SIMONBUSINESS WILLIAM E. SIMON GRADUATE SCHOOL OF BUSINESS ADMINISTRATION | SPRING 2002
ALSO INSIDE: JETBLUE’S DAVID NEELEMAN • NASDAQ’S FRANK ZARB • SIMON ALUMNI NEWS Dean Charles I. Plosser, left, turns the podium over to Frank G. Zarb at the inau- gural William E. Simon Memorial Lecture. For more on lecture, see page 11. Spring 2002
06 11 18 04
03 Message From the Dean
feature 04 True Blue JetBlue CEO David Neeleman on his airline’s recipe for success. —by Charla Stevens Kucko cover story 06 On the Wings of Goodyear Goodyear President and COO Robert J. Keegan ’72 is changing the way one of America’s oldest companies does business. —by Hilary Appelman business 11 feature William E. Simon Memorial Lecture Series Frank G. Zarb, chairman of Nasdaq Europe and senior advisor to The Nasdaq Stock Market, Inc., discusses the Enron crisis.
feature 18 Research Leadership Highlights • Consumer Choice and Attitude-Decision Consistency • Governance and Conduct in the Market for Managed Health Insurance • Stock Volatility in the New Millennium: How Wacky Is Nasdaq? —by Sally Parker
newsFLASH 21 Simon Launches New E-publication
alumni news 22 • Simon Sponsored E-Business Forum Draws Over 40 in London • Profile: Scott J. Gordon ’85
• Profile: Brent Nyitray ’94 BUSINESS 2002 Spring —by James Moore
• Mergers and Acquisitions SIMON • Class Notes 01 DEAN: Charles I. Plosser SENIOR ASSOCIATE DEAN FOR CORPORATE RELATIONS AND INSTITUTIONAL ADVANCEMENT: Charles W. Miersch SENIOR ASSOCIATE DEAN FOR FACULTY AND RESEARCH: Ronald W. Hansen ASSOCIATE DEAN FOR EXECUTIVE PROGRAMS: Richard M. Popovic ASSOCIATE DEAN FOR M.B.A. PROGRAMS: Stacey R. Kole CHAIRMAN, PH.D. PROGRAM: Ross L. Watts ASSISTANT DEAN FOR CAREER MANAGEMENT: Lisa M. McGurn ASSISTANT DEAN FOR INFORMATION TECHNOLOGIES: Kevin Brennan ASSISTANT DEAN FOR M.B.A. ADMISSIONS AND ADMINISTRATION: Pamela A. Black-Colton EXECUTIVE DIRECTOR OF ALUMNI RELATIONS AND DEVELOPMENT: Hollis S. Budd DIRECTOR OF ALUMNI RELATIONS: James Moore DIRECTOR OF MAJOR GIFTS: M. Eve Elzenga DIRECTOR OF MARKETING: Dawn S. McWilliams DIRECTOR OF OPERATIONS AND FINANCE: Martha Every DIRECTOR OF PUBLIC AFFAIRS: George M. Tomczyk DIRECTOR OF STUDENT SERVICES: Donna Lampen-Smith
EDITOR: Charla Stevens Kucko CONTRIBUTING EDITOR: SIMONBUSINESS, Vol. 16, No. 2 © 2002. James Moore Published semiannually by the University of Rochester, William E. Simon Graduate School of Business Administration, Carol G. CONTRIBUTING WRITERS: Simon Hall, Box 270100, Rochester, New York 14627-0100. Hilary Appelman, Sally Parker Postmaster: Send address changes to the William E. Simon Graduate ART DIRECTOR/DESIGNER: School of Business Administration, Carol G. Simon Hall, Box Michael T. Johnson 270100, University of Rochester, Rochester, New York 14627-0100. BUSINESS 2002 Spring PRODUCTION MANAGER: © 2002 William E. Simon Graduate School of Business John M. Robortella Administration, University of Rochester SIMON PHOTOGRAPHY: 02 Annette Dragon, John Smillie WILLIAM E. SIMON GRADUATE SCHOOL OF BUSINESS ADMINISTRATION
Message FROM the dean
t the Simon School, we are constantly aware of the fact A that maintaining excellence—in our programs, faculty and research, and in the quality and success of our students— is an ongoing process. With that in mind, I am pleased to say that the School was ranked No. 23 in U.S. News & World Report’s 2002 rankings of graduate business schools—up three places from No. 26 in the 2001 ranking. The survey results were based on a poll of corporate recruiters and business school deans, and on statistics supplied by the participating schools. However, while it is gratifying to be ranked among the top business schools in national publications, we will not stop in our efforts to improve all aspects of the School. We will remain cog- nizant of the fact that rankings can be erratic and stay focused on enhancing the fundamental elements that contribute to an out- standing management education and the success of our students. By working together, we will continue to improve and ensure the recognition that goes with it. The cover story in this issue of Simon Business focuses on Robert J. Keegan ’72, a highly successful alumnus for whom excellence is also a top priority. As president and chief operating officer at Goodyear Tire & Rubber Co., Keegan is changing the way one of the nation’s oldest companies does business. His innovative marketing strategy, complete with an advertising cam- paign entitled “On the Wings of Goodyear,” is aimed at guiding the company to a new level of success. Keegan, considered a mar- keting whiz during his tenure at Eastman Kodak Company for successfully deterring a challenge to Kodak’s North American market share, discusses his role at Goodyear, and also shares his views on teamwork, leadership and the value of a Simon M.B.A. In this issue, we also present the full text of the inaugural William E. Simon Memorial Lecture, given by Mr. Simon’s close friend and colleague, Frank G. Zarb. Mr. Zarb, chairman of Nasdaq Europe and senior advisor to The Nasdaq Stock Market, spoke on the lessons to be learned from the Enron collapse. On behalf of the Simon Community, I would like to extend our grati- tude to Mr. Zarb for joining us in honoring the memory of our generous benefactor, Bill Simon, who died in 2000. Thank you for taking the time to read this magazine. I hope you enjoy the information it contains. Since our commitment to excellence applies to all facets of the School—including Simon Business—we always welcome your feedback.
Charles I. Plosser BUSINESS 2002 Spring Dean and John M. Olin Distinguished Professor of Economics and Public Policy SIMON
03 WILLIAM E. SIMON GRADUATE SCHOOL OF BUSINESS ADMINISTRATION
Feature leadership
trueBlue—by Charla Stevens Kucko It’s no secret that JetBlue Airways CEO David
Neeleman favors the color blue. For his March 1,
2002, lecture to students at the Simon School, the
42-year-old superstar entrepreneur lived up to his
easygoing, down-to-earth image dressed in a navy
blue blazer with a light blue oxford shirt unbuttoned
at the neck, and casual pants. It isn’t surprising BUSINESS 2002 Spring that he included the word “blue” in his new airline. SIMON
04 WILLIAM E. SIMON GRADUATE SCHOOL OF BUSINESS ADMINISTRATION
s a kid growing up in Salt Lake City, Utah, execution and making it right with customers. Instead A David Neeleman never dreamed of owning an of offering passengers “lousy meals,” JetBlue serves airline; he just knew he wanted to be success- healthy snacks, at the same time reinforcing the brand ful, no matter what business he pursued, and he want- through the use of blue gourmet potato chips. By cut- ed to be his own boss. A young Neeleman achieved ting costs, JetBlue is able to splurge on features both goals in the late 1980’s when he helped found Neeleman knows customers will enjoy such as plush Morris Air, a discount flier in Salt Lake City, that leather seats and 24 channels of live television at every Southwest Airlines subsequently purchased in 1993 for seat back. JetBlue was the only airline to offer in-flight $130 million. After a brief stint at Southwest, he left live television coverage of the 2002 Winter Olympics. to help establish WestJet, a low-fare Canadian airline, Neeleman also discussed with students his actions and Open Skies, a computer-reservation system that following the September 11 terrorist attacks on New he later sold to Hewlett-Packard. In 2000, Neeleman York City and Washington, D.C. He was certain of launched low-fare air carrier JetBlue Airways with two things: He had to communicate with his employ- funding from Weston Presidio Capital, Chase ees and make immediate security upgrades to his Capital Partners (now JPMorganChase fleet of aircraft. Neeleman said internal & Co.) and financier George Soros, communication was critically among others, injecting new life important. “That day, we sent into New York City’s under- hourly e-mail updates to all of utilized John F. Kennedy our crew members inform- International Airport. ing them about what was Neeleman told more going on,” he said. “We than 300 Simon students continued with daily that his recipe for JetBlue’s updates for the next few success is basic: Start with months. I heard from a lot of money (JetBlue is employees at other airlines the highest funded start-up who had no clue what was in airline history); fly new going on within their com- airplanes (JetBlue’s fleet of pany. That’s unacceptable.” Airbus A320’s is the youngest in JetBlue was the first airline to the skies); focus on service (by offer- install bulletproof cockpit doors on ing customers the best airline experience all of its planes, and it recently you can deliver), and hire the best people announced it will install security cameras for safe- (JetBlue screens employees rigorously, trains them well ty on the entire fleet. and gives them the best tools). Neeleman told stu- Neeleman has his finger on the pulse of JetBlue at dents that building brand loyalty is one of the keys to all times. And, the pulse indicates excitement. a successful business. “All our employees are referred Neeleman announced at the Simon lecture that to as ‘crew members’ and they are ambassadors for our JetBlue would launch a new frequent-flier program in brand,” he stated. “We make them part of the com- April 2002 called (what else?) TrueBlue. A naming pany, and when the company goes public, they will be agency originally suggested the title for the company eligible to purchase JetBlue stock at the initial public name, but the company went with JetBlue instead. offering price—we will give them ‘a piece of the With service to 18 cities and 23 brand new air- rock.’ ” (JetBlue’s IPO on April 12 saw stock prices planes (and 12 more to come in 2002), Neeleman has soar from $27 to $45 per share—a gain of 67 percent.) no regrets. “My goal is to make the JetBlue experience ‘The rock,’ according to Neeleman, is based on five memorable, so customers will want to come back core values: safety, fun, integrity, passion and caring. and try us again,” he explained. “I think we’re suc- JetBlue interviews 40 people for every person hired— ceeding.” SB the company always looks for “a people person” who David Neeleman’s lecture was sponsored by the Simon School’s BUSINESS 2002 Spring reflects its core values. student-run VISION Program, which brings prominent lecturers According to Neeleman, integrity means flawless to the School each year to discuss all facets of leadership. SIMON
05 WILLIAM E. SIMON GRADUATE SCHOOL OF BUSINESS ADMINISTRATION
COVER STORY teamwork, leadership
—by Hilary Appelman
ach year, from 1953 to 1958 when school let out for the “When I got to Spain, needless to say, I was nowhere in terms summer, Robert J. Keegan packed his bags and moved to of language,” Keegan says. After about six months, Keegan had a E Chicago, where his father, Robert “Smiley” Keegan, was grasp of basic street Spanish. After a year, he was doing business a pitcher for the Chicago White Sox. Each fall, he returned to in what he called “Spanish-English.” Rochester to resume grammar school. “I would speak English to them but could comprehend them Change is a way of life for Keegan. That has stood him in speaking in Spanish. For six months, that’s what I did. And just good stead as president of Consumer Imaging at Eastman Kodak at the point where I was getting very comfortable with Spanish, I Co., and now, president and chief operating officer at Goodyear was moved to run our European consumer business. Tire & Rubber Co. Both venerable companies faced profound “It was hard!” says Keegan. “Those are tests of leadership. changes in the marketplace on his watch: Kodak—the onslaught How do you do in that situation? Can you maintain your confi- of archrival Fuji onto its North American turf; Goodyear—the dence? How do you treat the people? ongoing battle to be the consumer brand of choice in the hither- “My career has been a whole series of changes,” the 54-year- to nameless, faceless world of tire sales. old executive says. “I always encourage young people—if they In 26 years with Kodak, Keegan spent 13 years working over- really want to develop to the fullest: move. For me, it’s been just seas, with stints in London, Madrid, and Auckland, New a tremendous experience moving from national culture to nation- Zealand. In October 2000, he moved to Goodyear. Adjusting to al culture. That forces you to think through all your assump- a new corporate culture was a challenge. But, Keegan says it tions—not just your business assumptions but your social paled in comparison with being sent in 1990 to head up Kodak’s assumptions. How will people work in teams? What’s important operations in Spain, where he was the only non-Spaniard in the to people? How do they best go after goals? How do they com-
BUSINESS 2002 Spring operation. He arrived in Madrid, four weeks after being named municate with one another? How do they communicate with the to the post, with just two hours of Berlitz language training market?
