserve University Farmer School of Business Adminis- France’s universities in Cleveland, Ohio, has named Myron tration at Miami University, Ohio, is of management science. He is cur- J. Roomkin the new dean for the the new dean of the M.J. Neeley rently president of France’s commis- Weatherhead School of Manage- School of Business at Texas Christian sion for the evaluation of manage- ment, effective November 1. University, Fort Worth, Texas. ment programs. Roomkin played key roles at the J. L. Kellogg Graduate School of Man- I The College of Business at Utah I Karen Dill Bowerman, most recently agement at Northwestern University State University in Logan has named the interim dean of the Craig School and most recently was dean of the Glenn M. McEvoy the associate dean of of Business at Fresno State Univer- Kogod School of Business at Ameri- business graduate programs, includ- sity, has been named the new dean of can University. ing the on-campus MBA program the College of Business and Public and the off-site Alliance MBA. In ad- Administration at California State I Edward J. Mathis has been appointed dition, Karen A. Forcht has become the University, San Bernardino. interim dean of the College of Com- new head of the college’s Business merce and Finance at Villanova Uni- Information Systems Department. I W. Randy Boxx has been named the versity in Pennsylvania. He is the new dean of the Harry F. Byrd Jr. former chair of the economics depart- I A. Frank Adams III has been chosen to School of Business at Shenandoah ment and currently teaches in the hold the Aronoff Professorship of University in Winchester, Virginia. MBA program. Mathis succeeded Family Business in the Cox Family

BizEd SEPTEMBER/OCTOBER 2004 13 Headlines

SHORT TAKES I Lawrence E. “Larry” tion, teams will advance to the semifi- Bell has been named nals; when those conclude on Janu- Enterprise Center at the Coles Col- the newest Executive ary 17, selected teams will go on to lege of Business at Kennesaw State in Residence at the the international finals in Paris. Last University in Georgia. Adams is the Coles College of Business at Kenne- year, more than 30,000 students first person to hold the newly created saw State University in Georgia. He signed up for the initial phases of the post, which he assumed July 1. will also join the board of the Coles competition. More information can College. Bell worked with AT&T for be found at www.e-strat.loreal.com. I John M. Jennings has been named as- 29 years in management and market- sistant dean for undergraduate pro- ing. Since 2000 he has been in aca- I The Center for Entrepreneurship at fessional development for The Uni- demia, serving as a visiting professor The Ohio State University’s Fisher Col- versity of Texas at San Antonio with Kennesaw State’s executive lege of Business in Columbus an- College of Business. Jennings, who MBA program. nounced that the team developing has more than 24 years of corporate the product Vertebration won the marketing and executive develop- I Don Lien has been named director of fourth annual $100,000 Business ment experience, began his new du- international business programs for Plan Competition sponsored by ties June 1. He was formerly the vice the College of Business at the Uni- Deloitte & Touche USA LLP. The president for business marketing with versity of Texas in San Antonio. Lien, team’s business plan proposes devel- SBC Communications. professor of economics, has served as opment of an im- interim director for the past year. plant used to fuse I The University of He recently completed a one-month adjacent vertebrae Washington Business appointment as the United Overseas together as well as School in Seattle has ap- Bank Professor of banking and fi- development of the pointed professor Tom Lee nance at Nanyang Technological corresponding im- as associate dean for ac- University in China and was named plantation instru- ademic and faculty af- director of the Financial Research ments. The im- fairs. Lee is a professor Center at Shanghai Finance College. plant, known as a of human resource management and titanium alloy lum- organizational behavior. I Sandi Nielsen has been appointed bar interbody fu- director of the Professional Educa- sion device, benefits patients with I William B. Gartner has been named tion Center at the College of Busi- spinal arthritis. Vertebration will re- the Arthur M. Spiro Professor of ness at Eastern Michigan University ceive $16,000 in cash and more Entrepreneurship at Clemson Uni- in Ypsilanti. than $65,000 of in-kind services de- versity. He comes to Clemson from signed to aid in startup operations. the Lloyd Greif Center for Entrepre- BUSINESS COMPETITIONS neurship at the University of South- I Registration for the fifth edition of HONORS AND AWARDS ern California. the L’Oréal e-Strat Challenge is open I Bertrand Venard, professor of organi- from September 6 through No- zational behavior at Audencia Nantes I Marketing professor Dilip Soman has vember 2. A key part of the School of Management in France, has been appointed as the Corus Chair registration is a qualifying quiz, become the first French academic to in Communications Strategy at the which the company will use to receive a Sloan Industry Center Fel- University of Toronto’s Rotman choose 1,200 three-person lowship. The fellowships, awarded to School of Management. The chair teams to compete in the first encourage research excellence, were was established with a $2 million phase of the online business established in 1934 by Alfred Pritch- gift from Corus Entertainment, and strategy competition. ard Sloan Jr., then president and CEO a Canadian-based media and enter- At the conclusion of the of the General Motors Corporation. tainment company. seven-week competi- The accompanying grant will fund

14 BizEd SEPTEMBER/OCTOBER 2004 LEADERSHIP LESSON #25: EXPAND YOUR VIEW DEVELOP A GLOBAL PERSPECTIVE

Venard’s sabbatical at the Wharton School, where he will research a book on international money markets.

I A Fulbright grant also has been awarded to Lidija Polutnik, associate professor at Babson College. Her Fulbright Senior Spe- cialists grant in eco- nomics will take her to University of Zagreb, Graduate School of Economics and Business, in Croatia.

I Larry Michaelsen, who introduced the Integrative Business Experience pro- gram to Central Missouri State Uni- versity in Warrensburg, Missouri, will be sharing his ideas with the faculty at the Institute of Technology in Ban- dung, Indonesia. The professor of management in the Harmon College THETHE of Business Administration at CMSU will serve as a Fulbright Senior Spe- cialist, making one trip to Indonesia DREXELDREXEL this summer and returning in the 2004-2005 academic year. MBAMBA I Ronald C. Goodstein, associate profes- EXECUTIVE sor of marketing at Georgetown University’s Robert Emmett McDo- PROFESSIONAL nough School of Business, is the re- ONE-YEAR cipient of the 2004 Hall of Fame DREXEL UNIVERSITY’S TECHNO award presented by the Washington, LEBOW COLLEGE OF BUSINESS IS RECOGNIZED BY FINANCIAL TIMES, D.C., chapter of the American Mar- CORPORATE U.S.NEWS & WORLD REPORT keting Association. AND ENTREPRENEUR MAGAZINE FOR SUPERIOR PROGRAMS I The Sprott School of Business at Carleton University in Ottawa, Canada, Learn Here, Lead AnywhereTM LEBOW COLLEGE OF has won the Institutional Best Overall BUSINESS Research Performance Award from www.lebow.drexel.edu the Administrative Sciences Associa- tion of Canada. The award recog- nizes and encourages research activity Drexel in Canadian business schools. In the UNIVERSITY past four years, sponsored research at LeBow Carleton has grown to $100 million.

BizEd SEPTEMBER/OCTOBER 2004 15 Headlines

SHORT TAKES COLLABORATIONS Calgary markets. The ICD Corporate I A new center for tourism Governance College is a partnership I Three professors at the Lubin research at the University of between the Institute of Corporate School of Business at Pace University South Carolina in Columbia Directors and the University of in New York City have received recent will be a partnership be- Toronto’s Rotman School of Man- honors and recognition. Eric H. Kessler, tween the Moore School of agement. McGill University in Mon- an associate professor of management, Business and the College of treal and the University of Calgary has been elected president of the Hospitality, Retail and have now joined the college as part- Eastern Academy of Management, Sport Management. The Alfred P. ners in the program. the northeastern U.S. regional affiliate Sloan Foundation Travel and of the Academy of Management. Marc Tourism Industry Center will be I The College of Commerce at DePaul Scheinman, professor of marketing and funded by private investments as well University in Chicago is launching an international business, was a Fulbright as $400,000 in seed money from the undergraduate marketing concentra- Senior Specialist at the Universidad Alfred P. Sloan Foundation. It will be tion in sales leadership. 3M has do- Iberoamericana in Mexico City dur- the twenty-third Center for Industry nated $100,000 to become a found- ing June and July 2004. Stephen Blank, Studies established by the foundation. ing partner of the leadership professor of management and interna- program. David Hoffmeister, the tional business, is the Fulbright/Uni- I The French schools INSA Lyon and program’s director of corporate rela- versity of Montreal Chair in American E.M. Lyon have agreed to open perma- tions, notes that the program has Political and Economic Studies for nent offices in a shared facility in been designed in response to the fact the 2004-2005 academic year. He will Shanghai beginning in the summer of that 80 percent of marketing gradu- be teaching on the campus of the 2004. The goal is to improve integra- ates end up in sales positions. University of Montreal, Canada, for tion of Chinese students in both the coming year. schools. The partnership will create OTHER NEWS joint programs in science and manage- I The University of Michigan Business I Mohamed Matmati, lecturer in ment and meet the growing need for School in Ann Arbor has launched a management and behaviors at Greno- training for Chinese entrepreneurs. new Center for Global Resource ble Ecole de Management in France, has Leverage in Bangalore, India. The obtained France’s highest academic I ESSEC Business School in Paris has center will be co-directed by C.K. qualification, the Habilitation to broadened its international MBA of- Prahalad, Harvey C. Fruehauf Profes- Direct Research. ferings through new agreements and sor of Business Administration and partnerships signed with several uni- professor of corporate strategy and in- I Mark Nelson has received the Ameri- versities, including EGADE in Mon- ternational business, and M.S. Krish- can Accounting Association’s 2004 terrey, Mexico; Universidad Pom- nan, the Michael R. Notable Contributions to peu Fabra in Barcelona, Spain; and and Mary Kay Hall- Accounting Litera- Universidade Nova de Lisboa in man Fellow and ture Award and Portugal. ESSEC also has opened professor of com- the 2004 Wild- the ESSEC Asian Center, a campus puter and informa- man Medal and research center in Singapore. tion systems. Ac- Award. Nel- cording to Prahalad, the center will son is the PROGRAMS focus on “next practices,” issues of Eleanora and I The ICD Corporate Governance College, importance for the future in the busi- George Landew Professor of which trains Canadian directors to ness community and in public policy. Management and professor of ac- meet and exceed standards of good counting at the Johnson Graduate corporate governance, will expand I This fall the first classes will be held School of Management, Cornell Uni- its Directors Education Program in the $125 million Hyde Park Center versity, Ithaca, New York. from Toronto to the Montreal and of the University of Chicago’s Graduate

16 BizEd SEPTEMBER/OCTOBER 2004 School of Business. Offering 60 per- first graduating class this spring. The quartered in Florida, which is the cent more than the school’s current school, founded in 2002 by Gifford fourth largest economy in the U.S. space, it will feature 415,000 square and Elizabeth Pinchot and Sherman feet over seven floors, 12 classrooms Severin, infuses corporate ethics, en- I Audencia Nantes School of Management with a total of 906 seats, 34 group vironmental sustainability, and social has become the first French school study rooms, four management labo- responsibility throughout every to join the U.N.’s Global ratories, and 42 interview rooms. course in its otherwise traditional Compact. Through this Amenities include a winter garden, an MBA program. The school will initiative, the U.N. brings atrium, and outdoor terraces. be more than doubling its enroll- together firms, agencies, ment this fall by admitting an ad- and civil societies to pro- I Bainbridge Graduate Institute of Bain- ditional 50 students to its program. mote responsible corporate bridge Island, Washington, granted citizenship to respond to the chal- MBAs in sustainable business to its I MBA students at the Crummer lenges of globalization. Graduate School of Rollins College in Winter Park, Florida, recently helped I Grenoble Ecole de Management in CORRECTION develop the PCE Florida Index, a France is creating a Customer Capi- In the article “Brave New World, Bold market value index of small publicly tal Institute to study customer satis- New B-School,” which appeared in held companies headquartered in faction and loyalty programs. The the July/August issue of BizEd, the Florida. To develop the index, stu- center will use exchanges, research, author’s bio was inadvertently omitted. dents worked with PCE Investment documentary resources, and training The piece was written by Tim Bankers, an investment firm dedi- to bridge the gap between compa- Westerbeck, managing director and cated to providing merger, acquisi- nies, research scientists, and students. principal of Lipman Hearne, a commu- tion, and growth capital services to The institute’s goal is to uncover the nications firm with offices in Chicago mid-sized companies. The companies best corporate practices and most re- and Washington, D.C. in the Florida index make up more cent research developments and dis- than half of the total businesses head- seminate them widely. Iz

BizEd SEPTEMBER/OCTOBER 2004 17 Shirley Choi, one of the youngest CEOs in diligence, daring, and the ability to deliver

18 BizEd SEPTEMBER/OCTOBER 2004 No Sleeping

by Tricia Bisoux photos by Grischa Rüschendorf

Hong Kong, says that her success hasn’t hinged on issues of gender, age, or tradition. Rather, she says it was results that helped her sidestep stereotypes to become a leading force in China’s ever-growing private sector.

hirley Choi wants to set the record straight. China doesn’t ing to Seapower in 1994 to serve first as a credit manager, and fit the stereotypes that many people still entertain—and then as the managing director of its financial division, which the neither does she. As China moves into a new phase of company has since sold. As a successful merchant banker, she economic and social growth, says Choi, it’s building on listed more than 80 companies on the Hong Kong Stock its traditionally communist, agrarian roots to become Exchange. more cosmopolitan, more capitalistic, and more corporate. And Surprisingly, Choi, who has studied piano since she was four as she can well attest, Chinese women are pursuing professional years old, once seemed destined for a career as a concert pianist. careers and leadership positions in greater numbers. But while studying music at USD, she decided also to major in “When you talk to people in the West, many still think finance so she could “try something different.” That choice, along China’s like ‘The World of Suzie Wong,’” says Choi, referring with her musician’s proficiency with numbers, led her into business. to the 1960 film that portrays its protagonist, Chinese prostitute Choi, however, doesn’t see the move as so large a leap. Both Suzie Wong, as subservient, passive, and painfully traditional. music and business require diligence and discipline, she says, and It’s a portrayal that many in China find pejorative and offensive, both require a person to work well individually and as part of a and one that still stirs controversy today. “That was more than group. “In an orchestral score, you have different parts—piano, 30 years ago,” Choi says. “That’s perception, not reality.” oboe, violin, bass, French horn—the same as any organization. At the age of 35, Choi is an example of China’s new image. But it’s the way the conductor leads them that’s the crux of the Choi has served as CEO of her family’s company, Seapower story,” proposes Choi. “To succeed, the conductor must know what Manufacturing Hong Kong Limited, since succeeding her father, piece he wants to play and how he wants the music to sound.” Tsai Xi Liong, in 2000. A manufacturer of backpacks, camera Since taking the baton at Seapower, Choi has made innovative bags, and other accessories that are sold worldwide, Seapower changes to improve performance in what once was a functional but is headquartered in Hong Kong, with a factory in China; it stagnant business environment. recently opened a customer service office in San Diego, China, too, is shaking off age-old conventions, expanding its California, and owns a real estate operation in Indonesia. markets and encouraging private business. As it does so, busi- Born Siu Lui Choi in Xiamen, China, Choi graduated from the nesses and business schools are now entering Chinese markets University of San Diego with bachelor’s degrees in finance and with veritable gold-rush fervor. Choi is eager to see these devel- music in 1990. She attended Pepperdine University’s Graziadio opments come to fruition, but she also offers some words of School of Business and Management in San Diego to earn her advice. To bridge the ideological distance between East and West MBA in 1992 and later attended the executive program at successfully, she says, Western businesses must first see China as Stanford University’s Graduate School of Business in California. it is today, not as it was 30 years ago. Then, they must understand She worked as a merchant banker with Merrill Lynch before com- its history, its culture, and its ambitious plans for the future.

