New York Times Publishes a Four Part Article on the Business School

profile of the Business School accounting, the article goes on to say particularly the computer area — are A was published in the Sunday, that the number of MBA students pioneering new, more sophisticated November 28 issue of the New York specializing in the field has been ways to do what some accountants Times as the second in a three part halved from its former levels, still do by hand." series on business schools in the primarily because average starting In commenting on this part United States. Harvard was covered salaries for accountants are now less of the Times article, Dean Gilbert R. on October 3rd, and Stanford is to be than in other specialties. "Now only Whitaker, Jr. pointed out that included in an upcoming issue. about one in 10 Michigan MB As want the numbers of BBA accounting The article, which labeled us as to be accountants," says the story. graduates at Michigan have "one of the strongest research schools "They find the glamour and money been rising rapidly as have their in the country, according to business of finance, banking, and computer comparative starting salaries. scholars," took up 3A of a page in the information systems far more "Furthermore," he says, "the Times, and was split into four parts appealing — and lucrative. Business School faculty has approved which highlighted different aspects Ironically, some of those fields — an innovative 5-year program of the School. leading to a Master's Degree in The first section discussed the Accounting. This program, which research being done by finance limits admission to 30 outstanding professors E. Han Kim and Michael students per year, integrates two Bradley, who are studying more than years of liberal arts, one year of 2,500 acquisitions over a two year undergraduate business, and two period. "Our findings are that it years of graduate business into a doesn't look like the acquiring firms well-focused whole which provides are building empires," Professor both breadth in liberal arts and Bradley is quoted as saying. "The business and depth in accounting. combined value of the combined firm We expect this program, which was tends to be higher. There seems to be developed with advice from the Big synergy at work." Eight, to provide a national role The article continues, "Because model in high level preparation for most takeovers are for less than all careers in accounting, producing shares outstanding, Professor graduates who will rise to the top as Bradley said, those shareholders who leaders in the professional business do tender their stock early tend to do of accounting. Accounting teaching better. Professors Bradley and Kim and research remain very strong found that, on average, there is a 30 fields at Michigan as they have percent upward swing in the price of adapted to changing external market shares of acquired companies but forces and changing interest in the those shareholders who tender their field of accounting." shares early in such takeovers usually The third article in the four part gain about 35 percent." profile discusses research being done In a second story, the changes at the School on factors leading to taking place in the accounting field management's loss of control over are discussed. Citing the excellent computer systems. The research, reputation of the School in

2 which is being done by Professors Robert Mautz, Alan Merten and Dennis Severance, has identified nine similarities among companies in which computer services tend to be out of control. What can companies Volume X/V, No. 2 Winter, 1983 do about this? "Managers and computers must get together," Starting Small and Growing Big? Professor Merten is quoted as saying. The Essentials of Managing Growth 4 "Too many computer experts are Three entrepreneurs who founded their own companies and more committed to their profession experienced the "growth pains'" involved hi building an organization than to their organization. And too discuss how they got started and what they have learned. They include; many companies view computer people as freaks down in the basement. The systems people need Fred Alger 5 to learn more about their companies In 1964, Alger founded an investment advisory firm that specializes In and the company people need to intensive money management. It has been spectacularly successful learn more about the systems. Both Thomas Monaghan 7 sides express strong desires to bridge In 1960, Monaghan borrowed $500 with his brother to open a tiny that gap. They just have trouble restaurant in Ypsilanti. His business is now worth $260,000,000. bringing themselves to it." C. H. Rubin 10 The fourth article discusses a C B. Rubin & Company began as a spinoff, and its founder has worked three-pronged approach to with several companies from start-up all the way through a public understanding how organizations offering. Here he discusses the different: stages of growth. work. Professor Noel Tichy believes organizations must link their A Matter of Money 13 technical, political and cultural Why isn't more money being invested in new or developing companies systems — like the strands of a rope in Michigan? And what, can be clone about it? Professor Brophy's — in order to develop a unified Growth Capital Symposium is helping. approach to the long-term planning Diane Brown, MBA '80, and Genex 17 that keeps an organization thriving. When Diane Brown joined Genex two years ago, she was the 42nd Professor Tichy identifies the systems employee. Since then, the company has grown 500%, as: technical (the typical problems of a James Tantt, MBA '67, and National Semiconductor 19 business — production, people, When James Tann went to work for National Semiconductor in 1979, money, resources); political (the animal sales totaled $400 million. Now they are over $1 billion. internal battles for power and resources between organizational We're Two Thirds of the Way There! 23 fiefdoms); and cultural (the basic Gifts and pledges of $10.9 million have been given to the School since our norms and values held by members Capital Campaign began, bringing us a long way toward our eventual of an organization). He says all three goal of $15 million. systems go through various cycles Among Ourselves 24 depending on what changes the organization is going through at the Class Notes 28 time. If the systems are working at Washington Campus 35 cross purposes the organization can A six day seminar on the changing federal environment and its become greatly weakened. "The implications for business in the coming decade will be held lor response to managing in turbulent University oi Michigan alumni May 1-6 in Washington. D.C times," Tichy is quoted as saying, Cover photograph by Virginm Geren. Shoes m tke cover and page 4 used "requires organizations to return to courtesy Ann Arbor store. basic questions about their nature of Jacobson's and purpose. That's what this approach could help them accomplish." The Times articles were written by Dean: Gilbert R. Whitaker, Jr. Andrew R. McGill, assistant to the Director of Development and External Relations: managing editor of the Detroit News, Anneke de Bruyn Overseth and Ph.D. student in organizational Editor: Pringle Smith behavior at the Business School. Copies of the article are available by Copyright © 1983 by the Michigan Business School writing the Dean's Office. Printed by The University of Michigan Printing Services. This publication is made possible through the generosity of private donations.

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Editor's Note: It was a packed house in and for the company. The questions funds. This was important because Hale Auditorium on Homecoming I was asked to talk about today are: when your wholesalers went to retail Weekend when alumni and students How did I get from there to here? establishments they needed to have came to hear the stories of three W7hat problems did I have to solve high performance so they would entrepreneurs who founded their along the way, and what thoughts have something to talk about every own firms and experienced the about all of it could I impart to you? time they went in the door. Assets "growth pains" involved in building When I started my company in the under management on just the an organization. The discussion was fall of 1964, there were only a few mutual fund side went from 7 million so interesting that we decided to intensive money management firms to $150 million at the end of seven bring it to our readers via the pages around. The idea was to move assets years. of Dividend. What follows is an edited around to take advantage of Our second goal (which was my version of each of the panelist's opportunities in the stock market principal goal since the mutual fund remarks, plus the question and when they occurred rather than business was such a low income answer period that followed. The buying stocks and holding them, business comparatively) was to attract program was sponsored by the which was the old style. The promise money for the performance fees. Alumni Office. for the customer was much better And because of our first success we performance. The promise for the were also successful in this respect. Fred Alger, MBA '58, founded Fred money management firms was that if In December, 1965 we received our Alger & Company, Inc. in 1964, a you did well you got paid more, first business from Fund of Funds, fully integrated firm responsible for because the fees were performance which wras to grow to over a $100 research, trading, and transaction fees rather than fees based on assets. million dollars of funds under a processing. Under Alger's My first client was a group of performance fee basis. At this point management, the firm's assets have mutual funds called the Security- we made a good decision. We grown from $10 million in 1964 to Management Company. They had decided that the nature of Fund of more than $1 billion. two funds. We were to manage the Funds would not be a lasting business money in New York on a fully so we didn't budget against it. Instead discretionary basis. We got one we banked it. And as it turned out, red Alger & Company is an eighth of one percent, which on there were tough times ahead for us, Finvestment advisory firm. Our seven million dollars produced and the fact that we banked these customers are corporate pension around eight or nine thousand large fees proved to be a smart move. funds, and our charge is to manage dollars a year in income. This wasn't At about this time, as we moved diversified portfolios in the stock very much, on top of the modest into the late sixties, the business market and to make as much money capital I had, to keep a company and started to change. When I started the as we can each year. In the first 17 a family going, but it was enough — business, there were so few intensive years, our composite equity accounts you could manage. money management firms around compounded nearly 20% per year. There were two funds — a that you could find the smart guys on In this, the 18th year — a difficult balanced fund and a growth fund, Wall Street, take their best ideas, recessionary year — our accounts are and the business plan was that I assemble an interesting portfolio, up 25%. So much for the basic would use the growth fund as a and make a lot of money. But with business of managing money. show-case account to attract funds the tremendous success that we had From a company standpoint, we for management on a performance in attracting money, two things have grown even more dramatically. fee basis. So the first major hurdle to happened. First, the smart analysts I started the company by myself; we clear was that I had to produce a wanted to be money managers now have more than 60 people in the stunning result for the growth fund. instead of just smart analysts, and firm; assets under management have Now in that first year (1965) we did secondly, to compete for funds, every grown from $7 million to $1.4 billion achieve our goal. In fact, the fund bank and insurance company in the and our book value per share has was number one in performance in country became an intensive money grown five thousand percent. Our the country with a gain of something manager. And I could not compete pension and profit sharing plan over 78%. And the next seven years, financially with, say, the Morgan alone has more than $100,000 per among six hundred funds we had Bank. employee in it. So, in the past 18 two first place finishes and a second Now, in every research system years the business has been very place finish; and in three other years when stocks are going up there profitable both for our customers we placed in the top fifteen of all is plenty of glory to go around. But