SIMON under his belt. “For me, my 13 years overseas were the best and most intense
06 WILLIAM E. SIMON GRADUATE SCHOOL OF BUSINESS ADMINISTRATION
set of learning experiences that I could possibly have.” Keegan’s route to the top ranks of the business world was not preordained. As a young boy, playing with his father’s Keegan White Sox teammates in Chicago’s Comiskey Park, he got his dreamed of becoming a professional ball player. But M.B.A. in although he played high school baseball and basketball and a finance at the year of college basketball, professional sports were not in the Simon School cards. Instead, Keegan majored in math at LeMoyne in 1972 and went College in Syracuse, N.Y., and found himself working sum- to work for Kodak in mers at Kodak, more by fluke than design. The summer the first of a series of finance after his freshman year, a promised construction job dried and marketing positions in the United States and overseas. up, and Keegan needed work to pay for his college tuition. He stayed with the company until 1995, when he Kodak hired the children of employees, but no one in went to work for Avery Dennison Corp. as exec- Keegan’s family worked for Kodak. “So I just sat in the utive vice president and global strategy officer, employment office at Kodak,” Keegan says. “On the sec- only to return to Kodak two years later as presi- ond day, sure enough, one of the employees’ kids decided dent of Kodak Professional and then, of that he didn’t want to work that summer.” Consumer Imaging. Keegan got the job running a punch press and spent the Over the years, Keegan says, he was fortunate next three summers working at Kodak. At the end of enough to work with Kodak’s best lead- his third summer, he had an interview with Kodak’s ers. “I learned one heck of a lot from employment office. “Bob, you’ve been a good them. I would certainly encourage employee for three years. Would you be interested any young person going into the in coming back to Kodak and working for us?” he business area: first and foremost, was asked. work with people who are good “No, thank you,” the 20-year-old Keegan leaders. Watch what they do replied. He was heading to law school. “I don’t and modify it with your own have any plans to work for an industrial corporation,” style. That will be a very valu- Keegan recalls answering, chuckling today at the able experience, perhaps your memory. most valuable experience in the busi- When law school ness world.” didn’t work out as Keegan waxes enthusiastic over planned, Keegan wound the Simon School’s new positioning up working as a mathe- statement, “Where Thinkers matician in the R&D Become Leaders.” “People say that department at leadership is natural or innate. I Rochester’s Gleason tend to disagree with that,” he Corp., which set him on says. “Like many skills in life, the path to a business the more exposure and experi- career. “I literally went ence you have to good leaders, or to business school (to) a situation where you have because I saw finance to show courageous leadership— and marketing and man- those are the things that build ufacturing, and I liked good leadership skills. You learn all those disciplines by those situations in which you more than my work, do very well, and you learn a lot which was very individu- more in those situations where you al work,” Keegan don’t do so well.” explains. “It was fun; it The emphasis on teamwork in busi- was fulfilling; it was ness schools is a very positive development, challenging. But Keegan maintains. “Back 30 years ago, I think BUSINESS 2002 Spring frankly, I needed more business school was very, very different,” he people contact.” SIMON
07
Goodyear products provided by Christopher Agati, Goodyear Auto Service Center, 1965 Buffalo Road, Rochester, N.Y. WILLIAM E. SIMON GRADUATE SCHOOL OF BUSINESS ADMINISTRATION
A Marketer’s Dream t sounds perverse, but Robert prices 30 to 40 percent. Kodak’s market Consumers were confused by film and Keegan says one reason he went to share dropped almost overnight and its film speeds. Most people used 100-speed I work for Goodyear after 26 years at stock price fell. “They were hitting us right film, and Fuji’s price cuts were hard to Eastman Kodak is that most people don’t in our profit sanctuary, and they had good ignore. In response, Kodak began a heavy care about tires. product,” Keegan said. “The market was marketing push for its higher speed—and “This is a marketer’s dream,” he told screaming at us, ‘The game has changed, higher margin—films. At the same time, it Simon School students at a Frederick now what are you going to do?’ ” competed aggressively with Fuji on price for Kalmbach series lecture on February 28. Step one, Keegan said, was team-build- 100 and 200-speed film. Almost all the “You ride on tires every day. Your life ing. “I bet on outstanding people,” he said. company’s advertising dollars were poured depends on them, and your loved ones’ lives In the past, Kodak’s goal had been simply to into promoting the message that con- depend on them . . . but you don’t care!” be the market leader. Keegan’s team aimed sumers would get better pictures Marketers, he said, “salivate over that kind to expand the whole category by giving con- more often if they used Kodak’s of opportunity.” sumers reasons to buy more and higher- 400 and 800-speed films, which Keegan has presided over “deep change” priced film. were renamed “Kodak Max.” at both Kodak and now Goodyear. He took “Kodak had tired marketing at that Three years later, Kodak had over Kodak’s Consumer Imaging division point,” he said. “They’d cut advertising maintained its market share, just five months after Fuji moved into the dollars. They weren’t talking to the con- improved cash flow and North American market and slashed its film sumer very actively.” pushed film sales to dou-
says. “I think we were exceptionally well prepared from the and I do want people who are realists when they look point of view of analytic tools, understanding the overall at a problem.” Both at Kodak and at Goodyear, business system, (and) in terms of manufacturing and Keegan made sure to include company outsiders on his finance and marketing. But, we really weren’t very well pre- teams. “I like a good blend of people who know the pared in terms of the human side of business. situation and also people who are looking at it with fresh “Today, there’s much more emphasis on leadership, eyes,” he says. working in teams. I think business schools recognized in the At Kodak, Keegan credits “the best leadership team in intervening 30 years—certainly the Simon School did—that the history of Eastman Kodak” with staving off Fuji’s that’s the starting point,” Keegan says. challenge to Kodak’s North American market “What I see happening today is the School is really help- share. The team’s successful strategy: persuading ing prepare the students for the second part of that equa- consumers to shift to higher speed—and higher tion, which is do the analytics, gather the facts, but then, margin—Kodak film. At Goodyear, Keegan has ‘OK, how do we get this driven through a team atmosphere mobilized a team with a core of experienced mar- so that we’ve got a decision that’s implementable in the mar- keting professionals to combat consumer indiffer- ketplace?’ ” ence about tires, which he said have been “grossly Keegan says the M.B.A.’s he hires today have better undermarketed.” team-building and teamwork skills, better recognition of the If Keegan has his way, consumers will no importance of considering a diversity of opinions, and better longer think of tires as just “round and black,” he recognition that it isn’t just theoretical solutions that count, says. “Our goal is to build on the great equity but solutions that can be implemented. that we already have in the Goodyear brand, so “I think that is different, and I think, in part, it’s because that when the consumer comes into a dealer out- of—not the classroom experience—but the team and inter- let and faces somebody across the counter, their active exposure that young people get today in business first thought is, ‘I must have Goodyear.’ ” school,” he says. “Young people who have gone to business To that end, Keegan says his team made “a schools that are using a fair amount of team activity stand series of revolutionary decisions.” While out.” Goodyear’s previous advertising campaigns large- Keegan considers team-building key to his successes at ly targeted young male drivers, research showed Kodak and Goodyear. that women were responsible for close to half of “I try to create a team around me with good comple- all tire purchases and tire-purchasing decisions.
BUSINESS 2002 Spring mentary skills,” he says. “I don’t want people who are all Past campaigns were heavily product and tech- very, very similar in terms of their skill set. I do want people nology-focused, but research found that people
SIMON who are driven, very passionate about what we need to do, aren’t interested in hearing about tires; they’re
08 WILLIAM E. SIMON GRADUATE SCHOOL OF BUSINESS ADMINISTRATION
ble-digit growth. “We had a big success— “Profits were down, cash flow was down, about tires, but about the trips and journeys due to the best leadership team in the histo- everything was under attack,” Keegan said. they took on their tires.” That became the ry of the Eastman Kodak Co.,” Keegan said. “The market again was screaming: ‘The “On the Wings of Goodyear” campaign, “And the analysts said, ‘We’re really game has changed, you’ve got to change.’ ” which focuses on real-life moments such as impressed with your efforts; we like it; you Surveys showed that most consumers children on a schoolbus and morning com- guys delivered everything you said you were didn’t care what kind of tires they drove on. muters dodging obstacles on the highway. going to deliver—but what about digital?’ So Keegan pulled together a team with “That’s a dramatic change for tire advertis- “The market will always ask you what’s heavy marketing emphasis. While in the ing, to put it mildly!” Keegan said. next,” Keegan said. “They’re not interested past, Goodyear had been very manufactur- Six months into the new campaign, in looking back.” ing oriented, the company’s new vision is to market share has risen two points to 30 per- When Keegan joined Goodyear in become the preeminent marketer in the cent, cash flow has increased and Goodyear’s October 2000, the company’s stock industry, he said. stock price is up to $28. The lesson, said price had dropped to $17, down from Previous ads focused on young male Keegan: “Trust the facts. Trust the reality . . . $50 a year earlier. Raw material costs drivers, but Goodyear’s research showed that even if it flies in the face of every conven- were soaring, and Goodyear’s competi- 52 percent of tires are purchased by women. tional wisdom that the industry has grown tors were battling for share in a market The research also found that people don’t up with. That’s my message to you, what- so undifferentiated that 40 percent of talk about tires, Keegan said. “So what did ever industry you’re in. We trusted the tire sales were private label. we do? We started talking to people not facts, and they were right.”
interested in the trips they take riding on those tires. sumer think today? What do we think the consumer will To reach a much broader slice of Americans—by gender, connect to? Test it, test it again, and retest it. Then trust age, lifestyle and socioeconomic class, Goodyear completely your judgment about where those facts are leading you.” changed the focus of its advertising. The result: the current (And, says Keegan, have another path ready in case the deci- “On the Wings of Goodyear” campaign, featuring scenes sion proves not to be the right one.) from everyday life—carpool moms picking up children from Next up for Goodyear: achieving a richer product mix school; families around the world going on vacation; an by persuading consumers to buy higher-end tires. Just a few elderly couple driving to a bingo game. years ago, a 16-inch tire was considered a very large tire for a Past Goodyear ads were shown primarily in male and light truck or SUV. Today, a 20-inch tire is standard on the sports-dominated media. The new ads air on mainstream Dodge Ram pickup. “This is a huge change for our indus- television programs like “ER,” “Frasier” and “Dateline,” try,” says Keegan. While the demand for bigger tires, for and have appeared in People and Newsweek magazines. both cosmetic and performance reasons, was initially con- “It was so fundamentally different for our company,” says fined to young men, the segment is expanding. “Young Keegan. And the risks were substantial. If the campaign women, even men my age, like the look of bigger tires,” failed, Goodyear would have wasted not only money— Keegan says. “We’re right down to studying when we show the company boosted its advertising budget by 30 per- somebody a tread pattern, ‘Does it look aggressive? How cent—but, perhaps more importantly, time. aggressive do you want to be?’ There’s a fashion statement Six months in, however, the campaign appears to be today being made with wheels and tires. It’s very, very working. “The outcome has been an increase in all the important to a subset of people. One of my goals is to make measurable reactions from the target consumer seg- it very, very important to more and more people.” ments,” says Keegan. “We’re very pleased with that.” The fashion trend combined with the growing populari- Keegan says he and Goodyear’s chief marketing offi- ty of higher performance tires has resulted in a rapid growth cer, Cathy Fischer, showed the new advertisements to all of different product models for Goodyear over the past few 40,000 of its North American employees. “I can’t think years. “Think in terms of an individual tire store which may of one session that didn’t end in a standing ovation,” he stock 1,000 tires,” Keegan explains. “Matching that inven- says, clearly gratified by the response. tory with the consumers’ needs was a relatively simple task “The key in this area, as it is in most marketing, is: 10 years ago. Today, given the proliferation of different tires trust the facts,” Keegan says, repeating one of his and different sizes and different performance capabilities, mantras. “Many times, things other than the facts come this is a very complex equation. One of my key efforts at
into play—history, convention, the opinion of the boss. Goodyear is to create a set of supply chain capabilities that BUSINESS 2002 Spring What I try to do with my teams is indicate that none of make us a leader in our industry in solving this complexity.