BizEd SEPTEMBER/OCTOBER 2004 19 “Margaret Thatcher was able to conduct a civilized conversation with admire. She showed how a woman could maintain her poise and

would see her on television speaking in front of the Parliament. It was a fierce- looking situation with all the members sitting there, sometimes using foul lan- guage. Margaret Thatcher was able to conduct a civilized conversation with the Parliamentary members. She also de- unionized the state-owned companies in the United Kingdom, a very bold, con- troversial move at the time. By far, she is the female figure, other than my mother, I most admire. She showed how a woman could maintain her poise and make tough decisions, even in a con- frontational environment.

What are the advantages and draw- backs ofbeing such a young CEO? In the beginning, I had to overcome people’s doubts. They would look at me Before you came to Seapower, you were pursuing a and say, “Oh, you’re just a girl. What are you doing here?” successful career as a merchant banker with Merrill But actions speak louder than words. Young or old, you Lynch. What made you want to return to the family have to prove yourself. business? Before I became CEO, when I was moving from division In 1993, my father asked me if I would work at Seapower. He to division within Seapower, I noticed that our company told me that I would get a much more diverse experience with hadn’t done any corporate finance work for a while. I said, Seapower than I would if I stayed in finance, where I would “Look, I’m not going to sit here and wait for things to hap- only be working with numbers. He said that he would pay me pen.” So one Saturday morning, I went to the offices of only one-third of what Merrill Lynch was paying me, though! BOTO International Holding, the world’s largest artificial That had to be rectified somewhat, but my father told me it Christmas tree manufacturer. I walked up to the reception- was job satisfaction, not money, that counted. ist and explained that I represented Seapower. I told her that I didn’t have an appointment, but that I had a very sound You became the CEO ofSeapower at a very young business proposal for BOTO’s chairman. The receptionist age. The fact that you were going into the family looked at me funny and asked, “Are you sure you don’t have business may have given you some advantage, but an appointment?” I told her I wasn’t going to be pushy. If as a young woman entering an environment domi- he had time to meet with me, fine; if he didn’t, I would just nated by men, you faced considerable challenges. come back later. How would you advise women to help them work But the chairman did meet with me. I made a presenta- successfully under such circumstances? tion and, at the end, I told him that we would do an excel- When men think of women in business, they still often expect lent job for his company. He gave us the deal, and we did a certain kind of female executive: dark suits, short hair, unat- not disappoint him. tractive, and basically very blunt. But when men think of us, Afterward, I went back to my colleagues and told them they should think of what we can deliver, not of superficial I’d landed BOTO. They said, “You’ve got to be joking, stereotypes. I tell women executives to be themselves, not Shirley. Did you poison him or something?” Everybody was play to stereotypes. Substance doesn’t come from how you stunned because they didn’t think I could do the job. I look. It actually boils down to what you can deliver. think it all boils down to dedication, hard work, action, and For example, I went to school in England in the early track record. You can talk a lot about your capability, but in 1980s, when Margaret Thatcher was prime minister. I the end, you have to deliver it.

20 BizEd SEPTEMBER/OCTOBER 2004 the Parliamentary members. By far, she is the female figure I most make tough decisions, even in a confrontational environment.”

What did you learn in business school that you think In business school, you read a lot of case studies, many of most prepared you for the role of CEO? them about “boom and bust” scenarios. You learn why the Business school taught me how to build a team, work in company went down or how it became a giant. Students small groups, and listen to what other people have in mind. learn, “Oh, that’s why IBM stock price dropped so much— This has been very important in my work with Seapower. Apple was there, and IBM was too big.” When I first became CEO, for example, we had three or four In reality, there’s not always such a clear answer. different divisions with about 2,000 employees. I didn’t have Something unexpected often happens that’s not in your the knowledge to run all these divisions, so I went division game plan. In business school, I didn’t quite learn this real- to division and had small group meetings with top managers ity. We learn about emergency plans, but not about react- so I could listen to what they had to say and understand what ing to that something beyond your imagination that catch- their daily operations were like. es you off-guard. Now I’m getting a bit better at it, because Something even more important that I learned in my of on-the-job experience. But if you haven’t experienced it, MBA program was not in the textbooks, but in the interac- then you don’t know how to handle it. There’s no prior case tions among my classmates and professors. This was some- to refer to, so it’s difficult. thing I was not accustomed to in China. In Asian schools, you don’t see students raising their hands or asking questions. In Business schools often have programs dedicated to Asian society, we are taught to be obedient and passive. family-owned businesses. In your experience, what is As soon as I went to school in England and the United the biggest challenge of running a familybusiness States, I immediately saw the difference. Everyone is effectively? encouraged to speak up if they have a problem. If you see Well, if you’re a merchant banker, buying and selling com- something that can be improved, you raise your hand and panies, what’s the first thing you do when you want to say, “Wait a minute, I see something that can be done more cut costs? You cut jobs. That’s the fastest way to see results. efficiently.” I learned in business school that you should But if you look at a typical family-run company, there’s a never be afraid to speak up when you see a problem. great deal of personal emotion involved in it. When you try When I returned from my MBA program, I surprised the to make a rational decision, it may be difficult to act. brokers in our financial division by asking them how we For example, if a factory is not running well and you think could execute transactions more efficiently, and what they it should be closed down, or if the company needs thought could be improved. They simply were not used to to reduce its costs and you think people should be let go, being asked such a question. They were absolutely stunned! you might fail to make that decision and have to face the They said, “You have to be joking. We’ve been doing this consequences. forever. Everything is on track, everything is on the com- I remember when one of Seapower’s divisions wasn’t puter. It works fine.” running too well and I suggested to the board that we should close it down immediately. But unfortunately they How did you convince them that your more Western- decided to keep it open too long. That was a very painful style business approach would work? experience, because eventually we had to close down that I launched Seapower’s retail brokerage idea. That is, instead division anyway and let go all of the people working there. of having just one location, we opened satellite stations in By that time, we had cut our losses too late, and we lost a different cities, so people didn’t have to travel long dis- lot of money. It’s something that could have—and should tances. We brought ourselves to the customer instead of have—been avoided. having the customer have to come to us. Eventually, in Another problem with a family-run business occurs if you about two years’ time, we became one of the top three retail want to expand your company and use an outside managing brokerages in Hong Kong. director or consultant or CEO. Internal control is very The point is, no one in the company thought there was any important in Asian culture. However, the best talent room for improvement. No one had any interest in it. I doesn’t necessarily come from within. We have to be able to showed them there is always something that can be improved. let go of our egos and control. It’s very difficult, but it’s very important. As I’ve told my staff, “I don’t plan to work What do you wish you had learned in your formal forever. I’m looking for people who are more competent business education that you didn’t? than I am to take over when I leave.”

BizEd SEPTEMBER/OCTOBER 2004 21 “Even though it’s still called the Communist Party, it’s not about communism. It’s about making money. It’s about capitalism.”

It seems ironic for you to say that, since you’re only the government will play now that China’s markets 35! Most CEOs don’t think of finding their successors are opening up? until they’re much older. Many people think of Chinese culture in terms of commu- Well, I have other goals for myself. For example, Seapower nism, but the Chinese culture has evolved from a pure, com- donates about 30 percent of our net income to support dif- munistic society to what I would call a semi-socialistic and ferent orphanages and schools. In the future, I would like to capitalistic society. Even though it’s still called the be in charge of utilizing part of the company profits to help Communist Party, it’s not about communism. It’s about charities. It’s fulfilling and rewarding to be able to do some- making money. It’s about capitalism. thing for other people. In the communist system, you have a lot of people going Now, I can’t be a hypocrite—I can’t say I don’t want to to work because they were assigned to do that work. They make money for the company. But I do believe very much continue to do that work even if their company is losing in corporate social responsibility. I believe that for every dol- money. But in the early 1990s, the then premier Zhu Rongii lar a company makes, part of that dollar should go to sup- wanted to privatize. Rongii laid out a new plan for state- port a good cause. That’s something very important to me. owned enterprises that said, “If you can’t maintain your own P&L, you should be closed.” As a result, many factories were How do you think the business culture has changed closed, which forced workers into the private sector. most in China? China went through a lot of pain and controversy in the When I first became CEO, I initially found it very difficult early 1990s. Then, it went through the Asian financial crisis in to deal with my colleagues in mainland China, where the sit- 1997, when many different currencies—the Thailand bhat, the uation is worse than in Hong Kong. You might attend a Indonesian rupee—got attacked by speculators. It was a painful meeting for two, three, five hours, and afterward you still experience, but everybody learned invaluable lessons from it. didn’t know what the subject was! That was very annoying. Today, the Chinese government has a five-year plan, and After this happened a few times, I became smarter. I would one of its goals is to raise the ratio of middle-class people. tell my colleagues that, if we were to meet, they would have The ratio is still quite low right now, something like 10 to 15 one hour and one hour only to tell me exactly what they percent of the population. The party also wants to raise the wanted. And that worked quite well. productivity and individual income of farmers. China has Today I think China has become much more efficient. It about 1.3 billion people, and about 90 percent of the has not come as far as Hong Kong, but it’s actually Chinese population is still in the farmland. Even so, business improved quite a bit. Nowadays if I send my mainland can look at the 10 percent of the population who live in the Chinese colleagues an e-mail saying, “I need you to do one, urban areas—that’s still 130 million people. That’s a lot of two, three, four,” they reply to me point for point. They room for growth. don’t write me an essay. In the past ten years, we’ve seen tremendous progress. I’m not saying everything is perfect—there are still plenty of In the past, many viewed the Chinese government as things to be improved. But apparently Rongii’s strategy an obstacle to free enterprise. What role do you think worked quite well.

22 BizEd SEPTEMBER/OCTOBER 2004 Because ofChina’s growing presence in the global economy, it has become one ofthe most important new markets in the world. What do you think is most important to teach business students about this emerging market? Business schools should let students know that China is not a sleeping dragon—it’s a very active dragon at the The Education Program moment. It’s a major manufacturing bay for the world. Today, China is full of energy. Visitors who come to from the Financial Times Shanghai or Beijing can see that China has become very A powerful combination of print and online news cosmopolitan. resources – at huge discounts! Since China entered the World Trade Organization two Professors teaching all levels– from undergraduates, to and a half years ago, many industries have become posi- MBAs and executives– tell us how much they value the tioned for growth. For instance, the insurance industry and FT’s unmatched global business coverage and thought- the entertainment industry will be opened up in the next 18 provoking analysis. months. In the automotive industry, BMW and Mercedes The Financial Times Education Program offers an Benz are talking about building plants in China. And in the extensive range of product options – alone or in combi- financial industry, some banks are teaming up to issue a nation – customized to meet your school’s needs: credit card, an unheard-of item in China until recently. • FT Newspaper (print edition)– Individual & Institutional So, there’s a great deal of opportunity there. China still subscriptions available at major discounts has red tape in its system, but it has changed. Students need • Bulk FT– Bulk copies available at major discounts to know that. for institutions ( ) • FT.com Level 1 Access – Exclusive FT News & Comment Outsourcing of IT and manufacturing jobs overseas (including Lex Column updates), Industry-specific insight & has become an area ofconcern, especially in the U.S. analysis, comprehensive Special Reports on industries, countries & global business trends, Power Search of FT’s Many workers worry about losing their jobs or job 5-year archives, and exclusive FT newspaper previews prospects to workers in markets like China. Do you • FT.com (Level 2 Access)– All the benefits of Level 1 PLUS think their fears are warranted, or do you think out- access to financial history and data on 18,000+ corporations sourcing will ultimately be a good thing for global across 55 exchanges, and World Press Monitor, a powerful markets? research tool with access to over 500 of the world’s top That’s a million-dollar question! But I think it will ulti- media sources mately be a good thing. I recently read an article in The • Digital FT– Coming soon, the full FT newspaper delivered Wall Street Journal by Alan Greenspan in which he dis- electronically to your PC or laptop...Portable and eco- cussed what would happen as China’s manufacturing base friendly... an ideal solution for distance learners! grows and more companies move to China. He reasoned • On-campus, IP Access – Available at very special rates that because countries like China have a low cost base, they (Off-campus IP Access coming soon...!) can export goods at a relatively inexpensive price. Chinese • Finance Learning Labs/IP Access – Professional-level exports account for 65 percent to 70 percent of textiles in research & monitoring tools of the highest standard...An the world. If you walk into a Wal-Mart or Costco, more unprecedented wealth of information at a university- than 50 percent of the product you see was made in China. friendly price You can imagine what would happen to the U.S. economy To start your customized FT program today or for additional in terms of inflation without that low cost structure. information, please contact Mindy M. Hull, FT’s Director Greenspan noted that as manufacturing moves overseas, B of Education: tel (415)409.2481 or [email protected] America should focus on the service-driven and value- added industries. I completely agree with him.

