55822_Cov 6/29/04 2:00 PM Page 1 SIMONBUSINESS WILLIAM E. SIMON GRADUATE SCHOOL OF BUSINESS ADMINISTRATION | Spring 2004 Your Money Simon Alumni and Faculty Explore Options for Investing

INSIDE: Zupan Investiture • PAETEC Fellowships • Top Executives Speak at Simon 55822_Cov 6/29/04 2:01 PM Page 2

Entrepreneurs Share Success Stories Conference at the Simon School featuring young entrepreneurs gives students an inside view on starting a business.

An impressive panel of established national entrepreneurs came to the Simon School on May 7, 2004, to talk about how to start a successful business. The discussion was organized and moderated by Leonard Schutzman ’69, former senior vice president and treasurer at PepsiCo, Inc. and Simon School executive professor of business administration. Panelists included (above, from left): José J. Coronas ’75,* general partner at Trillium Group and former president of Johnson & Johnson Clinical Diagnostics; Sangam Pant, gen- eral partner at Evercore Ventures, a $100 million early-stage venture fund, and co-founder of TargetRx, an online pharma- ceutical market research company; Allison Wing, founder and C.E.O. of giggle by Oh!™, a San Francisco, Calif.-based re- tailer of nursery furnishings, décor, bedding, baby gear, toys, personal-care items, clothing and gifts; John S. Bronson, an investor and board member of NearWare Networks, Inc., a Los Angeles, Calif.-based company specializing in improved audi- ence targeting in the commercial television industry, and for- mer executive vice president for human resources at PepsiCo, Inc.; Schutzman; Dan Thorman, vice president and chief finan- cial officer at Madison Road Entertainment; and John Lusk, co-author of The MouseDriver Chronicle.

*Executive M.B.A. graduate 55822_Txt 6/29/0412:37PMPage1 04 24 22 14 12 09 03 Spring 2004 • • • • • • • • • • Alumni News Simon alumniandfacultyexplore optionsforinvesting. Y Cover Story business problems intheclassroom usingcutting-edgetechnology. Professor EdiealJ.Pinker creates aninnovativecourseproject thatenablesstudentteamstosolvecomplex Simulating ComplexBusinessProblems • • •A Research LeadershipHighlights • • •S • • • •P • Upfront our Money Alumni LeaderProfile:BobBalk’94 Class Notes Mergers andAcquisitions Dean ZupanMeetsAlumniatNationalandEuropeanReceptions Alumni LeaderProfile:PierreHeroux’91 Zeng HonoredforHeroism Announcing aNewNetworkingGroup Building AlumniNetworks Dean’s Corner Simon NetworkEvents Better? Which Witches Specific KnowledgeandPerformance Measurement Eckertreceives honorarydegreeRobert A. anddiscusseseffectiveleadership. The SimonCommunitygathersfortheinvestiture ofDeanMarkZupan;MattelChairmanandC.E.O. materials. Marketing andCommunicationsstaffearnsnationalawards forexcellenceinpublicationsandpromotional Case Competition. and ITconsulting. Simon Technology Conference paneldiscussionsexaminebestpracticesintelecommunications,software financial capitaloftheworld. New York Recruiting Program drawsalumni,current andprospective studentsandcorporatepartnerstothe tives onindustrytrends duringKalmbachLectures. Senior-level executivesdelivercareer insightandperspec- experience forSimonstudents. the SimonSchoolamongworld’sbestbusinessschools. Surveys bynationalandinternationalmediacontinuetorank AETEC Fellowships provide real-world investmentbanking

imon studentscompetewithpeersfrom othertopbusinessschoolsduringtheSchool’sannualMarketing Ta le ofTwo ‘Bubbles’ 30 12 — —by Sally Parker —by Jeffrey Owen Jones by

V icki Brown 14 01 SIMONBUSINESS Spring 2004 55822_Txt 6/29/04 12:37 PM Page 2

Assistant Dean for M.B.A. Admissions and Executive Advisory Committee Administration Pamela A. Black-Colton J. Peter Simon, Chairman Assistant Dean for Information Technologies J. P. Bolduc William M. Kearns Jr. Kevin Brennan Paul A. Brands, M.B.A. ’66 Robert J. Keegan, M.B.A. ’72 David J. Burns, M.B.A. ’78 Dr. Henry A. Kissinger Associate Dean for Alumni Relations and Development Andrew M. Carter William W. Lanigan, Esq. Hollis S. Budd José J. Coronas, M.B.A.* ’75 Donald D. Lennox Senior Associate Dean Richard G. Couch, M.B.A.* ’79 Jane Maas for Faculty and Research Frank G. Creamer Jr., M.B.A. ’70 J. Richard Munro Ronald W. Hansen John L. Davies, M.B.A. ’73 James Piereson Associate Dean for M.B.A. Programs Ronald H. Fielding, M.B.A. ’76 Robert E. Rich Jr., M.B.A.* ’69 Stacey R. Kole Barry W. Florescue, B.S. ’66 Willliam D. Ryan Director of Student Services James S. Gleason, M.B.A.* ’68 Leonard Schutzman, M.B.A. ’69 Donna Lampen-Smith Robert B. Goergen George J. Sella Jr. Executive Director Paul S. Goldner, M.B.A. ’79 Marilyn R. Seymann of Marketing and Communications Bruce M. Greenwald, M.B.A. ’69 William E. Simon Jr., Esq. Dawn S. McWilliams Mark B. Grier, M.B.A. ’80 Joel M. Stern Director of Corporate Relations and Larry D. Horner Ralph R. Whitney Jr., M.B.A.* ’73 Recruitment Charles R. Hughes, M.B.A. ’70 Joseph T. Willett, M.B.A. ’75 Angela Petrucco Michael S. Joyce Associate Dean for Executive Programs David T. Kearns *Executive M.B.A. graduate Donna P. Spinella

Chairman, Ph.D. Program Ross L. Watts

Dean Mark Zupan www.simon.rochester.edu Editor Charla Stevens Kucko

Contributing Writers Vicki Brown, Jeffrey Owen Jones, Sally Parker

Art Director/Designer Geri McCormick

Production Manager John M. Robortella

Copy Editors Ceil Goldman, Dawn S. McWilliams

Photography SIMONBUSINESS, Vol. 18, No. 2 © 2004. ISSN 1077-5323 Annette Dragon, John Smillie Published semiannually by the University of Rochester, William E. Simon Graduate School of Business Administration, Carol G. Simon Hall, Box Cover Illustration 270100, Rochester, New York 14627-0100. Joanne Andrews Office of Marketing and Communications: (585) 275-3736 (phone), (585) 275-9331 (fax), [email protected] Simon Alumni News Postmaster: Send address changes to the William E. Simon Graduate School Contributing Editor of Business Administration, 2-341 Carol G. Simon Hall, Box 270100, Beth Zogby University of Rochester, Rochester, New York 14627-0100.

BUSINESS 2004 Spring Contributing Writer © 2004 William E. Simon Graduate School of Business Administration, Susan Bauer University of Rochester

SIMON Copy Editor Sara McLaughlin 02 55822_Txt 6/29/04 12:37 PM Page 3

WILLIAM E. SIMON GRADUATE SCHOOL OF BUSINESS ADMINISTRATION

UPFRONT Simon Continues to Rank PAETEC Graduate Among the World’s Top Business Schools Fellowships

For the sixth consecutive year, the Financial ally refereed journals account for the re- Times of London has ranked the Simon maining 20 percent of the overall ranking. School among the 100 best business schools The Simon School in the world. In its January 26, 2004, issue, ranked No. 36 in the the Financial Times ranked the Simon April 12, 2004, issue of School No. 35 in the world and No. 22 in the U.S. News & World the United States. Based on alumni recom- Report’s survey of the top mendations, the internationally influential business schools; it had British newspaper also ranked the Simon ranked No. 37 in the Arunas Chesonis ’91 School No. 2 in the world for finance magazine’s 2003 survey. and No. 5 in the world for economics. In business-area specialties, Simon is ranked PAETEC Communications Inc., one of the “This international recognition by the No. 13 in finance, No. 14 in accounting, nation’s fastest growing telecommunications Financial Times is very gratifying and un- No. 24 in supply chain/logistics and No. 26 companies, has established two new gradu- derscores our commitment to making this in information systems. The survey results ate fellowships at the Simon School. The great business school even better,” com- are based on a poll of corporate recruiters, fellowships will provide real-world invest- ments Dean Mark Zupan. “We will remain business school deans and M.B.A. program ment banking experience from a customer focused on providing our students with the directors, and on statistics supplied by the perspective for two of Simon’s leading grad- highest quality management education and participating schools. uate students. career opportunities possible and promot- “We are pleased that Simon placed slightly “The strong bond that the Simon School ing an environment that fosters research higher in the rankings as compared to last is forging with top technology companies and the creation of new knowledge. Our year,” says Zupan. “The slight increase seems like PAETEC will afford our students the success in these areas will ensure that sur- to be attributable to one statistic: the percent- opportunity to graduate with an unprece- veys of merit will continue to recognize the age of students placed at three months after dented level of practical expertise,” says Simon School as one of the world’s best.” graduation—something our staff worked Dean Mark Zupan. “We’re very excited to The annual survey, which is described by hard on improving last summer.” be developing progressive programs like the Financial Times as “a comprehensive as- In addition to significant restructuring this with a company whose commitment to sessment of the value of an M.B.A. and the and reallocation of resources in the Career continuous learning and reputation for ex- schools that offer them,” was based this year Management Center, Zupan has established cellence in the marketplace are as strong on information collected from 137 business task forces to examine all aspects of the Full- and longstanding as PAETEC’s.” schools and their Class of 2000 graduates. Time, Part-Time and Executive M.B.A. PAETEC founder, chairman and C.E.O. Business schools are ranked by the Programs, as well as the mission/strategy for Arunas Chesonis is a 1991 graduate of the Financial Times annually according to the the School. “While we are mindful of the Simon School. Chesonis says the fellow- following criteria: the career progression ac- fact that rankings can be volatile,” he ob- ships will focus on transactional analysis crued from the M.B.A.; diversity; and re- serves, “we remain committed to our ulti- related to merger and acquisition activity, search. Placement statistics (such as salary mate goal of providing our students with a investment banking and financing alterna- figures from recent graduating classes) ac- world-class management education and the tives at PAETEC. Fellowship recipients will count for 55 percent of the overall rankings. tools they need to be successful in today’s work at PAETEC full time during the sum- Measures of the diversity of schools’ stu- global marketplace. By all of us working mer and part time during the second year dents, faculty and board members account hard and together, we will continue to im- through the winter quarter. SB for 25 percent of the overall ranking; faculty prove and secure the recognition that goes

and research publications in 40 internation- with it.” SB BUSINESS 2004 Spring SIMON

03 55822_Txt 6/29/04 12:37 PM Page 4

WILLIAM E. SIMON GRADUATE SCHOOL OF BUSINESS ADMINISTRATION

UPFRONT Diverse Group of Executives Deliver Kalmbach Lectures at Simon Since January 2004, the Frederick Kalmbach Executive Seminar Series has brought an eclectic group of corporate leaders to the Simon School to discuss current management issues with students. The series is sponsored by the School through an endowment funded by a grant from the Frederick Kalmbach Charitable Trust. Recent speakers have included:

Daniel Burnham, former chairman of Raytheon Company (retired in January 2004), shared his insight on “Leadership and the Value of Disciplined Processes.” Burnham told students on March 11, 2004, that the most important element of being a leader is integrity.

Dr. Siddhartha R. Dalal ’73, vice president of the Imaging and Services Technology Center at Xerox Corporation, spoke to stu- dents on January 28, 2004, on “Information Mining and Services Research: It’s Not Computing Prowess Alone.” Dalal discussed examples of the challenges involving search-engine technologies, imaging science and software engineering. He also described how alternative information sciences-based formulations have played a critical role in meeting these challenges. BUSINESS 2004 Spring SIMON