5 when there are problems and you up closing, and a small retail to a pension fund. But as I got into are dependent on someone else's brokerage house. So we wfere able to the business, I discovered that really, research, the question is, "Where adapt. And while we took a big hit on what they wanted was for us to make are you on the will-call list when the assets under management, because money. They liked our ability as an going gets tough?" And with the we had banked that money that we organization to make a lot of money large number of entries into the had earned from Fund of Funds we in the stock market. So as a business it turned out that the Fred were able to recreate our business in consequence, we had to reposition Alger Co. was way down on the list! a profitable and interesting way. ourselves and emphasize stocks, At this point, I decided that Another hurdle I had to overcome which was easy to do. The lesson here I would have to do all of my own — and I think it is a familiar one for was — if a person wants a Cadillac research, which meant I had to all business men and women — is not instead of a Chevrolet, then give him become a member of the Stock to presuppose you know the market a Cadillac. Of course, it was to our Exchange and keep all my brokerage better than it knows itself. In the late profit, as we made much more business so that I could pay for an 1970s the next burgeoning business money managing equities than we increased staff. It also meant I had to was the pension fund business, which ever would managing convertibles. become a registered investment we are into now in a major way. But One of the questions we were advisor and, unfortunately, originally I had felt that pension asked to talk about today is registered investment advisors are funds really wanted a convertible structuring your management team. prohibited from charging investment product which offered security, an There is a tremendous advantage to fees. Thus, I had to get rid of Fund absence of downside volatility, some a company if you start it yourself of Funds as an account because they upside potential, and a high current and your name is on the door. shared the performance fees and income. And one could adopt The advantage is that there is were unwilling to change that strategies which would be attractive unquestioned decision making. If I arrangement. So in essence I had to get rid of a major piece of very profitable business to secure the long term future of the company. It was a decision I made easily, because the long term future of the business was more important to me than any temporary loss of business. Another major problem I had to overcome occurred in 1970, when the company which ran the growth fund we managed (and charged one half of one percent management fee) got sued by a New York lawyer who made a practice of suing mutual funds to get them to reduce management fees. The suit said that half of one percent was too high, since I was doing all the work for the fund for an eighth of one percent. Well, the handwriting was on the wall, and in this case it said that Alger was going to be expendable. Forget the fact that we had created the funds, that we had done a great job for them. With that kind of continuing pressure Alger was indeed expendable. So in 1970 — having fired a large piece of business (Fund of Funds) already — we knew that we were going to be faced imminently with the loss of our largest piece of business, and we had to do something about it. As a consequence, we entered negotiations with City Investing to acquire two funds —a closed end fund specializing in convertibles, another small fund which we ended Fred Alger, MBA '58, founded an intensive money management firm.

6 say right turn, everybody turns right without questioning the decision because my name is on the door. There is also a more subtle advantage "If I had known what was ahead and that is, that one can be more generous in delegating authority. I have four division heads — and each I would have never even begun." one runs his area absolutely, and comes to me more or less for approval to solidify decisions that they've already made. I have a Thomas S. Monaghan, borrowed seller. I had no idea what the total treasurer who has been with me since $500 with his brother in 1960 to open price was, I had some vague idea how 1967 — a genius at administration a tiny restaurant in Ypsilanti under much the monthly payments were, who has been able to move us very the name of Dominick's Pizza. Today, there wasn't even a lease on the place! successfully into clearing. Not only Domino's Pizza, Inc. has 800 stores I could have signed this note for do we do all of our brokerage but we with system wide annual sales of thousands of dollars and not had a do all of our own clearing as well, $260,000,000, and employs over place to operate. I didn't go to see a and it's very unusual for a money 6,000 people. banker, I didn't talk to an attorney management firm to do both. Our (can you image what kind of advice head trader has been with me since would like to answer the question they would have given me?) 1969. He has instituted a very that's most often asked of me, So we started out in December of sophisticated trading system which I which is "What's a guy with a name 1960. My original plan was that the has allowed us to do all of our like Monaghan doing in the pizza pizzeria would be nothing more than brokerage business without any business?" Here's how it happened. a means of paying my way through discounts and yet to effect I was 23 years old in architecture architecture school. The place had transactions on a net basis — a school here at the University of formerly been open seven hours a delivered basis — which are Michigan, trying to stay in school but night — from five to midnight. I competitive. Our head of research is I couldn't afford to. My brother knew figured my brother would work 3 V% my younger brother, David Alger, a man by the name of Dominick hours, and I would work 3V2 hours, MBA '68. He is nine years younger Devarti who wanted to sell his pizza and I would have plenty of time to than I am — a brilliant young man, parlor in Ypsilanti near the campus. study and get through school. Then and fortunately there is enough age It was just a little hole in the wall. my brother got cold feet and decided difference between us so we are not And my brother bought it and talked to back out (although he kept his competitive, and he runs our me into going into partnership with 50%). That meant I was going to research department with an iron f him. That's how it all began. have to work the w hole seven hours a hand and absolutely. So a terrific You know, someone asked me ten night. I dropped out of school, and entrepreneurial advantage is to have the truth of the matter was I was your own firm. years after I started what I thought I owed my success to. I wasn't that working well over 100 hours a week. Another question we were asked to comfortable talking in front of a There was complete disaster. In fact, discuss is why we think we succeeded. crowd at that time, and I kind of the first month we didn't even have a It's a difficult question. I think it's panicked and tried to think real telephone! Now you try to operate a very important to know your business quick, what do I owe it to? (At that pizza parlor without a telephone! so well that you can create thinking time I had about 35 stores.) And We had five sizes of pizza ranging about your own industry. If you can when I went back in my mind to that from six inches to 16 inches, and create thought in your own industry beginning, the only truthful answer about 90% of our orders were for the then there is a good chance that you was — plain pure stupidity! If I had six inch pizza. We charged 30£ for will be able to dominate it. I think one known what was ahead I would have that. I wanted to make sure my prices last message I'd like to leave you with never even begun. It was the most were cheaper than anywhere else. My is that the success of a business or its humble beginning anyone ever big concern was I didn't want us to failure is entirely due to management started with. I made every mistake in screw the customer. Now that's one and only management. Which means the book. thing I did right. That was good that the training you are getting at So I went into business with my marketing strategy. But the problem the Business School (and indeed the brother as a 50/50 partner. Of wras I sold that pizza for 300, and it training I got at the Business School) course, the first rule is, you should took just as much labor and just as is the most valuable training you will know something about the business much money to deliver that 30# pizza get. Liberal Arts education as an you are going into. I knew absolutely all the way across Ypsilanti — four, undergraduate is also extremely nothing about the pizza business five, six miles away, free delivery. valuable, but my graduate degree at except that I loved to eat pizzas. And And I was selling those things like the Business School was for me the talk about being undercapitalized! I crazy. I w?as so busy I didn't have time most valuable learning experience think I had $77 in my checkbook. We to sit down and pay the bills. I could I have ever had. borrowed the $500 down payment never handle the rush. I was always and I never did get a receipt from the behind. And when I got an order for