Some say, “Leaders aren’t born, they’re made”; oth- ers say, “Leaders aren’t made, they’re born.” Which

24 BizEd SEPTEMBER/OCTOBER 2004

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one do you think is most true? Do you think you’re a and to business—that you have yet to make? born leader? Well, people often laugh at me, but one of my goals is to I would say I am a leader by training. Personally, I do not bring a Chinese company to international standing. If you believe people are born leaders. I think you have to become look at globally recognized companies, you don’t see any a leader through experience. Chinese companies. In fact, I don’t think an American or a Leadership is not just about leading other people. It’s Briton could name a single Chinese-owned company. about understanding the strengths and weaknesses of your team members. It’s about developing a sense of empathy, I’d never thought about that before. I can name sever- listening carefully to what people are trying to tell you. In al Japanese and Korean companies, but not a single my position, I listen to different sorts of information, gos- global Chinese company. sip, and jokes from my team members every day. I’m like an You can’t, because there aren’t any! But then, our leader information hub. Everybody tells me everything. didn’t start visiting other countries until the last three or Leadership is also about knowing how to digest this infor- four years. Even in the mid-1990s, you didn’t hear in the mation and how to rationalize it in the decision-making news that the Chinese premier was visiting the United process. This is so important. You can’t use only one source States or Latin America. And today, as I mentioned, 50 per- of information. You have to be that “information hub.” You cent of the products you see in Wal-Mart are probably have to listen to information from many different sources made in China—but no one knows the companies that and make the right decisions from what you learn. manufacture them! Finally, leadership is about vision and how you plan to position the company—not just in the next few months, but What would you like to see happen to Seapower in in the next one year, five years, or ten years. the future? When people talk about Seapower, I want them to know In your first decade in the business world, you’ve this company is owned by a Chinese family and offers a dif- already become a CEO, a goal many people spend ferent product. I’d like the company to achieve internation- most of their careers pursuing. What do you think al recognition—to have a report on CNBC someday, just are your most important contributions—to Seapower saying that our stock is doing well. Iz

BizEd SEPTEMBER/OCTOBER 2004 25 Winning

26 BizEd SEPTEMBER/OCTOBER 2004 In the world’s growing array of entrepreneurial competitions, students are practicing their pitches, preparing their business plans, and playing to win startup gold.

nce, a business plan competition may have gar- how do we implement change?’ Companies want employees nered nothing other than a passing mention in a who can recognize opportunity and build a plan that capi- local newspaper and an article in the alumni mag- talizes on that opportunity.” With these competitions, busi- azine. No more. These days, single-campus com- ness schools can create people who think entrepreneurially, Opetitions are often well-covered by local media, and larger says Swangard, not just people who are entrepreneurs. intercollegiate business plan competitions are big news, receiving coverage in business and mainstream publications. From Classroom to Craze What’s motivating the burgeoning enthusiasm for business The current explosion of business plan competitions began plan competitions? Most likely, the fascination with entrepre- in the early 1980s, when the concept of entrepreneurship neurship itself, say educators. The startup stories generated by was first making the rounds among business school students. entrepreneurial competitions show people just what can come At the time, most business school faculty and administrators from a great idea and a well-conceived plan. At the same time, still did not view entrepreneurship as a skill to be taught; they competitions provide an almost all-in-one edu- kept their focus strictly on more traditional cational experience, where participants learn a business disciplines. comprehensive set of business skills, including by Tricia Bisoux “In the 1980s and even in the 1990s, put- initiative, innovation, and strategy. illustration by Nick Bertozzi ting on a competition like this was a radical Moreover, such skills aren’t just useful to concept,” Swangard says. “Now it’s not so rad- self-employed entrepreneurs. They’re also in demand among ical, but there are still people at every university with an traditional companies looking for ways to set out in new entrepreneurship program who believe that this is a flash in directions, says Randy Swangard, director of the Lundquist the pan that will eventually go away.” Center for Entrepreneurship at the University of Oregon’s Not surprisingly, the first competitions in the U.S. were Lundquist College of Business in Eugene. The Lundquist launched by students, not faculty. In 1984, two MBA stu- Center hosts the New Venture Championship, one of the dents at the University of Texas at Austin’s McCombs School most prominent plan competitions in the U.S. of Business wanted to create a learning experience that “The more traditional companies—the Kodaks and GEs taught entrepreneurship to business students in the same of the world—are beginning to look not so much for ‘busi- comprehensive way that “moot court” trials taught litigation ness as usual’ as for ‘business as unusual,’” says Swangard. skills to law students. Soon after, they launched MOOT “They’re asking, ‘How do we move on, how do we adapt, CORP, the competition that is believed to have been the first official plan competition on record. MIT’s $50K (for- merly $10K) at the Sloan School of Management in Cambridge, Massachusetts, followed in 1989. Students at the Lundquist College launched its New Venture Championship in 1991. Today, there are dozens of intra- and intercollegiate business plan competitions around the world. In fact, competitions have become so au courant that Gary Cadenhead, director of MOOT CORP, recently pub- lished the book No Longer MOOT: The Premier New Venture Competition from Idea to Global Impact. It Ways chronicles the competition’s growth from an intracam-

BizEd SEPTEMBER/OCTOBER 2004 27 pus project to a global event, with events held on b-school marketing,” Cadenhead says. “A competition fills a need campuses in Europe, Asia, Australia, Africa, and Latin that otherwise can only be met through outside speakers or America, culminating in an annual global championship in new courses.” Austin. The new realization, says Cadenhead, is that entrepre- The Allure of the Entrepreneur neurship programs and competitions do what no other busi- Where prior generations dreamed of landing a top-level job ness discipline does quite as well. They integrate the entire with benefits and a corner office, members of this genera- business school curriculum into a single course and address tion dream of coming up with that one great idea that will topics a business curriculum typically does not cover. allow them to break free of their traditional jobs and be “If you want to launch an entrepreneurship program at their own bosses. This attitude is a legacy left by the late, your business school, it makes sense to start a business plan great dot-coms, says Patrick Turner, a professor of entre- competition, because students learn topics such as intellec- preneurship on INSEAD’s Singapore campus. tual property and trademarks, venture capital, and guerrilla “Two things came from the dot-com era,” Turner says.

In the Money ture capitalists are circling high and students are working the competition circuit, looking to land startup gold. This raises When successful entrepreneur and venture capitalist David an important question: Has winning a competition become Geliebter launched his venture capital firm Carrot Capital a more important than learning from one? few years ago, he was dissatisfied with the entrepreneurial Randy Swangard, director of the New Venture Champion - opportunities available to young people. While many busi- ship at the University of Oregon in Eugene, says he knows of ness schools had centers dedicated to entrepreneurship, he one team that entered its plan in 12 competitions. “It’s true thought that the vast majority of students in nonbusiness- that the more competitions students enter, the more they can related majors were being sorely neglected. learn, but it can become an obsession,” says Swangard. “It So, in 2001, Geliebter established The National Institute can become more about funding than learning.” for Entrepreneurship (TNIFE) in New York City and launched Gary Cadenhead, director of MOOT CORP at the Venture Bowl, one of the biggest business plan competitions University of Texas at Austin, agrees that the growing num- in the United States. Up for grabs is $1,000,000 in prize ber of competitions—and the growing pool of available money—$500,000 for first place, $250,000 for second, and funding—has produced a fervor among some participants. two third-place prizes of $125,000 each. The competition is As a result, MOOT CORP has recently set limits in place. open to any team with a member who is currently a full-time “Clearly, some teams work the circuit. However, competi- or part-time student at any college or university in North tion is stiff, and no school is able to dominate,” says America. Cadenhead. Even so, he says that this year’s MOOT CORP “David looked at what was happening on campuses directors agreed to allow student teams to enter their plans around the country,” says Suzanne Isack, TNIFE’s executive only once in any future MOOT CORP competition. “This year director. “Across the board, he saw that there weren’t enough a couple of teams were able to re-enter their plans in the opportunities for young people outside the traditional business same competition they participated in during 2003,” says school setting to get involved in entrepreneurial activities.” Cadenhead. “That option won’t be available next year.” With Venture Bowl and TNIFE in place, Carrot Capital With the spotlight on entrepreneurship fairly stable—and was no longer a venture capitalist. It became what its repre- interest in startups still on the rise—business plan competi- sentatives call a venture catalyst. “There’s the expectation that tions have become a mainstay in business education, both students aren’t just competing for bragging rights,” says on and off the b-school campus. As more competitions enter Isack. “Some real launching is expected to happen.” the market, it will be important for students, faculty, and New events such as Carrot Capital’s Venture Bowl repre- event sponsors to resist the funding fervor, say organizers sent a new phase in the evolution of the business plan com- like Swangard and Cadenhead. These educators hope to petition. What started out as simple classroom exercises keep today’s competitions true to their original mission— have become full-blown competitive showdowns, where ven- teaching the basics of business.

28 BizEd SEPTEMBER/OCTOBER 2004 Designs in Afghanistan

Tarsian & Blinkley 2003 Winner, Global Social Venture Competition, “Best Blended Plan”

After the fall of the Taliban in 2002, the country of Afghanistan was left in confusion, and its people, espe- cially women, were looking for ways to rebuild their lives “The first was very positive. It communicated to a genera- and their country. One way came via Sarah Takesh, who tion that it was possible for everyone to start a business. The has a bachelor’s degree in architecture from Columbia second was very negative—it gave the impression that it was University in New York City and an MBA from the easy, which it isn’t.” University of California at Berkeley. And although technology is still popular, students are Takesh’s company, Tarsian & Blinkley, employs Afghan branching out of that sector, says Turner. A recent winner of women who sew beautiful clothing for sale in the country INSEAD’s internal business plan competition wasn’t a high- and worldwide. In return, they are able to earn a living, flying computer company, but a juice bar chain. “This year, support their families, and take pride in their unique our two finalists were a chain of juice bars in Spain and a designs. “I wanted to blend my love of fashion with a sophisticated nano-tagging tracking system,” says Turner. social element,” says Takesh, who now lives in Kabul, “The second plan was probably the more interesting of the Afghanistan. She works with the Afghan Women’s two, but it needed a lot of work to make it viable. The juice Vocational Skills Learning Center, taking advantage of its bar chain, on the other hand, was well-rounded and the most existing infrastructure and network. fundable plan in the contest.” Takesh conceived her business plan when she visited One of the valuable aspects of a business plan competition, Afghanistan for an internship in 2002. In 2003, Takesh says Turner, is that it teaches students an important lesson entered the National Social Venture Competition (now the about entrepreneurship: In most cases, a great idea is not Global Social Venture Competition), the result of a collabora- enough to guarantee success. Through competition, partici- tion among UC Berkeley, Columbia Business School, London pants learn how to examine their ideas under a microscope to Business School, and The Goldman Sachs Foundation. see if they can stand up to market pressure and demand. Takesh is one of a growing number of students who In addition, as small business generation becomes more believe that social entrepreneurship will truly make a dif- important to the global economy, it will become more impor- ference in the world. She now looks almost in awe at what tant to expose people to entrepreneurship when they are her business has accomplished. “One year later, I’ve grad- young, believes Sharon Bower, associate director for the uated and I’m shocked to see this thing is up and run- Jefferson Smurfit Center for Entrepreneurial Studies at Saint ning,” says Takesh. “It’s awesome. I think at least 150 peo- Louis University’s Cook School of Business in Missouri. To ple are eating today, just because we’re here.” reach a younger population, SLU’s Global Student Entre- preneur Awards targets not MBA students, but young under- Sarah Takesh with Nasrullah graduate entrepreneurs who are already established. Rahmati, head of the Afghan Bower hopes that children in elementary and high school Women’s Vocational Skills will learn about competitions such as the GSEA and be Learning Center inspired. “Through these competitions, we can show very young kids someone who’s only 20 or 22 and already has a to support competitions business. That exposure can have a really amazing impact on on a regular basis.” them,” says Bower. “They realize that it’s not just 40-year-olds The Lundquist Col- who are making money—it’s also students only a few years lege, for example, sends about four teams each year to older than they are.” attend between eight and ten competitions each. Supporting the trips costs around $40,000, Swangard esti- The Cost of Competition mates. Then, of course, there’s Lundquist’s own New Although business plan competitions have wonderful pro- Ventures Championship, which has grown considerably. motional and educational appeal, they can put a strain on “Our prize fund is roughly $65,000. Then, we have the school resources. As small competitions start to grow and expenses associated with putting on the event for teams and big competitions strive to become bigger, weighing the cost hosting 50 judges for three days,” Swangard says. “It costs of competitions against their benefits has become a concern well above $100,000 to put on the NVC.” for business schools. Still, the expense can provide a valuable return on invest- “On the positive side, donors wholeheartedly support ment, including the good will of corporate sponsors and offering this kind of live-fire experience for students,” says judges, the appreciation of students, and the attention of Swangard. “However, it’s a major undertaking for a school the media. And as a successful competition like the MIT

BizEd SEPTEMBER/OCTOBER 2004 29 Fighting Fires

KidSmart Corporation 2003 Global Champion, MOOT CORP

When Bruce Black and Matt Ferris came to the MBA pro- gram at the University of Georgia’s Terry College of Business in Athens, becoming entrepreneurs wasn’t in their plans. That is, until entrepreneurship professor Charles Hofer introduced them to the inventor of a smoke for the top prize at Saint Louis University. That kind of alarm that woke children not with a siren, but with the global play is good.” voice of a parent. To date, their company, KidSmart Corporation in Destination: Specialization Atlanta, Georgia, has won first prize at MOOT CORP, In the future, the educational value of competitions for stu- second at the Venture Bowl, second at the University of dents promises to become richer and more targeted, believe Oregon’s New Venture Championship, and second with some competition sponsors. With the competition field Fortune Small Business magazine’s MBA Showdown. The becoming more crowded, individual competitions are seek- KidSmart Vocal Smoke Detector also won a New Products ing out ways to set themselves apart. In many cases, that Award at the 2003 Consumer Electronics Show. means specializing in one sector such as biotechnology or When the team first began competing, they believed in health care. their product; but that belief meant nothing without evi- “I think we’ll see more niche-oriented competitions,” says dence. “A product might fail not because people don’t like Swangard, pointing to the Global Social Ventures Compe- your idea, but because you’re not presenting it effectively,” tition at the University of California at Berkeley, which is built says Black. “We had to do the research. Once we could around social entrepreneurship. San Diego State University say that 19 out of 20 children don’t wake also holds a targeted competition that focuses on biotechnol- up to an alarm sounding at 120 decibels, it ogy. “At Oregon, we’re still in the ‘mishmash’ stage, and gave us a good leg up.” that’s fine for now. But many of the biggest competitions will Black and Ferris are projecting $9 mil- slowly have to redefine who they are to maintain their status.” lion in sales for 2004. “You can have a The growing sophistication of students themselves may also great concept, but it doesn’t mean anything push competitions into specialization. In the past, a competi- to anyone if you haven’t developed it,” says tion may have attracted business plans that were no more than Black. “With a business plan, you have to school projects. Today, students are entering sophisticated take that concept and make it real.” plans in industries such as retail, service, and technology. Bruce Black, seated, and Matt Ferris An End to Obesity?