04 55822_Txt 6/29/0412:37PMPage5 and incorporatechangesinthecorporateenvironment. large corporations,companiesfacetheneedtounderstand as mergers becomethepredominant methodofgrowth for Story oftheClairol/Wella Acquisitions.”Matteuccisaidthat “Embracing andMakingtheMostOutofChange:TheP&G and professional products atProcter &Gamble,spokeabout On February 3,2004, Robert Matteucci, Robert the topic“ManagingaGlobalBusiness”onApril19,2004. International Crude, atChevronTexaco Corporation,explored John M.Castagna, president ofcolor vice president andgeneralmanager, 05 SIMONBUSINESS Spring 2004 55822_Txt 6/29/0412:37PMPage6 06 SIMONBUSINESS Spring 2004 cocktail reception drew arecord crowd of that ensued.Laterevening, theannual Z Ol N M Eric Magnuson ’02,Jeff Logsdon ’02, In H Wayne France ’94, Jun Falcon ’98, ’02, S Gr 110 students.Participating alumniincluded spective andcareer advicewithmore than Ex prominent companies. from adiverse setoftheworld’s most dents tomeetwithalumniandrecruiters forstu- ues toofferaprimeopportunity first ofitskindinthecountry, andcontin- The program, now inits24thyear, wasthe place inthefinancialcapitalofworld. again brought Simon talenttothemarket- Ne (NYRP), heldatthe Waldorf=Astoria in The New York Recruiting Program anDlaVdv 0,Jim Dispenza haun Della Vedova ’02, ILA .SMNGAUT COLO UIESADMINISTRATION BUSINESS OF SCHOOL WILLIAM E. SIMON GRADUATE upan setthetoneforlively discussions St Simon StudentsWork TheirContacts ellicherry ’00,Peterellicherry Nguyen ’03,Peter aifan Ge ’97,AmiHeda ’94,Ray farinato ’82,Dave ’93,Phil Khani argolis ’78, Kruti Muniargolis ’78,Kruti ’02,Sanjeev O D change, 16alumnishared market per- nowich ’89 gBneis’7 Bor-Yu Chang’01, eg Bendelius ’97, w York CityonJanuary 7–8,2004,once UPFRONT dns lmiadRcutr lc to the Flock udents, Alumni andRecruiters uring theAlumniInformation pening remarks from Dean Mark and M ike Taylor ’02 Dean MarkZupan(aboveright)speakswith faculty andstaffattheNYRPAlumniReceptiononJanuary7,2004. Dean ZupanwelcomesSimonalumni,current andprospective students, during NYRP. Goldman Sachs,andprospective studentsataninformationreception associateintheEquitiesOperationsdivision,GlobalOperations,at left), . S ment towhathasbecomeahallmark underscorescruiters theSchool’s commit- Scotia Capital Pr Mo G Cr C The Bank ofNew York; Bear, Stearns & C corporate partners: Center washonored tohostthefollowing thanataxiride. travel anyfarther manystudentswithouthavingto view centrated andconvenient venue tointer- offers potentialemployers anequallycon- rations. At thesametime,program withseveral premierview banksandcorpo- tointer- dents aconcentratedopportunity first NYRPaudience. a chanceforDean Zupan toaddress his and viding amplenetworking opportunities prospective students,facultyandstaff, pro- more than250alumni,current and imon event. o. Inc.; Brink’s Company; Citigroup; onsulting; Banc of America Securities; enTek Inc.; Goldman Sachs Group; J.P. Wa oducts; Nomura Securities; Rothschild; Consistently positive feedbackfrom re- This year, theCareer Management The NYRPcontinuestoprovide stu- edit Suisse First Boston;Fitch Ratings; rganChase &Co.; McNeil Consumer dr o e okRecruiting Program York New ldorf for SB and Tw A Jaime Buck’03 etna; Archstone enty-First Securities (above . sored thisyear’s event. r strategic marketing skills,competingdi- F ‘5 hours,5minds, thousand dollars’ Case Competition Marketing for more ontheconference.) nual event atSimon. (See insidebackcover technology conference willbecomeanan- contacts inthefield.Students hopethe dents withanotherchancetomakevaluable working reception. The event provided stu- of ComputerAssociates,followed by anet- vice president and chieftechnologyofficer keynote address from Yogesh Gupta, senior The half-dayconference culminatedwitha systems, moderatedthepaneldiscussions. professor ofcomputersandinformation mation systems,and associate professor ofcomputersandinfor- practices. Faculty members trends andbest onindustry their views areas offinance,marketing andITshare alumni andotherprofessionals from the tohear students hadtheopportunity tions, software and ITconsulting.Simon with paneldiscussionsontelecommunica- technology conference onMay 7,2004, S Conference Simon Technology A School Marketing CaseCompetitionon schools, duringthe12thAnnualSimon Singh’s teamtookfirstplaceinthecompetition. team review strategyduringtheMarketingCaseCompetition. Simon student ectly withpeersfrom otherbusiness imon hosteditsfirststudent-organized irst-year Simon studentsdisplayed their pril 16–17,2004. Sandeep Singh’05 Rich Products Ro y Jones, Rajiv Dewan, (center) andmembersofhis SB assistant spon- is 55822_Txt 6/29/0412:37PMPage7 front ofapotentialemployer. to demonstratetheirmarketing talentin provided forstudents avaluable opportunity the grandprize of$5,000. The competition marketing/advertising firmtocompetefor S to apanelofjudgesfrom RichProducts, the day, teamspresented theirrecommendations strategies andsolutions.At theendof brainstorm ideasandformulatecompetitive share theirknowledge andexperiences, Wo and teamsoffive were randomlyselected. ranked M.B.A.programs across thecountry, imon Schoolandarepresentative ofalocal ILA .SMNGAUT COLO UIESADMINISTRATION BUSINESS OF SCHOOL WILLIAM E. SIMON GRADUATE ments of the service industry.ments oftheservice creativity andcommunicationaccomplish- award competitiontospecificallyrecognize CD. This isthe firstnationaladvertising for “Simon ataGlance” andtheSimon Pr for the2003–2005Simon Management Aw Advertising Industry from theService Ma competition sponsored by the A the brochure, “Simon ata Glance.” The D awards fortheprinted announcementof B the CD-ROM, “At Simon, Thinkers Si excellence in r national award cently garnered tions staffre- Communica- keting execution andimpactofmessage. Ad gold awards inthe 19thAnnualAdmissions S tional materials. collateral promo- publications and Ma The Simon Gains NationalAwards Communications Staff Marketing and The competitiondrew studentsfrom top- ecognition for imon earned ecome Leaders!”Simon earnedsilver r dmissions Advertising Awards, anational mon Management Programs catalog,and ean Mark Zupan’s appointmentandfor ograms catalog,andtwoawards ofmerit king onthecaseallowed studentsto S ve ards. The Schoolearnedagoldaward r r imon alsogainednationalrecognition keting and keting Report, r tising Awards forthe2003–2005

e

r

e W

T ILLIAM judges oncreativity, mar- h S

i 2003–2005

n

k

e

r

s E. S

B imon

e •

c IMON Management Programs

o

m

e L

G

e

a RADUATE

d

e

r

s

• W

S h

SB HO OF CHOOL e

SB

r e

A

T

h

i

dmissions n

k e

B

r s

USINESS

B

e

c o

m

e A

L DMINISTRATION

e

a

d

e

r

s

•

W

h

e

r e J o rich withinnovation andinspirationofits that, althoughrelatively young inyears, is ing, leadership—appropriate foraSchool strated thecapacityforinspired, andinspir- dean anindividualwhohasalready demon- U Ma Thomas H.Jackson ledtheevent. sity’s Interfaith Chapel.University President ceremonies onApril 1,2004,attheUniver- dean oftheSimon Schoolduringinvestiture Ma Investiture ofDeanMarkZupan ring insteadtocallita“coronation”; hence,thecrown. 12(rear center),andWalker,and sons,Will, 8(foreground). Walker haddifficultypronouncing “investiture,” prefer- Dean Zupanshares alightheartedmomentatthecloseofhisInauguralAddress withhiswife,Carol Shuherk,Ph.D., 2004. Dean Zupandelivershisinauguraladdress onApril1, ackson said. wn intheworldofbusinessschools,” niversity ofRochester—to have asitsnew “ rk The Simon Schoolisblessed—asthe tlCara n ...Rbr .Ekr eevsHnrr Degree Honorary Receives A.Eckert ttel Chairman andC.E.O. Robert

Z upan officiallybecamethesixth personal loyalty andwarmhumanity. Ihave brings thequalitiesof“kindness,generosity, in additiontostellarleadership, Zupan in thebestofhands.” incomparable integrity. The Simon Schoolis vision isharnessedtoboundlessenergyand foundations forsuchaccom level andafacultydedicatedtobuildingthe for honorableaccomplishmentatthehighest inspiring visionofstudentswhoare prepared bines arecord offirst-ratescholarshipwithan Kalt, alongtimefriendandmentor. “He com- sional schooloftodayandthefuture,” said “Mark Zupan is opening remarks duringtheceremonies. School ofGovernment, concurred inhis at Harvard University’s John F. Kennedy Pr leader, Mark Zupan, asitsdean.” great ofleadershipby installingatruly the art S E to itsmottoofmakingthinkersintoleaders,” Doctor ofLawsdegree.honorary “Livingup I chairmanandC.E.O.ofMattel,A. Eckert, nc., delivered anaddress andreceived an imon Schoolhasproven thatitappreciates ckert observed duringhisremarks, observed “theckert On ofessor ofInternational Political Economy J D oseph P. Kalt,Ph.D., Ford Foundation —Max Schulte,Rochester (N.Y.) uring theinvestiture ceremonies, Robert

a more personalnote,Kaltsaidthat, the dean forthegreat profes- plishment. This Democrat andChronicle 07 SIMONBUSINESS Spring 2004 55822_Txt 6/29/04 12:37 PM Page 8

WILLIAM E. SIMON GRADUATE SCHOOL OF BUSINESS ADMINISTRATION

UPFRONT Mattel Chairman and C.E.O. on Leadership Robert A. Eckert Shares His Recipe for Effective Leadership with Simon Students During Kalmbach Lecture

Robert A. Eckert, chairman of the board and C.E.O. of Mattel, Inc., oversees a toy manu- facturing giant with approximately $5 billion in annual sales. Generations of children around the world are familiar with his product portfolio, which includes Barbie®, Fisher- Price®, Hot Wheels® and American Girl®. Eckert spent most of his career, in fact, in brand management for Kraft Foods, Inc., the Dean Zupan (center) with Robert A. Eckert, Mattel Inc., chairman and C.E.O. (at left), and Joseph P. Kalt, Ph.D. (at right), Ford Foundation largest United States-based food company in Professor of International Political Economy at Harvard University’s the world. One of his major accomplishments John F. Kennedy School of Government. at Kraft was the introduction of Oscar Meyer Lunchables meal combinations, which have said many times that Mark is the nicest consistently delivered double-digit growth. human being I’ve ever met. I envy those of So, how did a “food guy” make the transi- you who will have the opportunity to work tion to toys? Eckert discussed his career strat- with him every day.” egy with Simon students during a Kalmbach Zupan, 44, former dean of the Eller Col- Lecture on April 1, 2004. For Eckert, it’s all lege of Business and Public Administration at about effective leadership. the University of Arizona, began his leader- Eckert, who earned a B.S. degree in business ship of the Simon School on January 1, 2004. Robert A. Eckert, Mattel Inc. chairman and C.E.O., administration at the University of Arizona talks about leadership with Simon students during a He is responsible for the administrative and an M.B.A. degree in marketing and fi- Kalmbach Lecture on April 1, 2004. and academic functions of the School, and nance at Northwestern University, told stu- serves as the leading advocate of its faculty, dents, “At the end of the day, no matter what programs and students, promoting its world- you’ve studied on a graduate level, you will end The team had a record of something like 0–11. class management education to an interna- up in a leadership position, and what you learn During a postgame interview, then coach Sam tional audience. and apply regarding leadership will be more Wyche was being grilled by reporters about the In his inaugural address, Zupan under- important than what you’re studying,” he said. possibility of being fired. Eckert remembers scored his commitment to making this “great According to Eckert, more than 800 books Wyche staring into the camera and saying, business school even better.” He commented, were written on leadership in 2003 alone. “Look, fellas, you know I’m going to get fired “The Simon School can take richly deserved After warning students to “beware of lists on and I know it. All I think about is getting ready pride in its wonderful history and accom- leadership,” Eckert cited his own favorite list, to win a football game next week.” That re- plishments to date. I am deeply honored to which outlined the qualities of successful lead- sponse changed Eckert’s outlook on leadership be joining the School and look forward to ers. The list included strong personal disci- and helped him overcome his fear of failure. working with the faculty, staff, students, pline, high self-esteem, persistence, the will to As for “unwavering integrity,” Eckert quoted alums and friends of Simon for the purpose finish stronger than you start, decisiveness, the J. L. Kraft’s motto, “What we say we do, we do of building an even brighter future.” ability to concentrate on one thing at a time, do.” In a society where lying appears to be ram- For Zupan, the move to Rochester has a sense of urgency, listening and learning, pant, Eckert said it is imperative to maintain been something of a homecoming. He was being a risk-taker who isn’t afraid to fail, feel- the utmost integrity. “If you’re going to be suc- born in Rochester in 1959 while his mother, ing lucky, a commitment to excellence, a cessful,” he noted, “you can’t lie.” Eckert has Maria, was earning a Ph.D. in chemistry at child’s enthusiasm, a sense of greatness, dedi- woven that integrity into all facets of Mattel’s the University of Rochester. His mother and cation to making the world a bit better, and a business. In 1997, the company established father, Janez, who is also a chemist, emi- strong and active faith in God or some higher global manufacturing principles, outlining 200 grated from their native Slovenia so that she power. Eckert’s addition to the list: “unwaver- standards for its workers (it outsources all of its could attend the University. They remained ing integrity.” manufacturing). in Rochester until Zupan was five, when the Eckert has overcome his own worry about Eckert said he learned a valuable leadership family relocated to Columbus, Ohio. Joining failure. In the late 80’s, he was managing lesson—this one on the need for adaptabil- his parents at the ceremonies were Zupan’s Kraft’s cheese business, and “things weren’t ity—from a 6-year-old girl who told him she wife, Carol Shuherk, Ph.D.; sons, Walker, 8, going well.” Philip Morris had just acquired wanted a “kitty” for Christmas. So, he worked and Will, 12; and brother, Andy Zupan. SB all year to develop a toy cat. When Christmas

BUSINESS 2004 Spring the company, and Eckert remembers reading that Kraft wasn’t doing well and “heads were came, that same little girl decided she wanted gonna roll.” Eckert knew deep down that he a toy dog instead! Eckert said the experience SIMON might lose his job. During this time, he recalls taught him that change is constant—“you al- SB 08 watching a Cincinnati Bengals football game. ways have to be a step ahead.” 55822_Txt 6/29/04 12:37 PM Page 9

FEATURE faculty research Research Leadership Highlights

A Tale of Two ‘Bubbles’

he rise and fall of Internet and biotech stocks in Despite the general perception of widespread fail- the 1990’s took investors on a wild ride. The ure in the Internet and biotech sectors of the 1990’s, Elizabeth A. Demers swoop also unleashed a deluge of experts who won- Demers said, the fortunes of firms actually varied dered whether any of this could have been predicted. widely, and there are a lot of success stories in both TWhile there may have been warning signs for individual sectors. That finding gave the authors hundreds of companies, conventional wisdom said, there were no general companies to study—both those that went on to predictors across the board. In particular, traditional account- wild success and those that folded. (They studied ing was not seen as a good predictor of success or failure. 371 Internet firms and 342 biotech companies.) A recent paper by Elizabeth A. Demers and Philip Joos, assis- Demers and Joos followed the numbers trail, tant professors of accounting, finds otherwise, however; “A Tale looking for clues. They studied financial and nonfinancial vari- of Two ‘Bubbles’: The Rise and Fall of Internet and Biotech- ables for the ability to predict success and failure at both the ini- nology Stocks” shows that old-fashioned accounting data can in- tial public offering (I.P.O.) date and after the initiation of public deed help to predict the success of even high-tech companies. trading. During technological revolutions, Demers says, euphoric in- Their models found that financial accounting in- Philip Joos vestors behave as though the laws of economic gravity no longer formation does have the ability to predict the out- apply. These times of new-era thinking create “bubbles” in cut- come for both failing and succeeding firms—even ting-edge industries—rapid rises in prices followed by a dra- for emerging industries undergoing a serious shake- matic implosion. The Internet and biotech pharmaceutical sec- out. They also discovered that they could apply a tors are obvious examples from the recent past, but it has biotech-based failure prediction model to forecast occurred for years: The railroads in Britain and the United Internet firm failures. States went through similar cycles, for example. Two influences thought to predict the success of a Demers and Joos looked at the characteristics of failures and ex- biotech firm—a deep-pockets investor and a phar- treme performers in the Internet and biotech industries. The two maceutical company’s stake in it—did not prove to be big fac- sectors are worth studying together because both high-tech indus- tors after all. tries rely heavily on intangible rather than tangible assets, both The involvement of high-prestige venture capitalists was a bet- have products that are vital to the economy and to society, and ter predictor of success in the Internet sector. But firms that were both generated high investor enthusiasm followed by a shakeout. characterized by more than just venture capital support and its In addition, some tech market reporters and casual empiricists associated Silicon Valley chatter and colloquial wisdom—that is, have observed that the Internet stock “bubble” mirrored the ac- they had strong economic fundamentals, as evidenced in their

tivity of the biotech sector, which preceded it by less than a accounting data—were more likely to be successful. BUSINESS 2004 Spring decade. Demers and Joos wanted to find out whether there were Because their models take into account current business reali-

indeed common characteristics across the two “bubbles,” and ties, such as the predominantly equity-based financing of technol- SIMON thus whether investors could learn anything from the first bub- ogy companies, the results of the authors’ study are more useful ble that could be applied in the second. than earlier failure-prediction models. Those were based on 1970’s 09 55822_Txt 6/29/04 12:37 PM Page 10