that really matters. What matters is: What does the con- But it’s huge. It’s huge.” SIMON
09 10 SIMONBUSINESS Spring 2002 ILA .SMNGAUT COLO UIESADMINISTRATION BUSINESS OF SCHOOL WILLIAM E. SIMON GRADUATE cash flow.”cash our and investment on return our mizing maxi- on based sions deci- of set that driving “We’re says. Keegan today,”process in is “This models. car certain for tires supply longer no will Goodyear means that cases, some In change. must that that notice given has Goodyear but profit, any if tle lit- brought have turers manufac- auto to sales tires.Traditionally, replacement is rest The manufacturers. auto to directly sales sents repre-percent 25 that, Of tires. consumer in is business billion $14 Goodyear’sof percent 70 About Detroit. with relationship redrawn a technology.”breakout new this in No.1 be to is “Mygoal Keegan. says ’03,” in starting impact significant with years five-plus of period a over product mainstream the becoming as “Weit see tires. run-flat of price the lower and performance improvethe to working still competitors—are its Goodyear—and so. done already has Corvette GM the and vehicles, their on equipment optional or standard as tires run-flat ing includ- investigating are companies auto Eight says. Keegan that, of advantage take to well-positioned is Goodyear and run-flats, in interest consumer strong found have surveys Independent I.” do neither and tire, a change and car yourdon’t youof “Because out get says. to Keegan want convenience,” and security of amount huge a brings “This flat. a with even miles 200 to 100 for speeds highway at driven be “run-flatcan technology”—tiresin that investment business.” our of economics the and chain supply our on demands the changes totally it consumer.that’sButthat’s the of for All fantastic great. of All safety, better tires. performance, bigger better to ing lead- is they’recreativity creative.and That cle, very getting vehi- that of performance the maximize to vehicle every on “We’re says. Keegan go them,” that with tires co-designing “We’re vehicles’ performance. those maximize designing to designers car of efforts the SUV’sand and cars mance Other changes in store for Goodyear include Goodyear for store in changes Other major a includes Goodyear’sfuture the for strategy high-perfor- of popularity the is demand Feedingthe than a year ago.” year a than effective more far is today structure cost the “Overall says. Keegan generation, cash and gain share market for goals life.” of way a industry—is our of competitiveness the us—given for efficiencies cost Driving company.the of what’sinterest greaterdo the must in “You says. Keegan difficult,” extremely always are decisions “Those 2002. in layoffs for plans further announced has and year last workers 10,000 off laid company The 2000. in Goodyear joined he since Keegan for decisions hard While the Bridgestone/Firestone tire recalls broughtBridgestone/Firestonerecalls the tire While its met Goodyear 2001, in economy poor the Despite of series a meant has investment on return Maximizing Goodyear some increased business and opportunities, and business increased some Goodyear Keegan says there was a downside as well. as downside a was there says Keegan “We’reWe’re environment. same that in under the microscope, too,” he says. “The says. he too,” microscope, the under facts say that ultimately there will be tires be will there ultimately that say facts that fail, like any consumer product. But product. consumer any like fail, that the safety record of the tire industry is industry tire the of record safety the exceptionally good. If you look at look you If good. exceptionally capitalize on the eventual the on capitalize company in a great position to position great a in company making this year are putting the putting are year this making decisions, those changes have changes those decisions, involved tradeoffs. But, says But, tradeoffs. involved and superior quality.”superior and Goodyear made last year and is and year last made Goodyear Keegan, “One of the things that things the of “One Keegan, attracted me to Goodyear was Goodyear to me attracted exactly these changes. Because changes. these exactly in times of change, there’schange, of times an in in Rochester,in N.Y. Hilary Appelman, a former Associated former a Appelman, Hilary rior safety,rior performance superior opportunity for companies to companies for opportunity win big.” win the government statistics, they statistics, government the economy. Like all business economy.all Like Press correspondent, is a freelance writer freelance a Pressis correspondent, rebound in the U.S. and world and U.S. the in rebound bear that out . . . why are why . . . out that bear Keegan says the changes the says Keegan products stand out for supe- for out stand products most consumers indifferent consumers most to tires today? Because today? tires to safety and quality,and safety our that overall feeling of feeling overall that within that ensure to is team’smarketers, as goal industry.the to speaks that think I good. be to tires all consider they SB “My goal, and my and “Mygoal, WILLIAM E. SIMON GRADUATE SCHOOL OF BUSINESS ADMINISTRATION
Feature a legacy of leadership
WILLIAM E. SIMON MEMORIAL LECTURE SERIES
Wednesday, April 3, 2002
Frank G. Zarb Chairman, Nasdaq Europe BUSINESS 2002 Spring Senior Advisor to The Nasdaq Stock Market, Inc. SIMON
11 WILLIAM E. SIMON GRADUATE SCHOOL OF BUSINESS ADMINISTRATION
WILLIAM E. SIMON
November 27, 1927—June 3, 2000
n April 3, 2002, the Simon School presented the inaugural William E. Simon Memorial O Lecture—the first in a series of talks in memory of our School’s loyal friend, benefactor and greatest advocate, the late William E. Simon. The lecture series was designed to bring to the Simon School outstanding men and women from business and government who exemplify in their careers the principles and values that guided Mr. Simon’s life. In each of these biennial lectures, individuals of acknowledged authority will address significant issues of the day in their areas of expertise. Whether economists or entrepreneurs, statesmen or industrialists, they will bring to their topics a perspective shaped by the appreciation of freedom and individual responsibility and the sense of compassion that together formed the under- pinnings of Mr. Simon’s credo. It was especially meaningful that the first lecture in this series was delivered by one of Mr. Simon’s close friends and colleagues, Frank G. Zarb. As chairman of Nasdaq Europe and senior advi- sor to The Nasdaq Stock Market, Inc., Mr. Zarb has distinguished himself as a leader in American business, public affairs and government. He is also a partner and senior advisor to Hellman and Friedman—a major private equity investment firm—and he has formed a new company, Frank Zarb Associates, which will provide advice and counsel to quality pre-IPO companies. From 1997 to 2001, Mr. Zarb was chairman and CEO of the Nasdaq and its parent organization, the National Association of Securities Dealers, Inc. (NASD). Under his leadership, the Nasdaq became one of the preeminent exchanges in the world. A former Simon School Executive Advisory Committee member, he has, over the years, helped many presidents solve what appeared to be intractable problems. In the mid- 1970’s, President Ford appointed Mr. Zarb the nation’s “energy czar,” a position held by William E. Simon during the Nixon Administration.
BUSINESS 2002 Spring Following is the full text of Mr. Zarb’s lecture, which was presented to over 200 Simon students, faculty, staff and distinguished guests. SIMON
12 WILLIAM E. SIMON GRADUATE SCHOOL OF BUSINESS ADMINISTRATION
“IT’S THE SOUL, STUPID.” NEW LESSONS FROM ENRON?
FRANK G. ZARB
hank you all for your kind wel- Enron started as a very good organiza- percolating for some time, but are now come. I am, of course, honored tion, and grew to be America’s seventh getting important new focus. Like many T to be invited to give the first largest company, but over a period of other failures, this story is bizarre. There William E. Simon Memorial Lecture at time, migrated to a very bad business is almost always the typical smell of per- the Simon School here in Rochester. Bill model. It mixed aggressive accounting, sonal greed and cover-up, but the chem- and I served together in government, and reckless financing and a touch of greed, istry of this one is different. In the com- he was my friend for a good many years. and took itself down with collateral dam- ing weeks, watch for the inevitable pro- Bill had many great characteristics, age to a number of other market partici- posals for reform—some constructive and but one of them was not patience or par- pants. some pretty goofy. I’d like to warn you, ticular reverence for form over substance. His idea of diplomacy was to get in your face and tell you what he thought, and You, Mr. and Ms. CEO, are the you could take it or leave it. You always knew what was on his mind, whether you SOUL MASTER of your company. liked it or not. “ It is in that spirit that I speak to you But this is not just one more business in advance, that while some of the so- today. I had actually started with the failure. It is not a Drexel Burnham or a called reforms are long overdue and” will notion that I was going to deliver an aca- Long-Term Credit Fund or a Baring make a good marketplace better, collec- demic paper, which would have tried to Brothers or a Tino D’Angeles story. Each tively, they miss the point. explain why this nation has still not pro- of those failures was a shocking story. You may have noticed that I titled my duced a sensible energy policy. But given Some resulted in juicy books, there were lecture today “It’s the Soul, Stupid.” My current events, I discarded that idea, and follow-up investigations—and then, they old friend, Bill Simon, would have appre- instead, decided to spend the little time were over. This story has longer legs, and ciated that title, and he would have we have together looking at how the it could have a more significant impact understood it in a nanosecond. Let me
recent business earthquake called Enron on the future of the marketplace. While start you with this theme: “You can’t sub- BUSINESS 2002 Spring will have aftershocks for the American there are no new lessons from Enron, it stitute mechanical form for human free marketplace. has brought to the surface a number of integrity.” SIMON When it all sorts out, we’ll see that capital markets issues, which have been Let’s look at 10 Enron-provoked 13 WILLIAM E. SIMON GRADUATE SCHOOL OF BUSINESS ADMINISTRATION
questions being raised by government make an appropriate investment decision. senior staff that I didn’t want to market regulators, legislators and others. Simple as that. or book products which I personally could not understand. I am afraid if we 1 Do we need to improve 2 Should accounting firms be applied that standard across the board corporate disclosure? rotated? Should accounting today, we would put some companies out A good friend of mine, who is one of partners be rotated? of business. Special financial products the better CEO’s in the world, told me These are two very different ques- are sometimes used to achieve a lawful that he had recently read his current tions. Changing the engagement partner and useful financial engineering purpose. 10K, and for the first time, recognized every three to five years makes sense. However, when the special purpose vehi- how difficult it was for the average reader People who like the people they are cle is so complicated that normal credit to understand. He said that he is going working with establish a relationship, and and risk exposure cannot be easily mea-
to initiate a project to revise the docu- sometimes, that relationship limits con- sured, the potential for trouble is almost ment so that it will have three parts: the frontation or friction, which is essential 100 percent. Special and complex finan- first part being a basic summary, the sec- to the audit process. So, yes to the rota- cial vehicles should get extra attention by ond providing more detail, and the third tion of lead audit partners. auditors and must be thoroughly under- even more detail, with deeper numbers, The proposal to mandate the rotation stood by those who are certifying the facts and analysis. What a great answer of audit firms is wrong-headed—if the books. If the product is being used to to the question, “How do we improve management of a company is either slop- circumvent an accounting standard (even disclosure?” The next time you pick up py or duplicitous. A new audit firm will a little); if it is being used to hide debt an annual report—yours or someone have a harder time catching on to what is (even a little) or cloud transparency (even else’s— take a look at the back of the truly going on. So, rotation defeats the a little), then it should be precluded from book. Look at the footnotes; see if you purpose that it is supposed to be accom- the company’s financial toolbox. can understand the footnotes even if plishing. A good audit firm will build you helped write them. Disclosure is institutional knowledge of a client; it’s 4 Do stock options contribute to more than simply making sure that you’re going to know where the tricky areas are executive abuse and, while we’re covered with small print in case someone and do a better job of reporting to the at it, what about jumbo loans to challenges you. Disclosure means con- board. The notion of mandatory rota- CEO’s? tent. tion, in my view, would be not only Here are two different questions. Disclosure means giving investors all wrong, but it would weaken the process. Jumbo loans, or any kind of loans, to the of the information needed to make a One additional thought: The initia- CEO and other senior executives are reasoned decision on the value of the tive to create a new self-regulatory over- cause for at least serious disclosure. The company. We don’t need legislation; we sight board for the accounting profession situation normally develops when a CEO don’t need accounting rule changes on is sound and will gain traction in the has confidence in his own company, and this point. We simply need to hold weeks ahead. That idea is a “no-brainer.” he maximizes his buying power of the
BUSINESS 2002 Spring management responsible for insuring company stock through use of margin that all of its shareholders and other 3 Are exotic financial products too accounts. When the stock price tanks, complex and out of control?