$50K proves, even local competitions have Halsa Pharmaceuticals big potential, says Ken Morse, director of the MIT 2000 Texas Champion, MOOT CORP Entrepreneurship Center, which puts on the competition ANN STATES with the school’s engineering department. “One thousand “We believe we’ve discovered a material that, when injected students, faculty, and businesspeople get involved with the by a physician into a medically obese patient, causes safe, $50K every year,” says Morse. “It offers a tremendous immediate, and substantial depletion of body fat in that learning opportunity for everyone involved.” patient.” For its part, SLU’s GSEA competition used to be limited Phil Speros says that he and his partners worked at least 25 to students in Missouri—it now has regional competitions in man-hours to write that 29-word “elevator pitch” for their busi- Australia, New Zealand, Sweden, and soon, China. And like ness, Halsa Pharmaceuticals in Bethesda, Maryland. But that’s MOOT CORP, the GSEA has also generated a book, what it takes to come up with a business plan that will impress Student Entrepreneurs: 14 Undergraduate All-Stars Tell Their both judges and investors, Speros says. Stories, with another to be published this year on ethics. The The team members include Speros, Kristen Etheredge, competition and the books result in a reputational payoff for Denise Bynum, and Mark Roppolo—all biochemists who the school, says Bower. earned their MBAs at the University of Texas at Austin. After “They put Saint Louis University’s name out there and they won the Texas round of the MOOT CORP competition in bring more attention to our entrepreneurship center,” says December 2000, the team secured $5 million in funding to Bower. “In every regional contest, an article will come out research and develop their promising new product. about the winners, and each of those articles includes a “Some argue that writing a business plan is an unneces- paragraph at the bottom stating that the team will compete

30 BizEd SEPTEMBER/OCTOBER 2004 Not Just Nuts

Maisie Jane’s Sunshine California Products Inc. 1999 Winner, Global Student Entrepreneur Awards

Maisie Jane Hurtado of Chico, California, grew up in a family that had raised almonds for four generations. As a child, she often heard her father, grandfather, and uncles discussing the “woes of almonds.” A primary concern Health care was one of this year’s biggest business plan targets, was that the family was exporting more than 80 percent with students writing plans to develop treatments for obesity, of their yield to other countries. This meant one thing: cancer, and diabetes, for example. Americans weren’t eating enough almonds. Swangard believes that specialized competitions may When Hurtado entered high school, she decided she become a necessary way to offer a more sophisticated pool of could entice America to eat more almonds if she offered participants a valuable learning experience. There may come something different. As a high school project, Hurtado a time, he says, when a panel judge from the manufacturing developed several recipes for baked almonds with more industry won’t have the experience to offer the best advice on exotic flavorings and educated people about their health a plan for the health care field. benefits. “It really goes back to the learning component of compe- In 1999, after she’d been running her business for four titions,” Swangard says. “The more we’re able to include years, Hurtado entered her company, Maisie Jane’s judges with specialized knowledge to provide feedback to the California Sunshine Products Inc., in Saint Louis University’s students, the better the students will be able to enhance their Global Student Entrepreneur Awards—and won. business plans and improve their skills.” Hurtado believes that young entrepreneurs may have an edge over those who are already in the workforce. Something Ventured, Something Gained “Most don’t have a family to support, so they can grow Entrepreneurship educators note that competitions have their businesses slowly and steadily with less startup cash,” another important benefit when it comes to teaching business says Hurtado. “It’s rewarding to think I’ve inspired other skills—motivation. Although a grade at the end of a course is young entrepreneurs and reassured them that, yes, they an incentive for students to do their best, a competition com- can be young, successful, and happy! These competitions plete with prizes takes that incentive to a much higher level. tell young people that if they have a business idea, they This benefit is especially true for social entrepreneurship shouldn’t be afraid of taking a risk.” competitions, says Mat Burton, vice president of university relations with Students in Free Enterprise. SIFE has a net- Maisie Jane Hurtado with husband Isidro Hurtado, who is also a co-owner and production engineer sary formality, but that’s naïve,” says Speros, who also holds with the business a doctorate in biochemistry from Johns Hopkins University in Baltimore, Maryland. “The difference between competing in a business plan competition and running a real business is like work of competitions throughout the world, which encour- the difference between playing touch football and playing real ages students to develop projects that will foster free enter- football,” he adds. Both teach players the rules of the game, prise in disadvantaged populations. he argues, but only the former teaches them without real- “University students have a natural passion to be part of world risks. something positive. They all want to go out and change the During the competition, one MOOT CORP judge joked to world. The challenge is to take that enthusiasm and all they’re the team, “If your product works, you could have a lousy learning on campus and channel it,” says Burton. “So we cre- business plan and still make a ton of money!” Still, says ate a competitive process. Instead of just telling them, ‘You Speros, he and his teammates are glad for the experience ought to go do these things,’ we offer competitions where they gained through competing so they don’t have to take there’s accountability. We give them a mission. Then, they that chance. aren’t just thinking about doing good—they actually accom- plish something.” More business plan competitions also mean more entre- Mark Robbolo, preneurial role models for the next generation, says Turner Denise Bynum, of INSEAD. “Worthy academics have tried to work out what Phil Speros and makes one person more likely to become an entrepreneur Kristen Etheredge than another, like you were more likely to start your own business if you were the second child of immigrant parents who divorced before you were 12. That’s nonsense,” he says.

BizEd SEPTEMBER/OCTOBER 2004 31 Trading on Success

iFOX 2000 Winner, European Business Plan Competition

As a broker, Jack Parrish knew it made sense to apply electronic trading to the largely phone-supported interest- swapping business. He just wasn’t sure whether the idea would translate into success. So, Parrish and four partners wrote up a plan for iFOX, Cleaner Water, Better Future an electronic interest-swapping company. In 2000, they entered the plan in the European Business Plan African Filtration Systems Limited Competition, a joint effort of INSEAD and London Business 2003 Winner, Students in Free Enterprise School, and won. “Entering the competition helped us get through the first level of triage. Winning it helped us vali- As a student at West Africa’s University of Ghana in date the idea,” says Parrish, who holds an MBA from Legon, Romeo Tetteh-Jones was thrilled when a chapter of INSEAD in Fontainebleau, France. the U.S.-based Students in Free Enterprise was started on Not many people actually understand the interest-swap- campus in 1999. He saw SIFE’s central mission—to teach ping market, Parrish admits. In layman’s terms, an interest- principles of free enterprise to disadvantaged communi- rate swap occurs when one company exchanges interest ties—as one way to address the economic problems facing payments for the interest payments of another party. many African nations. Because companies with poor credit ratings in a market In 2002, SIFE held its first business plan competition at aren’t always eligible for the best loan terms, they may opt the University of Ghana, and Tetteh-Jones was part of for a swap to pay less in interest and reduce their costs. Ghana’s first SIFE team. The team went on to win second Parrish initially bristled when he was advised to simplify his place at SIFE’s Entrepreneurship World Cup in Holland. team’s plan so the judges would clearly understand its mis- Inspired by his experience in his first SIFE competition, sion. At the time, Parrish thought simplification to be Tetteh-Jones organized Ghana’s 2003 National unnecessary, since likely investors would know the market. Entrepreneurship Competition. Next, he conceived a plan He was right—and wrong. Although those who eventu- of his own, African Filtration Systems Limited (AFS), a ally invested were experienced financiers, they may never company that provides sanitized, potable water to Ghana’s have heard of iFOX if not for the EBPC. rural and urban populations. Today, iFOX has merged with a competitor to create Tetteh-Jones’ business plan for AFS won Ghana’s 2003 London-based ATFox. Parrish’s partners have left for other SIFE Competition; came in second at SIFE’s 2003 World pursuits and Parrish runs the business. “The competition Cup; and won an Innovation Award from the Ronald H. taught me that you have to exude confidence in your plan Brown Institute for Sub-Saharan Africa, an organization to succeed,” says Parrish. “Judges and investors must based in Scientia, South Africa. Tetteh-Jones is now believe that you believe in what you’re doing and that you preparing to begin large-scale operations with AFS. Eagle plan to make it work.” Spring Filtrations of Holly Hill, Florida, will provide AFS Jack Parrish with filter components. The company will assemble these components to make economical water filtration units, which Tetteh-Jones estimates could reduce the infant mor- “In reality, you’re more likely to tality rate due to impure drinking water by 90 percent. become an entrepreneur if your AFS may never have come to be if not for his experi- parents or your grandparents were ence with SIFE and its competi- entrepreneurs, or if you’re part of tion, says Tetteh-Jones. “I’m now a community where entrepreneur- networked to business people at ship is a normal thing to do.” 20 companies, who mentor me The modern business plan competition, then, has in my business pursuits,” Tetteh- become more than an educational tool. It’s also a kind of Jones says. “With SIFE, I’ve entrepreneurial evangelist, spreading the word that entre- developed communication, team- preneurship is an option for everyone. Even more impor- work, management, and innova- tant, competitions remind would-be entrepreneurs that tion skills that I could not have success requires a solid business plan even more than a found in any textbook on earth.” bountiful bank balance. Once students have truly learned that important business basic, they’re not only better pre- Romeo Tetteh-Jones pared to play the entrepreneurial game—they’re more like- ly to end up as winners. Iz

32 BizEd SEPTEMBER/OCTOBER 2004 Women ON BOARD Women have made great strides in business, but their progress stops suddenly—and inexplicably—at the corporate boardroom door. Business schools must look beyond the discouraging statistics and discover just what’s keeping women off corporate boards.

by Patricia M. Flynn and Susan M. Adams illustrations by Vivien Flesher

omen have made such substantial strides in Facts and Figures business and make sizable contributions to the Several organizations have taken to heart the premise that Wglobal economy. In the United States, for “What gets measured, gets done.” Indeed, their studies, instance, women outnumber men in the population and are which have been released over the last 12 months, show responsible for more than 80 percent of all purchases of goods clearly that women’s access to seats on corporate boards of and services. Women represent more than 45 percent of all directors lags far behind their participation in other areas of investors and more than half of all financial managers, account- the economy. In fact, several 2003 census reports on direc- ants, and auditors. They own more than 10 million companies, tors—which range from regional to international—demon- which account for more than 45 percent of all U.S. firms. strate not just that women account for a small proportion of Yet, the boardrooms of many public companies remain off- directors, but that many companies still lack even one limits to women. Even among Fortune 500 companies, whose woman on their boards. Their findings show the stark reali- track record for women directors far outpaces smaller firms, ty when it comes to women in directors’ positions: women still represent a small minority of board members. I 13.6 percent of all board seats in Fortune 500 companies What keeps women out of the boardroom? Several recent are held by women, while 10.8 percent of companies surveyed studies suggest that the problem is widespread and systemic. have no women directors. (“2003 Catalyst Census of Women The research serves as a starting point for further exploration, Board Directors of the Fortune 500,” Catalyst) and as a benchmark for measuring progress, or lack thereof, I In countries such as Italy, New Zealand, Portugal, Spain, of women in boardrooms across the globe. Business schools Japan, and the U.K., less than 10 percent of corporate board have the resources and the contacts to study these findings, seats are filled by women. In the U.K., 58 percent of companies conduct further research, and work toward viable solutions. surveyed have no women on their boards; in Spain, that num- Moreover, business schools can do much more to pro- ber is 76 percent; and in Japan, it skyrockets to 97 percent. mote an important message to corporations. Changing the (Corporate Women Directors International) gender composition of corporate boards isn’t just for the I On the corporate boards of the 100 largest public com- sake of diversity, nor for regulatory compliance. It’s simply panies in Massachusetts, women hold 9 percent of the board better for business. seats, and 50 percent of these companies have no women

34 BizEd SEPTEMBER/OCTOBER 2004

directors. (“Strategic Assets: The Women directors of 2003 Census of Women Directors color are rare. Catalyst and Executive Officers,” The reports that only 3 per- Boston Club) cent of board members I In Chicago, 12.4 percent of are women of color in the all board seats are held by women, 415 Fortune 500 compa- and 10 percent of the companies nies for which they had have no women directors. (The data by gender. This is a 2003 “Census of Chicago’s 50 slight increase from the Largest Companies,” The Chicago 2.5 percent that Catalyst Network) Frustrated with such slow recorded in 1999, when it I In Philadelphia’s 120 largest first started tracking these public companies, 11.5 percent of all progress, some countries have data. board seats are held by women, and Frustrated with such 34.2 percent of companies surveyed passed legislation to trigger a slow progress, some coun- have no women directors. (“Women tries have passed legisla- on Boards: Different Perspectives. change in the status quo. tion to trigger a change in More Talent. Better Results,” The the status quo. Israel, for Forum of Executive Women) instance, passed legislation I In 175 public companies in for more equal representa- Georgia, women hold 7.1 percent of tion on the boards of the board seats, and 54.3 percent of state-owned companies in companies have no women directors. (“The Time Is Now! 1993. The share of public company board seats held by Women in the Boardrooms,” Board of Directors Network) women subsequently rose from 7 percent in 1993 to 30 per- These numbers show that women’s boardroom participa- cent in 1998 in these companies. More recently, Norway tion overall hovers around 10 to 12 percent. They also passed legislation mandating that women serve in at least 40 demonstrate the considerable range in results across countries percent of directorships at state-owned companies, effective and geographic areas, especially regarding the share of com- January 1, 2004. Sweden is threatening similar legislation in panies that still operate with all-male boards. 2005 if women hold less than 25 percent of board seats at In addition, larger firms are more likely than smaller firms that time. to have a woman director, and they also have a greater share The fact that legislation has sparked positive change in of board members who are women. In Chicago, for instance, some countries is encouraging. That it has often taken acts of while 12.7 percent of the Fortune 500 board seats are held by law to effect such change, and that the positive results are pri- women, the percentage drops to 8.4 percent for companies in marily confined to state-owned sectors, is less heartening. The the Fortune 501-1000. In the Philadelphia area, comparable message that women make strong contributions to boards of figures are 16.8 percent for Fortune 500 companies, and 9.2 directors has yet to take hold. percent for Fortune 501-1000 companies. The vast majority of companies lie outside the Fortune 1000 (all of which had Small Gains, Slow Progress revenues of over $1 billion in 2002), and on average have Somewhat greater gains have been made by women at the considerably less representation of women in the boardroom. executive officer level. In Chicago, for example, for the 23 There are also large differences among companies with more companies that have been tracked consistently over the past than one woman on their boards. In the U.S., for example, six years, the share of women executive officers rose 9 per- almost half (47.6 percent) of Fortune 500 companies have cent, compared to a 4 percent increase in women board mem- two or more women board members. But in the regional bers. Catalyst shows an increase of 7 percentage points in the studies that include many smaller companies, the percentage share of women executive officers in the Fortune 500 com- is often far less, from 44 percent for companies in Chicago, to panies nationwide from 1995 to 2002, relative to a 4 percent 28.3 percent in Philadelphia, to 19 percent in Massachusetts, increase in women directors between 1995 and 2003. down to 10.3 percent in Georgia. True progress, it seems, has been concentrated in the top

36 BizEd SEPTEMBER/OCTOBER 2004 WOMEN ON CORPORATE BOARDS, BY COUNTRY Board Seats Companies with no Held by Women Women Directors