WILLIAM E. SIMON GRADUATE SCHOOL OF BUSINESS ADMINISTRATION

factors, such as tangible assets and traditional ways of measuring Demers says, “this market was worth trillions, so where did all debt, that just don’t apply to predominantly intangible asset- these so-called unsophisticated investors come from?” What’s based and equity-financed technology companies. Demers and more, trade sizes show big money was involved during much of Joos believe their model can more readily determine the proba- the boom, particularly in biotech. bility of failure of new-economy companies in the future. As technological innovation speeds up, Demers notes, “bub- The authors also dispel previous conjectures about the nature bles” likely will occur more frequently—creating a demand for of “bubbles.” Not an officially recognized market phenomenon, ways to predict successes and failures. “bubbles” are simply considered irrational. Because they never- “The fact that we were able to get strong predictive power out theless do occur, analysts tried to explain their activity. One as- of the financial data is extremely interesting and exciting,” sertion, for example, was that they are associated with abnor- Demers says. “We just wanted to let the data speak for itself.” mally high levels of unsophisticated individual investors; (Research Paper FR 04-06) SB “dumb” money in the market pushes the stocks up. But, Specific Knowledge and Performance Measurement et’s face it: Most managers amass tons of information contribute to company goals. In that kind of world, there in the course of doing their jobs that their bosses know would be very little need for output-based incentives as long as very little about. A new paper by Michael Raith, assis- input measures provide a comprehensive picture of the man- tant professor of economics and management, shows ager’s actions, as output measures would unnecessarily expose Lthat managers are more likely to use that information, or “spe- the manager to income risk. cific knowledge,” to the benefit of their companies if they are In reality, a company may be able to observe and measure a given incentives in line with the company’s goals. manager’s actions, but usually still does not know much about “If you delegate decision rights to a manager, you also have how they contribute to company goals. Raith’s paper shows that to provide him or her with incentives. The puzzle is that once when managers have specific knowledge about how their ac- we turn to theories of incentive contracting, there’s no men- tions contribute to the company’s payoff, they are encouraged tion about specific knowledge,” Raith says. “The models don’t to use specific knowledge if given incentives that are based on allow for it.” output measures (those larger company goals). In contrast, Until now. The model set forth in Raith’s paper, “Specific compensation plans based on input measures (those closer to Knowledge and Performance Measurement,” is the first model what a manager has control over) fail to give managers much of incentive contracting that allows for specific incentive to use their knowledge of the company or the market. Michael Raith knowledge explicitly. The paper helps to explain some puzzles regarding compa- Most managers have a lot of discretion in nies’ compensation practices. One puzzle is that even though their jobs. They generally have a better under- many companies have become very good at measuring details standing about how their activities contribute to of managers’ performance, they continue to rely heavily on company goals than do their bosses or the per- broader output measures in their managers’ compensation son who designs their compensation package. To plans. Another is that companies’ compensation plans do not get this specific knowledge filtering up the food shield managers from risks outside their control (such as oil chain to benefit the company, firms must give managers incen- price fluctuations in the case of oil firm executives) to the ex- tives to do their jobs well and to use that knowledge. tent predicted by traditional theory. Raith’s explanation is that This is where the incentive contract comes in. To develop a firms must tie compensation to output measures influenced by viable one, a company decides what sort of performance mea- these risks if the managers have specific knowledge about how sures, out of hundreds of possibilities, best fit the situation. to respond to them optimally. For some, it could be stock price, for example. For others, it Raith’s model also generates a number of predictions about might be operational measures related to costs. the factors that drive companies’ optimal choice among differ- These performance measures lie along a continuum, Raith ent performance measures. The more important a manager’s says. On one end, there are input measures. These are factors knowledge is relative to that of his or her superiors, the greater under the manager’s control, such as operations and the quality the weight output-based incentives will have in the compensa- of products and services. On the other end are output measures, tion package. This means, for instance, that a C.E.O.’s compen- which are more closely related to the company’s goals but less sation plan should depend not only on performance, but also under the manager’s control, such as sales and contribution to on the ability of the company’s board to evaluate the C.E.O.’s profits. Of course, for different jobs, different sets of perfor- actions, which in turn will be related to the quality of corporate mance measures are available. This means that whether any governance. This and other predictions open up new avenues

BUSINESS 2004 Spring given measure is to be viewed as an input or an output will de- for empirical research aimed at a better understanding of com- pend on the job and on the other measures under consideration. panies’ compensation practices.

SIMON Traditional models of incentive contracting assume that Ultimately, Raith expects that his theory will aid companies both company and manager know how the manager’s actions in designing more effective compensation plans for their man- 10 55822_Txt 6/29/04 12:37 PM Page 11

WILLIAM E. SIMON GRADUATE SCHOOL OF BUSINESS ADMINISTRATION

agers. “Today’s companies have become very good at measur- important role in the optimal choice of performance mea- ing performance,” he says. “The question now is how you sures—in particular, the choice between input and output would use these to put together a compensation package. measures that has so far been ignored in the theory.” (Research What I show is that a manager’s specific knowledge plays an Paper FR 04-02) SB

Which Witches Better?

nce per quarter, on so-called “witching days,” large money on witching days than on other days, but and predictable liquidity shocks hit both Nasdaq and that their trades are important for stabilizing the Michael J. Barclay the New York Stock Exchange. Witching days desig- opening price. nate the simultaneous expiration of stock index futures, Nasdaq, on the other hand, is decentralized. This Oindex options, and single stock options and futures. These simul- makes it much more difficult for Nasdaq market taneous expirations can generate large imbalances between supply makers to aggregate orders and absorb the order and demand for the component stocks as traders attempt to un- imbalance. wind their arbitrage positions. The authors’ paper is the first to undertake a When options and futures contracts expire, arbitrageurs must cross-market comparison of these extreme liquidity reverse their stock market trades to close out their arbitrage posi- shocks. The paper shows that the Exchange’s opening call auction tions and realize the profits. To guarantee a profit, these stock is much better equipped to handle large liquidity shocks than the trades must execute at the same price that was used to settle the decentralized system at Nasdaq. And while the Exchange has im- derivative contract. proved its opening in recent years, Nasdaq has gotten worse. To top it all off, this huge volume of trade happens right at the Barclay became interested in comparing the markets as a mem- open because the derivative contracts settle at the open price. The ber of the Nasdaq Economic Advisory Board. During a board result? The unwinding of arbitrage positions on witching days meeting, Nasdaq economic research staff expressed concern about can cause a wild price spike—temporarily pushing price away the price volatility on witching days, particularly for their market. from the intrinsic value of the stock. They wanted a current look at the situation. “The excess volatility on witching days affects a lot of people,” The last time this problem was examined was in the late says Michael J. Barclay, Alumni Distinguished Professor of 1980’s. At that time, the derivative contracts were settled based Business Administration, professor of finance and area coordina- on the day’s closing price rather than at the open. Several papers tor for finance, who, with Terrence Hendershott of the University at the time looked at the closing volatility on witching days (lead- of California at Berkeley and Charles Jones of Columbia ing to a June 1987 switch to the opening price), but they did not University, has written a paper on the subject. “If the stock price compare the Exchange and Nasdaq. is being pushed around by liquidity trading, it’s affecting all Determining efficient opening and closing prices is an impor- traders in both the spot market and the derivatives that are being tant function of a securities market. These prices are used, for ex- settled that day,” Barclay notes. ample, to settle derivative contracts, price more than 10,000 mu- This is no small concern, Barclay says, because the integrity of tual funds, and set the value of the major market indexes, such as the financial market is wrapped up in the financial maxim that Standard & Poor’s. Because of the excess volatility in Nasdaq’s securities trade for their true value. “You can expect to buy or sell opening and closing prices, S&P instituted a pilot program to stock at a price that reflects its worth,” he notes. compute its index values using Amex closing prices for Nasdaq- In the paper, “Which Witches Better? A Cross-Market traded stocks. Barclay thinks that this is a bad idea. Comparison of Extreme Liquidity Shocks,” the authors explore “Only a tiny fraction of the volume for Nasdaq stocks is how two markets, Nasdaq and the New York Stock Exchange, executed on the Amex,” he says, “so the Amex prices may not manage the big-volume spikes on witching days without generat- be representative of the broader market. Nasdaq is instituting ing extreme price swings. They investigate the extent to which centralized opening and closing call auctions similar to what is these different market structures produce efficient prices for the observed on the Exchange. It is hoped that these new proce- settlement of derivative contracts—and avoid transitory volatility dures will help to bring Nasdaq’s opening and closing perfor- and large price changes that are subsequently reversed. mance back in line with the Exchange.” (Research Paper The two markets have different structures, particularly at the FR 03-30) SB open. The authors find that the problem is more severe on Nasdaq than on the Exchange. On the Exchange, all orders are The articles for the “Research Leadership Highlights” section of routed to a specialist, who sees the total order balance before the SimonBusiness were written by Sally Parker, a freelance writer in market opens. If arbitrageurs have caused a big imbalance be- Rochester, N.Y. Log on to SSRN.com to download copies of recent tween supply and demand, the specialist can either enlist other Simon School working papers. The site also includes a wide range of floor traders to assume excess demand or he or she can handle it. other research papers. BUSINESS 2004 Spring The authors find that specialists and floor traders make more SIMON

11 55822_Txt 6/29/0412:37PMPage12

12 SIMONBUSINESS Spring 2004 FEATURE b Vicki Brown —by simulation project. closely withanoutsideconsultanttodevelop aunique something different,” andover thesummerworked for thecurrent year, Pinker decideditwastime“to do area companiestosolve businessproblems. In planning projects, withstudentteamsworking withemployees at the useofinformationtechnology,” hesays. design.“Ait andcomeupwithanew keyelementis analyze abusinessprocess, identifywhat’s wrong with and Design, acourseinwhichstudentslearnhow to classroom. for bringingreal-world businesschallengesintohis entirely toSimon new andmostbusinessschools— information systems,adoptedanovel approach—one E S dieal J.Pinker, Pr P inker teachesCIS415Business Process Analysis E eviously, thecoursehadbeenbuiltaround field Pr Complex Pr nhances Student Learning B imulating ofessor Edieal J.Pinker in theClassroom usiness S oblems imon School associate professor ofcomputersand 55822_Txt 6/29/04 12:37 PM Page 13

WILLIAM E. SIMON GRADUATE SCHOOL OF BUSINESS ADMINISTRATION

Total Immersion process. “We’ve actually started,” she says. panies in the United States and abroad, was When students entered his class in the fall, “It’s on our 2004 strategic plan, and it came excited about the opportunity. Pinker presented them with a scenario, a set directly out of this [course].” “I have an interest in both worlds, busi- of project rules, a series of challenges and Sudhakar Das, another part-time Simon ness and education,” explains Shapira, who partial data. He told them they were vice student, already has a doctoral degree in has been an adjunct professor at several uni- presidents of BCS, a technology supplier mechanical engineering, and designs some versities, and also holds an undergraduate de- with a tremendous opportunity. A potential of the newest automotive parts for Delphi gree in industrial engineering and an M.B.A. customer, described as one of the nation’s Corporation’s Rochester division. Das notes degree, and has completed coursework for a biggest retail supermarket chains, was em- that because he is already working at a de- Ph.D. in operations management. barking on a major upgrade of its bar-code manding job, he takes only courses that will Shapira points out that when students are technology. Because the potential customer benefit his work—and, he says, “This was a exposed to real scenarios at a university in wanted to transition from wired technology very valuable course.” what he terms a “safe environment,” where to a mixed model of wired, wireless and Steve Quataert ’04, a property tax analyst they can deal with projects without com- mobile technology, and also enable new on- at Xerox Corporation, added that student pany politics and deadlines, they can delve line applications, it had expectations regard- collaboration was critical. The project, he into the business and bring their creativity ing customer support beyond what BCS says, “was structured in such a way that it to bear “without fear of what the bosses had provided. required a lot of communication on our might say.” Pinker challenged students to assess the part to really work through the process.” Shapira has extensive experience working value of taking on the customer and to de- with companies in many industries (e.g., termine what would be required internally A Good Thing Gets Better high technology, health care and consumer to satisfy customer requirements. He told The traditional way to bring real-world products) and, through his work, is familiar them that they would receive detailed data complexity into business classrooms is to with the automatic data collection industry. for each of four phases; every phase would use Harvard Business School cases. He and Pinker decided to focus on the bar- require different skills taught concurrently According to Pinker, however, these have code technology industry and zeroed in on during class, but not all project data needed significant limitations because they “are a customer-support process. Then, Pinker would be available. He also stipulated that limited in scope to fit single standard class says, “We created a simulated data set deal- students could make only three requests for meetings, and there’s often not enough de- ing with numerous aspects of the business.” additional data and that there might be de- tail and quantitative information to do a lays in getting the information. thorough and realistic analysis.” Keeping It Fresh “I wanted them to think about what they Pinker’s preferred approach had been to Although developing the project involved a really needed. In practice, when you ask for assign field projects. While students got a significant investment in time, Pinker says it data, it often takes time to get, and you lot out of the course as a result of working was time well spent. For example, he can often lose good will when you keep coming with area businesses, he says, “It was hard use the same general setting but update the back,” Pinker explains. to guarantee a high-quality learning experi- data set to change what’s expected of stu- During the quarter, Pinker also devoted ence for each student team. As an instruc- dents in future classes. “I have flexibility on significant classroom time to student presen- tor you want to hold all students to the where I put my emphasis and where I cook tations on various project phases. “The expe- same high standards and make sure that the the numbers. I can always move the prob- rience to go up and face the heat is very valu- project content is strongly linked to the lems to other parts of the process,” he ex- able. No one ever gets enough of that,” notes course material so that students have op- plains. Pinker also plans to explore “writing Pinker, who met regularly with students out- portunities to fully exercise the tools they this up in ways that we could make it avail- side of class to guide their progress. are taught in lectures.” With field projects, able to other universities.” he notes, “It’s hard to know what’s going on In the meantime, he’s already met his pri- The Payoff with the customer side. You have little con- mary goal. As he puts it, “When you teach Tina Power, a part-time M.B.A. student trol over the data you get. It’s difficult to people to become professional managers, who is director of financial planning and compare student groups’ performance. And you need to make them think how to pull analysis for PAETEC Communications it’s hard to ensure the project goals really fit all the data they have and the different skills Inc., a rapidly growing telecommunications the course.” they’ve been taught to solve a business prob- provider (founded by Arunas Chesonis lem. Then, you have to make them stand ’91), found the project extremely valuable. Setting It Up up and explain it. When I see a student Power describes the simulated project as Pinker approached Reuven Shapira, who sweating during his or her presentation and both “tough” and “interesting” and says she heads Consolution Inc., a Rochester-based the others furiously taking notes, I know quickly started thinking about processes in consulting firm specializing in supply-chain something good is happening.” SB her own work environment. She proposed management, in early summer 2003 about to her boss that their group re-engineer a jointly developing the simulation project. Vicki Brown is a Rochester, N.Y., freelance key process, one where “paper flow is time Shapira, who previously had worldwide re- writer specializing in business, education and BUSINESS 2004 Spring consuming,” and use IT to improve the sponsibilities for leading multinational com- health care. SIMON