7 a 12 inch pizza, that was cause for gulped again, and then I thought, both. And I loved delivering because celebration. well, 50% of something is better than it was a challenge. First of all, it was One day after we were in business 100% of nothing. I had this fear that something that I found out I could about six months, my brother said, when I finally got some success it do better than anyone else. Nobody "You know, Tom, you're better at might slip through my fingers wanted it except the customers. And this than I am. I think we ought to because of my lack of experience in so — I focused on delivery. split up. I just want out. You don't business and so on. But I figured that I couldn't really do this during the have to give me anything. I just don't with my hard work and his brains we course of the partnership, but when want the bother." I said, "Well I think could stabilize this business and make we split up I went whole hog. I took I ought to give you something." He it grow. Well, that turned out to be all of the tables out of our places, I said, "No, don't give me anything." the most lopsided partnership in the took everything off the menu but Of course we didn't have any money. history of American business. The pizza and I streamlined the So the only thing I could think of to guy got a free ride for three years. operations so that we could focus on give him was our Volkswagen — it And I was really as much to blame for nothing but delivery. The first year was a used Volkswagen, our delivery it as he because nobody would be as our business doubled in the three car. We had just made one payment stupid as I was to put up with this stores that we had. That was also on it, so I said, "You go ahead and absentee owner who was living at that when I changed the name. Dominick take the Volkswagen and I'll continue time better than I live today, while I didn't want me to use his name any to make the payments." was living on about 50 bucks a week, more, so I came up with the name Now that turned out to be a very living in a house trailer and driving Domino's because it sounded similar. valuable Volkswagen. For that, I an old rusted-out Rambler. So about I was scared to death to change the bought out half of what today is three years later, the bills were name for fear of losing some Domino's Pizza. piling up. We'd gotten into some business, because by that time our About a month or two after this, restaurants because he didn't feel Ypsilanti store was already the I was in the middle of one of those there was any potential in the pizza highest flying pizzeria in the state of rushes, and I was way behind, and I business. The pizza business was Michigan. So we changed the name got just one order too many of that supporting the losses in the to Domino's and adopted the domino damned six inch 131ZZ3L And I said, restaurants. He approached me one symbol and put three dots on it. I "No more six inch pizza!" day and said he couldn't stand the figured every time I added a store I'd All of a sudden we were handling pressure any more and we ought to add another dot. This week we the rush! In fact, it didn't even get split up. So he made a proposal to me opened our 800th store! Our logo busy. And at the end of the night we that really got me mad, but I didn't would just be one big white rectangle. let him know it. He wanted $35,000 had about twice as much money as we At this point everything was going in cash! Now I don't know where he had ever taken in before! Up until along pretty well, so we opened thought I was going to get that. And that time the more business I did the another store in Ann Arbor. he wanted me to take over all of the more money I lost. I was losing 4 or Meanwhile my partner filed bills. Well, we negotiated the deal 500 bucks a week, and then all of a bankruptcy, and everything we had pretty much the way he wanted it. I sudden I was making 4 or 500 bucks a during that partnership was in my borrowed from suppliers, I borrowed week! I was rich! And I owned the name, because his credit was bad. a little from the bank and we bought whole thing! So when he went bankrupt it about him out. That was in 1965. At this point I was scurrying pulled me under too. But we got around for advice because I was This was a hopelessly insolvent through that crisis and were rolling young and didn't have a lot of situation but it didn't bother me at all. along again. More stores. Stores confidence in my business ability. In fact, it forced me to stretch a little doing more volume. And then one I seemed to be pretty disorganized. bit. And I came up with the concept morning in February, 1968 I got a I never was and never will be an of delivering pizzas. Now delivering call at 4 in the morning and the guy administrator. And I thought I was pizzas doesn't seem like much to you said, "Your place in Ypsilanti is on getting good advice from an old today when you think of how many fire." I lost about $150,000 on that timer who had been in the pizza people do it, but the fact of the fire and I had $14,600 in insurance. business before. He had gone matter is that today Domino's Talk about stupid! bankrupt but he'd been successful for delivers about half of the pizzas Well, everybody went back into the a while and he had a lot of answers. I delivered in the United States. It was store, including me, and we kept one learned a lot from him. So I tried to a new concept then. The only pizza bookkeeper in the office. We spent get him to work for me, but he places that delivered were the places about six months paying off the bills, wouldn't unless I gave him a that had to deliver to survive. with sales higher than ever. We were partnership. So I asked him how Basically, any pizza place that ready to open up more stores, and by much interest he had to have and he delivered, you really wouldn't want to this time I was really getting a big said at least 50%. I gulped and said, buy a pizza from, because if they had head, because I had the busiest "OK, How much will you pay me for a good product they wouldn't have to pizzerias in the United States, and it it?" And he said, "Oh, $500." I deliver. Nobody delivered unless was the concept of delivery that they were crazy or stupid and I was was doing it.

8 Then I started attending franchise seminars, and I met people like John Lloyd Brown and Ray Clark and they were flying into a seminar at Boston College in their Lear jets. Boy was that exciting! I figured "Gee. Our operation is just as successful as their's is, we just don't have as many of them. So let's get a lot of them." By this time people wanted to work with us, banks wanted to loan us money for a change, and brokerage houses wanted to take us public. And those were the go-go years for franchising. They were the hottest stocks on Wall Street. At this point a brokerage firm gave us a game plan about the things we had to do in preparation to go public. They said you have to get a big CPA firm, you have to switch to a big city attorney, you have to increase your management depth — get some people with degrees to make your management staff look good, you've got to get computerized programs. I did all these things, and the thing they kept harping on was — you've got to show growth. And boy did I show them growth! In 1969 I went from 12 to 44 stores in ten months. And when the dust settled I had lost about a million and a half dollars! I had the busiest pizzerias in the world and I had the lowest volume pizzerias in the world. The new ones were terrible. We had become top heavy. The short of it is, I lost control of the company, and the bank took it over and brought other people in to run it. Tom Monaghan now has 800 stores in his Domino's Pizza chain. After ten months the franchisees were mad at them, the creditors were different businesses. And besides, even madder, and they handed the I'm doing something right. And if I they waited too long." company back to me. That was in am doing something right, I sure They sued us. March of 1971. would like to know what it is. I think The attorney said, "Don't worry one thing that we are doing right is So I had to go back in the stores about it. You can't lose." that we run a very informal company. seven nights a week, supervise them, We lost. I try not to get caught up in the buzz spend five days a week in the office We appealed. The attorney said, words. It's very easy when you are doing practically nothing but talking "Only 20% of appeals are won. running a company to get caught up to creditors. And it took me about a You're going to lose." in sophistication. I try to focus on year and a half before I could finally We won. only one thing, and that is satisfying start paying the creditors. By 1973 we But darned if they didn't take it to the customer. In our business that had paid off all of our creditors and the Supreme Court. But the means putting out as good a pizza as were rolling along pretty good. Supreme Court, thankfully, turned it we can possibly make and delivering Then in 1975 we had a problem down. This litigation took five years it as fast as possible. We're now the with Domino Sugar over the use of and cost us over a million bucks. second largest pizza chain in the the name. The attorney said, "Don't That brings us up to the present. country and the largest privately held worry about it. They are not going to I sometimes wonder whether I just restaurant chain in the country, and sue you. They are two entirely have the wind at my back, or whether I'm still trying to figure out what we I'm awfully darned lucky, or maybe are doing right.

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C. H. Rubin, MBA '62, became interested in high technology start­ ups and spin-offs while working as a y&i. CPA with Ernst & Whinney. He worked with Manufacturing Data Systems, Inc. and Daedalus Enterprises, Inc. from the start-up phase through a public offering and related accelerated growth. He has now started his own CPA firm — C. H. Rubin & Company in Ann Arbor, and has continued his work with high technology companies in the area.