SIMON investors have all of the information that he faces a margin call. Then comes the any reasonable investor should have to More than 10 years ago, I told my question: “Sell enough company stock to 14 and want to pass those ideas on to the to on ideas those pass to want and opportunities company,business spot will a reviews she or he as analyst, good a that answer.is acceptable fact totally The a found never and industry the in was I time the during it with struggled I time. long a for question difficult a been has Enron. with do to anything has this of none but practices, compensation current some to related complaint legitimate a is There experience. company same-sector other with compared be can it how and results to tied directly is it how value, add to designed is compensation executivehow of review thoughtful a from benefit can Shareholders compensation. executive Enron. with do to nothing has issue this that know do I but right, is side which I’msure not options. of treatment P&L concerning debate ongoing an is There harm. great doing of risk the runs it issue, option stock the with tinker to continues Congress If shareholders. the of those with interestemployee the align to way a representOptions stock. company of sale premature the promote nor practices accounting wrong promote neither They company.their in stake a employees all give to designed programs options good very many are wrong.There plain just is results of kinds those produce ally nonsense! What up.” go will prices stock their so better look statement financial their make to order in limit the to rules accounting push to managers corporate encouraging options, on heavily rely packages pay executive “Most said: who leader political a from quote a read recently I mess?” Enron the to contribute options stock of use al appropriate. is loan the whether decide to facts the all have should shareholders the and board required. The is minimum, a at disclosure, shareholder complete where case a Hereis optics. good create not does option loan the that demonstrate events Recent loan?” a for company the ask or call the satisfy ADMINISTRATION BUSINESS OF SCHOOL WILLIAM E. SIMON GRADUATE 5 euiisfirmactivities? securities unbundle research from other independent? Doweneedto sufficiently Are sell-side analysts The independence of sell-side analysts sell-side of independence The of Now,question bigger the is there gener- options stock that notion The liber- the “Did question, the Nowfor probably miss it. miss probably will agencies rating the whistle, the blow not do auditors the and thing, wrong the doing is company the If wrong. pletely com- just is Enron at brewing problems detected have could they that so nized reorga- be to need they that notion The well. very works system current The much. very paid get not do They ments. judg- their make and questions some ask auditors— outside ers—including oth- by done work the at look presented, company’sthe take as They information there. are agencies that’srating why not C.P.A.Obviously, process. certification a of intensity the approach to function audit-type an expect who those are There time. some quite for debate of subject answers. the of Somehow,“sell.” don’t I one is that think a half,“buy,” other a coverthe they and companies the of one-half rate always to analysts its directed allegedly has firm one business. broker-dealer the of parts other and analysts the between wall the maximize to do to need they whatever do to need firms Securities again). closure dis- friend old (our covers analyst the that company the in interest special a of ance appear- the least at have may analysts the that fact the of aware made are investors that important is so.it Therefore, think don’tI Maybe—but conflict. the inating elim- thereforeresearch for separately pay should investors and unbundled pletely com- be should research that suggested have Some firm. to firm from varies ably prob- and question to open is work walls those Howwell transactions. finance rate corpo- to related directly compensation analyst eliminated have and company the of parts other from separate activity analyst WallChinese the called keep to so- a erected objectivity.have firms Most total maintain to able be will analyst the that investors to explain to hard is it circumstances, Underthose effort. that for compensated fairly be to expect and firm the of division banking investment 6 The role of rating agencies has been a been has agencies rating of role The type situation? to raise ared flag inanEnron- berelied on Can rating agencies In an effort to control the problem, the control to effort an In on the company which also pays their pays also which company the on dependent savings equity retirement their of percentage overweighted an have to employees for idea good a not is simply It plans. ownership stock their in own could employee an stock company of amount the on limits put we ran, I company public last widely.morethe Incussed dis- be to needs that one probably and one interesting an 401K’sis example, for laughing. and dreaming keep giving, political corporate to respect with reform on counting are who you means Incidentally,November after 6. that gal ille- be will that contribution money—a soft in million $7 receivedrecently had it that announced parties major the money,”of one “soft as known butions contri- campaign abolish to voted Senate the after day the that see to amused was I giving. business about complaining Washingtonfrom cries hear will we us, entertain Nevertheless,to high. too just is conflict imagined or real some of face the in soft way.appearing ed of risk The even-head- and global a in matter Enron the address to forward stepped has leader government no then, since that, noticed you have and broke, first crisis the when help for calls the Washingtonto deaf was But, origin. of planet or party to regard without politicians of range extraordinary an impacted it deep, so was Enron’s result. different a duced program pro- consequences unintended of law mess. the to contributed have to seem not does giver, opportunity it equal an was which Enron, of case the in And, practice. the with Nothingwrong job. good a do would simply think they who legislators support occasionally,even And, will they businesses. specific affecting legislation to key are who politicians those support to continue will executives and Companies 8 7 opne themselves? companies the regulated orcontrolled by bemore closely stock company in Should employeeinvestment policing? needgovernment officials ment andgovern- executives business therelationship between Does The issue of employee stock plans, stock employee of issue The The true. be to seems reverse The I had to include this laugher this include to had I after the election. So, for those of those for So, election. the . 15 SIMONBUSINESS Spring 2002 WILLIAM E. SIMON GRADUATE SCHOOL OF BUSINESS ADMINISTRATION
salaries. Obviously, this is a company-by- due diligence. But there they are anyway, believes that the standard is being satis- company and a board-by-board decision. hyping away. When the bubble bursts, fied and an outside audit committee is at But, best practices would indicate that the same media will be critical of analysts work. The same obviously relates to the some limits on employee purchase plans who favored the stock, but rarely discuss finance committee and to the board as a would make sense. This does not require their own shortcomings. whole. It’s difficult to recruit knowledge- able, committed directors who have the time and the technical ability to do it right, unless the CEO encourages active board oversight and supports their work. The best finance committee chairman I have ever had is now the Secretary of Treasury. He’s smart and tough; he was able to get under the numbers, asked hard questions and, from time to time, embarrassed my staff. What a wonder- ful, but rare, situation. It not only pro- tected the company, the shareholders and the board, but it also protected the CEO. When you have good people on the board who are empowered by the right corporate culture, it works best. The board is important, its function is important— but we had better understand their limi- tations and recognize how much they depend on the ability and integrity of the CEO and staff, including outside auditors. There are other views: Professors Lawler and Conger at the Marshall School at the University of J. Peter Simon (left), a son of William E. Simon and current chair of the School’s Executive Advisory California have done some interesting Committee, applauds the first Simon Lecture Series speaker. research on board structure. They con- cluded that governance would be legislation or government action. It sim- 10 Are boards of directors and audit enhanced if: ply means that management and boards and finance committees able to should pay attention to the issue. properly represent shareholders? • the chairman was independent of the Leaving the ultimate decision to employ- The granddaddy of all questions has management, ees may not be the best idea. A group to do with the role of the board of direc- • 75 percent of the board were indepen- study by several Harvard University pro- tors and audit committees and, in the dent members, fessors concluded that employees tend to case of Enron, were the board and the be passive investors when it comes to audit committee performing their func- • the independent members of the board their 401K investments. Some company tions. There are some real core issues met without management present, and guidelines make sense here. here that need to be addressed and better • board members were paid in stock and understood. Here is one constant: The not stock options. 9 What about the business Press ability of a board to protect and represent and its treatment of so-called shareholders is directly related to the integri- They concluded that if these elements “hot” companies? ty level of the CEO and the senior staff of were present at Enron, it probably would There have been complaints that the the company. Think about this example: have avoided the debacle. They may be Press was easy on Enron during its good The rules call for the audit committee to right, but I don’t think so! times and that contributed to the end be made up of only outside directors. So, So there you have it —nothing new result. That’s nonsense—however, it is Company A has a selection of first-class in the 10 issues I’ve just outlined. time for the Press to do some internal outside directors on its board, some of Enron has raised to the surface a thinking. All too often, that “hot” new them from a different country, all of number of old questions provoking a call company becomes the darling of the them from a different industry. So here for change—some of it good, some of it business Press. Reporters normally do we go, we put outside directors on an not so good. While the process is proba-
BUSINESS 2002 Spring not have the technical background or audit committee, some of whom are not bly going to yield some constructive experience to properly evaluate the com- really familiar with the practices of the result, we have to take care and not allow
SIMON panies they write about, and they certain- industry and less familiar with the prac- popular sounding but counterproductive ly don’t have the time to do the necessary tices of the country. But, everybody elements to creep into the solution. And, 16 who know what they are talking about. about. talking are they what know who people by analyzed been all have they and in, are facts the all when is debated be to legislation unlikely.that for time The highly is that but legislation, some may matter Enron preposterous.The the on borderedhave sources political from come have that proposals the of some and enlightening, than less been has far harm no Do is: that and government, of principal first the reinforce to matter,need this they In worry.severe a is year, truly election it an in it do to try they When dangerous. is itself, in that, marketplace, the in dabble to decides Congress When Congress. with do to has worry Mybiggest For the Congress proposals. their of results the with live to have not do which voices the by don’tand careful, be is… intimidated be regulator the to message short my So, reform. for appropriate are steps what and happened what exactly understand to leader thought enforce, and investigate only not must lator regu- the where case rare a Hereis thing. wrong the be will soon too something doing often, too all and, something do to Congress by and public the by pressure intense under are They issues. the of all understand and back step to is role first Enron.Their as such uation story.Andersen Arthur the course, of and Enron, comes that of heels the On job.great a did he and open, markets the get to trying and 9/11 of catastrophe the with consumed were days Youfirst his time. recall, may difficult very a at job the into walked has confidence), of deal great a have I whom (in SEC the of chairman Pitt, Harvey full. hands his has really ronment envi- post-Enron the in Regulator The For theRegulator people: following the for messages fast very some with LectureMemorial itself. fix to seems marketplace the end, the in that, comfort some take can we ADMINISTRATION BUSINESS OF SCHOOL WILLIAM E. SIMON GRADUATE Regulators have a role to play in a sit- a in play to role a have Regulators Simon Bill this conclude me let So, , and I say I and , but the regulator must be a be must regulator the but . Frankly,so posturing . the all for the country in helping in country the