13 55822_Txt 6/29/0412:37PMPage14

14 SIMONBUSINESS Spring 2004 COVE R STORY Money xlr pin o Investing for Explore Options Si mon Alumni andFaculty Y —by Jeffrey Owen Jones our forth by our distinguished panel of experts. by ourdistinguishedpanelofexperts. forth The following are someofthekeyprecepts asset sists ofcommonsenseandfundamentalverities. individual investors, therecipe forprosperity con- it isreally nosecret atall.For thegreat majorityof no different todaythanithasalwaysbeen.In fact, consensus isthatthesecret tosuccessfulinvesting is management andonkeyinvestment vehicles. Their faculty fortheirperspectives onpersonalmoney might well wonder, where shouldIputmymoney? of Warren Buffett. At timeslikethese,aninvestor and bearishstockmarket assessmentsfrom thelikes sluggish jobgrowth, internationalsecurityworries corporate boardrooms. Into thisgloomybrew stir of disquietingreports latelyfrom Wall Street and malfeasance. mediahave broughtThe news aspate M We utual fundscandals,insidertrading,corporate

asked agroup ofSimon Schoolalumniand 55822_Txt 6/29/04 12:37 PM Page 15

WILLIAM E. SIMON GRADUATE SCHOOL OF BUSINESS ADMINISTRATION

Save to Invest Burnside notes that there is strong theoretical and empirical Human beings are subject to the Parkinsonian urge to spend at support for the idea that an investor should own everything. “A least as much as we make, even against our better judgment. diversified investor takes a lot of risks,” he says, “and the aggrega- “Saving is like losing weight,” observes Ronald H. Fielding ’76, tion of all the risks taken together has a moderating effect be- senior vice president and portfolio manager at Oppenheimer- cause they don’t all manifest at the same time.” Funds, Inc. in Rochester, N.Y. “Everybody knows they ought to do more of it.” Control Costs Investment, Fielding points out, begins with saving. “You can’t “Actively managed mutual funds that are trying to trade regularly do much financial planning if you are spending every dime as and beat the market have expense ratios of as much as 1 or 2 per- fast as it comes in,” he says. cent, or more,” observes Barclay. “Funds like that, with high fees “If you want to have more money later,” says Daniel J. and high expenses, have trouble passing on any greater returns Burnside ’01, vice president, quantitative strategies, for Clover they might make to investors. The evidence suggests they can’t.” Capital Management Inc. in Rochester, “the best strategy is to Underscoring this point, Burnside says that “commissions, save more, not to stretch for a higher rate of return.” Burnside is management fees, transaction fees, taxes—these create a bogey also an adjunct lecturer in finance at the Simon School. you have to overcome.” Know Yourself Stick with Your Plan “Asset allocation is a matter of understanding your own risk toler- “Albert Einstein said compound interest is the most powerful ance and choosing the appropriate tradeoff between risk and ex- force in the universe,” comments Fielding. “But you’ve got to pected return,” says Michael J. Barclay, Alumni Distinguished give it time, and Americans have a big problem with patience.” Professor of Business Administration, professor of finance and area Rosen notes, “It’s important for people to understand how coordinator for finance. “In a financial market, you can always gen- much discipline is required to remain invested with good asset erate a greater expected return if you are willing to accept a greater allocation. They can’t just hop from one fad to another, chasing risk.” (See page 11 for an article on Barclay’s recent research.) performance.” “Be aware of your emotions and understand the pitfalls and “The run-up and collapse in the late 90’s to 2001 demon- traps those emotions typically lead you into,” counsels Michael strates the value of having a strategy and maintaining it for the S. Rosen ’83, co-chair and C.E.O. of Context Capital Manage- long term,” says Barclay. “If you’re in for the long run, you get ment, LLC in San Diego, Calif. He and others urged checking the benefits of the upside and can bear the downside—you get out the research work of Richard Thaler, a former Simon School the long-run average performance of the market. If you try to faculty member and pioneer in behavioral finance. chase the market, you run the risk of getting in at the top and Gender can be a strong factor in financial behavior. As an ex- out at the bottom—getting stuck with most of the losses and ample, Ellen M. Willand ’87, an independent certified financial missing most of the gains. Just as it is very hard to pick individ- planner in Rochester, N.Y., points to a study by Brad Barber and ual winners in the stock market, it is also extremely hard to time Terrance Odean, professors at the University of California at the stock market.” Berkeley. Barber and Odean found that “trading is hazardous to your wealth.” According to their study, households that traded frequently earned a much lower return than did those less active with their portfolios. Further investigation showed that the men in the household traded 45 percent more than women, lowering their return almost a full point. The problem, according to the researchers: men have excessive confidence in their own abilities. Watch Liquidity Be aware of your needs for liquidity and how liquid your invest- ments are, advises Frank G. Creamer Jr. ’70, director of marketing for CDP Capital Real Estate Investments—U.S., in New York City. Real estate is typically not liquid. Real Estate Investment Tr usts (R.E.I.T.’s) and Commercial Mortage Backed Securities (C.M.B.S.’s) can be more flexible options for this investment class. Diversify “Diversification is the first rule of investing,” says Fielding. BUSINESS 2004 Spring “Concentration of funds is speculative.” And speculation is risky. “If someone is trying to beat the mar- ket, you know they are not diversified because they are betting SIMON on a certain area of the market to do better,” Willand points out. 15 “But it might do worse.” 55822_Txt 6/29/0412:37PMPage16

16 SIMONBUSINESS Spring 2004 W ate attheInstitute fortheFuture. School andwasaresearch associ- of Pennsylvania’s Wharton ment strategiesofmutualfunds. crostructure, andthetaxmanage- public corporations,market mi- of large-blockshareholders in clude corporatefinance,therole Aw School M.B.A.Superior Teaching ored withnumerous Simon S business teachersintheUnited zine in1994asoneofthetop12 B.A., Mathematics and N A M Ph tates, Barclay hasalsobeenhon- lumni DistinguishedProfessor amed by ichael J.Barclay A School ofBusiness Coordinator forFinance Pr of Business Administration, U E B illiam E.Simon Graduate H .D., Economics and ards. Research interests in- conomics, Colgate usiness, Stanford University dministration niversity as alsotaughtatUniversity ofessor ofFinance andArea B usiness Week maga- index flows directly toinvestors. smallandalmosttheentiredo notneedtoholdcash,sotheirexpensesare return very onthe must acquire and divest stocksastheirinvestors comeandgo,E.T.F.’s donotanytradingand shares available tobuyandsellonthestockexchange. Unlike regular indexmutualfunds,which B The bestknown oftheseiscalledS&P’s Receipts 500Index (S.P.D.R.’s, Depository or“Spiders”). pure randomchance dictatesthatsomewouldhave goodreturns—even years inarow. quiteafew trading ondumbluck.Amongtheliterallytensofthousandsmutualfundstochoosefrom, as you wouldexpectittoifthedeviationswere random.” lucky,” saysBarclay. “And if you considerthedistributionofallmutualfundsover time,itlooks any betterthanthis.” average, butyou’re not doingworse,either. And,onaverage, theactively tradedfundsdon’t do average. “That’s notesBarclay. andthegoodnews,” thebadnews “You’re not doingbetterthan funds, whichbuyandsellregularly tobeatthemarket. inaneffort the Vanguard 500,whichmodelstheStandard &Poor’s 500Index. tohowing stocksinproportion theyare represented ontheindex.One ofthebestknown is Ba sense tolookforonethatoffersallthemutualfundbenefitsatlowest cost. The answer, says On Index Funds andExchangeTradedFunds (E.T.F.’s) nobetterthanthemarket asawhole. sional fundmanagersperform companies orothermarket segments. index fundsorE.T.F.’s thatare internationallyorientedorthatfocusonsmaller(small-cap) achieve thebroadest diversification, investors mightalsowanttoincludeintheirholdings uilt likeanindexfundtoemulatetheS&P, Spiders andotherE.T.F.’s are with actuallytrusts, An indexfund’s costsare typicallyjustafractionofthoseborneby actively managedmutual F A relatively competitoroftheindexmutualfundisExchange new Traded Fund (E.T.F.). I “ To S r ndex mutualfundsseektoridethewave ofthemarket by emulatinganequityindex—buy- ce you acceptthattheaverage mutualfundisonlygoingtodoaswell asthemarket, itmakes clay, issomeformofindexed investment vehicle. There is no scientific way to distinguish whether an individual manager is very smart orvery smart There isnoscientificwaytodistinguishwhetheranindividualmanager isvery ome peoplecomplainthatwithindexfundsyou resign yourself tobeingnobetterthan or mostinvestors, indexmutualfundsandE.T.F.’s are asensiblewaytogo,saysBarclay. To

statistically sophisticatedanalysts,even glamourfundswithglitteringrecords maysimplybe use therecent scandalsasanexcuse toshunmutualfundsaltogether.” yo have beencleanedup,” notesBarclay. “Avoid mutualfundsif particular prudent waytogo,saysSimonprudent SchoolProfessor Michael J.Barclay. flying mutualfunds. however,The coldtruth, isthat,onaverage, profes- still nurtures themystiqueofgeniusstockpickerswhomanagehigh- v While theburstingstockbubbleof2001cured manyindividualin- Brains orLuck? folksare becausesomanyordinary investedpart inthem. late, therecent mutualfundsscandalsdrew plentyofattention—in Among theluridheadlinesthatsprouted onthebusinesspagesof Michael J.Barclay Mutual Funds and meetingyour investment goals. also offersimplifiedrecord keeping,andadviceonmanagingrisk cost. Compared ofindividualsecurities,mutualfunds toaportfolio dollars, mutualfundsofferawaytodiversify investments atlow estors of the fantasy that they could outsmart themarket, estors ofthefantasythattheycouldoutsmart Wall Street u are concernedabouttheintegrityoftheirmanagement,butdon’t B F “Most ofthelossestoinvestors were smallandmostoftheabuses Are mutualfundssafeinvestments? Not onlysafe,butgenerallythe or ordinary investors with portfolios oflessthanseveral investors million or ordinary withportfolios ut withsomanymutualfundsoutthere, how doesonechoose? 55822_Txt 6/29/04 12:37 PM Page 17

WILLIAM E. SIMON GRADUATE SCHOOL OF BUSINESS ADMINISTRATION

Real Estate Frank G. Creamer Jr. ’70 Frank G. Creamer Jr. ’70 Director of Marketing CDP Capital Real Estate “A prudent portfolio strategy should have some countability. Moreover, in contrast to directly own- Investments—U.S. allocation for real estate,” says Frank G. Creamer ing a percentage of a real property, R.E.I.T.’s offer New York City Jr., a veteran real estate investment authority. liquidity—with investors able to buy and sell shares “Partly for reasons of diversifying portfolios, but freely. Recently named to his cur- also because it is such a large asset class, to ignore R.E.I.T.’s have shown vigorous growth over the rent position; previously it is a mistake.” But, Creamer cautions, investors past five or six years, says Creamer, with 2003 reg- oversaw the structured fi- should be aware of the risks. istering some of the best performances ever. nance, business and market- He recommends 8 to 15 percent as a reason- ing activities for the Com- able and prudent proportion of one’s portfolio to Risks mercial Credit Group of earmark for real estate (bearing in mind that As with any investment segment, Creamer notes, Lend Lease Corporation. most homeowners already have a large percent- real estate has its risks. The dark side of the silver Prior to that, Creamer was age of their assets and net worth in real estate). cloud in real estate is that increased interest has an owner and principal of Interest in real estate has surged in recent years, driven up prices, and the big gains of the recent Creamer Vitale Wellsford, and Creamer cites a number of reasons why: past cannot be counted on to continue. For in- the successor firm to a real •With a steady increase in home prices, people vestors just getting into R.E.I.T.’s, warns estate consulting company have come to believe that the real estate seg- Creamer, “at the present time [May 2004], it is that he founded in 1990. ment in general might be a good investment. not reasonable to expect as much of a pop in Previously held various exec- •A boom in home equity loans has put cash in value going forward. They may not lose money, utive positions within Citi- many pockets, giving more and more individu- but they are not likely to see the gains of recent corp during an 18-year als a good feeling about the value of real estate. years,” he notes. tenure, including executive •Investors burned in the stock market in recent director of Citicorp’s global years are on the lookout for something that Other Cautions real estate activities with a may be less volatile. Interest rates have almost nowhere to go but up, total portfolio of mortgages •Baby boomers looking toward retirement are and any rise in rates will put pressure on the real and commitments in excess increasingly interested in income-producing in- estate segment, which is traditionally leveraged, of $30 billion. Member of vestments. “With the proper analysis and re- according to Creamer. Interest-rate increases cou- the Real Estate Roundtable; liance on fundamentals, real estate can provide pled with lower than planned occupancies and in- council member of the both predictable income and growth in value creased costs (energy, insurance, taxes) can erode Urban Land Institute and the over time,” says Creamer. debt service coverage ratios and impact value. Simon School Executive The current uncertainty about job growth Advisory Committee. Real Estate Investment (due to productivity gains and other factors like Trusts outsourcing and telecommuting) may not bode B.A., Fordham University An investment vehicle getting a lot of attention well, since job growth is a traditional driver of M.B.A., Finance, William lately is the Real Estate Investment Trust (R.E.I.T.) real estate, Creamer says. E. Simon Graduate —public entities whose sole business by law is in- Recent projections in office and multifamily School of Business vesting in income-producing properties, Creamer rental buildings predict declines in value over the Administration explains. R.E.I.T.’s are often specialized—in retail, next two to three years for both segments—in the residential, office or hotel properties, for instance— case of office buildings, due to shortfalls in de- and must distribute 90 percent of their income mand; in the case of multifamily residential build- each year, while their dividends are tax exempt. ings, part of the reason is an oversupply caused by Traditionally, real estate investment has not been builders taking advantage of low interest rates. easy for individuals. Few 401(k) programs offered real estate as an asset-allocation option. People who Best Advice found a way to put money directly into real estate Given an uncertain outlook and the inherent ventures risked finding themselves involved in an complexity of the real estate field, Creamer enterprise controlled by a few individuals subject to stresses the importance of solid professional guid- limited oversight and few reporting requirements. ance—an investment advisor with a proven track In addition, with the long lead time needed to de- record—and access to good data and a quality velop and build real estate, investors might have to research team. “It is not enough to just look into contend with the ups and downs of several market- the rearview mirror to see how things have place cycles in trying to realize a return. been,” says Creamer; “one also needs to look at With R.E.I.T.’s, individual investors buy shares how asset classes and cities and markets will be- in a public structure run by professional managers have in the future for your investment decisions with mandatory levels of transparency and ac- to prove right most of the time.” 55822_Txt 6/29/0412:37PMPage18