'm last on the program but I'm also I the one with the shortest history, so maybe that is appropriate. C. H. Rubin & Company is only about four years old. In that four years we have increased our volume by roughly a factor of five, which I think is pretty good for a service business. In a service business, you are just re-selling your time, so there are definite limits on growth and not so much opportunity for the multiple present in other types of businesses. As a CPA with a small firm you deal with a lot of entrepreneurs. You're dealing with people like Tom who play "you bet your company" every time they have a fire or whatever disaster there is. I have 3*8S'i*4»*., worked with many firms from their inception, through rapid growth, to large scale success. Based on this experience, as well as my own, I think that no matter how your company begins, whether a start-up or spin-off, it will go through roughly three stages of growth. C. H. Rubin & Company began as a spin-off, which is different from a raw start-up because in a spin-off you already have a part of the business in place. The product, with a market in some form, is already there. Stage one in a spin-off is essentially C hi. Rubin works with high technology firms in the Ann Arbor area.

10 a search for the missing parts of your organization. Before you "spun off you were in an organization where others were doing certain things for "The third stage is a very difficult one for you. It might have been a home office that was doing the accounting, entrepreneurs, and it's here that a lot of them or a research center doing research for you, or a legal department. In my drop out It's at this stage that you lose case, an important missing part was the typing pool. I really missed that flexibility." dearly in the first few months of my spin-off. I had no trouble doing an audit or a tax return. My problem was getting somebody to type the darned thing so that I could wanted from their CPAs. The answer people, motivated them with options deliver it. was they want the CPA as an advisor and let them grow with the business. and a consultant to the business. As That was a very successful strategy In a certain sense, in that first a CPA to a small business you become for a company that was on a really stage your organization is out of sync a part of the support system for the fast track. In the second stage there is among the various parts. Certain entrepreneur. The person that he no place for a manager who is going parts may be very sophisticated. The can talk to, a source, a reference, to sit down at a clean desk and product you may already know — someone to bounce things off of. manage. They must be people who you've had five or ten years in the Starting your own company can roll up their sleeves, pick up a pencil business — but the rest of the things be lonely. or whatever it is and do the work. you're dealing with may be the basics like where do I purchase? These little What is the best definition of a When you get on to the third stage things can take an inordinate amount small business? People have tried to in the growth of a company, that's of your time. It reminds me of a define it by volume, number of where you really can be a delegator, spin-off here in Ann Arbor when employees, etc., but I think a real and where you have a large number Willow Run Labs left the University. functional definition of a small of people in the system. The system They had 350 employees, and this businessperson is someone who has then has to have its own momentum wonderful umbilical cord with the to make most of the decisions — has to be good, because at this level University's computer system. And himself. In this first stage, the there is no manual override. If you all of a sudden that cord was cut and important thing is to manage your are off on the wrong track you can go they had a hell of a scramble trying to time and what limited resources you a long way down the road before the figure out how do we get a payroll have. You really have to focus problem gets big enough for done? How do we get information yourself on your main area. Other someone to notice. together for customer billing? All problems in other areas have to be This third stage is a very difficult these little details that they used to taken care of with a bandaid. one for entrepreneurs, and it's here have done for them. Now stage two is an interesting that a lot of entrepreneurs drop out stage — that's probably where of the system. It's at this stage that So your spin-off organization my company is right now. Stage you lose the flexibility. Product needs some time to mature in the two is where you start to make innovation is something that really support areas, and you have to get the transition from a rnulti-hat needs care at this level, because you off of what I call the IBM syndrome entrepreneur to multi-manager. tend to lose it. I was in a large — the need for or expectation of Managers at this level are "hands on" organization of 20,000 employees IBM quality/quantity support staff. A people. You don't have to have a for 15 years. Towards the end I felt small company will not have a perfect heavy investment in systems because that the company way was the only backup or support staff. You have to you've got people there who started acceptable way. That's great — but if run basically by the seat of your out with the business and can you are an entrepreneur, it's not pants. You have to make quick override the system when it is where you want to be. decisions, you don't have time to necessary. When there's a question consult with anybody. You have to It is important to recognize what they know the answer. They don't develop what I call the multi-hat stage of growth your company is have to refer to a policy memo or to ability. Take off your purchasing hat, in so that you can match your someone else on the staff, because put on your personnel hat, your sales management approach to the stage. they can see the complete business. hat or whatever it might be. Nothing is more detrimental to a Manufacturing Data Systems business's growth than a In stage one, you must identify (which has gone from roughly 5 sophisticated stage three answer to your market. For example, what is a million in sales to about 75 million in your stage one start-up problem. I small CPA firm's marketplace? A sales) took the approach of having believe that if you correctly match recent survey asked chief executive good hands-on managers at this your management approach, you will officers of small companies what they stage. They hired highly qualified enhance your growth.

11 a simple store and low overhead, so that he can process his pizzas and get them out the door and delivered in 30 minutes. Every great business success is more than hard work — you have to have an idea — and it's got to be the right idea, and then you apply the hard work and all that other good stuff. It's very important Q. (to Monaghan): Is there any one thing the trough. Timing is going to be that you can create thought in your that kept you going after you went very important. If I'd started my industry so that you can adjust to broke so many times? business in '79 I don't think I'd be change when it occurs, and do it with Monaghan: Well, I really didn't have here discussing it today. confidence, so you're constantly any choices. It was the only business I moving ahead. That way you're knew, and I felt that no matter how A. (Monaghan): In my business the always on the attack, you're never long it took I could eventually get the timing is better than ever for getting defensive. into business. There are businesses bills paid off and not make the same Q. You've all talked about how you have mistakes next time. And I love this all over that are mismanaged and going broke and all they need is to have a passion for the business. business. It's something I feel I know What do you do when you have to better than anybody else and that this somebody who can give a little bit of energy and thinking and they can delegate ? system — this concept — it looks A. (Monaghan): Delegation is pretty simple to you but it's make a success out of it. Many businessmen might be great when something I think I do pretty well. something that came pretty much I'm willing to let my people make right out of my mind and that of my they get started, but I've seen our franchisees over the years. When mistakes just like I made mistakes. employees. It wasn't something you My philosophy on that is hire the best could find anywhere else, and that they start out they're excited — they're scared of failure so they work people you can hire and get out of gives you a certain sense of their way. It usually works — and if ownership that you still have their tails off and they're really enthusiastic about their business, but they're no good they'll soon hang confidence in. I have no doubt that themselves, and you'll find out we can continue the same rate of after 6 or 8 months when they're starting to make good money they whether you've got the right person growth — 50% a year — for another or not. five years. And to cash in doesn't change. They start going out and make any sense to me. It's too much buying a new BMW, a house, new Q. Do you think of yourself as fun. furniture, new clothes and of course businessmen — in the sense that you if you do that you can't put an apron could go into a business and run it? Q. (to all three): What problems do you on and work in the store any more Or are you specialized? think entrepreneurs will face in the and the next thing you know the A. (Rubin): I think you have to know future? business is gone — the profits are the business, especially at the start-up A. (Alger): In my business the largest gone and they're in trouble. The or the second stage level — there's no problem will be the speed of change, money comes from satisfying the room in here for expensive staff with and the need to be very decisive and customer, and you'd be amazed how the right answers — you have to to know more than you had to know little credit people give for their know the business — when the 15 years ago. The stock markets are success to the customer. There's all reverses come you have to be able to trickier than they were 15 years ago. kinds of businesses for sale — they dig in and get things moving again. There's a good possibility that we might want 10 or 20 or $30,000 could get into a good trend market down, but they'll take nothing down Q. (to Alger): How much of your which could last 10 years — in —just convince them that you can thinking was innovative? Or did you fact, we're forecasting one, but make it work. It's a heck of a lot take an idea already existing and nonetheless the competitive demands better doing it that way than starting make it as good as it could be? to be superior are going to be very from scratch with all the red tape and Alger: People may copy you, but they intense, and the entrepreneur is everything. don't know why you're doing what going to have to be very decisive and you're doing. To think creatively very productive in his thinking. It's Q. (to A Iger): Please expand on what you about your business means that going to be a trying time, I think. meant by "creating thought" in your you've figured out in advance all the industry. things that can possibly go wrong, so A. (Rubin): I think the biggest Alger: I made the point that to be when they do, you don't have to think problem for our audience is perhaps a success you had to develop too much about how to respond to going to be one of timing. They are knowledge of your business to such a them. Other people — the ones who not part of our generation who were degree that you could create thought are just copying you — may become depression babies who came to in that business. A perfect example unglued. Most successful companies fruition without a lot of competition. would be Tom. He got to know his I think are those that understand We didn't have the baby boom business extremely well and what they're doing and keep generation with us shouldering up to perceived that the key was delivery — improving that basic product.