for may , ultimately require ultimately , brought a lot of ordinary people into the into people ordinary of lot a brought has marketplace the of democratization the years, recent in But, shapes. ferent dif- and sizes different in come Investors For Investor the you’rebe. trust, should you history—and that weaken you moment The trust. lute abso- with viewed is certification, of seal offer,to your have you that product tant impor- most one, the that sure make then business, accounting the in be to going is worthless. M approval,you’reof seal that contribution in confidence the from subtract could which business, consulting of excess an including practice, or attitude any tice, prac- any anything, encourage you If fee. job.That’s your your done earn you how you’veaccurate, and truthful is fication certi- the that certain being to dedication absolute an with financials certify you If certification. your of value the to related directly is company Yourany to value Firm Accounting aPublic For theCEO of company.your of Master questions: these yourself Ask you. to happen can Lay Ken to happened What Company aPublic For theCEO of • And when the news is bad and your PR your and bad is news the when And • it: Is crisis? a in respond we Howdo • mem- board tough smart, pick we Do • do us help to auditor our expect we Do • share- a everything disclosing we Are • about the truth?” the about answer,“Howyou Press,” do the to respond we “Howshould ask, people later? price bigger a pay and up it cover or,price… the pay and Let’sup it clean tions? ques- right the ask to them empower and encourage we do And, questions? right the ask to necessary information the all have they sure we Are bers? there? or here corner a cuts it if even ideas our implement to us help or right it know? to needs holder You, Mr. and Ms. CEO, are the SoulYou,the are CEO, Mr.Ms. and ake a choice: If you are you If choice: a ake either. not there—then maybe there—then not it’sIf Soul. that for matter,around look that for institution pany,other any or Soul. Corporate the as it It’sof think to easier crises. to response the guides which ric fab- the is It regulators. its and customers its to shareholders, its to relates it how manages, company a how dictates culture culture.That unique a have institutions, all like Companies, thought: this with place. don’t,you If you’rethen wrong the in of ter ability the in confidence have you sure absolutely Make give: can I guidance important most the is here But, today.it of all over go to time enough not and directors corporate for advice of lot a havedirector. I good a being of difficulty the up point does Enron For the Corporate Director don’t confidence. lose but opinion, second a get homework, your do cynical, Be world. the in kets mar- capital regulated most and best the have still we But, require.investors that confidence of kind the guaranteed factors those of neither where recently examples quality.Unhappily, some had have we of Housekeeping”seal “Good a be could exchangesrecognized on listed being and certification audit the past, the In signals. dependable the be to used what tarnished have events other some and ter investor.Unfortunately, mat- Enron the long-term average the for good very be can market equities the in investing that shows History risks. marketplace accept must you and analysts, first-class homework your Do market.To say: to investor,have that I Those of you who are part of a com- a of part are who you of Those You’llit. see you when it know you leave will I gentlemen, and Ladies the company’sstaff.the top and CEO SB . You with . deal should you shouldn’tbe and charac-and 17 SIMONBUSINESS Spring 2002 WILLIAM E. SIMON GRADUATE Feature SCHOOL OF simon faculty BUSINESS Research LEADERSHIP SB Highlights
Consumer Choice and Attitude-Decision Consistency merican consumers have a dizzying array of attitudes toward one brand than others in the choice Posavac A options when it comes to the products they category, she will purchase this brand. can buy. Because there are so many alterna- Not necessarily so, Posavac says. tives, carefully considering each one before making a In a set of experiments, Posavac, along with David decision is a near impossibility, particularly because Sanbonmatsu and Edward Ho, prompted participants consumers are so busy. Instead, according to one to consider a randomly determined alternative. Their Simon professor, consumers may often engage in the research shows that “a brand that is not the most pre- selective consideration of alternatives, that is, consider ferred may come to be the most preferred simply as a alternatives one at a time, when making decisions. result of receiving selective consideration,” they write. In a recent paper, Steven S. Posavac, assistant pro- This means that a consumer’s category favorite— fessor of marketing at Simon, and two University of say, Coke—may not be chosen if he is prompted to Utah psychologists show that, within a range of consider an alternative that is not his favorite, but that options belonging to a product category, consumers he nevertheless likes, for instance, Dr. Pepper. gravitate toward options that they are led to consider. “Simply selectively focusing on one brand from a Their research shows that selectively considering a choice set may have implications for product judg- brand affects consumers’ attitudes toward the brand, ments and subsequent choice from the set,” the and how they rank the options within that choice cat- authors write. “Selective focus on a choice alternative egory and arrive at a decision. The research is detailed in their paper, “The A brand that is not the most preferred Effects of the Selective Consideration of Alternatives on Consumer Choice and Attitude-Decision may come to be the most preferred BUSINESS 2002 Spring Consistency,” which will appear later this year in the “ simply as a result of receiving Journal of Consumer Psychology. Marketers often assume that if a consumer has relatively more favorable
SIMON selective consideration. 18 ” WILLIAM E. SIMON GRADUATE SCHOOL OF BUSINESS ADMINISTRATION
may make attitudes toward the focal alternative more The research suggests an opportunity for marketers extreme.” of brands that are liked but are not the most popular In that case, “it’s likely their attitude toward the brand in a category. Marketers of these products often considered option will become more favorable,” pursue product refinement or aggressive promotion to Posavac says. increase sales. But, Posavac says, simply leading con- At work here is attitude polarization, the phe- sumers to consider the attributes of one brand—in nomenon where merely thinking about an object results essence, shining a spotlight on it—can generate more in attitudes toward the object becoming more extreme, positive attitudes toward the brand, a higher ranking of or polarized, in the initial direction of the attitude. that brand among the alternatives, and the increased In other words, if you have a generally positive likelihood that consumers will choose that brand. impression of Volkswagen Jettas, your feelings about The paper also discusses specific strategies for lever- the car will become more positive the more you think aging selective consideration effects. about it. If you dislike them, you’re likely to dislike (Research Paper MS 02-01) SB them even more. Governance and Conduct in the Market for Managed Health Insurance onprofit companies once held sway in the The authors argue for a balance between the philan- managed health care market, but that is rapidly thropic goals of nonprofits and the bottom-line sense of N changing as for-profits gain footing: In 1985, for-profits. only 26 percent of HMO enrollments were in for-profit “We make the case that nonprofits care about insur- HMO’s. By 1999, that figure had ing people and that it’s important to pursue the non- climbed to 64 percent. profit objective of insuring people, while still obtaining Van Horn What does this mean in terms of the same level of cost efficiency that uninsurance levels and coverage costs you see in the for-profits,” Van for communities across the country? Horn explains. The question is the focus of a Communities across the recent study by R. Lawrence Van country are trying to strike a bal- Horn, assistant professor of eco- ance that makes sense for their nomics and management at Simon, and Gerard Wedig, unique needs. This is no easy task. who is joining the Simon faculty from the Kelley In fact, what generally happens School of Business at Indiana University on July 1. when a for-profit enters a market In their paper, “Governance and Conduct in the dominated by nonprofits is that the Market for Managed Health Insurance,” the authors nonprofits behave differently to studied 1999 and 2000 figures for all metro service compete—ratcheting back on ben- areas and counties in the country. They show that efits and becoming more selective when the share of for-profit managed care goes up in a about whom they’ll insure. market, the rate of uninsurance also increases. At the Van Horn, who also is head- same time, medical costs and premiums for consumers ing up Simon’s growing health who are insured go down. care M.B.A. concentration in the Federal studies show nonprofit health plans are program, says some related issues more likely to offer open enrollment and community remain unresolved. For-profit rating. In addition, they earn their tax exemption in managed care firms enter markets part by providing insurance access to otherwise unin- that have a greater profit potential. If surable risks, such as people who are self-employed, that potential dries up, will the for-prof- work in small companies or have pre-existing medical its exit? And what are the effects of all of conditions. For-profit companies lack this legal obliga- this on the quality of care? tion. The authors predict that “the shift “So there’s this tradeoff between how many people toward for-profit ownership in health insur- are uninsured and the costs borne by those who have ance will continue, so long as the HMO insurance,” Van Horn says. “How should we think industry is profitable and rewards managerial BUSINESS 2002 Spring about this as a community? What are going to be the effort more than philanthropic reputation.” SB marketwide implications?” (Research Paper FR 01-18) SIMON
19 WILLIAM E. SIMON GRADUATE SCHOOL OF BUSINESS ADMINISTRATION
Feature simon faculty
Stock Volatility in the New Millennium: How Wacky Is Nasdaq?
on’t blame the unusual volatility of Nasdaq they are calling for a correction Schwert D stocks only on the small, high-flying new of the wild swings. Others argue issues among them. The factor that seems that high trading volume causes to explain the phenomenon best is technology stocks, volatility, and they are pushing a Simon School professor has found. for steeper transaction costs that “It’s not just new IPO’s; it’s not just Nasdaq. It would reduce trading and make appeared to be technology as opposed to youth or volatility go away. But, Schwert where they were trading that drove the behavior we isn’t convinced the phenomenon were looking at,” says G. William Schwert, requires a solution. Distinguished University Professor and professor of “Even though there’s unusual volatility, I’m not finance and statistics. He looked at Nasdaq’s volatili- sure that means we have to do something about it,” ty from 1997 to 2001 in his paper, “Stock Volatility he says. “I’m not really sure there’s that much linkage in the New Millennium: How Wacky Is Nasdaq?” in the data between the volatility and what goes on in Technology stocks drove the unusual up-and- the real economy. down swings on Nasdaq during that time. While “The reason people who work for Xerox or recent IPO’s were among the volatile stocks, so were Global Crossing or Kodak have been hurt is not large, valuable, well-capitalized technology compa- because their stock prices went down; it’s because nies. Similar things were happening to technology their businesses are not doing well. The company’s stocks on the New York Stock Exchange at the same performance causes layoffs and (lower) stock prices. time, Schwert points out. You don’t want to get confused by reversing the Schwert investigated the Nasdaq volatility in rela- causality.” tion to the more seasoned issues in the Standard and The paper opens the door for further study of the Poor’s 500. He also analyzed the relation of the link between volatility and the economy. Studies volatility to the hot IPO market in 1998 and 1999. have shown that stock volatility is a leading indicator “Given that some of the large technology firms that for economic activity and that, in particular, height- influence Nasdaq volatility are also included in the ened volatility often is associated with recessions. S&P portfolio, it is surprising that S&P volatility has (Research Paper FR 02-01) SB not increased more,” he writes. Nasdaq’s extreme volatility has led some observers The articles for the “Research Leadership Highlights” to conclude that investors had been guilty of irra- section of Simon Business were written by Sally Parker, tional exuberance in valuing at least some stocks, and a freelance writer in Rochester, N.Y.
Given that some of the large technology firms that influence Nasdaq volatility are also included “in the S&P portfolio, it is surprising that S&P volatility has not increased more. BUSINESS 2002 Spring
SIMON ”
20 WILLIAM E. SIMON GRADUATE SCHOOL OF BUSINESS ADMINISTRATION
NEWS flash
Ever Miss the Classroom? Find out what Simon professors are thinking and doing!