United States (2003) 13.6% (500) * 10.8% involved in more than 70 percent of Australia (1999) 10.7% (300) 53.0% all electronics purchases in the U.S. Japan (1998) 0.2% (2,396) 97.0% alone, according to the Consumer Spain (2002) 4.6% (300) 76.0% Electronics Association. United Kingdom (1997) 5.0% (200) 58.0% Having women “on board” doesn’t just establish diversity, meet a quota, or *The number of companies is shown in parentheses. abide by law—it reflects the realities of the marketplace. tier of business. The Philadelphia and Chicago studies, in par- Time to Move Forward ticular, demonstrate that gains, when made, tend to be Unlike Israel or Norway, the U.S. is unlikely to mandate among the largest companies in the area. Smaller companies, women’s participation on boards. One positive development, which account for the vast majority of businesses, still have however, is that major recent changes in corporate gover- significant work to do. nance present incentives and opportunities for companies to There is a growing consensus that corporate boards should diversify their boards. be “strategic assets” of organizations. (Read, for instance, the The growing emphasis on sound corporate governance, as piece by the National Association of Corporate Directors, well as regulatory requirements for board independence and Board Evaluation: Improving Director Effectiveness, financial expertise, should indirectly expand the proportion of Washington D.C., 2001.) The more diverse boards are in women directors. Women, who have been absent from the terms of talent, expertise, and pro- fessional and personal back- BOARD SEATS HELD BY WOMEN, U.S. grounds, the stronger an asset they become. Directors who reflect the various constituencies All Companies of companies and that come to Study (all 2003) Surveyed Fortune 500 Fortune 501–1000 the table with different back- grounds pose different kinds of United States 13.6% (500)* 13.6% (500) Data not available questions, ask about untapped Atlanta 7.1% (175) 12.7% (14) 9.1% (12) markets, and provide new ways Boston 9.0% (100) 12.4% (11) 9.8% (11) of thinking about business issues. Chicago 12.4% (50) 12.7% (34) 8.4% (11) Business schools can make cor- porate leaders aware of the busi- Philadelphia 11.5% (120) 16.8% (26) 9.2% (17) ness case for women on corporate boards. Many of the companies *The number of companies is shown in parentheses. that lack women directors operate (includes both “Board Seats” and “Companies with No Women” data) in markets dominated by women as customers and employees in the United States. Some, for instance, manufacture women’s shoes; boardroom for so long, make excellent candidates for “inde- others sell everything from ice cream to financial services; still pendent” directors as now required by the U.S. Sarbanes- others manage nursing homes. These are examples of only the Oxley Act of 2002. Moreover, as women represent over half most obvious instances in which female perspectives are likely of all financial managers in the United States, they provide a to prove highly valuable to the bottom line. large pool of candidates who could qualify as “financial It may not be surprising that six of ten board directors experts,” which are being recommended for audit commit- with cosmetics company Avon, for example, are women. tees of NYSE- and NASDAQ-listed company boards in 2004. What is surprising is that computer companies Apple and In addition, the Securities and Exchange Commission Gateway have no women on their boards. After all, (SEC) mandate that public companies disclose the nominat- women control or influence 66 percent of home comput- ing committee’s selection process and minimum require- er purchases, according to Intelliquest; they are also ments for directors bodes well for women. The traditional

BizEd SEPTEMBER/OCTOBER 2004 37 COMPANIES WITH NO WOMEN DIRECTORS

All Companies informal process of depending on the recommendations of current board Surveyed Fortune 500 Fortune 501–1000 members has often produced a limited pool of candidates, most of whom United States 10.8% 10.8% Data not available shared characteristics of incumbent Atlanta 54.3% 7.1% 33.3% directors and hindered women’s Boston 50.0% 10.0% 27.3% access to board positions. Chicago 10.0% 6.5% 27.3% The corporate tradition of seeking Philadelphia 34.2% 0.0% 41.2% mainly CEOs and former CEOs for the board is also losing its hold. Nominating committees are placing increasing value on functional expertise as they strive for the average number of boards on which individuals are will- strategic advantage in an increasingly global marketplace. ing to serve, thus providing opportunities for new faces in the Women offer a wealth of expertise in areas such as finance, boardroom—including, and perhaps especially, women. technology, marketing, and human resources (including com- Research shows that diverse boards are more likely to tackle pensation expertise), thus vastly broadening the pool of qual- head-on issues of ethics, conflict of interest, and board assess- ified board candidates beyond the CEO level. ment than are more homogeneous boards. Read, for instance, In addition to these changes, board members are being The Conference Board of Canada’s 2002 report, “Not Just asked to shoulder more responsibility and devote more time the Right Thing, But the Bright Thing,” available at to board commitments due to new laws and regulations such www.realassets.ca/web_pdfs/reports/ra_report_may_02.pdf. as Sarbanes-Oxley. Such developments are expected to reduce Companies, especially larger ones, are increasingly turning

Champions for the Cause

Many organizations are studying the discrepancy between women’s participation on boards of directors and their participation in business at large. Business educators looking for more information can visit their Web sites or contact their offices for access to many studies, publications, and other information on the issue:

The Board of Directors Catalyst The Chicago Network The Forum for Executive Network 120 Wall Street, 5th Floor 5734 S. Kimbark Avenue Women P.O. Box 5616 New York, NY 10005 Chicago, IL 60637-1615 1231 Highland Avenue Douglasville, GA 30154 212-514-7600 773-324-0202 Fort Washington, PA 19034 770-489-6689 [email protected] [email protected] 215-628-9944 president@boarddirectors www.thechicagonetwork.org [email protected] network.org 2825 North First Street, www.foew.com www.boarddirectors Suite 200 Corporate Women Directors network.org San Jose, CA 95134 International National Association of 408-435-1300 1211 Connecticut Avenue, NW Corporate Directors The Boston Club [email protected] Suite 504 1133 21st Street, NW P.O. Box 1126 Washington, DC 20036 Suite 700 Marblehead, MA 01945 8 King Street East, 202-835-3713 Washington, DC 20036 781-639-8002 Suite 505 [email protected] 202-775-0509 [email protected] Toronto, Ontario M5C 1B5 www.globewomen.com [email protected] www.thebostonclub.com 416-815-7600 www.nacdonline.org [email protected]

38 BizEd SEPTEMBER/OCTOBER 2004 to search firms to identify potential female board candidates. In addition, several women’s organizations such as The Boston Club are well-positioned to help companies recruit women board candidates who meet their specific needs. Obstacles still must be overcome, however—from direct opposition within corporations, to a lack of knowledge on how to find potential qualified board members who are women, to simple inertia. Documenting the status of women directors, in and of itself, will not bring about change. Business schools, their advisory boards, and their graduates can play a more active role than in the past in facilitating the process.

A Larger Role for Business Schools It’s a logical next step for business schools to address the problem directly through their executive education programs, partnerships, case study selection, and research. Schools worldwide can become key resources for corporations by con- ducting research and further documenting the benefits of diversity on boards. U.S. business schools with campuses in the more than 40 states without a Census of Women Directors, for instance, should consider conducting an annual report to track the sta- tus of women in boardrooms and in executive positions in their states. Most states have professional women’s organiza- tions that would be willing to co-sponsor this activity and help with dissemination of the results. In addition, given their extensive links to the business community, business schools can be instrumental in intro- ducing women executives and entrepreneurs to corporate leaders involved in the selection of board members. Business schools can host forums on topics such as effective net- working and personal marketing, and can offer training, mentoring, and coaching for women. More generally, they can incorporate issues of corporate governance and risk management into their teaching of management develop- ment and diversity. The tide appears to be turning, but business schools can help to ensure it continues to turn in a positive direction and that the pace is more than glacial. When more companies tap into the large, underutilized reservoir of highly qualified women and assign them places around their boardroom tables, women, men, and business will benefit. Iz

Patricia M. Flynn is Trustee Professor of Economics and Management and former dean of the McCallum Graduate School of Business at Bentley College in Waltham, Massachusetts. She is also a director of Boston Fed Bancorp and Boston Federal Savings Bank. Susan M. Adams is associate professor of management and director of field-based learning at Bentley.

BizEd SEPTEMBER/OCTOBER 2004 39 More Steak Than by Peter Lorenzi

SizzBusiness schools create wealth and addle value, yet they continue to draw criticism. How can business educators respond when management education comes under fire?

40 BizEd SEPTEMBER/OCTOBER 2004 Business education is one of the great successes of the modern world. That success wasn’t particularly easy to foresee, however. their general education courses often do not master these In 1907, when asked to consider developing a business skills until they’ve moved on to the business school cur- school, Harvard president Charles William Eliot said, riculum. Worse, liberal arts courses sometimes teach stu- “There’s no market for it.” Nearly a century later, the dents to loathe business and to accept guilt for the ethi- statistics prove him wrong. cal lapses in corporations. Today, more than 200,000 MBAs are awarded annual- I believe a formal education, including a broad knowl- ly, making the MBA the world’s most popular graduate edge of liberal arts, is an excellent start for someone who degree. In 1998, 24 percent of all master’s degrees award- wants to become a global leader. Undergraduate business ed were in business. Undergraduate business education schools that follow the highest level of accreditation dwarfs MBA production, with more than a million under- require that their students complete at least half of their graduates enrolled in American business schools each year. degrees outside of business courses. As a result, business In 2001, 92 percent of accredited colleges and universities students as well as business faculty are familiar with a gen- offered an undergraduate business program. In addition, eral liberal arts education, which prepares them for a executive education has become a highly profitable busi- career in the 21st century. I am less sure that a liberal arts ness, especially for branded schools, offering businesspeo- education that does not contain a professional component ple the cachet of a top-tier MBA without the typical aca- such as business education really prepares students for demic prerequisites. jobs after graduation or even for lifelong learning. Despite the fact that business degrees offer substantive value—more steak than sizzle, so to speak—business edu- Business schools rely too heavily on the corporate cation has come under attack by a variety of critics with a world for support. wide range of charges, from questions about its academic Columnist Robert Samuelson has criticized corporations purity to doubts about its value. It’s time that business for hiring business schools to train their junior executives. educators and business graduates started vigorously refut- He believes that business schools have “subtly permitted ing these charges and taking every opportunity to point many companies to shift responsibility to outsiders for out the profound effect management education has had on selecting and training managers.” But I believe the close the business world. relationship between corporations and business schools is a Management educators need to examine the specific strength, not a weakness. Business schools prepare students accusations leveled at business schools and be prepared to practice business, so it’s only right that they often have with effective counterclaims. While some of these accusa- the financial backing of corporations that endow chairs and tions are not recent, they are still widely cited, and I believe contribute funds to the construction of new facilities. they need to be directly and immediately addressed. Business schools have failed to cure all of Commercial success, which business the world’s economic and business schools promote, violates the standards problems while causing many of the of liberal education. world’s ethical and moral problems. In fact, business education is usually rooted To the first half of that statement, I would reply: in a liberal arts education. Many business Are business schools to be credited or blamed faculty have significant liberal arts expo- for a country’s economic progress? sure, if not a degree in liberal arts. Some Obviously not. Samuelson claimed in 1990 business faculty have no business training at that “the MBA explosion has coincided with the all; their degrees may be in psychology, mathematics, or deterioration in the performance and stature of corporate philosophy. Conversely, few liberal arts professors have America.” To that, I would point out that America’s taken business courses or obtained business degrees, and strong GDP growth over the past 50 years coincided with many have little or no work experience outside the univer- the growth of MBA programs. While some indicators sug- sity. Therefore, these liberal arts faculty might have a lim- gest that American global competitiveness declined ited ability to judge the value of a business degree in a real- between 1945 and 1990, most of that decline can be world work situation. attributed to the revival of post-war economies and the rise Aphilosophy professor once claimed that business of Third World nations—who benefited from American education “sucks undergraduate students dry of ideal- business expertise. ism.” In fact, the liberal arts foundation may be the To the second half of the statement, I would say: source of that lost idealism. Students who should have Business schools certainly have a responsibility to teach learned writing, speaking, and critical thinking skills in the ramifications of unethical corporate behavior and the

BizEd SEPTEMBER/OCTOBER 2004 41 Despite the criticism of graduate business education, continue to flock to business schools to learn about

importance of a productive work ethic, but they cannot be Citing prestigious, full-time MBA programs as a microcosm the primary source for ethics education. Business schools of university business education, as Pfeffer and Fong seem to instill a pro-social work ethic, an understanding of global do, would be like offering Rolls Royce as representative of the competitiveness, and the skills to manage in a challenging automobile industry. To reach every individual—undergradu- world. It is up to students to use the knowledge they have ate, working professional, or senior executive—who is inter- gained in the classroom in a positive way. ested in a business education, today’s business schools must offer a wide range of programs and time slots. If we cannot Business schools do notproduce business leaders— be flexible enough to meet our students’ needs, we won’t and the executives they do produce often fail. have to worry about having students much longer. The explo- This is a serious accusation, sometimes leveled by business sion of part-time and weekend programs is a strength of professors themselves who are burdened with self-doubt. In today’s business schools, not a weakness. their widely read article about the value of an MBA degree, Stanford University’s Jeffrey Pfeffer and Business schools exist Christina Fong noted that the four most recognized merely as cash cows for American business leaders lack a graduate or undergradu- their parent universities. ate business degree. They cite Fortune magazine’s “CEOs Pfeffer and Fong note that Who Fail,” 40 percent of whom had an MBA. “there is little doubt that busi- To me, these seem like unconvincing correlations used to ness education is big business.” imply causality where none exists. They are based on incom- I submit that the “big business” plete evidence and anecdotes. Better evidence would require of business schools is a boon to some kind of systemic study, such as a survey of senior exec- the university system as a utives of the Fortune 500. whole. The cost to develop and As to the claim that business schools produce leaders who maintain a business school is quickly recouped. And busi- fail, it should be pointed out that failure is part of learning. ness schools procure large donations from alumni and corpo- Counting failures without measuring success is cynical and rations. In 2002, AACSB International reported that more short-sighted; it is also an inappropriate test. Business lead- than 270 responding business schools had their own positive ers often cite their short-term failures as part of their long- endowments, totaling a combined market value in excess of term success. $68 billion. The Wharton School at the University of It is true that MBA programs might occasionally produce Pennsylvania completed a $445 million campaign in 2003; “defective products”—leaders who are poorly trained or eth- Harvard has targeted $500 million by 2005. ically challenged. Yet developing managerial competence is at What would happen if MBA programs vanished? More the heart of an MBA education, and that is where it most than likely, many universities would suffer significant financial often succeeds. The purpose of an MBA is to improve an indi- losses. My belief is, if MBA programs vanished, it would only vidual’s business management skills and odds of success as a be a matter of time before another business and management manager. Census data relating income to educational level education program would appear out of common need. show that a professional education has an overall positive effect, despite well-publicized exceptions. Business professors do not contribute much to busi- ness knowledge today. The value of a business degree has Pfeffer and Fong also claim few professors at business schools been diluted by too many programs. write popular business books. In 2001, they say, only two of Pfeffer and Fong look with dismay at the the top ten best business books were authored by academics; explosion of part-time, weekend, and exec- the rest were written by journalists or businesspeople. utive programs. While they acknowledge However, I would point out that most business professors the value of having working man- either spend their time teaching or writing textbooks; and agers enrolled in MBA classes, they the bulk of business texts are written by professors, not cor- don’t acknowledge that working man- porate leaders. agers often can only enroll in MBA class- Textbooks are rarely popular, but they are likely to impact es through such part-time programs. student learning more than popular books do. In other disci-