18 SIMONBUSINESS Spring 2004 S R M.B.A., Finance, William E. M.A., Economics, University St.B.A., LiberalArts, John’s ness schools,includingSimon. lion. Has taughtatmanybusi- funds withassetsof$14bil- ment of10municipalbond C sional more than 25years. active asaninvestment profes- money asateen,andhasbeen St O enior Vice President and onald H.Fielding ’76 urrently, oversees manage- arted investing paperroutearted ppenheimerFunds, Inc. Po B Si of Rochester College, Annapolis,Md. usiness Administration mon Graduate Schoolof r tfolio Manager states getintocrisestheysolve them,whereas corporationsgobankrupt.” pal bondsisabsolutelytinycompared tocorporatebonds,becausewhen itself andmajorstateagencies,”saysFielding. rateofdefaultonmunici- “The credit-risk ifyou sticktotowns, basis—particularly school districts,thestate buy Californiabondsandsoon. they are issued,New Yorkers usuallybuyNew York bonds,Californians he notes. “For peopleina30percent attractive,” orhighertaxbracket,theyare very isthattheyaregood news typicallyexempt from federalandstatetaxes. usually paylower interest bonds. thancorporatebondsortreasury The term securityandmore interested inincomethangrowth. tion ofbondstheyholdbecauseare more concernedwithshorter- the stockmarket. Older investors are more likelytoincrease thepropor- feel relatively secure thattheycanrideouttheinevitable upsanddowns of ties. If theyhave andholdontoit,theycan adiversified stockportfolio ested inlong-termgrowth are likelytohave ahigherpercentage inequi- depends onageandstageoflifetheinvestor. Younger investors inter- who wantto “One ofthethoughtsaboutmunicipalbondsisthattheyare notforpeople Municipal Bonds should, whenpossible,bemunicipalbonds,headds. than bondsdo,”saysFielding. Bondskeptoutsideatax-sheltered plan and stockselsewhere, becausestockshave lesscurrent taxconsequences more heavilythan capitalgainsordividends. or college-savingsplan. This isbecauseinterest earnedfrom bondsistaxed rate bondsorothertaxablebondholdingsintheirtax-sheltered retirement mix ofstocksandbondswouldprobably wanttoconcentratetheircorpo- ties inone’s portfolio. For example,savvyinvestors holdingadiversified determinantofhownotes, andanimportant toallocatebondsandequi- T The Tax Factor • • sense becausetheyare correlated.” notperfectly or thehealthcare ofagingparents, amixture ofstocksandbondsmakes you areand market planningforretirement, analyst.“Whether education of equitiesandbonds,”saysRonald H.Fielding, aveteran fundmanager “I believe thatinaperson’s overall financiallifethere shouldbeamixture Ronald H.Fielding ’76 Bonds ax considerationsare ofanyone’s abigpart investment picture, Fielding M B Commonly heldby peopleintheir50’s andolder, municipalbonds F Bonds provide amuchsteadiercashflow, sotheyrepresent incomesecurity. and theytendtofollow adifferent cycle thanthestockmarket. Bond pricesriseandfall,buttheyare generallylessvolatile thanstocks, “It makesmore senseforthebondstobeinsidetax-sheltered vehicle F ielding says the proportion of bonds and stocks in a portfolio generally ofbondsandstocksinaportfolio ielding saystheproportion ielding citestwoprincipalattractionsofbonds: ecause municipalsare generallyexempt from taxes inthestatewhere unicipals alsooffergreat security. safeon a are generallyvery “They get rich butforpeoplewhowantto stay rich,” Fielding says. 55822_Txt 6/29/04 12:37 PM Page 19

WILLIAM E. SIMON GRADUATE SCHOOL OF BUSINESS ADMINISTRATION

Hedge Funds Michael S. Rosen ’83

You’re riding along the highway when the family minivan begins to sputter, reminding you it may be time to take it in for a tuneup. Just then, a stylish luxury sedan glides by in the passing lane. “Wow,” you say to yourself, “I’d love to get one of those.” The minivan driver is the average investor, shaken by the market declines in the first years of the millennium. The alluring sedan rep- resents hedge funds, which appear to have prospered through the hard times. Rather than tune up the practical vehicle, many investors are tempted to trade it in for the high-performance model. Resist the temptation to jump into the fast lane, warns Michael S. Rosen, whose firm specializes in hedge funds. Hedge funds are not for the average investor. “They are for larger, more sophisticated in- vestors and for institutions,” he notes. (Rosen estimates that the University of Rochester’s endowment is about 20 percent invested in hedge funds.) For individual investors, hedge funds by law are restricted to those with high incomes and net worth—$1 million in net worth for one class of hedge fund and $5 million for another class. “If you look at the investor base of our funds, it is only about 10 percent directly from high-net-worth individuals,” Rosen explains. “The other 90 percent is split between institutional investors and ‘funds of funds’—pooled vehicles for high-net-worth investors who Michael S. Rosen ’83 invest in a diversified group of hedge funds.” Co-Chair and C.E.O. Although Rosen says that hedge funds are worth considering as Context Capital part of the total financial portfolio for investors who have accumu- Management, LLC lated significant wealth, the funds cater to a special segment of the San Diego, Calif. investing public. While investors in stocks, bonds and other directional markets Before founding Context, generally count on the markets going up, Rosen notes, “hedge fund was the co-principal owner investors prefer a volatile market.” Compared to mutual funds, hedge of Rochester Capital funds are relatively unregulated, which allows them to engage in less Advisors, LP and FMC, Inc., traditional approaches. Although hedge funds come in many vari- the two investment advisers eties, in general they use complex strategies and technical tools to to The Rochester Funds, a capitalize on movements in the market—whether up or down—and mutual fund company spe- on price discrepancies between similar assets. cializing in the management Many outside the investment community first heard the term of convertible securities and hedge fund in 1998, when the Federal Reserve organized the contro- high-yield municipal bonds. versial bailout of Long Term Capital Management, a prominent hedge fund on the brink of collapse. Thanks in part to that negative B.A., University of Rochester introduction, hedge funds today are sometimes characterized as M.B.A., Finance, Marketing, highly risky, with managers painted as gunslingers. William E. Simon Rosen counters that image. “The vast majority of money invested Graduate School of in hedge funds is really thought of more as a fixed-income substitute Business Administration of very low volatility with goals of 8 to 15 percent returns,” he says. BUSINESS 2004 Spring SIMON

19 55822_Txt 6/29/0412:37PMPage20 20 SIMONBUSINESS Spring 2004 597,8614,893 474,854 95,0114,751 603,078 439,216 92,2444,612 553,875 406,042 89,5574,478 508,448 375,168 86,9484,347 65 466,515 346,440 84,4164,221 64 427,812 319,712 81,9574,098 63 392,097 294,852 79,5703,979 62 359,144 271,733 77,2523,863 61 328,747 250,238 75,0023,750 60 300,711 230,257 72,8183,641 59 274,860 211,689 70,6973,535 58 251,028 194,437 68,6383,432 57 229,062 178,413 66,6393,332 56 208,821 163,534 64,6983,235 55 190,175 149,722 62,8133,141 54 173,003 136,904 60,9843,049 53 157,193 125,012 59,2082,960 52 142,641 113,984 57,4832,874 51 129,252 103,760 55,8092,790 50 94,286 116,936 105,613 54,1832,709 49 85,510 95,206 52,6052,630 48 77,384 85,645 51,0732,554 47 69,863 76,866 49,5852,479 46 62,906 68,808 48,1412,407 45 56,474 61,415 46,7392,337 44 50,530 54,637 0 45,3782,269 43 45,040 48,426 44,0562,203 42 39,973 42,738 42,7732,139 41 35,299 37,533 41,5272,076 40 30,991 32,772 40,3172,016 39 27,023 28,422 39,1431,957 38 23,371 24,450 38,0031,900 37 20,013 20,827 36,8961,845 36 16,928 17,525 35,8221,791 35 14,097 14,519 34,7781,739 34 11,500 11,785 9,123 9,302 33,7651,688 33 6,948 7,049 32,7821,639 32 4,962 5,010 31,8271,591 31 3,150 3,165 30,9001,545 30 1,500 1,500 30,0001,500 29 28 27 26 25 1 $30,000 7 24 $474,854 27 3 8 5 $603,078 Percent MoreMoneyUnderReducedExpenseCase Final BalanceatAge65(ReducedExpenseCase) Final BalanceatAge65(BaseCase) Percent RateofReturn(ReducedExpenseCase) Percent RateofReturn(BaseCase) Percent FractionofWage SavedEachYear Percent ReducedExpenses Percent AnnualGrowthofWage Wage Starting g ae()a n fYa $ Edo er $ Lower Expense Case ($) Year) ($) (Endof Year ($) Endof at Wage ($) Age Po r ino aeSvdAcutBalance Account Wage Saved tion of Ba se Case Analyst); C (Chartered Financial tions includeC.F.A. M.B.A., Finance, Account- B.A., CornellUniversity A member oftheN.Y. Consultant). (Chartered Financial U C.L.U. (Chartered Life M A.A.M.S. (Accredited Asset CIAL S M called FIN434Investment he teachesapopularcourse nance attheSimon School, titative investment strategies. tools andstand-alonequan- v whichde- ysis department, directs thequantitative anal- businessareanew andco- M H Pi Clover CapitalManagement, V D elops riskmanagement trategies. cademy ofSciences. ice President, Quantitative nderwriter); andCh.F.C.nderwriter); aniel J.Burnside ’01 eads Clover Capital ttsford, N.Y. anagement Specialist); anagement and Trading anagement’s institutional H B G S ing andInformation B An adjunctlecturer infi- I St nc. ystems,William E.Simon usiness Administration urnside isaninvited raduate Schoolof r is licensesandcertifica- P ategies L ANNER ERTIFIED ™ professional; F INAN - 55822_Txt 6/29/0412:37PMPage21 ple get angry—and theyoughttobe.” ple getangry—and time ofsavingandinvesting, thenyou seepeo- moreend upwithaquarter moneyafteralife- ceed. If you telltheminsteadthattheycould expense,you oftendon’tof unnecessary suc- to getpeopleoutragedabout1percent ayear v expense by 1percent raisesthefinalaccount age 25untilretirement atage65.Lowering the a fixed percentage ofhiswageeachyear from penses. It looksatatypicalwageearner, saving sive effectoninvestment returns duetoex- portant—minimizing expenses. portant—minimizing they losesightofsomethingthatisreally im- about thenexthotsomethingorotherthat with ‘investment pornography’ tellingthem v clients andtheirconsultantsondeveloping in- B v estimate thecorrosive effectsofcostinanin- cause are happytokeepinvestors inthedark, be- providers andproducts ofinvestment services the rangeofpossibilityformostinvestors. a 30-year period,whichhesaysiswell within r the following exampleshowing theeffectof on aninvestment program, Burnside offers a lottominimize them,”Burnside says. tax. “Taxes takeabigchunk,andyou cando B to seeallthewaysyou cangetnicked,” investment professionals, itcanbereally hard y costs are myriad,” hesays,“and theharder intheinvestment process. “The intermediary investment adviser, mutualfundoranyother stand thefullcostsofyour stockbrokerage, pline yourself todo.” That’spartners. something comes tocontrolling costs,theyare notyour of thecostfactor. locker room thattheyoverlook theimportance getting returns theycanbragaboutinthe minimize costs.But investors sooftenfocuson O Daniel J.Burnside’01 The CostFactor educing costsby just1percent eachyear over alue by 27percent. Says Burnside: “If you try estment strategies.“Investors are soflooded Daniel J. estment program,” observes ou look,themore costsyou find.Even for urnside, whoworks closelywithinstitutional urnside said. ne ofthebasicssuccessfulinvesting isto The spreadsheet atleftillustratesthecorro- “ “ O To B And unfortunately,” saysBurnside, “many There isatendency tovastly under- ILA .SMNGAUT COLO UIESADMINISTRATION BUSINESS OF SCHOOL WILLIAM E. SIMON GRADUATE urnside urgescareful tounder- scrutiny ne ofthebigexpensestobearinmindis

illustrate thedramaticimpactofcosts y our costs are their re v you enue. When it enue. When have todisci- “ feel themout. You have tobuildconfidenceandtrust.” luctant totalkabouttheirmoney. gentle— She tobevery takesalow-key approach. “Itry or thoughtsofretirement. When theydocometoher, Willand findsclientsare initiallyre- cide togettheirlifeinorder, butbecauseofsometrigger—suchasajobloss,aninheritance folios inconjunctionwiththeirgoals. When you domore, itcostsalot.” money, nottoolittle,”shesays.“My clientsdon’t transactalot—onlytobalancetheirport- discourages themfrom beingtooactivist.“A lotofthetime,peopledotoomuchwiththeir is pretty good.” anything sexy?But ifIcangetmyclientsthemarket, that brag aboutyour financialadviserwhensheisn’t saying doesn’t chat.“How makeforgoodcocktail-party doyou ket,” Willand tellsherclients.Admittedly, shesays,this not trying to not trying basedondiversification. “We’redesign begin—aportfolio where themoneyisworking?’ ” going touseit?How are we goingtogetthepoint “W investment statementandlisttheirgoals,says Willand. many areas considered toreach personalfinancialgoals. funding andestateplanning.Investing isonlyoneofthe ment planning,insuranceanalysis,investments, college financial planincludesbudgeting,incometaxes, retire- cial situationbefore developing aplan.Acomprehensive planning andtheneedtoconsiderallareas oftheirfinan- want todotheinvestments today.” look atmelikeI’m givingthemaroot canal,”says Willand. “Especiallythemen;they B says Willand, “Ifigured Ihave anM.B.A.andIknow aboutstocksandallthisotherstuff. it takes,andIcan’t imaginegivingitaway.” financial planning,”notes Willand, whoworks onafee-onlybasis. “Iknow how muchtime ofanyone whooffersfree leery highcommissions.“Iwouldbevery ucts, sometimesatvery says. compensated,” Willand toasktheplannerupfront toexplainexactlyhowis important heorsheisgoingtobe sion, by commissiononlyorby variations onthoseapproaches. “Before signinganything,it training itishard toknow it,” Willand opensyour says.“Getting eyes.” certification field issobroad andcoversplanning wouldalsosuffice.“The somuchthatwithoutspecial Anyone canhave abusinesscard saying‘financial planner,’ butIthinka CIAL In ’87 Ellen M.Willand Financial Planning J ut when I got certified infinancial planning,Irealizedut whenIgotcertified there wasmuchmore tolearn.” If W W O When theydoturntoinvestments, clientsfirstwritean F “W a effrey Owen Jones isawriterandfilmmakerinPittsford, N.Y. D Fr The otherkeyissueisfeestructure. Planners maybepaidby feeonly, by feeandcommis- e ask, ‘What isthepointofmoney? Howe ask,‘What are we irst, Willand focusesclientsonthenature offinancial

v C nly afterweighing thesebasicquestionsdoesportfolio y illand findsthatpeopletendtoseekafinancialadvisernotbecausetheysuddenlyde- illand steersclientstoward long-termthinking,and esting, ofcourse,isonlyonecomponentmoneymanagement.For Ellen M.Willand, oes someonewithanM.B.A.needhelpfrom afinancialplanner?“After IleftSimon,” ee or low-cost planning services areee orlow-cost oftenusedaslead-generatinggambitstosellprod- planningservices ou are shoppingforadvice, Willand recommends checkingprofessional credentials. hen I tell my new clients that investing comes at the very endofwhatwe do,they clientsthatinvesting comesatthevery hen Itellmynew ERTIFIED P L ANNER beat F ™ INANCIAL the market, we’re to trying professional P L ANNER is whattolookfor.” AC.P.A. trainedspecificallyinfinancial ™ professional get the mar- , investing comeslast. C M.B.A., Finance, Accounting, B.S., CornellUniversity ning firm. a largeRochester financialplan- president offinancialplanningat 1991. Previously, shewasvice sive financialplanningpracticein F R I E ndependent Financial ounded afee-onlycomprehen- llen M. Willand ’87 ochester, N.Y. ERTIFIED P A School ofBusiness W P L lanner dministration illiam E.Simon Graduate ANNER C ERTIFIED F ™ INANCIAL professional F INAN SB - 21 SIMONBUSINESS Spring 2004 55822_Txt 6/29/0412:37PMPage22 22 SIMONBUSINESS Spring 2004 ALUMNI edu/outside2003/onlinegiving.asp. pledge onlineathttps://secure.simon.rochester. simon.rochester.edu or(585)273-4751 E-mail orphoneinyourpledgetoalumni@ iscrucialtotheSchool’s success. participation So, raiseyourhandandbecounted.Everyone’s closes onJune30,2004. The SimonAlumniAnnualGivingCampaign There’s stilltimetoshowyoursupport! Si River Campus U O F Meliora Weekend R 2600 Elmwood Avenue The Bagel Bin 8:00–9:00 a.m. F F F R 4751 fordetails. or callSusan Bauer at(585)273- for themostupdatedinformation edu/alumni/regional_events.aspx W P Events Simon Network riday, October 8–Sunday, riday, September 24,2004 riday, August 27,2004 riday, July 30,2004 lease checkthelistingsonour ochester NetworkingBreakfasts ochester, N.Y. niversity ofRochester mon Alumni Reception TBA ctober 10,2004 eb siteatwww.simon.rochester. ILA .SMNGAUT COLO UIESADMINISTRATION BUSINESS OF SCHOOL WILLIAM E. SIMON GRADUATE news ence thanthoseforwhichyou sitions requiring more experi- job postings,where we listpo- age you tolookattheonline notes. In addition,we encour- activities orcollectingclass companies, organizingregional for jobsorinternshipsatyour prospective students,recruiting assistance withinterviewing y teer roles thatare ofinterest to where you canindicatevolun- form alsocontainsasection site. ing pageoftheSimon Web the AlumniNetwork and Giv- or by usingtheupdateformon [email protected], (585) 273-4751,by e-mailing R by changes toyour contactdetails: y via e-mail. There are three ways invitations andothernotices I work) inthecampusdatabase. formation (forbothhomeand we istobesureopportunities that events andnetworkingnews, y “Help ushelpyou.” nected withothers.Astheysay, ing you involved andcon- we By hear from us. for you to from you as us tohear for important and it’s justas tion iskey, Communica- Dean’s Corner ncreasingly, we willbesharing ou. We alwayswelcome your ou canletusknow about ou apprisedofSimon School elations andDevelopment at