Starting this month, the Simon School will produce a new E-pub- lication, Simon Faculty Press, which will be e-mailed on a timely basis to a wide variety of audiences, including corporations, media, B-school deans and academics. This new online publi- cation will present Simon faculty viewpoints on a broad range of issues, and draw on their leading-edge research and expertise, which have had a major impact on business practice throughout the world. To view this new publication, visit the Alumni Online Community at www.simon.rochester.edu/faculty/facultynewslet- ter/volume01.htm. Our inaugural issue features, “Do Academics Help Keep the Market Efficient?” by G. William Schwert, Distinguished University Professor and professor of finance and statistics. For more information, or if you would like to comment, con- tact the Office of Marketing at (585) 275-3735, or e-mail Dawn McWilliams, director of marketing, at mcwilliams@simon. rochester.edu. BUSINESS 2002 Spring SIMON
21 22 SIMONBUSINESS Spring 2002 ILA .SMNGAUT COLO UIESADMINISTRATION BUSINESS OF SCHOOL WILLIAM E. SIMON GRADUATE ct J.Gordon’85 Scott earned his J.D. at FordhamUniversityat J.D. his earned later,and full-time—he CIBC, at point, that desk—at trading the at tinuing con- while student evening an as Starting school. law of notion nagging a to tion atten- pay to decided Scott environment, transaction-based a to return to desire a and law the in interest long-standing a Motivatedby commoditization. of sure mea- some to yielded had swaps of days later,Fivepioneering years the Bank. Investment Chase at The desk swap the securitization. asset of field legal specialized highly the in prominence to him led has time, right the at place right the in being of habit a and turns unexpected through that, career a upon io pnoe -uiesFrmDasOver40inLondon Forum Draws Simon Sponsored E-Business ALUMNI profile Proteus firm, sponsor,consulting U.K. event the representingBoyd, Andrew and Umanis ’93 FundCatalyst firm, venture London the of officer ’80 Schwartz Commerce company software CRM British the VanDuyne,to of manager general addition In alumni. Simon three featured and institutions financial in commerce e- of development the in trends explored Plosser,discussion I. the Charles Dean by by organized January late in discussion panel PennsylvaniaUniversitya of attended M.I.T.Chicago, Cornell, the and Harvard, at schools business graduate W M Jon VanDuyne’85 Scott’son began career post-Simon , founder and partner of Paris-basedof partner and founder , . , an e-commerce consulting firm, consulting e-commerce an , University of Rochester and the and RochesterUniversity of the School, Simon the of ates gradu- London-based 40 than ore gram in 1985, he embarked he 1985, in gram pro- B.A.-M.B.A. 3-2 UR-Simon hen , the panel included panel the Scott J. GordonJ. Scott , founder and chief executive chief and founder , ; PatrickDarmon-Zaoui . Moderated byModerated . news finished the finished Rodney Aspect Interact he works for works he Austin, from routeTex., en while by stopped where ’94 London’s Club.AutomobileRoyal at Forum E-business the after alumni Simon Azerbaijan, to attend a friend’swedding. a attend to Azerbaijan, his current position as “one of a relative a “oneof as position current his to Brooklyn of section Beach Brighton the in sports racket playing youth Journal, the in article an in tured Business Simon issues. legal their as well as objectives, business their to sensitivity and of understanding heightened a clients his offer to him allows that foundation the establishing with School, Simon the at student M.B.A. and undergraduate an as initiated background, finance and economics strong his credits Scott transactions. their document and ture struc- and clients advise to firms, law ent differ- three with years nine in Street,and Wallon Simon at acquired he tools the firm law Chicago-based the of practice tives NewYorkderiva- and securitization asset 1993. in Law of School and a group of London business leaders business London of group a and relations, alumni of JamesMoore,director ’90 , hosted a lunch for Dean Plosser,Dean for lunch a hosted , (left) traveled farthest to attend the event; he event; the attend to traveled farthest (left) As noted in the Fall 2001 issue of issue Fall2001 the in noted As the of charge in partner Nowthe The following day,following The Kirkland & Ellis & Kirkland describing his path from his from path his describing Dell Computer Corporation Computer Dell , Scott was recently fea- recently was Scott , , Scott has applied has Scott , Mark BabunovicMark New YorkLaw Jeffrey Thomas Jeffrey , to , Switzerland. Bern, Netherlands,and the Amsterdam, in Outlook Economic his presented he tour,Europeanwhich annual during an alumni. Simon and London panel discussion on trends in e-business. in trends on discussion panel London Patrick’93 Darmon-Zaoui responsible banker was banker responsible the which in KongHong in FleetBoston for transaction a year,closed past he the classes. asset of variety wide a from generated entitlements flow cash- other or receivables by backed ties securi- issue they which through actions trans- the and vehicles purpose special ing structur- in counsel lead as act associates of team his and Scott securitization. asset of field growing the in practicing country” the around attorneys of handful alumni in the future. the in alumni Simon other with encounters similar to forward looks he said Scott faction.” satis- and pleasure increased me gave deal that forward, point Fromthat nection. con- Rochester,Simon discoveredthe we to comparison a drew then, and NewYork in time, experiencing the at were we weather cold the about me asked he When conversation. first our from Peterwith working enjoyed “I said, Scott Dean Plosser was in London as part of part as London in was Plosser Dean Scott is pleased to note that, within that, note to pleased is Scott SB SB makes a point at the at point a makes Peter’98 Luk . rn yta ’94 Nyitray Brent ADMINISTRATION BUSINESS OF SCHOOL WILLIAM E. SIMON GRADUATE profile Mergers trading desk at desk trading arbitrage risk the on director managing a Brent, ago.” years 15 BrentNyitray’94 Simon,” Brent notes. BrentSimon,” coveredat well strategy—were corporate and theory options analysis, required—financial skills core The desk. arb risk a on trade to well me prepared School “The arb. risk to gravitated ly quick- and graduation after duty.Elliott active joined Heof years four after Simon to came BrentUniversityWisconsin, of the at fund. hedge NewYork the Associates, Elliott at years six after 2001 of fall the have a son, Matthew.is son, Mark a have they that Janet,write wife, MoskowitzMark 1985 Instruments Atlantic at CEO the is William 2002. 7, February on Victoria, daughter,their Kaitlin of birth the celebrated Kirstin, FormanWilliam 1983 Institute at giving annual and leadership of director the Nancyis school. acupuncture of year second her in is and Bishop,Richard to married ly Miller NancyAnn 1981 employed. self- N.Y.,is Mike and Rochester,Faithin reside Penfield,N.Y.and Mike in Club Racquet and Golf Lake Shadow at 2001, 22, September on married were Kaye Robert 1977 “ A While in Manhattan, he maintained the relationships he had he relationships the maintained he Manhattan, in While yearsNavyR.O.T.C.undergraduate A his during midshipman potential for activity over the next 10 years or so,” says so,” or years 10 next the over activity for potential greatest the have to me to seems Europe moment, the at doldrums the in is worldwide activity M&A lthough in Columbia, Va.Columbia, in and FaithDaileyand Bear Stearns Bear TaiSophia and his wife, his and . “Europe feels to me like the U.S. did 10 to 10 did U.S. the like me to feels “Europe . and his and was recent- was . North ’ London office, joined the firm in firm the joined office, London ’ and acquisitions York. ProvidentGroup the at president vice a is Sam 2002. 3, February on Henry Thomas, son, their of birth the announced Margie, Ticknor Sam 1989 York. New at director managing the Jonathanis Ashley.and Samantha sisters, joins He 2001. 1, August JoshuaRyan,on son, their welcomed Randi, wife, PolanskyJonathan 1987 Co., of president the is Karen 2001. September in Michael, David son, their of birth the brated cele- David, husband, her and StricklandSampsonKaren in Terrytown,N.Y. at director tax a Ayer Moving and Storage Movingand Ayer in Ayer,in Mass. TritonPartners and his wife, his and Kera & Co. in New in and his and in solidation.” con- on focus to then, and currencies, acquisition solid create to structures capital simplifying on focus to activity initial the expect I ones. worldwide pan-European,creating to champions national protecting from go identity,pan-Europeanwill the focus with the comfortable more becomes Europe as that believe “I explains. Brent costs,” has stance this that realizing are regulators and companies shareholders, minority of treatment the in and rights shareholder protecting in U.S. “Althoughthe lags still Europe economy.European the in involved become to time right the be London.” in position the discuss to thereafter soon me called they but fit, right the be to not out turned It there. opening an about me called time, the at Bear at classmates my of one but Elliott, at happy very professionally.was off “I paid also has that effort ing gratify- personally a classmates, Simon his of some with developed July 2, 2001. Jeremy is a Jeremyis 2001. July2, Chandler,Bailey on son, their of birth the celebrated Dawn, JeremyHawk 1994 NewYork. in at president vice a is Henry 2001. 11, September daughter,on Jenna,born their of birth the announced Henry Yarbroudy tan. JPMorganChase at president vice a is Ann sister,older Claire. her joins Grace 2002. 3, January on daughter,second born Grace, their of birth the announce to pleased John,are husband, HeidenreichAnn 1993 Rochester,N.Y. OppenheimerFunds at president vice a is brother,year-old Luke.Tony two- their join Katherine and Veronica 2002. 27, February Mary,Katherine and on Veronicadaughters, twin Ruth Mary,Margaret welcomed TonyTanner 1990 Not only was Bear a firm that interested him, but it seemed to seemed it but him, interested that firm a Bear was Notonly SB and his wife, his and and his wife, his and in Manhat- in and her and and his wife his and in Citigroup , birth of their son, Brian, in Brian, son, their of birth the announced Jim, husband, PaleySuzanneBoehl 1997 Public burgh Theater. the for director fund annual the is Dorothy 2001. 22, April Jennon Rebecca welcomed Mike, husband, her GordonHunterDorothy Chase at acquisitions and mergers for president vice a is Ken 2002. 25, January daughter,their on Nicole, of birth the announced Lisa, Babineau Ken 1995 Rochester,N.Y. at manager product a is Michael Systems Learning at marketing dent, presi- vice is Leslie 2002. 9, January on Allen, Sophia and Allen Alexandra girls, twin their of birth the announced band, MaurerLeslie Associates at manager business who was doing statistics arb statistics doing was who Celltech Pharmaceuticals Celltech Michael ’98 Michael * Executive M.B.A. graduateM.B.A. Executive * in Rochester,in N.Y. in Rochester,in N.Y. * and her hus- her and * JPMorgan- and his wife, his and , and , , Sylvan Daymon Pitts- and her and and in 23 SIMONBUSINESS Spring 2002 24 SIMONBUSINESS Spring 2002 ILA .SMNGAUT COLO UIESADMINISTRATION BUSINESS OF SCHOOL WILLIAM E. SIMON GRADUATE older brother,older Nicholas. her joins Michaela 2002. 21, February on Marie Michaela of arrival the announce to pleased are Maura, FrankMeleca system. school high public the in teacher a Seattle,Wash., is Suziewhere December.in live They Class wife, Bhattacharya Ameet 1999 fiance, Jan Pingel, are plan- areJan Pingel, fiance, PaulaCalloway N.Y. Corporation Triciaat employedare and Ameet Both 2001. 