12 A Matter of Money

Whyisn ft more money being invested in new or developing companies in Michigan! And what can be done about it! Professor Brophy's Growth Capital Symposium is helping.

ot so long ago, when Michigan's availability of money, both localities Symposium, as it was called, took economy seemed solid and also sported highly developed place in 1980, and has been repeated healthy, David Brophy, associate networks of professionals — venture in 1981 and 1982. It is co-sponsored professor of finance, asked a simple capitalists, financial advisors, lawyers, by the Business School and the U-M's question: Why is it that in Michigan accountants and so on — who Institute of Science and Technology. we spawn so many technology based wielded the knowledge and expertise In addition to the formal program, companies, and yet so few of them necessary to turn a good idea into the two-day Symposium allows ample develop into large successful a thriving, multi-million dollar opportunity for private meetings and businesses? business. informal discussion. This is where To answer this question, Brophy Turning to Michigan, Brophy the real action takes place: deals are compared the Detroit-Ann Arbor found a very different story. Even arranged, contacts are made, and area with two spots generally though the state is the sixth largest in new companies are given birth. considered to be hotbeds of the country, and even though there is "The first year," says Brophy, entrepreneurial activity — a great deal of wealth here, precious "we had about 100 people; last year Palo Alto-San Francisco and little of it was being invested in new we had 125 and this year we had 280. Cambridge-Boston. The resulting or developing companies in the state. Now the Symposium attracts study, entitled "A Study of Venture Moreover, networks of professionals investors from all over the country, Capital Investment: The Financing which support entrepreneurs and and there are more companies that of New, Technology-Based Firms" which should naturally be present in want to present than there are time found that a major difference a state of this size, were nonexistent. slots to present them. The other between those two areas and The lack of available financing aspect of the Symposium is that we Michigan was money, and lots of it. dissuaded companies from locating provide an educational experience. Companies in the Boston or the in the state, forced who-knows-how- In this year's program, for example, Palo Alto area had available to them many Michigan entrepreneurs to we had three workshops run by millions of dollars from a variety of leave, and impeded the growth of highly competent people from major sources to nurture all stages of a companies already here. law firms, major accounting firms, company's development. This One way to remedy this situation, and major venture capital firms. included start-up money, venture thought Brophy, would be to So the Symposium has become a capital, expansion capital, and organize a symposium designed to resource, not only for the person who finally, access to public markets for bring together bankers, investors, has a company and is trying to raise companies that wanted to go public, and entrepreneurs — meetings that money, but for the person who is as well as professional investment would serve as a forum through one step back, thinking about the banking services for companies which Michigan entrepreneurs could potential. So we are providing both interested in mergers and present their companies to venture an educational service and a acquisitions. Along with the capitalists from around the country. functional service." The first annual Growth Capital The Symposium is only one

13 aspect of Brophy's interest in this What can I do for you?" says the subject. He has also done extensive vice president. research on venture capital and "My associates and I have just entrepreneurship, and is the author "A recent study shows the formed a company that can produce of numerous articles on the subject as a device that will revolutionize the well as a book, entitled, "Finance, midwest to be best positioned assembly line. All we need is some Entrepreneurship and Economic among regions for the growth money to get the thing going," says Development," published by the Smith confidently. Institute of Science and Technology of technology based firms." "Ideas are not collateral in the of the University of Michigan. In banking business, Mr. Smith," says addition, the 1982 Venture Capital the vice president. "I'm afraid I can't Paper Award, given by the National help you." Association of Small Business "Well, can you suggest who I could Investment Companies (NASBIC) go to for this kind of financing?" asks was presented to Brophy and his To understand the difference Smith. co-authors, Edwin Amonsen and between an environment that "I really don't know," says Mr. Vice Philip Bontrager, for their paper, encourages growth and one that President. "Analysis of Structuring and Pricing doesn't, let's compare the cases of Smith, disheartened and confused, of Venture Investment Proposals." two hypothetical entrepreneurs — tries several banks in Michigan with This is the second year Brophy has Stanley Smith of Ann Arbor and similar results. Then he hears that a won this award. Last year his paper, Joshua Jones of Palo Alto — whose millionaire friend of a friend invests entitled "Venture Capital, 1981" won stories occurred before the in new companies all the time. A the competition. The award includes Symposium was organized. Let's say meeting is arranged. Smith sees the a check for $1,000 to the University, that both people are electronics millionaire and explains his situation. plus appropriate certificates for the geniuses and inveterate inventors, "Mr. Smith," says the millionaire, author(s) of the winning paper. The and both have recently made "your product looks good. I could see prize money has become the seed technological breakthroughs which making an investment, but quite capital of the Venture Capital have strong commercial potential. frankly, all my investing is done Research Fund which supports Each has developed what he thinks through my investment counselor. student research activity and case is a marketable product. From this If you could talk to him . . ." writing in the venture capital area. point on their stories differ as much "Where is he?" says Smith. In discussing his research and as light and dark. "In Boston," explains the the development of the Symposium, Smith of Ann Arbor walks into millionaire, "but he'll be passing Brophy points out that by providing the biggest law firm in Michigan and through here in about a month, and an environment in which our own says, "I've developed a product that I'll arrange a meeting." people will generate companies and will revolutionize the assembly line, A month later, after meeting with these companies will develop, we and I want to start a company." After Smith, the investment counselor calls automatically nurture an Smith renders the details, John Doe Mr. Millionaire to say, "I've got tons environment that will be attractive to the attorney says, "An electronics of solid investments for you here in companies in other states. "That's company, huh? Well, we're a big my own backyard in Boston. What do where I think our energies should be firm. We do labor law, divorces, etc. we need Smith for? But I told Smith going," he says. "A recent study by — but start-ups? We don't do those." what he needs is a venture capitalist, the Joint Economic Committee shows Smith asks if another firm could be and I gave him a list of some of the the midwest to be best positioned recommended. "I have no idea," says venture capitalists around the among regions for the growth of Doe. "Have you tried the yellow country." technology-based firms. To realize pages?" From that list of venture capital this potential we must provide an A month later, Smith finds a firms, Smith finds one that is in environment which will nurture lawyer willing to struggle through Michigan. He talks with that firm, such activity. We must orient our the start-up in exchange for payment which makes, on the average, about universities in this direction, increase somewhere down the road. six investments a year. The firm says the availability of technically trained Unfortunately, this lawyer has never to Smith, "Your idea is interesting, labor, reduce the impact of taxes and done a start-up, has no connections but we can't do anything for you this social welfare costs, and maintain in the financial community, and year. Keep in touch." (Keep in mind a high quality of life in our state. knows nothing of the electronics that this example dates from before Along with these, we must develop a market. the Venture Capital Symposiums financial community which is Next, Smith looks for money. were organized. The picture has structurally and operationally Having devoted most of his adult life improved since then.) capable of providing for local to electronics research, he is not With production plans still on financing needs." schooled in the ways of finance. He the drawing board, his partners calls on the vice president of a bank. becoming disgruntled, and every "Good morning, Mr. Smith,

14 Professor Brophy (right) talks with two members of Chicago venture capital firms at a reception held during a recent Growth Capital Symposium. They are Brian Cressey, left, partner in Colder, Thoma and Company; and David Dullum, center, of Frontenac Company. Other pictures on this page were also taken at that reception. The next Symposium is scheduled for March 31 and April 1,1983 in Ann Arbor.