Yo The bestwayforustokeep

calling theOffice ofAlumni knowing how toreach you, have your mostupdatedin- can doabetterjobofkeep- u’ ll noticethattheupdate yo on aregular basis aswell. If meetings andmini-reunions Sw cities. Groups inJapan and London; andmanyother Angeles, Calif.; Seattle, Wash.; Yo Calif.; Washington, D.C.;New things rolling inSan Francisco, committees ofalumnigetting with shouldbearfruit, forts ning. This spring,renewed ef- alumni networks upandrun- graduates togetregional worked withmanydedicated Over theyears, we have Networks Building Alumni S names andanevents page. The work description,organizers’ to have a Web sitewithanet- r B work inyour region, contact ochester.edu. De of AlumniRelations and D have forseasonedhires to send anyopeningsyou may might recruit students.Please D Ma the world. ship withouralumniaround utation andlegacyinpartner- tinuing tobuildtheSimon rep- tocon- as dean.Ilookforward monthsofmytravels first few meet manyofyou duringthese as Wordattachments). simon.rochester.edu (preferably imon SchoolAlumniNet- eth Zogby atzogby@simon. u’ rk The goalisforeachregion ean ebbie KingcadeintheOffice itzerland have beenholding It v d liketohelpwiththenet- rk

elopment atkingcade@ City; Boston,Mass.; Los has beenmypleasure to

Z upan meliora2004/index.html. www.rochester.edu/ sponsible for forwarding invi- sponsible forforwarding schools, whichare thenre- its events toothermember world. Eachschoolcanopen business schoolsaround the comprised ofliaisonsfrom B members oftheNew York metro area, we have become other intheNew York City S ofworking toconnect As part Group New Networking Announcing a imon graduateswithonean- Go sible from theSimon Web site. lished itspages;theseare acces- A profiled inlastfall’s work ofChicago,whichwas Me more information,visitthe J C.E.O., andDavid Neeleman, M speakers includeAnne corporate keynotes.Featured to follow oneofthescheduled alumni reception, mostlikely planning toholdaSimon on campusinOctober, we are U graduates. During the that are ofrelevance toour us whenthey’re holdingevents on theirprograms. They notify Ad more closelywiththeCollege’s the springandsummer. other sitestobepostedduring network isdoing.Checkfor and takealookatwhatthe link ontheleftnavigationbar, “Regional AlumniNetworks” and Giving,” thenclickonthe edu, clickon“Alumni Network usiness SchoolClub, agroup etBlue Airways C.E.O.ForetBlue Airways lumni Network, niversity’s Meliora Weekend ulcahy, Xerox chairmanand We v

liora Weekend Website to www.simon.rochester. ancement Office topartner

are alsocollaborating alumni/ has estab- Si mon at 55822_Txt 6/29/0412:37PMPage23 r Z O Alumni please notifythe such groups inyour own city, areas, soifyou are aware of nities inothermetropolitan investigating similaropportu- Ne tations totheiralumniinthe ILA .SMNGAUT COLO UIESADMINISTRATION BUSINESS OF SCHOOL WILLIAM E. SIMON GRADUATE ochester.edu. t died inthecollapseof site tohelptheinjured. He cian, went tothedisaster emergency medicaltechni- selfless courage.Zack, an Z 29, 2004. in Roanoke, Va., onMay N 19, 2004,andonthe in Albany, N.Y., onMay Yo was placedontheNew ogby atzogby@simon. to meethisfriends. where Zack frequently went Z be known asZhe“Zack” dent. Bayard Street willnow while aSimon Schoolstu- (N.Y.) VolunteerAmbulance E.M.T. trainingatBrighton St tween Mulberry andBaxter r r Yo thisspring. further The New ber 11,2001,washonored Center disasteronSeptem- victims ofthe World Trade Ze The heroism of F Zeng Honored ffice by e-mailingBeth ow ack, inrecognition ofhis ename Bayard Street, be- esolution inApril 2004to w York Cityregion. We are eng Way. It borders apark ational E.M.S.Memorial r or Heroism rk rk In ng ’98, eets inChinatown, ers. Zack gainedhis

S City Councilpasseda addition, Zack’s name tate E.M.S.Memorial who diedhelping Zhe “Zack” after at (585) 273-4751 (585) orb at andDevelopment Alumni Relations Susan Bauer intheOffice of ther information, contact io iigSmo Leader Simon Living Symbol “We established PAETEC the Simon School . to On GivingBack https://secure.simon.rocheste Please consider the supporting Simon Schoo oefudi h etro hsmgzn.I o rfr o a aeyu itonline at you prefer, you can make your gift magazine. If this lope found inthecenter of y u hc aal oteSmnSho/nvriyo ohse n ali intheenve- it Rochester andmail of payable tothe Simon School/University our check o thelong term.” for friendships new and shaping al team offinancialprofession- ch real-world to expose students Simon to at fellowships .I’ u a ofmaking way our s. It’s legswt u talented withour allenges [email protected]. r. edu/outside2003/onlinegiving.asp lA P C Strategy CompetitiveM.B.A., andOrganizational Arunas EE omnctosInc. Communications AETEC un nulFund. To contribute, make lumni Annual hairman andC.E.O. hsns’91 Chesonis o usin orfur- . For questions 23 SIMONBUSINESS Spring 2004 55822_Txt 6/29/0412:37PMPage24 24 SIMONBUSINESS Spring 2004 I A to work eachmorning.Last a bithappiertogetupandgo into acareer, we mightbejust passionate about?”andturnit trepreneurs tospeak—some where hebrought inlocalen- V y have stayed withmeover the There were twoclassesthat r Q: What are your clearest class- with mywife,Karen. afamily andstarting partment Lomb’s corporateauditingde- while working forBausch & time to beablestudypart nomic policyreview. Ineeded with government andeco- sors whowere actively involved tion fordistinguishedprofes- ester. The Schoolhadareputa- me thebestM.B.A.inRoch- thatSimonI knew wouldoffer S Q: What brought you tostudyat De S beyond theirexpectations. restaurant isthriving full-service events. ing sporting Today, their Fr crêpesat serving ily started a year ago,Heroux andhisfam- company in2002. Then, about leave from the taking voluntary r while moving inhisca- forward timeattheSimonpart School ford, N.Y. He hadbeenstudying C just thatby opening spoke withHeroux. ILA .SMNGAUT COLO UIESADMINISTRATION BUSINESS OF SCHOOL WILLIAM E. SIMON GRADUATE Pierre Heroux’91 Alumni LeaderProfile eer atBausch &Lomb, until oom memories? ears. Professor Geater’s New imon? imon’s AlumniRelations and ugust, enture Management class, rêpes ontier Field inRochester dur- v elopment Staff recently question, “What are you question, “What f we couldanswer the at SchoenPlace inPitts- P ierre Heroux ’91 S imply did on oneofmypassions—mak- arestaurantthat we start based Last January, Karen suggested to spendmore time together. to stayinRochester, andhoped Karen we wanted andIknew chase ofasmallcompany. as well asinvestigating thepur- some consultingwithstartups, direction. In 2002–03,Idid of mylifeandwork inanew time wasrighttotakecharge the came available, Iknew leave be- When thevoluntary ture/entrepreneurial angle. ven- my studiesonthenew of be, Ifocusedthelastpart idea whatthebusinesswould o down theroad, tohave my general manageror, somewhere was tobecomeadivisional ing thedegree, goal so mynew goal wasachieved before finish- & Lombbusinessunit. That ing thecontroller foraBausch 1983, Ihadthegoalofbecom- myM.B.A.in When Istarted lead toSimply Crêpes? after Simon andhow didthat Q: What didyou dobefore and so we have tobecreative. isn’t extramoneyforbonuses, small companyisthatthere ests?” The challengewithina aligned withtheowner’s inter- “How canemployees become I applyitrightnow by asking, cornerstone ofSimon teaching. isa larly agencytheory—which organizational theory—particu- going backtowhatIlearnedin business plan.Ialsofindmyself having auniqueandfocused the keystomakingitwork, like ful—which allowed ustolearn successful andsomeunsuccess- wn business. While Ihadno we T tion, whilewe were basedin it’s familyaffair. atrue In addi- would beakeyingredient. So, Q duced pure in maplesyrup r We ized crêperestaurants intown. ized there weren’t anyspecial- crêpes formysiblings. We real- my fathertaughtmetomake home. By thetimeIwas11, so we grew uphavingcrêpesat business. I’m French-Canadian, enough tobecomeaprofitable make that“hobby” unique We breakfast onSunday morning. r The restaurant camefrom our evolve? Q: How didtherestaurant could doanything. the absolutebeliefthatwe ure, butwhatwe heldontowas case scenariowasfinancialfail- “W r and consdeveloping a then, afterconsideringthepros was, “You’re kidding,”and ing crêpes.My firstreaction ecipe—plus, myunclepro- ealization thatIlove making okyo, withBausch &Lomb, ough businessplan,we said, uebec, whichwe believed

would stopandgetfresh had ourown family brainstormed how we could ell, whynot?” The worst- happy. It’s simplynotwork. peopleandmakethem new fast, Igettomeetandtalk daymakingbreak- spend every to thecommunity. Igetto with myfamilyandgive back while atthesametimework utilize allmylearnedskills locations. Rightnow, Igetto expect tooperateinatleast50 sion. Within seven years, we terms ofgrowth andexpan- ing ourplannedtimetablein and we’re committedtofollow- exceeding ouroriginalgoals, ful chainofrestaurants. We are fore longI’ll manageasuccess- I wouldliketothinkthatbe- right now? Q: Are you doingyour dream job dinner sixdaysaweek. offering breakfast, lunchand restaurant added afull-service at Frontier Field. Now, we’ve we home, andthat’s essentiallyhow have somethingsimilarback thought itwouldbegreat to cessful businessmodel,we J trendy Harajuku. Asthe small concessionstandsin crêpesat dessert fruit-filled apanese seemedtohave asuc-

started theconcessionstand started SB 55822_Txt 6/29/0412:37PMPage25 hosts andguestsforwelcoming thedeantoSimon Community! Chicago, Ill., andBoston,Mass. We anticipateevents inBuffalo, N.Y., and Washington, D.C.,aswell. Thank you toallofour and various citiesinCaliforniaandEurope inMarch; andby thetimethismagazinereaches you, we willalsohave heldrecepti S community. In January, To ADMINISTRATION BUSINESS OF SCHOOL WILLIAM E. SIMON GRADUATE Out inJanuaryatPAETEC headquarters. Dean Zupanthanks 2004. Attendees (from left): (from left): 2004. Attendees Associate DeanHolliBuddhostedanalumnireception inSeattle,Wash., onApril25, Josh Goldberg Mantha’97 ’03,Surya Newell ’95,NageshPabbisetty ’97,SteveAudino’96,Bruce Parks ’92, left) andeventhost left) Joining DeanZupaninDallas,Tex., onMarch3,2004,were Dean ZupanMeetsAlumniatNationalandEuropeanReceptions imon alumniatPAETEC’s inFairport, headquarters N.Y. From there, we went toAmsterdam, theNetherlands, inFebruary; Dallas,

kick offtheNew Year withDean Mark Zupan officiallyonboard, we heldthefirstofmanyreceptions tointroduce himtoour Arunas Chesonis’91 Lance Drummond ’85* Henry Darakhovskiy’95, Henry Arunas Chesonis’91, Arunas and for hostingtheRochesterSimonNight (at right). Melanie Caoile’99. Lada Darakhovskiy, chairman andC.E.O.of Francis Price’75 Brion (at P F programs, inAmsterdam,associate deanforexecutiveM.B.A. theNetherlands,on Ewout Steenbergen ’98*, (from left) Among theattendeesatalumnireception inChicago,Ill.,onApril26,2004,were Kavita are bothSimonSchoolAlumniNetworkofChicagocommitteemembers. Calif., onMarch9,2004. Dean Zupanwitheventhost AETEC Communications Inc., ebruary 19,2004.Theotherco-host (notpictured) was Marya Savola’99,MattJaffe’01 Marya Richard Couch’79* ING Housereception co-host, withDonnaSpinella, graciously hostedRochester-area and (at right)atabreakfast inAlamo, K *Executive M.B.A.graduate avita Soni’02. F eike Brouwers ’00.* ons in gracious Marya and

alumni

T ex., 25 SIMONBUSINESS Spring 2004 55822_Txt 6/29/0412:37PMPage26 26 SIMONBUSINESS Spring 2004 ILA .SMNGAUT COLO UIESADMINISTRATION BUSINESS OF SCHOOL WILLIAM E. SIMON GRADUATE 2003. Jeff isseniorvicepresi- their son,Matthew, onApril 9, ner, Kevin Yodler, welcomed J 1987 and Storage is thepresident of on September 24,2003.Karen 2001, andAshley Victoria, born Da They now have twochildren, S writes thatshemarriedDavid Ka in New York City. at partner No their daughter, Hannah, on S Scott Gordon 1985 Mergers Calif., onMarch9,2004. Alumni Network,andaprospective studentattheUniversityClubinSanFrancisco, Dean Zupanjoined Dean ZupanMeetsAlumniatNationalandEuropeanReceptions fryHl ’87 effrey Hall tacey, of celebratedthebirth ampson onApril 8,2000. r vid Jr., bornonSeptember 7, v en (Strickland) Sampson ember, 10,2003.Scottisa Kirkland andEllis in Ayer, Mass. and hiswife, Deniz Tunca ’00 and hispart- Ayer Moving and acquisitions (center), whoisspearheadingtheBayArea D officer at president andchiefoperating J 2004. Sal joinsoldersister, S w S 1988 Alphonse Alaimo’88 wife, Erin, announcedthe Angeles, Calif. P dent ofmarket research at enna. Sami isexecutive vice alman (Sal), onMarch 6, ami Abbasi elcomed theirsecondchild, allas, Tex. aramount Pictures R adiologix Inc. and hiswife,Ally, in Los and his in town, N.J. In management at of globalbankingandcash G Amanda joins6-year-old sister, S ofAmanda announce thebirth wife, Elizabeth, are proud to ’88 S B P Cr schild, Inc. managing director at brother, Daniel. Neil isthe old sister, Alexa,and3-year-old 2004.Sarah joins6-year- uary child, Sarah Elizabeth, inJan- Kim, welcomed theirthird Ne 1989 ment lyst at 2003. Alisafixed-income ana- Catherine, onNovember 29, oftheirdaughter,birth hira onJune 20,2003. imon alumnus aul Streiber ell onOctober 25,2003. abrielle. Craig isthedirector ternational Inc.ternational aig Mondschein il Augustine B Lance Drummond ’85* Richard Couch’79* Andrew M.Carter in Amsterdam F y of theDean’s Receptions thathave takenplacesofarthis We Thank you! H was inattendanceasPaul’s ear (asofpress time): eike Brouwers ’00* arry Meyer,arry B.A.’64 ugo Sonnenschein, B.A.’61 in San Francisco, Calif.