42 BizEd SEPTEMBER/OCTOBER 2004 students and businesspeople from around the world effective management, marketing, and leadership.

plines, are university professors responsible for the bulk of not judge how much they learned—nor should he judge them. popular books in their areas of specialty? Probably not. If not, Deming believed that profound knowledge can be difficult to why try to hold business professors to that standard? describe and even more difficult to measure. He also believed that the customer determines the quality of the product of the Business schools do not respond quickly enough to process. According to these criteria, business schools regularly changes in the real world. pass the most demanding test: the market test. In responding to the threat of for- At the undergraduate level, business schools often are not profit and online business pro- able to enroll the very “best and brightest.” Many of the more grams, business schools have gifted choose liberal arts and science programs, including pre- been aggressively innovative. It’s medicine, pre-law, and engineering. The most valuable aspect true that innovation is sometimes of a business school education is how it can take the students absent from the top-tier schools, with modest-to-good academic abilities and college board but that is common across industries. Innovation often comes scores and transform them into informed, educated, realistic, from struggling, second-tier organizations who leapfrog productive, well-paid, contributing members of society. complacent first-tier competitors. Innovation can result from Business schools succeed because employers value what creative, poorly resourced desperation, not just from well- business school graduates bring to the workplace: mastery of funded inspiration or complacency. And innovations brought the basic language and culture of business; a set of values, to business education by one school are quickly adopted by knowledge, and skills; and an appreciation of the integral role other schools, so that the level of education and its delivery of work and career in a meaningful life. The fact that students are raised across the spectrum. bring some of these desired characteristics with them to busi- ness school or learn them outside the classroom makes the The topic of business cannot lessons no less valuable. Business schools value these charac- really be taught. teristics and facilitate these lessons; the lessons need not be This is the most serious accusation part of the business school’s formal curriculum. of all. Pfeffer has asked the ques- tion, “Do you really learn anything Conclusion: Business schools offer real value. in business school?” Samuelson has Despite the criticism of graduate business education, students declared that business schools have and businesspeople from around the world continue to flock to two main objectives: to enhance under- business schools to learn about effective management, market- standing of how business works and to train ing, and leadership. Why? Because there is value in business future managers. Samuelson claims that business school education, and that value will grow with globalization. schools are somewhat successful in achieving the first The best evidence of the value of business education lies in its objective, but fail to achieve the second. Arguing that busi- economic impact. Business education has resulted in market- ness skills are not teachable, Samuelson declares that “no two driven salaries, advances in knowledge and creativity, and cul- businesses are exactly alike. ... The essence of business—tak- tural knowledge transmitted across generations and geography. ing sensible risks, creating valuable products, motivating Business schools serve customers. They create wealth by people, and satisfying customers—lies elsewhere and cannot adding value to the lives of their students. They provide the be taught in the classroom.” basis for a sustainable comparative advantage to their host I would reply that businesses—like human bodies for doc- institutions and to their customers. While not businesses, tors and river beds for civil engineers—do indeed differ. business schools operate in a businesslike fashion, as global However, the analysis and understanding of their problems, knowledge enterprises befitting and benefiting universities in practices, and purpose is certainly possible, if difficult. the 21st century. We must actively advance these truths about Business schools succeed because they recognize that the business education. If we do not, the critics will continue to world is diverse, dynamic, and complex; they prepare students believe that business education offers more style than sub- to manage in that world. B-schools produce globally compet- stance, more sizzle than steak. Iz itive products: knowledge and knowledge workers. I would also look for inspiration to W. Edwards Deming, Peter Lorenzi is a professor of management at the Sellinger School of who awarded A grades to all his students, claiming he could Business, Loyola College, Baltimore, Maryland.

BizEd SEPTEMBER/OCTOBER 2004 43 Poised for the Future AACSB is perfectly positioned to cope with some of the most pressing issues in management education today, from globalization to the doctoral shortage to the implementation of international accounting standards.

It has been 42 years since I taught my first university class and heightened the importance of our professional organization, 31 years since I was named to my first university administrative AACSB International. In recent years, AACSB leadership has post. It should be no surprise if I note that much has changed expanded its efforts to become a positive force in helping in management education during that span of time. members to articulate, understand, and manage significant Over the last four decades, our evolution has been steady— changes within the industry. An effective and committed net- with dramatic spikes at some points. As a result of the rise in work of members has been instrumental in leading initiatives the global economy, emphasis on international business edu- that are advancing management education around the globe. cation has skyrocketed, along with the number of business schools around the globe. International partnerships, study International Expansion abroad programs, and exchange programs have become com- During the past five years, AACSB has firmly secured its posi- monplace. More and more college graduates are pursuing tion as a leader in management education beyond North graduate degrees, especially MBAs. America as it makes a significant impact in Change has been rampant in other areas, as Europe, Asia, Latin America, and Australia. well. The production of Ph.D.s has risen, then by Doyle Z. Williams Through accreditation, educational pro- fallen. More schools have raised the bar on grams, communications, and knowledge- research expectations. Accounting accreditation has become a based services, AACSB is providing high-level services to the reality. Rankings have emerged as a dominant focus for many global community. These initiatives benefit all members by schools. Classroom emphasis has shifted from teaching to enabling them to identify programs of quality outside their learning and assessment. Technology has replaced blackboards own boundaries. As a result, there have been enhanced oppor- and chalk as a key component in the delivery of management tunities for study abroad programs for students, as well as education. New dynamics in the economics of management exchange programs for students and faculty. education have caused more emphasis to be placed on fund Another significant step in worldwide advancement has raising and revenue generation for noncredit programs. been the establishment of the Global Foundation for The changing environment of management education has Management Education, whose mission is to address global

44 BizEd SEPTEMBER/OCTOBER 2004 challenges and opportunities within concert with a quality business pro- management education and practice. gram. For those programs to be consis- GFME was recently formed as a part- tent and effective, accreditation stan- nership between AACSB and the dards for accounting and business European Foundation for Manage- should be coordinated and synchro- ment Education (efmd). I believe this nized. AACSB is in the best position to partnership sends a powerful message achieve this outcome. that international cooperation is not Doyle Williams The public has a strong interest in just important; it has become an essen- the practice of public accounting. In the tial reality. Through the GFME partnership, management U.S., every state has a State Board of Public Accountancy that educators will be able to draw on resources that will help them sets educational standards for aspiring CPAs. These boards address issues in cross-border management education. work together through the National State Boards of Accountancy, which in turn worked with the American Doctoral Faculty Institute of Certified Public Accountants to produce the One issue the new GFME partnership might address is the Uniform Accountancy Act in 1997. While state statutes are growing global shortage of doctorally qualified faculty. not always in harmony with the Uniform Accountancy Act, AACSB has taken a leadership role by forming a task force to these cooperative efforts have led to a great deal of consisten- seek solutions to this problem. The Doctoral Faculty cy. AACSB accreditation is acknowledged in the UAA. Commission observed that a continued decline in the produc- Given recent accounting scandals in the U.S., it is more tion of business Ph.D.s threatens the future of scholarship and important than ever for business schools to take a stance for research at a time when they are more important than ever. strong accounting programs, including five-year programs. Regardless of our diverse missions and programs, we are all Acting under the Sarbanes-Oxley Act, Congress has created affected by the doctoral shortage—and other professional the Public Companies Accounting Oversight Board groups have recognized that. AACSB’s efforts have sparked (PCAOB), which will undoubtedly address the credentialing interest among education and faculty leaders domestically and of CPAs who practice before it. The PCAOB will be studying abroad. I urge AACSB members who have affiliations with educational standards as well. other organizations to encourage these groups to take up the I predict that within the next ten years there will be the issue as well, as we seek long-term resolution of this problem. equivalent of a national CPA certificate for those auditing pub- One organization that is working to alleviate the doctoral licly held companies. Not only will strong, accredited account- shortage is the PhD Project. Founded nine years ago by Bernie ing programs help create consistent national standards that will Milano and the KPMG Foundation, it addresses the acute lack contribute to the CPA certificate, such programs also will aid of minority Ph.D.s in business. The PhD Project has assisted in the ongoing effort to create international accounting stan- hundreds of African Americans, Hispanics, and Native dards. I believe that, within 20 years, an international certifi- Americans to earn their Ph.D. degrees. The PhD Project now cation program will be in place. Business schools need to be at enjoys the support of 18 foundations, corporations, and other the table when international standards are drafted. organizations, including AACSB. An accreditation program of information systems is also under way, led by the Accreditation Board for Engineering and Accent on Accounting Technology (ABET). A few IS programs in business schools Another key area where AACSB can have an immense impact have already achieved such accreditation. The inevitable ques- is in accrediting accounting programs. At AACSB’s tion is whether or not AACSB will seek to accredit IS pro- International Conference and Annual Meeting in April, the grams in business or leave that task to ABET. AACSB’s board membership adopted revised accounting accreditation stan- of directors welcomes comments on this issue. dards. Nonetheless, questions occasionally still arise about whether AACSB should accredit accounting programs. For Rankings—and the Alternative me, the answer is a resounding “yes.” I believe that account- Another issue that many business schools wrestle with regular- ing accreditation is inevitable and that if AACSB doesn’t set ly is annual rankings of business schools produced by com- the standards, someone else will. I also believe the accounting mercial publications. While these rankings have been beneficial profession is best served if accounting education is offered in in some respects, many well-documented ill effects also have

BizEd SEPTEMBER/OCTOBER 2004 45 resulted. AACSB’s New Issues Committee is currently finaliz- Meet the Board Chair ing a paper addressing some of these points, and the report will be disseminated to all members. In the meantime, I publicly call for the publishers of these It’s no surprise that Doyle Z. Williams ardently supports rankings to cease the apparently intentional mislabeling of the idea of accounting accreditation. Williams has always their products. For instance, magazine covers and book titles had a passion for accounting. He served as founding claim they include rankings of the best business schools. But dean of the School of Accounting at the University of a thorough read of the publication often reveals that it has Southern California and led that school to be among the ranked only MBA programs, or only full-time MBA pro- top five in the nation. In other critical roles, he was coor- grams. It is as if the magazine has touted itself as publishing dinator for the Area of Accounting at rankings of the best countries in the world, when in fact it Texas Tech University and chairman for offers only a ranking of one city from each country. the Accounting Education Change B-schools annually produce more than a million graduates Commission from its inception in 1989 from baccalaureate and part-time MBA programs. The num- until 1993. ber of MBAs produced from full-time programs is one-fifth Most of his many honors revolve that number! When this misrepresentation is pointed out to around accounting excellence, the most the publishers, they shrug it off. They prefer to keep to their recent one being the American Institute of original claims in the interests of selling books and magazines. Doyle Williams Certified Public Accountants’ Gold Medal, These commercial rankings occasionally are valuable to receives the its highest honor. He has also held key business schools looking to benchmark themselves against Gold Medal from peer institutions. However, business schools have another the American offices with accounting organizations, resource: the management education database developed by Institute of including president of the American Certified Public Accounting Association, vice president AACSB’s Knowledge Services department. The database Accountants. and member of the board of directors of provides a wealth of data about business schools, their the American Institute of Certified Public prospective students, and their prospective employers. Some Accountants, and many other positions. of these data have now become an integral part of the accred- Now in his eleventh year as dean of the Sam M. itation process. Although the effort will be challenging, Walton College of Business at the University of Arkansas AACSB has committed itself to helping more non-U.S. in Fayetteville, Williams has presided over the school’s schools participate in and use this database program. I’m rise in eminence. Since he has been dean, the school has truly excited about the important contribution this initiative recruited 63 percent new faculty, secured private funding is making and its potential for the future. for a new building, established the Graduate School of Business, and achieved ranking among the top 30 public AACSB Member Services undergraduate business schools in the United States. The Knowledge Services database is not the only valuable Williams also is active within AACSB, serving as vice service offered to AACSB members. Other useful services, chair-chair elect from 2003 to 2004. His term as chair which will continue to be priorities in the coming year, are began in July 2004. He has been a member of the board Web-based resource centers, the community of affinity of directors since 1999 and chairman of the Accounting groups, and a variety of publications. Accreditation Committee twice. In addition, he has served Resource Centers: Two existing resource centers and one in the on numerous accreditation visiting teams and as chair- construction stage provide members with forums for learning man and member of various committees. about and discussing critical issues in management education. Williams holds a B.S. degree in accounting from The Ethics Education Resource Center, created by the Ethics Northwestern State University of Louisiana and M.S. and Education Task Force and AACSB staff, helps members Ph.D. degrees from Louisiana State University. He has address ethical issues in the curriculum. The Assessment authored more than 45 articles and several monographs Resource Center helps educators as they seek to change their and has contributed to more than ten books. He holds emphasis from teaching to learning. This second Web site is the Sam M. Walton Leadership Chair at the University of especially sensitive to regional institutional accreditation stan- Arkansas. dards as well as AACSB’s new accreditation standards.

46 BizEd SEPTEMBER/OCTOBER 2004 A Walk About Walton

The University of Arkansas in Fayetteville first opened its doors tional and research center, with a state-of-the-art multimedia to students on January 22, 1872. Fifty-four years later, the lab, four computer labs for undergraduate students, and a business school was founded, initially consisting of four profes- separate computer lab for graduate students. sors teaching 36 courses in business administration, econom- The Walton College has implemented an integrated under- ics, and sociology. Today the faculty consists of 75 permanent graduate core curriculum, developed an advanced enterprise full-time members teaching approximately 2,800 undergradu- resource program curriculum in information systems, and ate and graduate students. established three investment funds—a stock fund, a fixed- In 1998, the school received a $50 million cash donation income fund, and an asset allocation fund—with real money from the Walton Family Charitable Support Foundation, managed by students. believed to be the largest donation to an American business Seven specialized centers have allowed the Walton College school at that time. The school was subsequently renamed the to strengthen its public service and research: the Center for Sam M. Walton College of Business. Business and Economic Research; the Bessie Moore Center for The Walton College offers two Ph.D. programs—in eco- Economic Education; the Small Business Development Center; nomics and business administration—with concentrations in the Center for Management and Executive Development; the accounting, economics, finance, information systems, market- Supply Chain Management Research Center; the Information ing, management, and transportation and logistics. Master’s Technology Research Center; and the Center for Retailing degrees are offered in accountancy, information systems, eco- Excellence. nomics, and transportation and logistics management. Throughout its long history, the Walton College has not lost Undergraduate fields of specialization include accounting, eco- sight of its threefold mission of teaching, research, and service. nomics, information systems, finance, marketing, transportation “Learning is a lifelong adventure that begins with discovery,” and logistics, general business, and management. A separate according to the school’s credo. “Our passion for learning bachelor’s degree is offered in international business. The must be sustained by intellectual curiosity and scholarship, and Walton College also boasts an advanced computing instruc- we must endeavor to instill this same passion in our students.”