27, December Evani,on Sabrina daughter,their of birth Glenn lives in Rochester,in livesN.Y. Glenn moted in the spring of 2001 of spring the in moted HershoffLawrence N.Y. at opto-electronics for president Aiello Larry 1973 lawnmower.riding a and order,dog particular a no in acquire, to is objective diate imme- Their N.H. Bedford, in house a purchased have Lynn,wife, his and Dennis Stewart Stern at partner senior a as years 10 Soter Dennis 1972 (FIS) Officials SkiInternational of chairman as years 12 serving after organization and leadership for award highest BrownO. Glenn 1962 Corning, Inc. Corning, Tricia, in North America. North in celebrated the celebrated is senior vice senior is in Rochester,in has retired after retired has in Manhattan. in and his wife, his and * and her and * , in Corning, in , received the received was pro- was * and his and * notes Xerox York. at dent presi- vice assistant an is Laura 2002. January in Elizabeth, daughter,of Emma birth the announce to pleased Rob,are Illig Laura York. New at consultant financial a Jamalis Lebanon. in Resort Riviera Melia the at honeymoon their spent and Beirut in 2001, 4, August Elissar,on wife, married were HammoudJamal Co. at isfaction sat- corporate/customer of tor direc-N.Y.Geneva,a Paulais in Castle Belhurst at ding wed- 2002, 24, May a ning officer for officer financial chief as Joeretired London. in years many after N.J., Ridgewood, to returned in Providence,in R.I. Corporation Leasing Citizens at manager risk senior and president vice senior to Charlotte, N.C. Charlotte, in Johnlives group. resources firm’sconsulting the of officer operating chief was he from spring RobbinsJohn Management in chapter a authored has 2002, in and, Bond Michael and Journal in 1991 in article an published College at business tional interna- and management of Dr.FrankeRichard 1974 Joe 1975 Handbook of Cross-Culturalof Handbook StrategicManagement , in Rochester,in N.Y., and Citigroup in Baltimore, Md.,Baltimore, in with Geert Hofstede Geert with Janice Willett Merrill LynchMerrill and her husband, her and Eastman Kodak Eastman Accenture (Blackwell). Merrill LynchMerrill retired this retired * and his and * Loyola in New in professor , , where , have ’s in course in fixed income investments during this year’squarter.this winter during investments income fixed in course School’sfirst-everthe ProfessorJones taught and market, bond pal munici- Ron’sthe Hall.on Gleason focuses Oppenheimer of division in presentationFebruary his following InvestmentClub the of bers mem- and left), from second (front, finance of professor Jones,assistant OppenheimerFunds ’76 FieldingRon N.Y. Corporation Management Eastwood at president vice a is Marc sister,big Samantha. joins Hillary 2001. 9, September daughter,Hillary, on Betsy,second their welcomed HaasMarc 2000 Eindhoven. at manager center call a is Heidi and Netherlands,the Montfoort, at er manag- plant a is Dirk 2001. 29, December on Floris, son, their of birth the announced van HeidiWoudenberg van DirkWagensveld Finance. CorporateApplied Journalof firm’ssulting regarded highly ’79 Chew Stewart Stern for Manhattan in Janiceworks Africa. and East Middle the Europe, in operations 1976 Eaton AutomotiveEaton , editing the con- the editing , Rabobank and his wife, his and in Rochester,in with (far right), executive vice president at president vice executive right), (far Don in Rochester, speaks to faculty member Chris member faculty Rochester,to in speaks and * in * in * Executive M.B.A. graduateM.B.A. Executive * Nielsen Co.Nielsen at associate customer a is Heather and N.J., Lakes, Co. Merck& at analyst financial senior BrendanLynch Andrews Kish included attendance in members 2000 of Class 2001. September James TonyPelosi Systems at tant consul- a is Chris and analyst, business senior a is Sharon year.this earlier married Placzek’00 Christopher FreidkesSharon 2001 world class, ISO 9001 regis- 9001 ISO class, world Rochester,a in is based Inc., February.in Transmation, officer of officer executive chief and president Sassano E. Carl 1975 , Kim Hall Kim were married in married were American Management American in Centreville, Va.Centreville, in , Ken Haas Ken Transmation,Inc. John MajorJohn and , in Franklin in , Tonya is . , was named was and Heather Phyllis , Amanda A.C. and were , trip to Houston, to Tex.trip Steve recruiting March a on staff School’sManagement Career Simon the of members ShepardStephan 1978 [email protected]. at him contact you that asks he e-mail, by reconnect to or coffee for meet to want area Boston the in alumni called area, e-mail wireless the in startup early-stage another ing pursu- now is He companies. middle-market other and institutions financial munity com- to services infrastructure WANand security vides pro- which Cybergnostic, up start- of officer executive chief as run successful a completed StrasCampbell Systems’president. LPAis Don software. cation appli- business custom writes company, new The division. software Perinton,N.Y., firm’s custom the bought that team a led recently Xelus, at utive Soule Donald 1977 Foundation.Center Dental Eastman the and area),GreaterRochester the in affiliate PBS (the WXXI StrongHospital,Memorial of InstituteTechnology, Rochester the of directors of board the of member a is He executive. corporate a as years 27 his over companies gy technolo- in growth of record proventrack a and company the to experience considerable brings 2000, October in tors Transmation’sdirec- of board joined who Carl, sional. profes- process the for tools calibration industrial-grade of manufacturing and design technology,the in leader tered ADMINISTRATION BUSINESS OF SCHOOL WILLIAM E. SIMON GRADUATE Class M Planet M Class LPAInc.Systems, , a former exec- former a , has recently has hosted . If any If . , Mobil Corporation Mobil at group systems tion informa- global the in works with the $300 million $300 the with president vice executive an N.Y.Island, Long Tony, now Manchester Technologiesof firm consulting Rochester-based TonyMazzulo N.Y.,2001. October in ProductsRich from marketing of president AustinDiane 1985 Westfor president vice Group. was Chris Dialog, at ment appoint- her Priorto vices. ser- information line-based on- of provider worldwide leading a is Corporation Carey,Dialogue The N.C. Corporation at officer financial NaylorChris 1984 summer.this open to scheduled PerkinsBuffalo, in more two building of cess pro- the in is group area.The Rochester the for franchises Perkinsthree buy to investors other two with joined name, his bears that firm Yorkacquisitions and mergers Western the runs Newalso Rochester,N.Y. John,who new his of one at alumni Simon 20 over for breakfast working ButtrillJohn 1983 firm. services cial finan- international Group,an Ltd. NewZealand, Macquarie with Patrickis Zealand. New Auckland, to Australia frommove his of wrote PatrickMcCawe 1982 , part of the Macquarie the of part , Perkins eTracksolutions , headquartered in headquartered , restaurants in restaurants * hosted a net- a hosted * was named chief named was retired as vice as retired in Buffalo, in sold his sold recently The Dialog The . to Exxon Bausch & Lomb & Bausch for manager promotions the is Suzanne U.S. the throughout ations across Europe.across ations oper- country establishing and refining including operation, EMEA the around turning for responsible be Jonwill role, his In software. SME in leader U.K. Group,the Sage by bought was that ny compa- software CRM based U.S.- a is Interact London. EMEA, Commerce, at manager eral gen- as tion posi- new a accepted Duyne Jon Van Manhattan. in breakfast networking Simon first the sponsor to Manchester May,for arranged he In Farashseries. lecturethe of part as students with speak to March in campus on was Rochester.in operations Tony eTracksolutions supervise Manchester,to continues its clients with advice on the on advice with clients its providesGnosis Manhattan. LLCAdvisors, Gnosis AugustineJoe 1987 Ken ny’sstores.European compa- the all for changeover currency the managed Guy recently,Euro the adopted Europe When chain. retail and grocery international the for director a is family,his Parishe with where DuzdabanianGuy 1986 ing TunnellAssociates and firm, consulting logistics transportation a owns Ken family.their with Rochester in Interact Fortune and Suzanne TunnellSuzanne 500 clients 500 has formed has Carrefours . lives in lives in in , serv- ,
,
live VanDuyne company investment. company individual for analysis flow cash- fundamental bottom-up and sovereignrisk for analysis macroeconomic top-down methodology,tion combining valua- disciplined a applying on focusing Fund, Yield High Global Millennium-T the manages He England. Ltd. Management, at ager man- portfolio senior and tor StrubelJoe channels. wireless and Internet the over transactions electronic e-Vantagefacilitate products manager.business strategic e-VantageSolutions London, Tomin been joined have which of most banking, in yearsJanuary. 14 After in London in discussion panel e-commerce School Simon TomAugustin Wallbanks. Streetinvestment for functions A & M various managing years 15 Joespent firm, new his forming Priorto support. litigation and ules mod- training customized of creationresources, acquisition and merger of optimization Round Rock, Round Tex. Corporation Computer Dell at compliance and risk audit, for president vice named DavidsonJohn Francisco,Calif. San in live Erin, wife, his and He team. income fixed value-driven the with analyst senior a is Al funds. client of dollars billion $15 nearly managing firm ment LLC Management, Capital Seneca join to Securities America Alaimo Al 1988 , an independent invest- independent an , * Executive M.B.A. graduateM.B.A. Executive * Millennium Asset Millennium left Banc of Banc left is executive direc-executive is * has been has * attended the attended in London, in in 2000 as 2000 in in 25 SIMONBUSINESS Spring 2002 26 SIMONBUSINESS Spring 2002 ILA .SMNGAUT COLO UIESADMINISTRATION BUSINESS OF SCHOOL WILLIAM E. SIMON GRADUATE family live in London. in live family Wasserstein at GroupDebt Global the in sales institutional exchange foreign for director a as position new a began April, In marketing. and sales of president vice senior the was he where provider, managed-services and center data Internet an RELERA, from Syngistix Johnjoins Colo. wood, Inc.Syngistix, at sales of president vice PitekJohn XBox. Microsoft the behind power graphics the as known best is company market.The graphics PC the of cent per- 50 than more mands com- and graphics, in ing company,ductor specializ- semicon- a is NVidia Calif. Corporation at finance for PageJohn individual tax, corporate tax, individual and corporate of areas the in experience of years 10 over has Adil firm. advisory N.Y.,management wealth Pittsford,the at partner Capital at manager folio Masood, Adil manufacturer.computer the Gateway,at sales direct for president vice recently most was Michael providers. service print-for-pay and universities corporations, for management document handles developer software the Ga., Atlanta, in Based Systems T/R of officer operating chief and president vice executive Leiss Michael 1989 Dresdner Kleinwort Dresdner , has been named a named been has , Jeff Thomas Jeff is vice president vice is . Jeff and his Jeffand . was appointed was in February.in in Santa Clara, Santa in NVidia a senior port- senior a became the became in Engle- in Forte financing group. group. financing the City,of director as NewYork in firm banking investment independent Company,Solomon J. tomers. cus- on focus enhance to region Americas the in realignment structure tional Lomb’s& Bausch organiza- of part sales, and ing Canada’sfor bility market- America Latin Lomb & Bausch Rivera Efrain agement. man- portfolio and finance Michael Schutzler Michael clients. other from data form, dential confi- in and, results ous client’sthe tices, previ- own prac- best identified against benchmarks create to tions opera- sales and marketing of audits high-value vides Rochester.pro- in firm The launched ’94 HowardMulcahey RobertsGraeme 1990 solutions for local news and news local for solutions revenue and technology Internet of provider based WorldNow of president named Zagorski Mark 1992 SteinJoseph 1991 controls. and processes marketing established and strategy business focused a of development the ed company,facilitat- he where service commerce Internet at TechWave,consultant an internal full-time, as served recentlymanager.Michael member and president as serves and 1998 September Consulting Reis Piri , will add responsi- add will , eMarketingAudit , a Manhattan- a , * joined * , president of president , has been has and created in Peter an have rechargeable batteries. rechargeable Polymerand primary um lithi- standard and tomized cus- of marketer and turer developer,leading manufac- a is Ultralife worldwide. operations battery able recharge- and primary all for responsible is William position, new N.Y.his In Newark,in headquartered Inc. Batteries, Ultralife at COO appointed Schmitz A. William NovemberIn 2001, dent. presi- vice executive its as served promotion, his until and 1999, since company the with been has Mark companies. information and alumnae: Simon also are colleagues Rochester,N.Y. Two her of in firm consulting ment GroupHartman at consultant senior TerhaarLaura Ribas America. Delhaize of headquarters Salisbury,in based N.C., be retailer.will Richard food international Belgian Group, Delhaize for finance of president vice JamesRichard countries. 