S would liketoextendourthanksthegracioushosts eneca Capital Manage- in New York City. married KariLynn and hiswife, H S ami Abbasi oneywell in Morris- and his R oth- in Boston in theEastBay (Calif.) and in Burbank in Dallas E wout Steenbergen ’98* in Chicago P managing director at Nick is on January 28,2004. of theirdaughter, Danika Rae, Carolyn, celebratedthebirth N 1990 H is with joins olderbrother, Henry. Sam on January 12,2004.Mark their son,Mark William, born M S L Andrew Laniak am Ticknor aribas uisa, celebrated the birth of uisa, celebratedthebirth R porate communicationsat of investor relations andcor- best man.Paul isvicepresident icholas Kello asbrouck Heights, N.J. argie, announced the birth of argie, announcedthebirth adiologix Inc. Bergen Capital in New York City. and hiswife, and hiswife, and hiswife, in Dallas, Tex. BNP in 55822_Txt 6/29/04 12:38 PM Page 27

WILLIAM E. SIMON GRADUATE SCHOOL OF BUSINESS ADMINISTRATION

their son, Charles, in Novem- and finance department at rector of international develop- P. Amanda Gay* (formerly ber 2003. Charles joins older NTT DoCoMo Inc. in Tokyo. ment at Ethicon Endo-Surgery, known as Phyllis Adams) brother, Louis. Andy is the Inc., a Johnson & Johnson announced the birth of her C.O.O. at CJ Winter Machine 1997 Company, in Cincinnati, Ohio. daughter, Moorea, on Decem- Technologies in Rochester, N.Y. Anjali Arora and Manish ber 2, 2003. Phyllis is the chief Gupta ’98 celebrated the birth Welcome to Sean Miller, 8- of staff at Citigroup in Cincin- 1992 of their daughter, Naina, on month-old son of Kismet nati, Ohio. Craig Zando and his wife, January 9, 2004. Manish is (Kuzanli) Miller and her hus- Lynda, welcomed their son, president of Panache Services 2001 Marco Vincent, on June 30, Inc., a business process out- Philip Bartlett’s second son, 2003. Craig is the executive di- sourcing (B.P.O.)services com- William, was born on Septem- rector, Leveraged Finance pany that he co-founded in ber 30, 2003. William joins Group High Yield Sales and Cupertino, Calif. In addition older brother, Nate. Philip is Trading, at CIBC World to her new responsibilities as a employed by the State of Markets Corporation in New mother, Anjali works on mar- Alaska, Department of York City. keting consulting projects. Revenue, in Juneau. band, Harold Miller. Hal is 1994 1998 the director of projects/IT at Marina Lyssenko married Eileen (Walsh) Dufty and her Daniel Chai and Kara-Ann The Sutherland Group in Brian Chinn on October 4, husband, Jeffrey, celebrated the (Osselmann) Chai welcomed Rochester, N.Y. 2003, in Berkeley, Calif. birth of their son, Aidan, in Rainer Anshelm Osselmann Marina is an investment bank- December 2003. Aidan joins Chai on February 27, 2004. 1999 ing associate with Citigroup older brother, Ryan. Eileen is a Nancy Sumida and her hus- Global Markets in San regional controller at Auto- band, Roy, welcomed their son, Francisco, Calif. matic Data Processing in Elk Ryan Alexander, on September Grove Village, Ill. 2003 Ami Desai and Zachary Ami Heda and his wife, Nienus are engaged to be mar- Vandana, announced the birth ried on August 21, 2004, in of their son, Akshay, on Decem- Michigan. Ami is a senior re- ber 23, 2003. Ami is vice presi- Rainer joins older brother, search analyst at Synovate Wilhelm. Daniel is a senior Heathcare/Isis Research in consultant at LECG, LLC in Columbia, Md. Cambridge, Mass., and Kara- 5, 2003. Ryan joins older sister, Ann is a market strategist at Hayley. Nancy is a marketing Sadhvi Khanna and her hus- George P. Johnson Co. in North analyst at Agilent in Santa Rosa, band, Amit, celebrated the Easton, Mass. Calif. birth of their son, Rishi, on November 16, 2003. They live Jonathan Hill and his wife, 2000 in Paramus, N.J. dent, finance, at AGT Seven in Sue, write that they have a son, Mary Beth DiMartino and her New York City. Connor, who will be 2 in July. husband, Brian McAdams, Ashok Sarathy married Pranuthi Jonathan is a senior consultant were married on October 18, Belliappa on December 28, Yu-an Lee and Iwao Saito were at I.B.M. Business Consulting 2003, at the Kodava Samaja in married on December 23, Services in New York City. Bangalore, India. Ashok is the 2003, in Tokyo. Simon alumni manager of GMAT operations at from the Class of 2002 in at- Kevin Hong and Yulia the Graduate Management Ad- tendance included Keiko Fransisca ’99 were married on missions Council in McLean, Va. Ejima, Hikaru Fukanuma, January 18, 2004. Kevin is a di- Tetusya Kawase, Takanami Steven Stagnitto married Erin Kiichiro, Susumu Kimura, Myers on September 13, 2003, Maeda Mitsuhiko, Iichiro 2003. Mary Beth is a senior at the Interfaith Chapel on the Ohara, Yasuo Shimokura and market research analyst at University of Rochester River Kosuke Uchida. Yu-an works Wyeth Pharmaceuticals in Campus. Steven is a senior lab in the accounting department Collegeville, Pa. engineer in the Laboratory for

of Costco Wholesale Japan, and Laser Energetics at the Univer- BUSINESS 2004 Spring Iwao works in the accounts sity of Rochester. SIMON *Executive M.B.A. graduate 27 55822_Txt 6/29/0412:38PMPage28 28 SIMONBUSINESS Spring 2004 He C nology organizationat ogy intheresearch andtech- technol- imaging andservices position asvicepresident of J ture attheSimon Schoolin S ILA .SMNGAUT COLO UIESADMINISTRATION BUSINESS OF SCHOOL WILLIAM E. SIMON GRADUATE firm intheprivate equity partner erating executive andlimited accounting firms.Lenisanop- companies andleadingpublic in LosAngeles,Calif. Gr S executives from comprised ofseniorfinancial board, established advisory act aschairmanforitsnewly M J 1973 home intheGranite State. are enjoying lifeintheirnew moved toNew Hampshire and and hiswife,Lynn, have & Co. 30-year career at D 1972 asked Nth Orbit 1969 in Jamesville, N.Y. the School District. Edward owns S school board president forthe Ed 1968 tions nancial officerat accepted apositionaschieffi- E anuary 2004(seepage4). anuary Class iddhartha Dalal iddhartha ames Chiafery ames Chiafery orporation trategic Communications kaneateles (N.Y.) Central dward Meltzer ennis Soter ass., asaseniorvicepresident

oup, Inc. ward Buttolph delivered aKalmbachLec- Bu Ev in KingofPrussia, Pa Leonard Schutzman ttolph Lumber Company in New York City. He ercore Capital Partners of San Jose, Calif., in Swampscott, in Rochester, N.Y. r etired aftera notes joined Fo writes thathe S P accepted a tern Stewarttern was elected r rism eSolu- tune Xerox LaVoie 200 . to . lite network. global positioningsystemsatel- on theU.S.government-owned tion systemsandsoftware based ble Navigation makesnaviga- tion ogy andbusinessskills. tor-led courseware fortechnol- learning solutionsandinstruc- E J and execute effective growth. tion tohelpcompaniesidentify agement andstrategicinnova- principles ofvalue-based man- Conn. The firmcombinesthe McGinley, LLC, ing tofaculty. istrators andtechnologytrain- managerial trainingtoadmin- and informationsystemsstaff, training tothemanagement developing anddelivering IT cuse, N.Y. Pat isresponsible for vice president at Yo of the accepted apositionasdirector P and C.E.O.of S 1977 E chief executive officerat S 1976 C A commercialization at vice president oftechnology W 1974 management firm, Ma 1978 the commercial sector. under government programs, to nologies, usuallydeveloped r ogy commercialization group is S esponsible fortransferringtech- effrey Tischler an Diego, Calif. The technol- teven Berglund tephen Hoffman atrick Murphy lement Kisaprovider ofe- lement K pplications International orporation (SAIC), rk illiam Bond rk

in Sunnyvale, Calif. Trim- T

Gr S raining Center tate University ofNew essle in Rochester, N.Y. started hisownstarted T was appointed was appointed rimble Naviga- A in Wilton, writes thathe is president sta Funding was named Gr based in Science essle & in Syra- management company. vices, real estateandenergy I as chieffinancialofficer. Abrams In ester chapterofthe C.E.O. oftheGreater Roch- sulting andproduct manager. kets, director ofworldwidecon- mar- aviation andtransportation strategist, generalmanagerof several capacities,includingchief ployed by Xelus for10years in gist. He waspreviously em- in Fairport, N.Y., aschiefstrate- J 1983 R 1982 Ed Ma ITT’s globaloperations. VBSS technologyintoallof integratethe plans tofurther develop policy, objectives and In Industries,ITT Inc. B was nameddirector, Value- S 1981 cations C.E.O. of Ph r ov tions, assetacquisitionandthe as loanconsolidationopera- opment andoperations,aswell businessdevel- antee services, sponsible forSallie Mae’s guar- position,Bobisre-his new S oration, at antor services, to seniorvicepresident, guar- Cliffs, N.J. tion company, inEnglewood asset managementandliquida- In ndustries is a construction ser- ndustries isaconstruction ollment-management division. ohn Buttrill* higenori “Nori” Morimoto allie Mae, ased Six at Sigma (VBSS), obert Ballard*obert

dustries, Inc. ersight ofthecompany’s en-

il Freedman his new position,Norihis new will c., W rk

odarski a consumerreceivables Thomas in Ireland. commonly known as Chorus Communi- Chorus nRso,V.In in Reston, Va. r ejoined was appointed joined in Atlanta, Ga., was appointed was promoted SLM Corp- Am in Tokyo. X A erican elus Inc. brams procedures. advancement systemsand ments totheUniversity’s the maintenanceandimprove- M fice ofProspect Research and of theGift Office andtheOf- Ma R services forthe services come director of advancement operations andfinance,tobe- where shehadbeendirector of School inDecember 2003, Mart 1984 and Politics by theRhodeIsland Do honored withtheGeorge T. Campus, inProvidence, was Wy president ofthe D 1988 B Co chief accountantfor E 1987 P Charles ispresident of Di the Auburn (N.Y.) CitySchool Charles Beck* 1985 sity of Rhode Island,sity ofRhode for urbanaffairsatthe J and accountingpolicy. financial reporting andcontrol ton, N.J.John willoversee all Ty and chiefaccountingofficerat senior vicepresident, controller J R R Bu ing director andprincipalof R ohn McCray ohn Davidson* dwin Erickson lastics ochester. end, Wash. ochester, N.Y. avid Collins* ed Cross. anagement. She alsooversees ochester, N.Y. co International strict’s schoolboard. unty, Washington, wning Award forEducation oming Railway Company oming Railway r ttrill andAssociates tha supervises theactivities tha supervises ha Every in Auburn. In J ohn isalsomanag-

her new role, her new ,* viceprovost left theSimon was electedto U is seniorvice Ge was appointed was appointed niversity of nesee & in Prince- Pa F in South einstein Au U cific in niver- tech in 55822_Txt 6/29/0412:38PMPage29 those twoorganizations. focusing ontheintegrationof professional imagingoperations, K mand asseniorvicepresident of Karen becamesecond incom- hai, China.In August 2003, family have relocated toShang- A Company man Kodak dent, greater Asia region, at appointed chairmanandpresi- president andC.E.O.ofthe S 1989 Ka G the United States. lations identifiedasminoritiesin explore nationsthathave popu- students toresearch, studyand creative programs thatencourage of in educationandhissupport r B ticals Inc. to C.F.O. at ILA .SMNGAUT COLO UIESADMINISTRATION BUSINESS OF SCHOOL WILLIAM E. SIMON GRADUATE ecognized forhiscontributions hane Coppola lack Heritage Society. John was pril 1,2004.Karen andher odak’s combinedconsumerand erard Michel r en Smith-Pilkington* in Parsippany, N.J. Help Us FindtheNext SimonLeader NPS Pharmaceu- was promoted was appointed m N of ex If youare interested inhelping the Admissions Office toidentify men and women who wouldbe effective ot only will you be guiding prospective students to your alma mater—one of the world’s ot onlywillyoubeguiding prospective students toyouralma mater—one ost renowned business schools—you willalsobesaving eachone hisorher application fee! ost renowned business schools—you

cellent candidates for aSimon M.B.A., pleasecontact Rebekah Lewin,senior associate director M.B.A. admissions, at(585)[email protected]. was E ast- and internalcommunications. the company’s globalexternal T phia, Pa. In position, hisnew affairs, at utive vicepresident, corporate Ti 1990 multi-location businesses. of largercustomers,particularly launched tofocusontheneeds key accountsprogram was I Choice OneCommunications vice president ofkeyaccountsat M ager ofB&LMexico. Latin Americaandgeneralman- was namedpresident ofB&L since 1989andinAugust 2001 has beenwithBausch &Lomb Lomb tant treasurer at W porate vicepresident andassis- E in New York City. nc. im willberesponsible forallof frain Rivera m Cost* ike Rosato* estwood One in Rochester, N.Y. The new prospective Simonstudent$125! in Rochester, N.Y. Efrain Ar was appointedexec- amark was promoted to was namedcor- radio network B ausch & in Philadel- and save a companies intheUnited States. fastest growing privately held azine’s 2003listofthe500 was rankedNo. 10on 2004 namedintheJanuary 2, A C imaging, at president, digitalandapplied ager, inkjetmedia,andvice Laurel Spring Gr and co-owner of D [email protected]. N.Y. Bobcanbereached at both Rochester andAlbany, provides in engineeringservices firm, professional engineer, andhis O S patent lawbefore theUnited currently registered topractice patent barexaminationandis R 1991 tates Patent and Trademark thena Award nomineesfor obert Gundermanobert ompany, aniel Lazarek, ffice. Bobisalsoalicensed oup, GND Engineering, PLLC, writes thatthecompany was oneofthe E astman Kodak , general man- C.O.O., C.F.O. The Access passed the Inc . mag- Boca Raton,Fla. biotechnology companyin N T Ea the board ofdirectors of Thomas McLain B r E Ma Po the board ofdirectors forIPAC Ma 1992 S investment teamat and headoftheresearch and E Bu as director ofthe J 2004, issueof ector of heart services at services ector ofheart ecurities om isC.E.O.andpresident of ben Howard ben willalsocontinuetoserve ournal anner Health abi Biopharmaceuticals, r stman ChemicalCompany. rn rk tfolio Management Ltd. rk