AACSB is in the process of designing the Doctoral news from members, and thought-provoking columns such Education Resource Center, a joint project with DocNet, an as “Dean’s Corner.” organization of doctoral program administrators. The center Finally, BizEd celebrates its third full year of publication with will be directed at management educators and will focus on this issue. Its mix of staff-written articles and contributions improving programs and developing innovative practices. from outside experts brings readers up-to-date on relevant top- Another site, which will be directed at prospective doctoral ics that range from globalization to corporate governance. students, will contain information about doctoral education and accredited doctoral programs. These two sites, as well as Planning for Progress the ethics and assessment Resource Centers, will be accessi- AACSB has made enormous progress in fulfilling its interna- ble through www.aacsb.edu. tional leadership role in management education—and I expect Affinity Groups: AACSB’s Affinity Groups offer members a that progress to be ongoing. AACSB accreditation will con- chance to meet with like-minded professionals to discuss tinue to expand around the globe. Knowledge services will problems, solutions, issues, and concerns. The 12 existing become more valuable to educational institutions, prospective Affinity Groups are organized around missions, scope of pro- students, and employers. AACSB member services and affini- grams, size of institutions, geographical location, and other ty groups will continue to help members exchange best prac- commonalities. Interest in the groups is growing, and three tices and keep abreast of changes in management education. new groups were recently added—Development Profes- In the coming months, AACSB’s role as a thought leader sionals, Entrepreneurship Programs, and Technology will become more critical. I believe AACSB is well positioned Leaders. Currently representatives from more than half the to serve its members and management education worldwide. I member institutions, about 475 schools, participate in suspect those who founded AACSB in 1916 did not envision Affinity Groups. the global breadth of the organization today or expect it to Communications: Another key member benefit is the range attain a membership approaching 1,000. Similarly, we can only of communications products that keep members connected imagine the impact AACSB will have in the coming century. and informed. The Web site, www.aacsb.edu, contains com- The key to AACSB’s future will be, as it was in the past, a prehensive information on accreditation, member benefits, committed and informed voluntary leadership drawn from affiliated organizations, conferences and seminars, and job institutions around the world. I urge all members to become openings. involved in building an even stronger foundation for man- eNEWSLINE, a monthly electronic publication, provides agement education through leadership in regional, national, members with information on the association and its events, and international organizations. Iz

BizEd SEPTEMBER/OCTOBER 2004 47 Technology

How Effective Are Tech retained the materials better. Tools for Learning? “In education, there’s a lot of buzz about experiential learning The majority of business schools are using right now, and I think simulations fit software and online learning tools to very well into that role,” says enhance their traditional delivery Deirdre Woods, chief information methods. Now, many educators are officer and associate dean at the wondering how effective they are in Wharton School. “Students seem to facilitating student learning and how retain the material better and be satisfied students are with a tech- more engaged.” Woods notes that driven approach. According to a re- students can also repeat the experi- cent survey of Wharton MBA stu- ence with a simulation, through dents, most students wouldn’t trade playback, to revisit choices they may in technology for traditional teaching have made in certain situations. methods. While technology may help in- computers, which will allow lab tests The Wharton School at the Uni- crease student attention, however, to be completely portable. versity of Pennsylvania in Philadel- the traditional case study still fares The new lab is now being used phia surveyed 290 ’04 and ’05 MBA well when it comes to the depth of by researchers from a number of students. When asked whether com- learning provided. Forty-two percent disciplines, including economics, puter- and Web-based tools en- of students surveyed said that case- political science, anthropology, and hanced their learning, only 14 per- based courses were as effective as sociology. Their findings could be cent found that they didn’t. tech-based courses when it comes to applied to a number of real-world Sixty-five percent reported that their how well they learned the material. business problems, says John Mor- learning experience was enhanced, And while 46 percent noted that they gan, an economist and associate while 21 percent reported that it was retained their knowledge of the ma- professor at Haas who is also serv- significantly enhanced. terial more effectively in a tech-based ing as XLab’s director. Students also noted that the tech- course, 39 percent noted that they For example, Morgan recently based learning tools effectively cap- found case-based courses equally ef- conducted an experiment to find out tured their attention and kept them fective in this area. Only 15 percent what produces greater revenue for engaged in the material. Eighty-three said that case-based courses were less sellers when a company is put up for percent surveyed said that computer- effective in helping them retain the sale—asking for payment in stock and Web-based tools were effective material than a tech-enhanced course. shares or cash. In the experiment, or very effective in enhancing their students took on the roles of corpo- levels of attention and engagement in XLab Targets Social rate executives bidding against one class, while 64 percent said that such Sciences another to purchase a firm. The stu- tools were effective or very effective dents used laptops outfitted with in enhancing their retention of the The University of California at Berkeley’s custom-designed software that pro- material afterward. Haas School of Business recently vided real-time information on bids The most telling findings of opened XLab, a new research facility to all participants and helped them the survey dealt with how students designed to conduct controlled labo- calculate the consequences of various compared their experiences in tech- ratory experiments that will test social decisions. Students whose strategies enhanced courses with those in more science theories. Partially funded by a proved successful would each earn traditional courses. Sixty-two percent seed grant from the National Science $50, providing incentive to play of students surveyed reported that Foundation, XLab is housed in two competitively. their attention and engagement were large rooms at the Haas School and The test supported the theory better in tech-based courses than in can accommodate up to 40 partici- that shares bring more revenue for traditional lecture- or case-based pants as experimental subjects. It uses the seller in a bidding contest. “This courses, while 46 percent said they 50 battery-powered wireless laptop idea comes from the economics liter-

48 BizEd SEPTEMBER/OCTOBER 2004 ature, but hasn’t really made its way ing the impact of paperless environ- Two MIS associate professors, out of the ivory tower,” says Mor- ment installations. Tony Townsend and Brian Men- gan. “With XLab, we assess whether Iowa State University is among a necke, have been working with the theory works in practice and number of institutions that have OPNET Technologies for several whether it will have a big strategic received academic grants from months regarding the software payoff in the marketplace.” OPNET. Other software recipients acquisition. “Students will have the include the Massachusetts Institute same computer tools used by IT $4 Million Software Gift of Technology in Cambridge; Stan- professionals in Fortune 100 com- for Iowa State ford University in Oakland, Califor- panies such as AT&T, MCI, Veri- nia; the University of California at zon, Accenture, Oracle, and NCR,” OPNET Technologies, a Bethesda, Maryland, Berkeley; the University of Illinois at says Townsend. software firm, recently donated more Urbana-Champaign; and the Georgia OPNET’s gift to the College of that $4 million in software, licenses, Institute of Technology in Atlanta. Business was made through the and upgrades to Iowa State Univer- The software gift from OPNET Iowa State University Foundation. sity’s College of Business in Ames. provides ISU’s telecommunications This gift includes licenses, future Students will use the software, which laboratory with critical software to licenses, and future maintenance. includes licenses to OPNET’s IT keep its business students up-to-date Guru and Modeler products, to with corporate technology, says Sports Car or SUV? design and study communication Labh Hira, dean of ISU’s College of Ask the Software networks, diagnose application per- Business. “It sends a clear message formance problems, and plan for that Iowa State is focused on provid- With more products than ever available to network growth and high availabil- ing a technology- and information- consumers, the process of deciding ity. In addition, graduate students based business program.” Hira adds which product to buy has become and faculty will use the software to that this type of external support is more complex. Researchers at the conduct advanced telecommunica- vital in outfitting Iowa State’s new University at Buffalo School of Man- tions research, such as modeling Gerdin Business Building with the agement, part of the State University wireless security systems and study- latest technologies. of New York system, have developed a new software program called WEBAim to help make that process a little easier. Developed by Stanley Zionts, a professor of management science and systems, and Jingguo Wang, a doc- toral student, WEBAim asks users to specify their levels of aspirations and then uses their responses to compare products. WEBAim then determines whether one product is at least as good as, or better than, another. If it is, it deems that product the “supe- rior” choice, and the one the user should consider purchasing. “What makes WEBAim unique is that users determine which factors are included in the analysis,” Zionts says. “They can evaluate products and services using their personal prefer- ISU’s telecommunications lab, where OPNET’s software gift will be used to study communication networks. ences, which may not correspond to

BizEd SEPTEMBER/OCTOBER 2004 49 Technology

more general comparisons or the might find that gas mileage is more to an access point that is wired to the preferences of others.” important to him than he originally overall network; the access point Although this software program thought.” Zionts sees the program must also have line-of-sight access to may seem to be a more complex ver- being used not only for big-ticket an antenna. This setup can be costly sion of the pencil-and-paper “pros purchases, but also for any decision, on a large scale. In a mesh network, and cons” list that consumers have such as renting an apartment—or many access points are connected used for years, Zionts notes that even choosing a spouse. Eventually, wirelessly to one another, so that in- consumers often miss important fac- the program might be used by formation can be relayed from one tors when making their purchasing manufacturers to gauge consumer point to the next until it reaches its decisions. For instance, consumers perception of their products’ design destination. A mesh network uses often use such guides as Consumer and price. many low-cost wireless access points Reports magazine and online re- and requires only a limited number of views, which can often lead them to The Big Apple Goes wired points and antennae to oper- a product ill-suited for their personal Wireless ate. It also works especially well in needs. To test this theory, the re- areas where large mountains or sky- searchers used data from Consumer This summer, New York City administrators scrapers might block traditionally re- Reports, evaluating all the products took bids from companies to con- layed wireless signals. considered in the March 2004 issue. struct what promises to be the largest To work in Manhattan, the net- The products ranged from carpet municipal wireless network ever es- work will require at least 600 access stain cleaners and disposable diapers tablished. The network, which will points—probably more. It is esti- to digital SLR cameras and comput- cover Manhattan, would provide mated that the project will cost be- ers. They expected to find that most broadband access not only to users of tween $500 million and $1 billion. of the products the magazine rec- mobile devices such as PDAs and lap- ommended would also be found tops, but also to emergency services U.S. Falters in E-Readiness “superior” by WEBAim. personnel in the fire, police, and However, when subjective criteria medical departments. The network A 2004 ranking of countries’ “e-readiness” were taken into account, WEBAim also would be used to control traffic indicated that the U.S. may be losing found that almost 40 percent of the signals and locate vehicles. ground. The survey was conducted products were inferior to any partic- The network eventually would have by The Economist Intelligence Unit ular individual’s needs. This finding the capacity to serve tens of thousands Ltd. with the help of IBM’s Institute indicates that consumer guides and of users at once, whether they are sta- for Business Value. In terms of e- consumers themselves tionary or moving in vehi- readiness, the U.S. slipped to sixth may not be taking into DATABIT cles at speeds up to 70 place. The U.S. had placed second in account personal criteria miles per hour. 2003 and first in 2000, 2001, and Gartner Research predicts such as the interaction According to Com- 2002. In the top five this year were that worldwide PC sales between brand appeal puterworld magazine, Denmark, the U.K., Sweden, Nor- will jump 13.6 percent this and cost tolerance in analysts note that tradi- way, and Finland. year to 186.4 million units, their buying decisions, tional wi-fi technology One reason for the drop, the study spurred by the replacement Zionts says. would be too cost-pro- said, is that broadband is still a com- of an estimated 100 mil- “The value of the pro- hibitive for such an am- parative rarity among U.S. house- lion PCs. The average life- gram really comes into bitious project. Instead, holds, reaching only 7 percent of the span of a corporate com- play as consumers refine they say that most prac- population. By comparison, South puter, Gartner finds, has their preferences and one ticable technology for Korea ranked number one in broad- lengthened to four years or more criteria change the project would be a band penetration at 27 percent. An- from three. About 30 per- in importance,” Zionts “mesh network.” other reason is that while the U.S. is cent of computers now in says. “For example, a In a traditional wireless still strong in terms of e-readiness, use are more than three person using WEBAim network, each individual other countries are simply progress- years old. to purchase an SUV user connects wirelessly ing more rapidly.

50 BizEd SEPTEMBER/OCTOBER 2004 www.gsm.kaist.edu

NEWSBYTES

I TARGETING TEEN BIZ business information is essential to and provide at least 20 percent of In a move to attract more teenagers the future of our young people and its content in an online format. The to entrepreneurship, the U.S. Small to their full participation in our CELawarding body of e-learning Business Administration now offers nation’s economy.” experts is being finalized, and the a new Web site that targets teens program is currently undergoing who want to start or grow their I NEW E-LEARNING INITIATIVE pilot testing at two European busi- own businesses. The site, at www The European Foundation for Man- ness schools. .sba.gov/teens, offers information agement Development, the Univer- on the basics of small busi- sity of St. Gallen’s Swiss Centre for I EXPERTS ONLINE ness, such as writing a Innovation in Learning, and the Southern Methodist University’s business plan, making Swiss company Spirus Applied Cox School of Business in Dallas, sound financial decisions, Learning Solutions have joined Texas, recently launched its new and knowing the legal issues forces to launch a new Certifi- institutional research Web site at involved with running a busi- cation of e-Learning (CEL). www.smubizexperts.com. Students, ness. “It’s never The certification is designed business professionals, and members too early to to ensure the quality and con- of the media can access the latest spark the entre- tent of e-learning programs research by Cox faculty in account- preneurial spirit at business schools. To be ing, entrepreneurship, ethics, and instill opti- eligible for CEL, a pro- finance, management and organiza- mism in our gram must involve man- tions, marketing, strategy, and tech- youth,” says agement education, be nology. The site also translates tech- Hector Barreto, well-established (offered to nical information into practical terms SBA administra- at least two cohorts of stu- for nonacademics, and facilitates tor. “Access dents), offer the equivalent direct contact with Cox faculty to key small of 100 hours of education, members. Iz