24 in facilities 350 over with company printing demand on- certified, 9000 ISO an is Alphagraphics 2001. Rochester,in N.Y.,ness in busi- for opened and 2000 Alphagraphics er,an purchased Michael, Bittner Ron 1993 in Manhattan. The new Manhattan.The in WorldInc.Group,Capital ButaniGaurev 1994 Kimberly Tolley Kimberly ’01 Kristine Rush ’98 Rush Kristine and his broth- his and franchise in franchise was named was has joined has , a manage- a , the The was is a is , . , their family.their Pittsford,N.Y.,in with husband, her Rochester,N.Y.and She in based chain supermarket at planning marketing of tor Kellmanson Mary portfolio. value relativetax-exempt their for fund a raising is firm ers around the world. the around ers manufactur- to technology heating induction vides Rochester,N.Y., pro- which Inc.Ameritherm, for development business SteveSkewes 24). page (see ’72 Soter by inception their since managed and founded were groups Both Services. FinancialAdvisory its EVAMarket and practice firm’sconsulting the Middle of helm the assumed has Stewart Ellis Martin 1995 Parisoffice. Accenture firm consulting the for lyst Collado Monica 1997 England. London, in for gist Glaser Sergei Rochester. in Logisoft at opment devel- business of director recently most N.Y.was He HoneoyeFalls,in family his with lives Matt keting. mar- and sales for president vice N.Y.,as February in Insulator Lapp Bailey Matthew 1996 Wegmans ’s Manhattan office, Manhattan ’s Alfa Securities, Ltd. Securities,Alfa , who has retired has who , , working in its in working , , the East Coast East the , , of , Jeff ’94 Jeff is director of director is is chief strate- chief is in LeRoy,in Stern joined , in , is an ana- an is Dennis is direc- is , live , Rational Software Rational for development corporate of manager a is Larry Program. Pre-term Cohort Red the at speak to January in pus Brennan Larry 1999 bank. the for vices ser- merchant and banking municipal management, cash commercial the oversee will he position, new his In ing. market- and sales of director as served he where Chek.com from bank the joins Ronald manager.product commercial Bank PooleRonald Francisco,Calif.San in Association AutomobileState the at development corporate for manager senior JuliaMiers-Grimsrud 1998 at working Turkeybeen has and 1999 in Kocak Ilker N.Y. Rochester,in firm consulting strategy and development ness Strategies ’99 PeterGregory ADMINISTRATION BUSINESS OF SCHOOL WILLIAM E. SIMON GRADUATE England. EuropeEquity GE Capital’sGE in group venture NangiaDeepali Rochester,in N.Y.based both are firm the and Annette companies. client to vices ser- officer information chief Consulting IntelligenceEnterprise of owner and founder Marvin Annette Inc. Technologyat group and Science the in director Hileman Dane manager.ing market- operator,a wireless as , in Corning, N.Y.Corning, in , have formed have in Auburn, N.Y.,Auburn, in as , a marketing, busi- marketing, a , , which provides which , Turkcell moved back to back moved joined and * is a technical a is * was on cam- on was is an associate an is Brightgarden is the is in in London, in Jim SenallJim , a leading a , California Corning, Cayuga is the is ing the program management program the ing build- manager program a as Microsoft Quintana Sonia headquarters. company’sN.Y.,Skaneateles, instruments medical the of out Germany.works Louise Franceand in centers service technical and tomer Welchcus- regional Allyn the Navan,Ireland,and in Services SharedEuropean for responsibility direct includes also This support. and service technical service, tomer cus- global includes which Strategy,CareCustomer Wide for the for responsibility additional given McDonald Louise Standards.and TelecommunicationPolicies and Fundamentals Telecommunication VoiceCommunications, are titles course The quarters. spring and winter the during classes telecommunication professor,adjunct teaching of InstituteTechnology at faculty the joined Masterson Mary Ann enues. rev- in (U.S.) billion $4 about with company infrastructure telecom Dutch traded publicly a is Getronics operations. of officer cial finan- chief the Frankis U.S. the to trip business a during February in School Simon FrankGarcia finance. of president vice tant assis- JerseyCity,an as N.J., join Mercerto PallaviDonde Singhania projects. software of ity predictabil- and quality speed, improvesthe that platform development software a builds which Calif.,Cupertino, WelchAllyn in September 2000 September in * stopped by the by stopped * Getronics MBIA, Inc. MBIA, * joined * * has been has * World Rochester has * ’ Brazil ’ as an as left in at operations, billing global dent, presi- vice a is Helen U.K. the in assignment 13-month Rochester,N.Y., a following Zamboni Helen Alberta. Edmonton, in facility development and research company’sstorage data at manager TurnerRobert Group.Development Business the with underwriting is responsibility main Her Services Capital VendorFinancial at development business in analyst risk a as year new Ross Zhang Ellen areas. tructure infras- and development tion applica- the in projects aging man- for responsible is Sonia methodologies, management Program-ProjectMS oping devel- to addition In region. company’sthe for office East research Isis’of by director recruited and BethTerry Mary were ’01 ButlerTherese is Isis at Also Md. Columbia, at lyst ana- research marketing senior DiMartino Beth Mary Rochester.Universityof the at students of dean was she appointment, January Technology at affairs student for president vice new Cooper Beth Mary sultant. con- a was she where Questra, from company e-learning and training computer the to came Sue consultant. mentation Rochester,N.Y.,imple- an as Corporation K Element Bodinson Sue 2000 Global CrossingGlobal Isis ResearchIsis in Danbury,in Conn. Nick Angle ’90 Angle Nick Rochester Institute of Institute Rochester . Prior to her Priorto . YottaYotta has joined has is a product a is * returned to returned * * began the began * . . Both . * is the is * in , in the in , is a is . in GE Community. Online Simon the through them contact to events social informal in interested alumni Simon encourage both They at ager man- analysis market a as on signed has Deniz office. trict company’sthe in cialist dis- spe- strategy business a is and Microsoft with been mer.Ipekhas sum- Franciscolast San from Deniz’moveafter area D.C., Washington,the in apartment Tunca TuncaDeniz business. market Wegmans at merchandising for president vice senior became Colleen time, same the At graduation. since worked company,had he where development commercial and capital ventureRochester ner in the in ner part- a became January,Chris WegmanO’Donnell O’Donnell to tions promo- brought year new The Manhattan. in livesNick sector.financial the of ysis anal- objective and original in specializing firm research tique Capital group sales the MonogenisNick Portugal. at group high-tech and munications com- the for manager to ed MendesGoncalo leading manufacturer of adhe- of manufacturer leading a is Reichhold Park,N.C. Inc. Reichhold, at unit business Resins Performanceand Coating Global the supporting chain supply of director senior Brandt Don 2001 have settled into their into settled have * Executive M.B.A. graduateM.B.A. Executive * AOL/Time Warner , an independent bou- independent an , Christopher Accenture , her family’sher , food since graduation since TrilliumGroup and * was named was * and Ventana in Triangle Colleen has joined has was promot- was IpekOktem in .In , a , . 27 SIMONBUSINESS Spring 2002 28 SIMONBUSINESS Spring 2002 ILA .SMNGAUT COLO UIESADMINISTRATION BUSINESS OF SCHOOL WILLIAM E. SIMON GRADUATE York,diver- to intends Origin New upstate in management and acquisitions residential on focusing Initially owners. for value create to nology tech- information by enabled techniques management tive innova- of integration the and practices financing aggressive Rochester,N.Y., uses that in company investment LLCOrigin Burns Kevin markets. arts graphic and plastics adhesives, coatings, the for emulsions latex synthetic and resins polyester resins, coating sives, 10 itaniis laecl orwrite: annuities,please call gift charitable To learn moreabout ohse,NwYr 14627-0100. Rochester, New York 270100 Box Hall Schlegel Administration Business of William E. Simon Graduate School Alumni of Director Executive S.Budd Hollis Relations and Development and Relations otat fetv uy1,2002. effective July contracts decrease for new may rates annuity generous The current for life. guaranteed income to thedonor return annuities Charitable gift , a real estate real a , has formed has ANNUITY tion with tion orienta- hire new completed ly Gomez-Lahoz Enrique firm’sgroup. estate real the in analyst research a is January.in Dougbank, ment Co. & Ramsey BillingsFriedman Divine Douglas 2002. March in offering equity private initial its closed Origin offerings. private later through available becomes equity additional as segment market by and geographically both holdings of portfolio its sify % , the Arlington, Va.,Arlington, the , invest- Booz Allen Booz joined recent- Management Hayes-FischerCapital Naveed Yahya city.the outside just live family his and Enrique office. firm’sconsulting the London into settled has and Scotland, Hamilton October 23, 2001. 23, October on Calif., Angeles, Los in home attorney,his tion at died ’73 Slivkin H. Richard ’95 Ozay Dag in memoriam in 2002 Directory Simon School Publishing, 1-800-877-6554. To placeanorder, callB.C.Harris or CD-ROM. Available inhardcover, softcover issetfor thisfall. Delivery purchase throughJuly15,2002. Directories areavailablefor in Edinburgh, in in Rochester,in is an analyst at analyst an is died in Istanbul, in Turkey,died 2001. September in , veteran real estate and business litiga- business and estate real veteran , profit endowments. profit not-for- and clients individual net-worth high for investing value on concentrates ment, manage- under million $150 about N.Y.with firm, The * Executive M.B.A. graduateM.B.A. Executive * In Memoriam
Harry V. Keefe Jr.
arry V. Keefe Jr., a member of the H Simon School’s Executive Advisory Committee since 1992, died on March 8, 2002, at the age of 79. Known as the Dean of Banking, Keefe was active in all facets of the banking industry: a consultant to bank managements; an invest- ment banker to more than 100 clients; a com- mentator to the Press, regulators and legislators, and a frequent speaker to his peers at the Financial Analysts Federation. He was the author of Banking—A Vital and Stable Industry, and many articles on investment and finance. Keefe began his remarkable career in 1947 with R.L. Day, followed by Tucker Anthony. In 1962, he opened his own firm in New York City—Keefe, Bruyette & Woods. Starting with only eight employees and $50,000 in capital, he grew the firm to 180 employees and $83 million in capital in the next 27 years. After resigning from KBW in 1989, he formed Keefe & Keefe International, a merchant banking and advisory firm to bank managements. Concurrently, in May 1991, he organized Keefe Managers, Inc., a registered investor advisor that manages a nontraditional hedge fund and an all-long fund. These funds trade exclusively in securities of banks, thrifts and other money-lending institutions. The Wall Street Journal, in its February 10, 1998, edition, named Keefe Managers the top-ranked money manager out of 928 managers tracked for the years 1995–96 and 1997. Keefe, a graduate of Amherst College and Boston University Graduate School of Business, was a generous philanthropist, giving freely to colleges, secondary schools and charities. He was honored by Amherst College, Lafayette College, Boston Latin School and Wheaton College. WILLIAM E. SIMON GRADUATE SCHOOL OF BUSINESS ADMINISTRATION EXECUTIVE ADVISORY COMMITTEE
J. Peter Simon, Chairman
William Balderston III George J. Gillespie III, Esq. Henry A. Kissinger George J. Sella Jr. Charles L. Bartlett James S. Gleason ’68 M.B.A.* William W. Lanigan, Esq. Marilyn R. Seymann J. P. Bolduc Robert B. Goergen Donald D. Lennox William E. Simon Jr., Esq. Paul A. Brands ’66 M.B.A. Paul S. Goldner ’79 M.B.A. Jane Maas Joel M. Stern David J. Burns ’78 M.B.A. Bruce M. Greenwald ’69 M.B.A. Paul W. MacAvoy Sir John M. Templeton Andrew M. Carter Mark B. Grier ’80 M.B.A. Louis L. Massaro ’80 M.B.A.* Ralph R. Whitney Jr. ’73 M.B.A.* Richard G. Couch ’79 M.B.A.* General Alexander M. Haig Jr. J. Richard Munro Joseph T. Willett ’75 M.B.A. Frank G. Creamer Jr. ’70 M.B.A. Larry D. Horner James Piereson John L. Davies ’73 M.B.A. Michael S. Joyce Robert E. Rich Jr. ’69 M.B.A.* Ronald H. Fielding ’76 M.B.A. David T. Kearns William D. Ryan Barry W. Florescue ’66 B.S. William M. Kearns Jr. Leonard Schutzman ’69 M.B.A. * Executive M.B.A. graduate
William E. Simon Graduate School of Business Administration Rochester, New York 14627
Change Service Requested