C is chiefinvestment officer D enter . *Executive M.B.A.graduate utton in Sydney, Australia. in Greeley. was appointedto was appointeddi- R in Greeley, Colo. ochester Business W was electedto estern Statesestern IPAC a 29 SIMONBUSINESS Spring 2004 55822_Txt 6/29/04 12:38 PM Page 30

WILLIAM E. SIMON GRADUATE SCHOOL OF BUSINESS ADMINISTRATION

Alumni Leader Profile Bob Balk ’94

s a five-time Para- interesting, work; to have the swers differ, and has where you’ve lympian, earning six U.S.O.C. board vote them- ended up surprised you? AParalympic medals, Bob Balk selves out of office in support When I was finishing college, I ’94 has a unique perspective on of our recommendation was just wanted a good opportunity how personal and professional tremendously rewarding. to prove myself. That took a boundaries can intersect and long time, an inordinate and lead to success in both areas. Q: How are business and athlet- unnecessary amount of time. Not long after Balk finished ics similar? Or different? (I now know that it’s very im- college, he suffered a fall that It depends upon how you ap- portant to network early!) After ter at the University of Sydney left his legs paralyzed. But he proach them. Athletics can be a my accident, I had no direc- has had the most lasting im- certainly kept moving. Now career just as much as being an tion, and it took me a while to pact. Studying abroad opened manager of Global Venture investor or any other profession start looking up, much less for- my eyes to a completely differ- Capital Investments at the you might consider. You need ward. I quit my job to finish ent view of what I might want Boeing Company in Seal discipline and commitment to my M.B.A. full time in Aus- to do personally and profes- Beach, Calif., Balk graduated reach a goal. If you don’t set a tralia through Simon’s exchange sionally. I became close friends from the Simon School’s Part- goal, you won’t get where you program, because I knew when with a student from Duke Time M.B.A. Program in 1994. are going. If you are not willing I was done, I wanted to con- University, Jeff Cooper. Jeff got to work with others, you are tinue my athletic career and not me into Boeing in 1997 and Q: How have your athletic pur- going to struggle. Even the most only have a business career. then introduced me to my suits and Simon education, to- famous individuals, either in In discussing the future with wife, Tricia, in 1998. I would gether, helped you get to where business or sports, have a team Tricia, we see how lucky we are. say meeting him had a very you are today? that supports them. You need to We were trying to determine significant impact on me. Athletics is closely woven in understand your resources and where the next five years would every aspect of my life. If you utilize them without waste. The take us, considering the last five Q: What piece of advice have you take a top-level look at my biggest difference is the propor- have included dramatic change received that has helped you the work at Boeing, athletics does tion of preparation versus and opportunities. I am not most in both your work and races? not play a significant role. doing. If you think about the sure if I could look forward 10 “Go hard or go home,” which Traveling extensively to com- winning field goal in this year’s years to tell you where I would another athlete once said to me. pete, however, certainly helps Super Bowl, you will recall that work or what I would be doing. If you have not come pre- my global perspective. When it took about a second for them I can guarantee it will be differ- pared—or are not willing to working with global invest- to snap the ball and kick it— ent and not at all what I can prepare—to be ready to per- ments, it is important to have a but how many years of training conceive of today. Eventually, form in a race at your best, ev- very broad world view and be went into that one second? I I’m going to hang up competi- eryone loses. It’s obvious who is comfortable with new places would encourage Simon grads tive athletics and focus more on just going through the motions, and people. My Simon educa- to consider hiring Olympians my business career and starting and going through the motions tion, combined with my ath- through the Olympic Job Op- a family. I will participate in is boring and frustrating. You’re letic experience and Boeing portunity Program. Olympians sports for as long as I can and much better off moving on to background, was crucial in my are very talented people who continue my involvement with find something you can be pas- ability to support the United need an opportunity to prove its administration, as well as sionate about so you can get ex- States Olympic Committee’s re- themselves professionally. coaching, in the future. cited about committing every- cent restructuring efforts. It was My life has been nothing thing you have. incredible working with a team Q: What part of your M.B.A. but surprises—good ones— of 10 very capable people who studies has proved to be most and more successful than I Q: In answering the question are passionate about Olympic beneficial? could have imagined. I’m very “Where do you see yourself in 5

BUSINESS 2004 Spring sport. To have been able to put I have to say that it was all in- happy and intend to keep it to 10 years” now, versus when forth a strong recommendation teresting and challenging, but that way. SB you were finishing college (before to the U.S.O.C. was hard, but doing an exchange for a quar- SIMON your accident), how do the an-

30 55822_Txt 6/29/04 12:38 PM Page 31

WILLIAM E. SIMON GRADUATE SCHOOL OF BUSINESS ADMINISTRATION

Helen Zamboni* accepted a 2002 position as senior counsel in Mohannad Aama published an the corporate department at article on Lebanon’s economy Underberg & Kessler, a law in the Beirut newspaper The firm in Rochester, N.Y. Daily Star. Mohannad is a member of the Global Associa- 2001 tion of Risk Professionals. Judith Alexander-Wasley was named product manager, Trust Paul Ames is the director of department, at M&T Bank in the Institutional Data division Rochester, N.Y. Her responsi- at Yanni Partners, Inc. in bilities include personal trust, Pittsburgh, Pa. employee benefits and institu- Peter Alpern ’96 (at left) and Drew Hearon ’01 (at right), hosts of the 2004 tional custody product lines. Economic Outlook presented by Professor Charles I. Plosser on December 11, Marcos Azabal Schramm is liv- 2003, at Lehman Brothers in New York City. ing in Madrid, Spain, and Daniel Burnside accepted a working for The Royal Bank of position as vice president of Scotland as a risk and portfolio 1994 1998 quantitative strategies at Clover manager. Ami Heda accepted a position Karen Gleasman,* director, Capital Management in as vice president, finance, at Global Manufacturing Tech- Rochester, N.Y. 2003 AGT Seven in New York City. nology Organization, at East- Jon Bloomfield* accepted a po- man Kodak Company in Roch- Gemma Fernandez is a finance sition as a senior consultant at 1995 ester, N.Y., received the 2004 director for Glaverbel, a Belgian Deloitte & Touche Tohmatsu in Anthonie (Ton) Langeler* Chairman’s Leadership Award company in Valencia, Spain. New York City. Jon is in the fi- wrote to say that his company, from Chairman and C.E.O. She writes that she still sees nancial services sector, which pro-Actuate in Utrecht, the Daniel Carp. First presented Marcos Azabal Schramm ’02 includes insurance, banking Netherlands, offers analysis and two years ago, the award cele- regularly (see Class of 2002). (commercial and retail) and in- implementation for United brates business performance and vestment services. States companies wishing to leadership abilities. Harvey Potter writes that he launch their products in Euro- was promoted to vice president pean markets. His e-mail In January 2004, Lisa Morris at Bear Stearns in New York address is ton.langeler@ relocated back to the United City. pro-actuate.com. States from Paris, France, where she had worked as an Edward Stansfield is the founder international marketing man- and C.E.O. of Studio 4 ager for L’ O r eal. In her new Networks in Los Angeles, Calif. role, Lisa will be managing Studio 4 Networks is an on- L’Oreal’s Garnier brand in New demand network that provides York City. high-quality educational, early childhood developmental and 1999 health and fitness television pro- Robert Holzhauer assumed the gramming for the family. position of managing director of Allergy Asthma Immunology 1997 of Rochester (AAIR) while con- Carter Driscoll joined the tinuing as C.F.O. He is also Alumni gather in Tokyo for the English Language and U.S. Culture Program (ELUSC) Independent Research Group, a chairman of RCIPA Inc., the reunion held on February 21, 2004. The reunion was hosted by Hajime Shoji ’98, a subsidiary of TheStreet.com, in business association of the project manager at the Boston Consulting Group in Tokyo. Over 20 Tokyo alumni New York City, as a technology Rochester Community and their families were in attendance, along with Ellen Zuroski and Janet analyst. Individual Practice Association. Heyneman, senior lecturers in management communication at the Simon School. Zuroski is the director and Heyneman teaches students in the ELUSC Program. On February 23, 2004, Hiromasa Honda ’03 hosted the Tokyo applicant reception at Nagesh Pabbisetty is vice presi- the corporate headquarters of his company, Kirin Brewing. More than 14 alumni at- dent of Real Broadcast Net- tended the information session and met with prospective students. work, part of RealNetworks

Inc., in Seattle, Wash. BUSINESS 2004 Spring

*Executive M.B.A. graduate SIMON

31 55822_Txt 6/29/0412:38PMPage32 32 SIMONBUSINESS Spring 2004 ILA .SMNGAUT COLO UIESADMINISTRATION BUSINESS OF SCHOOL WILLIAM E. SIMON GRADUATE advisory services. advisory andstrategic tools, coursework ductivity through measurement and maximize employee pro- increase customerengagement O Cleveland, Ohio. The Gallup Gall at an associatepartner Ga rganization helpscompanies ry up Organization

D SIMON SCHOOL ietz was promoted to server. You canalsofaxyourorder to:(585)383-8417.Itemswillbeshippedwithin48hours!Internationaldeliveryisalsoa Simply gototheWeb sitewww.simon.rochester.edu/virtualstore, indicatewhichproduct andlogoyouwant,order through the We are carryingover25Simonbrandedproducts! You willfindNikegolfumbrellas, poloshirts,clocksandmore! V V isit: www.simon.rochester.edu/virtualstore isit the“SimonSchoolVirtual Store” in The nesses andindustries. focusing onemergingbusi- v M & Co. at department biotechnology equityresearch Pe estment andmerchant bank urray isaresearch-driven in- ter Nguyen in New York City. Brean joined the Br ean Murray r E battle againstcancer. Jack wasthedirector offinanceat C. John ChapmanJr.* (Jack) 1983 IN MEMORIAM etired in2002. astman Kodak Company in Rochester, N.Y., whenhe died after a short butvaliant died afterashort vailable.

secure 55822_Cov 6/29/04 2:01 PM Page 3

Simon Technology Conference

Senior-level managers from prominent national and regional companies explored issues and trends in IT consulting, telecommunications and software on May 7, 2004, during the first student-organized Simon Technology Conference. The School’s High Technology Management League (HTML), an organization for students interested in pursuing a career in the high-tech industry, hosted the conference. Kevin Sheldon ’04 and Anjan Rao ’04 led the team of students that organized the successful event.

Panelists discussing software (above) agreed for the need to shift from invention to application of data- bases and to make Web services ubiquitous and standardized. In the not too distant future, Juan C. Jones ’88 (second from right), vice president of service delivery management at Oracle Corporation, predicted “technology will continue to evolve away from huge laptops to small, streamlined, professionally-managed, highly-secure technology.” Roy Jones (far left), Simon School assistant professor of computers and infor- mation systems, moderated the discussion. Panelists included (from left): Peter Bruu, president of Simple Business Technology; Wendy Brabon, C.E.O. of Ignite Worldwide; Ralph J. Dandrea, president of ITX Corporation; Kevin Stevens ’91, program manager at Microsoft Corporation; Jones; and Len Bayer, executive vice president and chief scientist at Harris Interactive.

Yogesh Gupta (above), chief technology officer at Computer Associates, examined “Technology Trends and Their Business Impact” during his keynote address following the panel discussions. Gupta said one of the biggest hurdles to overcome with regard to information technology will be infrastructure transformation. He also highlighted business and technol- ogy trends that are driving the need for and the real challenges in realiz- ing the benefits of on-demand computing, and how technologists should work to overcome those challenges.

The IT consulting panel (above), moderated by Rajiv Dewan (far left), Simon School associate professor of computers and in- formation systems, focused on outsourcing. Jeremy Seligman ’84 (far right), director of IT strategy and competency develop- ment at Ford Motor Company, said “outsourcing can make sense from a cost perspective, but if you are engaging in a strat- egy of outsourcing where you lose intellectual capital, then you are doing too much outsourcing.” Other panelists included: Thomas Agnello (second from left), relationship manager at Deloitte & Touche LLP; Andrew Belton ’99 (third from left), partner at Mercer MC; Howard Berger ’85, director and team leader, business technology at Pfizer Global Pharmaceuticals; Christopher Burns ’99, venture consultant with High Tech- nology Rochester; and Steve Graham ’74, managing director of Computer Aid.

Photo at right: Jeremy Seligman (at left) networks with students after the IT consulting panel discussion. A third panel on telecom- munications included: Kevin Dickens ’89, C.O.O. at Choice One Communications, Inc.; Kevin Nicholas ’93, senior man- ager, customer markets at Bell South; Martin Stern ’80, part- ner at Preston Gates Ellis & Rouvelas Meeds LLP; Jeff Thrall, senior account executive at PAETEC Communications Inc. and co-founder of THINQ Interactive; and Tim Williams ’86,* C.E.O. and founder of Pics Telecom Corporation. *Executive M.B.A. graduate 55822_Cov 6/29/04 2:01 PM Page 4

Recruiting Venues for 2004–2005 In a New York Start your fall interviewing season in the comfort of the Waldorf=Astoria Hotel, located in midtown ‘‘ Manhattan. This early recruiting program allows you to choose top talent from our graduate business Minute ranks and, uniquely, from our undergraduate talent pool. We bring the best of the University of Rochester to you! Friday, October’’ 1, 2004

The spectacular fall colors of the Northeast await you! Our expanded facilities in Gleason Hall overlook Fall in Rochester’s Genesee Valley Park, providing a relaxed atmosphere for your recruiting trip. Only five min- Rochester utes from the Greater Rochester International Airport, we can easily accommodate your day trip to inter- view some of the world’s best M.B.A. talent. Starting in September 2004

For 25 years, NYRP has demonstrated the Simon School’s commitment to excellence in a regional inter- New York viewing program. The Waldorf=Astoria staff is equally proud of its longstanding commitment to quality Recruiting service at this premier event. This program allows you the opportunity to interview both first-year and Program second-year M.B.A. candidates. Friday, January 7, 2005 The Corporate Relations team is ready to customize your recruiting experience. Angela Petrucco, Director of Corporate Relations and Recruitment Telephone: (585) 275-2519 E-mail: [email protected]

William E. Simon Graduate School of Business Administration Rochester, New York 14627

Change Service Requested