BizEd SEPTEMBER/OCTOBER 2004 51 Yo r Turn u by Yash Gupta

product line is not a unit or an al model far removed in structure, Business School object but rather a value-laden and style, motivation, andculture from a Is Not the “Real lifelong process; where the goal of for-profit corporation, we should the enterprise is not growth or mar- emphasize how business schools dif- World” ket share but intellectual excellence; fer from the real world. We should Many industry executives, corporate not profit or proprietary rights, but focus on our core competencies—on recruiters, consulting firms, andeven the free good of knowledge; not doing what higher education can do business academics have asserted efficiency of operation but equity of much better than industry. that business schools are “behind treatment; not increased productivity First, we offer students and facul- the curve” when it comes to man- in economic terms, but increased ty the freedom to experiment via agement training andpractice. They intensity of thinking about who we case studies, simulations, and other see business schools as ineffective, at are andhow we live andabout the projects. Case-study experimentation best—and, at worst, irrelevant. In worldaroundus.” exposes students to alternative solu- response, business schools have tions and to a level of feedback attempted to provide more and post mortem analysis rarely “real-world” business training to available in real business situa- students, to prove their rele- tions. Students can see how oth- vance to business. But in ers solvedthe same situation, attempting to recreate real- compare their performances, worldbusiness, business schools and learn from that knowledge are undermining their true core without the impingement of competency. Their purpose is real-worldpressures. not to offer real-worldbusiness In addition, new technologies experience; their purpose is to give us the ability to bring cases educate. into the classroom in ways that There’s no question that greatly enhance the power of “learning by doing” works. these proven learning tools. Via Practical experience has been the computer simulations, we can primary source of management create scenarios that test a stu- education for centuries, and it dent’s mental agility and devel- will forever be an important op leadership and crisis manage- complement to academic study. ment skills far beyondthe real- But higher education was not world challenges our students built to emulate the real world. are likely to face in the work- The best business schools in the place. By facing the challenges worldcannot match a true on- of these “hyper-realities,” stu- the-job experience. Anything we can As academics, we sometimes for- dents learn not only how to manage do lacks the urgency, context, finan- get that the atmosphere of higher “what is,” but how to manage cial peril, and financial rewards of education is, by design, inherently “what might be.” actual employment. different from corporate environ- Even so, many business schools Bartlett Giamatti, in the book A ments. Its purpose is to offer an are still reluctant to integrate simula- Free and Ordered Space, eloquently alternative to experience. It’s an tions into their classrooms. In the formulated the difference between alternative that has long been viewed 1988 article accompanying “for-profit” businesses andinstitu- as more effective andefficient than BusinessWeek’s very first ranking of tions of higher education. “A college “learning by doing.” Rather than MBA programs, Andy Grove, for- or university,” he writes, “is an insti- attempting to deliver quasi-real mer president of Intel, described tution where financial incentives to worldexperiences or trying to put a how a business school dean rebuffed excellence are absent; where the “corporate shell” over an institution- his suggestion of teaching leadership

52 BizEd SEPTEMBER/OCTOBER 2004 using simulation. Sixteen years later, real worldas it now is, business ture that can deliver the depth and many business schools eschew simu- schools should provide platforms for breadth of business knowledge need- lations in favor of throwing students experimentation andcreative explo- ed to educate top managers. Business directly into so-called “real-world” ration of new management schools, on the other hand, already experiences. approaches. What better place to have an education infrastructure in Just as the learning power of sim- put new theories of management place—portions of which may come ulations is often overshadowed by into play than in an institution at virtually no cost—andcan addfur- this real-worldemphasis, so is the unconstrainedby the needto show ther value by offering programs tai- insight provided by our research. quarterly earnings? What better lored to the unique needs of a com- Even as our faculty are creating place than business school to give pany. Most companies are better knowledge and finding new solu- free rein to the ideas of young servedby “outsourcing” manage- tions, our students often pass future managers who will be asked ment education to us. through our programs with little to develop innovations in industry? Business educators can best serve exposure to professors’ best work. the business community when we Giving students more access to cur- focus on the essence of who we are rent research wouldgive them Let business deliver real-world as educators and what we do better insights andtools for the future that than anyone else. Let business deliv- may be unknown andunavailable in experience. We must teach er real-worldexperience. We must any company or industry training teach students to evaluate what program. Furthermore, exposure to students to evaluate what works works and what doesn’t, absent real- faculty research opens students’ eyes and what doesn’t, absent real- worldconsequences. We must give to the research process itself and them freedom to experiment and demonstrates how they can find new world consequences. We must open up the fieldto innovative new solutions and develop new analytical approaches. Many students may even tools—a valuable skill for managing give them freedom to experiment prefer to wait to get their on-the-job in an always uncertain future. and open up the field to training on the job, where they’ll Unlike for-profit business, a uni- actually get paidfor it. versity is built to provide an open innovative new approaches. As educators, our primary mis- exchange of ideas. We can present sion should be to broaden the vision speakers with conflicting views of the Many students may even prefer of our students, so that they analyze future, sharp criticisms of business, to wait to get their on-the-job situations andproblems more effi- wildproposals, andalternative solu- ciently than any untrainedobserver. tions. In this rich environment of training on the job, where they’ll We shouldhelp them to see oppor- competing views, which might pres- tunities others do not see; to hear, ent a public relations nightmare for a actually get paid for it. understand, and effectively address private firm, students learn to devel- all types of criticism andinput; to op anddefendtheirown values and Finally, as business educators, we solve problems not yet encountered; solutions to challenges they may face should tout our hidden gem. Some andto know how to experiment as future managers. In this regard, critics warn of the proliferation of with new solutions. We must teach our “ivory towers” are actually far corporate universities and expanded them to work with tools that less insular than many corporate company training programs. But haven’t yet been tested. More headquarters and provide a great despite the rising cost of higher edu- important, we must prepare them to learning benefit to our students. cation, we have a clear cost advan- test tools they’ll needto invent for Rather than trying to advance tage in training managers for the vast themselves. Iz ourselves by following existing busi- majority of businesses in the world. ness models, we should be trying Only a few employers can justify Yash Gupta is dean of the University of out our own new models and new committing the immense resources Southern California’s Marshall School of ideas. Rather than recreating the required to develop an internal struc- Business in Los Angeles.

BizEd SEPTEMBER/OCTOBER 2004 53 1:03 PM Page 1 Bookshelf

Daisy Wademan’s Brush, Nancy M. Carter, organization has been strengthened Remember Who You Elizabeth Gatewood, Patricia by key partnerships with employees, Are might be consid- G. Greene, and Myra M. customers, host communities, other ered the ultimate Hart examine attitudes about businesses, government, and the graduation present. women as well as women’s owners of the parent company. Tisch Inspired by the traditional roles in the work- is not above being goofy—in one example of Harvard place and juxtapose these memorable chapter, he describes Business School pro- against the specific skills and how he dressed up as his mother in fessors who spend commitments required by a video designed to pitch Loews as the last class hours sharing personal any individual bent on founding a the best contender to build a new stories with their students, Wademan fast-growing, high-stakes enterprise. hotel. Nor is he aloof—he spent a has collected essays from 15 HBS They note that women historically week doing the front-line jobs of his professors. Alternately moving, hilar- start businesses in service-oriented bellmen, housekeepers, cooks, and ious, and reflective, each story is as sectors like flower shops and day- waiters. But his message is serious. inspiring as an after-hours tête-à-tête care centers, and often are content Only through partnering with every with the most respected senior to keep them relatively small and stakeholder, from taxi drivers to city leader you’ve never had the chance controllable. But they also point out planners, can a business develop a to get to know. From Jeffrey that other women with grander strong staff that can weather eco- Rayport’s description of a bewilder- plans are frequently thwarted by nomic troubles and nimbly move to ing final exam to Rosabeth Moss stereotypical attitudes about take advantage of fresh opportunities Kanter’s experience of delivering a women’s roles in society that make it when they present themselves. crucial speech by telephone, each difficult for (Wiley, $24.95) essay offers an intimate look at a women to secure key event in the life of a gifted funding and Most corporate leaders seeking to grow and thoughtful business school develop essential their companies are desperate to professor. The life lessons, though social networks. innovate their businesses and intro- sometimes familiar, remain pro- As the title of the duce new products. Not so fast, found. Savor the moment. book suggests, warns Sergio Zyman in Renovate Understand yourself. Care about the authors have Before You Innovate. The man who the people around you. Follow plenty of advice oversaw one of the most disastrous

your dreams. Be open to possibili- about how new product introductions in recent ties. The lessons are even easier to women can over- memory—New Coke—strongly

learn when presented in such a come the obsta- believes that most innovation is a

charming format. (Harvard Business cles clustered in their path and recipe for ruin. Instead, he favors School Press, $19.95) launch the next superstar business. renovation, in which companies (Prentice Hall, $24.95) examine their core essences and In general, women make less money than identify growth opportunities consis- men do, and that’s even more true Even the most self-reliant entrepreneur tent with products consumers when they open businesses as entre- determined to go it alone depends already want from them. “The phi-

preneurs. While 39 percent of all on a vast and essential network of losophy of renovation is, ‘Let’s find

U.S. firms in the U.S. had revenues governmental agencies, community out what we can sell and see exceeding $1 million in the year groups, and educational systems. whether we can make it,’” he writes. 2000, only 26 percent of the firms According to Jonathan M. Tisch, While CEOs might think they owned by women broke that mark. Chairman and CEOof Loews already know how consumers view Why would this be? Five professors Hotels, collaboration and coopera- them, Zyman suggests carrying out with a background in entrepreneur- tion are the basic building blocks of research to discover what emotional ship attempt to answer the question any successful enterprise. In The benefits, physical benefits, and in Clearing the Hurdles. Candida Power of We, he describes how his attributes consumers associate with

54 BizEd SEPTEMBER/OCTOBER 2004 Bookshelf

their brands. Only then should they What Price the Gary L. Lilien, “the bulk of consider growing their businesses Moral High research and teaching in market- organically with new products that Ground? A man- ing focuses on the consumer mar- make sense. (Portfolio, $24.95) agement professor ketplace.” That’s true even at Cornell, Frank though, in 1995, the financial While top executives may spend a great uses sociological value of B2B transactions was deal of time constructing their orga- studies about sympathy, commit- more than $6 trillion—twice that of nizational charts, much of the real ment, and cooperation to dissect consumer transactions. Other con- work of any why people keep bargains, why they tributors examine how technological enterprise gets defect, and why they behave fairly. advances have changed the market- done through In one chapter, he even asks the fas- ing classroom and offer a compara- informal social cinating question, “Does studying tive review of existing marketing networks. economics inhibit cooperation?” textbooks. (Best Business Books, Discovering how (The answer is, it certainly seems to. $49.95 hardcover, $29.95 softcover) connections work Economists give less to charities and among employees generally act less cooperatively than School administrators considering accredita- at all levels will others, leading Frank to wonder if tion might want to read Jeffrey W. help managers exposure to the self-interest model Alstete’s Accreditation Matters. Part learn how knowl- causes people to behave more self- of a series of publications on higher edge gets dissemi- ishly.) He applies his analysis of education issues, the book takes a nated and how to encourage collab- human behavior not only to the eth- look at accreditation in general, oration between departments. In ical dilemmas of individuals but to although most of its comments are The Hidden Power of Social Networks, situations calling for socially respon- applicable to management accredi- Rob Cross and Andrew Parker dis- sible behavior by firms. In general, tation in particular. Alstete reviews sect the factors—such as knowledge his conclusions are optimistic. the history of accreditation by and accessibility—that make certain “People who are intrinsically moti- regional and specialized bodies, dis- employees critical parts of the infor- vated to adhere to ethical norms cusses its importance and a few criti- mation exchange. They also provide often prosper in competitive envi- cisms, and then breaks down the templates for mapping social net- ronments,” he observes. (Princeton key elements necessary for success- works, uncovering bottlenecks, and University Press, $27.95) fully achieving accreditation. building bridges between disparate “Recently, student learning has groups. “Managers who target In Fundamentals of Business Marketing been at the forefront of regional strategic points in social networks Education, editor J. David and specialized accreditation can quickly increase an organization’s Lichtenthal and a host of contributors requirements, and most institutions effectiveness, efficiency, and oppor- consider how business-to-business should make every effort to focus tunities for innovation,” write the marketing is being taught at the Ph.D., their resources and strategic plan- authors. All the more reason to know executive education, master’s, and ning on making this the highest who’s discussing what around the undergraduate goal of their strategic and opera- water cooler every morning. (Harvard levels—and tional agendas,” he writes. He sprin- Business School Press, $29.95) express their kles the text with examples of how view that much one administrator committed the Why do people perform kind acts? Why are improvement whole school to the accreditation they morally responsible? Are they needs to be process, or how another school always motivated by some selfish made. At the devised a self-study plan. The cumu- reason, or is there really a place for doctoral level, lative effect is to give the reader a altruism in private life—and corpo- according to good idea of how much work is rate life as well? Robert H. Frank authors Erwin involved in accreditation—and how takes on these questions and more in Danneels and much value. (Jossey-Bass, $26) Iz

56 BizEd SEPTEMBER/OCTOBER 2004 Spotlight Left: Former dean Patricia O’Brien with Simmons MBA students and Boston Stock Exchange VP Bruce Newell ringing the opening bell. Below: Fulbright scholarship recipients Buhle Ngobo and Deborah May with Sherene Aram, recipient of a scholarship from C200, Through a an organization of women business leaders. Bottom: Gail Deegan, retired CFO of Houghton Mifflin Company Gender Lens and 2002 Simmons executive in residence. Simmons School of Management Simmons College women and men with Boston, Massachusetts strong role models, says O’Brien. To that Simmons School of Management end, Simmons writes may be the only business many of its own case school in the world whose studies on women student population is 100 leaders to supplement percent women. The the existing, often school’s mission is to provide sparse, supply of cases business education “taught featuring women pro- through a gender lens.” tagonists. Simmons Simmons offers five product lines also offers an entrepreneurship pro- in business education, including its gram that focuses on women, undergraduate program, which addressing the difficulties women serves 180 students; its MBA pro- still face in getting venture funding gram, which serves 250 students; or selling their business plans to and its executive education pro- banks. Through such efforts, grams, which attract 800 women O’Brien hopes more women will annually. It also offers its annual be encouraged to pursue business “Women and Leadership” confer- careers—and that gender will be less ence and its Center for Gender in of an issue in the workplace. Organizations. Each program is “When we were founded 30 designed not only to provide an years ago, women were 5 percent of education in management and lead- middle management. Now, it’s 50 ership, but also to focus on the par- percent,” said O’Brien. “Today, ticular roles, challenges, and man- women hold only 5 percent of sen- agement styles of women in the ness environments. A recent CGO ior management positions. Our goal workplace. study by Deborah Merrill-Sands, now is to get that up to 50 per- For 20 years, Simmons’ “Women who will be taking over as interim cent.” Still, some women who and Leadership” conference has dean, explored whether women truly attend Simmons’ business school attracted heavy hitters such as HP wanted to pursue top corporate posi- wonder whether a women-only CEO Carly Fiorina, who spoke at tions. It surveyed 571 Simmons business program truly reflects real- this year’s event. “Her story says to graduates and found that more than world business. On that issue, women, ‘You can get there if that’s half of women 34 and younger want- O’Brien is perfectly clear: It doesn’t. where you want to be,’” says Patricia ed to achieve the highest leadership “This isn’t the real world,” O’Brien, who served as dean of positions in their organizations. At O’Brien says. “We view our pro- Simmons’ business school for the the same time, only 27 percent said grams as sabbaticals where women last seven years before accepting a that being “in charge of others” was can hone their skills. Then, they can new position with Harvard College important. This distinction makes it return to the real world with a new last month. “It’s inspirational, and important that business curricula take voice, a new presence, a new confi- it’s a way of building the network.” into account women’s unique dence, and new skills.” Simmons’ Center for Gender in approach to leadership, says O’Brien. Simmons School of Manage- Organizations promotes research on It has become incredibly impor- ment is a member of AACSB gender roles and differences in busi- tant that business schools provide International. Iz

64 BizEd SEPTEMBER/OCTOBER 2004