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15 it, they know what you're talking about. This category includes banks, There are six venture capital firms currently in life insurance companies, pension funds, brokerage houses. They also operation in Michigan, and five more in the would be likely to know people in category one and might say to the process of forming. Two years ago there were entrepreneur, "Don't go away, let me only two. call my friend the venture capitalist." They might say to themselves, "Aha, here's the kind of company that's not bankable right now, but I'm not percent! It is certainly no coincidence day bringing another company closer going to slam the door on it. I know a that from 1970 to 1980, only to duplicating his product, Smith vehicle that this guy needs and I'm Massachusetts and California had a decides to appeal to venture going to see that he gets it, because, positive inflow of venture capital, capitalists in other states. Over the for example, if I'm a banker, and I according to Stanley E. Pratt, editor next six months and at his own can find the venture capital to get the of Venture Capital Journal. During that expense, he flies to Boston, New equity in place for that company, decade, he said, California accounted York, San Francisco and Dallas. His there's a working capital loan down for 28 percent of the nation's venture search for capital is costly and time the road for me, or there are bank capital investments (though it had consuming. After one year, he has deposits, or whatever." Says Brophy, only 15 V2 of America's venture spent his life's savings, is frustrated, "That's how you grow businesses. In capital resources), while and not much further than when he Michigan, however, that attitude has Massachusetts attracted 15% of the started. not been common. In fairness we country's venture capital activity with Now let's consider the experience should point out that if there are no only 10% of its resources. of Jones of San Francisco. When he institutions in category one in this went to a big law firm there, the Venture capital bankers say it is state, the category two people are lawyer said to him. "So you want to much harder to arrange deals in the not going to be able to refer start an electronics company. Well, newer areas than in Massachusetts or entrepreneurs. If they can't look I've read your prospectus, and I California. "I did a deal in Columbus, down the hall or across the street, think it's impressive. You've come Ohio, last year," says Lawrence G. they're going to have to refer the to the right place. I did a dozen Mohr, a partner in Hembrecht & entrepreneur to New York or start-ups last year for companies Quist, a leading San Francisco Chicago or wherever for venture very similar to yours. I know the venture capital company, "but it was capital." electronics market pretty well, and agony because the attorney there I can put you in touch with a couple didn't know what venture capital was The third category is that of the of venture capitalists who specialize all about and kept worrying about skilled service provider; a lawyer, in products of your type. I can the SEC." an accountant, a financial advisor, a tax expert — people who provide recommend an excellent CPA, and Brophy explains that the creation professional services to businesses. here's the name of a financial advisor of an "environment for growth" In a place where a great deal of who can help you protect your means the development and entrepreneurial activity is assets." nurturing of a network of happening, category three people One year later, Jones's company professionals who cater to know each other. A visit to a lawyer employs 25 people, is taking orders, entrepreneurs, and explains that may put the entrepreneur off and and is lining up expansion capital. such a network can be divided into running, because that lawyer may say This is what Brophy means when he four categories. First are those firms to himself, "my success ratio with this talks about an "environment for directly involved in the investment of kind of company over the years is growth." And such an environment is venture capital funds. In effect, they such that I am willing to defer some more than academic, especially in have a sign on their door saying, payment on the front end to get this Michigan, where jobs are scarce. "Venture Capital Available Here." company going because I know I High technology industries in They exist in partnership form, or in will then be its attorney for life." In Massachusetts employ 250,000 the form of small business investment addition, that lawyer may very well people, one-third of the state companies chartered by the SBA. say, "I know a CPA we can get to do manufacturing labor force, and had Michigan is modestly represented in the tax work, and a personal financial sales last year of $19.5 billion, by an this business but is gaining ground advisor as well." There's a sort of estimate of the Massachusetts High rapidly. New funds are being loop mechanism between the Technology Council. Electronics formed, and membership in the categories, in the sense that, for plants in thcSilicon Valley employ Michigan Venture Capital Forum is example, if the third category exists, 161,000 people, according to a study increasing steadily. then the first two categories also by the Crocker National Bank of Category two includes the set exist, and if the first one doesn't exist, San Francisco, and had sales of more of financial institutions to whom it's tougher for the second two to than $10 billion in 1981. From 1975 venture capital is parenthetical to exist. through 1980, electronics-related their work. It's not something they do jobs in Silicon Valley soared 93 every day, but if you ask them about Continued on page 21

16 When Diane Brown, MBA '80, joined GPHPX two vpars a 00 slip was flip 4/nn PTTTTIIOVPP Siitirp nhpti trip pomtiativ has grown 500% . . .

he people who joined Genex Tduring the early days still have an esprit de corps," says Diane Brown, MBA '80, now Director of Technology Marketing for the company. "When asked how long we have been at Genex, we respond by giving our employee number. When I started here in May, 1980 as assistant to the vice president for commercial development, I was employee number 42. Now Genex has over 200 people and I no longer know everyone's name or face." Genex, which is headquartered in Rockville, Md., was established in 1977 to apply recombinant DNA technology to the development of commercial products and processes. The years 1976-78 saw several genetic engineering companies being Diane Brown holds a master's degree in molecular genetics from Johns Hopkins besides her founded, but the real excitement MBA. She is pictured in her office at Genex. began in 1980 with two happenings. First, the announcements came of the food industries," she explains. "For she says, "because only they can sign first human therapeutic proteins each industry we analyze their a million dollar check.") She might (e.g., interferon and insulin) made in products and processes to see if meet with clients to explain the a bacteria which proved that genetic biotechnology has a competitive edge potential applications of engineering is feasible. Second, the when compared to standard biotechnology and to discuss Supreme Court ruled that a "new" technology. In some cases it is not the production economics. Hopefully, living organism developed in a appropriate technology, but in many she can show them how Genex can laboratory could be patented under cases it has a clear advantage. We help them successfully enter the area federal law. With these two then convince industry to undertake of biotechnology, and persuade them occurrences companies in the the necessary research and to buy a research contract from the industrial world began to take notice development to bring the company. "I spend a lot of time on of biotechnology and to ask what this biotechnology-based process into the phone, in meetings, writing new technology could do for them. commercial reality." letters, reading trade journals, and Diane, who holds a master's degree On a typical day, Diane might work acting as a conduit for information in molecular genetics from Johns on determining which corporations between the clients and Genex's Hopkins besides her MBA, says that would be likely candidates for a scientists," she says, adding that her answering this question is a big part research contract (Genex does job has involved a good deal of travel. of her job. "Potential applications of business in the U.S., Europe, Japan, She goes to Europe, Japan and genetic engineering and South Africa and Canada) and throughout the U.S. on marketing biotechnology can have a major finding out the key people to talk to trips, and once was given 24 hours' impact on the pharmaceutical, at these corporations ("We try to talk notice to go to Caracas, Venezuela. chemical, energy, agriculture, and to vice presidents and presidents," "Working in a field that changes

17 and grows so quickly is exciting," says that focused on recombinant DN A Company, Inc. to develop a Diane, "but as an individual you have technology, and that currently it is genetically engineered strain of to be flexible, able to work with the third or fourth largest of such bacteria capable of converting certain incomplete data, willing to try just companies in terms of the number of coal tar fraction feedstocks to a about anything once, and have the employees. Since the company's phenolic compound at high rates ability to remain optimistic even formation in 1977, between 100 and and end product concentrations; when 'doubting Thomases' try to 200 biotechnology firms have been contracts with a Japanese company deflate your enthusiasm." organized worldwide. In addition, and a Swedish company to develop For the industry in general, Diane a number of major firms in the a microbial strain that produces explains, properly managing the flow pharmaceutical, chemical, energy, human serum albumin, the of new scientific information is agricultural, food processing, and predominant protein in human critical for future planning. Scientific pollution control industries have also blood; and a contract with another developments are happening so entered the field through internal Japanese company to develop a quickly that a process or technique expansion, joint ventures, microbial strain that produces may be obsolete before it is even acquisitions, or through contracts human urokinase, which is used to commercialized. "We have to factor with universities. They have treat blood clots in the lungs. this in when predicting our future committed significant resources to Diane says the most difficult commercial plans," she says. genetic technology research and part of her job is to find the right Man has engaged in crude but development applicable to their combination of client, project, effective forms of genetic respective product areas. One aspect technical feasibility, process engineering for thousands of years. of Genex's business strategy is to economics, potential market, people, The result has been organisms perform research for such major and money that allows Genex to ranging from improved strains of firms that might lead to joint efforts execute a research agreement. "The wheat and corn, to Siamese cats and to produce and market resulting most satisfying part of the job," she Russian wolfhounds. But the process products. Although currently its says, "Is when all these parameters is slow; it depends on infrequent, major source of revenue comes from fall into place and we sign a random events that cannot be research contracts, Genex is also multimillion dollar contract." directed; and the combinations of working on becoming a Management problems associated genes that can be tested are limited to manufacturer of its own proprietary with the rapid growth of Genex arise those that can be assembled by products. Work under research mostly from personnel and facility naturally occurring genetic contracts at Genex is divided into planning. Explains Diane, "The mechanisms, which in general allow discrete phases, explains Diane, and leadtime for hiring one qualified for exchange of genes only between if the company does not achieve a scientist is several months. Think organisms of the same species. All specific technical milestone by the about trying to interview and hire these limitations are substantially end of each phase, the customer has two hundred in a short time frame! eliminated by the new genetic the option to terminate the Add to this the market pressure on engineering methodologies that have agreement. salaries, and personnel policies been developed during the past To date, however, Genex, has become a major topic of discussion. decade. successfully accomplished all interim To go along writh the increase in The universality of the genetic milestones in its contracts. And the personnel it is necessary to have the code and of DNA as the genetic company's revenues have grown. facilities and equipment in place. We material allows the entire repertoire Starting from zero in 1977, they started out in 1977 in only a small of genetic information in nature to be increased to $23,625 in 1978, to office. Now we have 8.1,000 square manipulated in a rapid, directed $255,112 in 1979, to $2,322,609 in feet of laboratories, pilot plant, and manner by the genetic engineer. The 1980, to $5,661,673 in 1981 and offices, as well as approximately immediate practical consequence of $2,836,086 for the first five months 40,000 square feet of undeveloped this newly developed methodology is of 1982. Here are some examples of space and 10 acres of land ready for that simple microorganisms such as the research Genex has engaged in: a the next expansion. We have become bacteria can be turned into contract with Bristol-Myers Company very adept at working with jack mini-factories to produce many to develop genetically engineered hammers pounding outside the proteins from a number of different strains of microorganisms that office, and many people have organisms. In the long term, it is produce leukocyte (alpha) and changed locations four times in theoretically practicable to produce fibroblast (beta) interferons, two years." virtually any protein from any (interferons are believed to have While we were working with Diane organism. potential therapeutic value for the on this story, the announcement Competition in the genetic treatment of certain viral diseases came that Genex has gone public engineering industry is intense, says and some types of cancer); a contract with an offering of two million Diane. Genex believes it was the third with a Japanese company to produce shares. The company grew from 42 genetic engineering research and a genetically modified strain of E. coli to 200 employees in two years. No development company established which produced L-tryptophas, an telling what growth is still ahead! amino acid; a contract with Koppers

18 » « hen J ames 1 an « 101 Nation a 1 vSpmi rn or in 1979 annual salps total \J xJ JL JL JL JL 1. JL JL vJ JL JL • CiJL LL JLUX4..L uCllvO %~\J LCIL Now they are ov • # ames Tann, MBA '67, joined JNational Semiconductor (where he is currently Director of Marketing for the Module Products Group) in 1979 when the company's annual sales were $400 million. Four years later, National has grown to over $1 billion in annual sales, and the growth of Jim's department has exploded. During 1982, the module products group grew by over 100% in the U.S. over total growth in 1981. "Our plan," says Jim, "is to grow 40% by the end of 1983, and at present, we are ahead of schedule, even during these tough economic times. There is nothing like the semiconductor industry, at least through the 1980s." In the late 1960s, when Jim was working toward completion of his BSE in physics and math and his MBA, he never received a formal course in ICs (integrated circuits) because this technology was too new and was developing too quickly. "While I was at school," he says, "manufacturing costs of ICs were rapidly decreasing and the market for ICs was exploding. All the time new applications for ICs were being developed and the semiconductor manufacturers were running as fast as they could to keep up with the pace of technology." / It has been a hectic pace. If the efficiency and cost of the automobile had improved in the past 20 years at the same rate as microelectronics, a Rolls Royce would now cost $2.75, get three million miles per gallon, and would deliver enough power to drive the Queen Elizabeth. James Tann is currently Director of Marketing for the Module Products Group at National Semiconductor. As Jim points out, the key to an Connecticut, the company moved growth," he adds thoughtfully, "is integrated circuit is density — that is, its headquarters to California. that although there may be a limited the number of components that can Including NSC, the number of amount of resources, there are be built onto one tiny silicon chip. electronics companies to come to the always great opportunities for people From 1960 to 1980, the number grew Valley in 1966 could be counted on to pursue personal and team from less than 10 to more than one hand. opportunities. Lines of com­ 100,000 per chip. This increase in The company grew quickly, adding munication at National are direct and density was the primary force (along to the small Molectro offices in 1969 fluid. As an example, during the past with the associated reduced cost and a two-story, 110,000 square-foot year I have not only had marketing increased performance), that put structure on its own Semiconductor responsibilities, but I have also had computers into everyday use in Drive. Between 1966 and 1969, design-engineering, test-engineering business, industry and the home. nearly 30 other companies joined the and pilot-line responsibilities. Over This is the revolution. A computer ranks. the next few months, I plan to can now be a large stand-alone In 1974, despite the industry's eliminate some of these burdensome system, or a quarter-inch square first major recession, National responsibilities by adding new silicon chip. Semiconductor completed an even personnel or promoting from within, "National Semiconductor early-on larger two-story building to make a policy at National. Because of the made the decision to fill a market way for more production and growth, my greatest thrills are niche as a broad-line semiconductor engineering facilities. It was during preparing sound plans and supplier," says Jim. "To accomplish this decade, with the microelectronics exceeding them; watching people this, and to keep pace with the rapid revolution in full swing, that literally grow into positions at all levels that changes in technology, the company hundreds of companies emerged to they themselves 6 months before organized itself by structuring a share in the prosperity. And by then, considered too difficult; and number of businesses within the NSC was the largest semiconductor grasping the importance of a new company designed to attack different manufacturer in the Valley. technology as applied to innovative markets within the industry. National The company continued to grow opportunities." maintains this structure today. In this at a tremendous rate, with factories "The major difficulty in managing way, it concentrates on the IC being built in Salt Lake City, Utah; in this type of structure," says Jim, business and is also active in the Scotland; and the Far East. In 1979, "is to find enough good people and systems business. yet another building in the have enough time to train individuals "In order to manage our company's Santa Clara complex was to accept rapidly-increasing exceptional growth," Jim continues, completed. It encompasses over responsibilities. Because of our "the company is organized to have 315,000 square feet (the size of three growth, we all have a tendency to profit and loss centers at the lowest football fields) and houses the exceed our ability to respond, so we possible levels. These centers are engineering facilities of several must constantly be on guard to avoid generally structured to control different product lines; nearly all the pitfalls of over-committing. In engineering, wafer fabrication, test the marketing groups; and the this mode, important details are engineering, product and process corporate staff. surely missed, and it is imperative to engineering, accounting and product Today, National Semiconductor be able to rely on people who report marketing. The sales force, finance, Corporation is the leading broad-line to me." large-account marketing, R and D, manufacturer of a wide range of Jim described for us a typical and general administration are kept integrated circuits (ICs) in the major day — choosing at random a day in separate. technology areas including linear, August, 1982. He began with an "With this somewhat complex digital, logic, hybrid, memory, early morning meeting with a major organization," explains Jim, optoelectronics, board-level supplier to solidify a substantial "National has been able to effectively computers, transistors and modules. increase in IC supply for a new manage growth by fostering a National's microcomputer systems product that had just been number of small entities designed to division develops and markets introduced. At that meeting they make immediate decisions at low microprocessor, microcomputer and worked out details and also began organizational levels." memory systems. With 31 plants in negotiations for a second-source Twenty years ago, National nine countries, the company also agreement with the same company. Semiconductor, like many other produces systems products including Such agreements, says Jim, are companies, was headquartered on point-of-sale systems and IBM- common in the industry and provide the East Coast. But in 1966, it compatible computer systems. the customers with alternate sources acquired a small integrated circuit "The key qualifications that help for the ICs they depend upon to company in Santa Clara called us manage this kind of growth," says manufacture their own products. Molectro. Keeping its transistor Jim "are flexibility, aggressiveness, Then he went to visit a customer and manufacturing operations at the team work and the elimination of closed a $5 million order for 1983. original site in Dansbury, bureaucratic barriers. One of the Returning from that visit, he advantages to such large and rapid reviewed the mail and handled

20 telephone calls. He then held a program review on a new custom product where some technical A Matter of Money difficulties had developed, and Continued from Page 16 discussed a strategy for communication with the customer. By then it was lunchtime. The fourth category consists don't, they know they'll be losing the After lunch, he participated in of individuals who have funds to business to out-of-state firms. A another program review where a invest in growth situations. In the direct result of the Symposium in this specification waiver from the normative model, there would be regard is the formation of the customer was required. This was professional money managers — Michigan Growth Capital negotiated with the customer by investment advisors — around for Foundation, a non-profit telephone. The rest of the day was these people. But although Michigan organization devoted to improving spent reviewing mail, approving has an enormous stock of wealth, the the quantity and quality of these two major price quotes, analyzing management of this wealth, for the professional services available locally. pilot-line performance, reviewing most part, is done out of state. We are The first meeting of this group was the forecast and profit/loss results for an exporter of capital. Although held in October, 1982, with 35 in the previous month and reviewing most of the wealth in Michigan was attendance. Erwin Ziegelman and and commenting on a licensing earned in an entrepreneurial way, Professor Brophy are co-chairmen. agreement with a company in France. the people who earned the money In the past several years, progress "Since we are on the west coast," he and the people who now hold it are has certainly been made. At the 1982 says, "from 3 to 6 p.m. is the best time separated by several generations. Venture Capital Symposium to get paper work completed, except They don't have the entrepreneurial eighteen firms were presented, and for necessary calls to Australia and "zing." They're not looking for new Brophy says that on the average, Hong Kong." things to invest their money in, but those firms received 12 follow up tend more to be passive holders of visits from venture capital investors. Commenting on semiconductors funds. Consequently this fourth "At least nine of those 18 companies in the '80s, Jim says, "In the next 10 category is not well developed in look like national class companies years, semiconductors will certainly Michigan as yet. However, the that are going to get their money and be one of the most exciting fields to Detroit Bank & Trust Co. and the make their mark," he says. "We may be in. Most of the major growth National Bank of Detroit have have a long way to go, but I think industries of the 1980s (computers, established venture capital we're now heading in the right telecommunications, robotics, etc.) subsidiaries, and a new law allowing direction." The fourth Venture are all fundamentally based on five percent of state pension funds to Capital Symposium is scheduled for semiconductors. Our challenge is to be invested in venture capital also has March 31 and April 1st in Ann maximize profitable growth into spurred the formation of some Arbor. Anyone interested either in these segments while retaining the investment companies. presenting a company or in buying or flexibility to be able to identify and merging with a company should get address new markets with Brophy explains that this four-part in touch with Professor Brophy at yet-to-be-developed technologies. As network develops naturally as the (313) 764-7587. Those interested in we grow even larger, I'm sure some availability of growth capital attending just because they are of our management flexibility will be increases. And the Venture Capital interested in the field are also reduced. Our challenge is to invent Symposium is starting to show some welcome. new methods and organizations to results. People from Chicago and meet these future hurdles. New York are coming to the Herbert Doan, the owner of Doan Symposium, so when local "I believe the major problem Resources, one of the best-known accounting firms, law firms, bankers, area for our industry is to remain venture capital companies in etc. also come to the Symposium, competitive in a fundamental Michigan, points out that it took they see whom they are sitting next industry in a world-wide market. California 30 years to get where they to, and they want to exchange We must find ways to maintain our are, and it took Boston 20 years. information so that the level and profitability to fund the major "I think we could do it in 10 years," calibre of the service available in investments required to continue he says, "because we have the role Michigan gets brought up to national U.S. leadership. The approach to models. It's a matter of how well we standards. "When venture capital this challenge is not easy, but our can build on our foundation." companies are in place, bankers will strategies for the 1980s must reflect There's no question that we are know where to send an entrepreneur this complex problem. building. According to Brophy, there and that will be factored more into "The only thing certain about the are six venture capital firms currently their thinking," says Brophy, adding in operation in Michigan and five semiconductor industry," says Jim, that attorneys and accountants are "is that to be successful, one must more in the process of forming, now more interested in giving better whereas two years ago there were manage 'change,' for the nature of service to start-ups, because if they semiconductors is to foster change." only two. Perhaps that says it all.

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No, this is not a waffle iron. It is the plywood base and fiber glas domes for the first floor concrete slab under the new library. The "waffle" appearance of the floor underside will be the ceilings for the library, classrooms, and office areas.

22 e re Two Thirds o/tk Way There! Capital Campaign is Right on Target

Gifts and pledges of $11 million also volunteering their time and C. Andrew Kostrevagh, BBA '55, have been given to the School since effort to the campaign. Among them partner in Ernst & Whinney. the Capital Campaign began, are Donald R. Mandich, BBA '46, New York and Grand Rapids are bringing us a long way toward our MBA '50, chairman, Comerica, Inc.; targeted for the next concentrated eventual $15 million goal. Ninety Louis G. Allen, BBA '51, MBA '56, efforts. The New York Primary Gifts four percent of the money raised so chairman, Manufacturers National campaign will be co-chaired by John far has come from within Michigan; Bank; Joseph G. Conway, BBA '49, R. Edman, BBA '50, MBA '51, vice more than 50% of it from Michigan vice chairman, National Bank of president, General Motors corporations and 33% from Detroit; George H. Cress, BBA '58, Corporation, who is also serving as Michigan foundations. Says Dean president, Ann Arbor Trust general chairman of the overall Whitaker, "This not only show's a Company, and David L. Hatfield, Business School campaign, and vote of confidence in the Business MBA '72, president of Fidelity Vincent R. McLean, BBA '54s MBA School and the University of Federal Savings of Kalamazoo. '55, executive vice president and Michigan, but equally, if not more chief financial officer of Sperry important, in the future of the State's Our encouraging progress is due Corporation. Robert L. Hooker, economy." in no small part to the concentrated MBA '58, executive vice president of Corporations and foundations that campaign efforts being conducted in Transnational Motors, Inc. is in the Ann Arbor and Kalamazoo. George have contributed major gifts over process of putting together a Cress, chairman of the Ann Arbor $100,000 include: Burroughs campaign organization to assist him area, is being assisted by a steering Corporation; Chelsea Milling as chairman in Grand Rapids. committee which includes Donald S. Company; Ex-Cell-O Corporation; Meanwhile, the mild winter Chisholm, BBA '55, MBA '56, Federal-Mogul Corporation; weather has made intensive work president of Ann Arbor Associates, possible on the buildings, which are Michigan Bell Telephone Company; Inc.; HowardJ. Cooper,Jr., BBA fast taking shape. As of late January, Steelcase Corporation; The Upjohn '50, president of Howard Cooper all below-grade column pads, Company; The Towsley Foundation; Volkswagen, Inc., and Richard A. foundation footings and walls for the McGregor Fund; Herrick Hadler, BA '49, retired Hoover library were complete as well as all Foundation, and the Whiting Universal executive. Over $1.2 the below grade utilities such as new Foundation. Many Michigan banks million has been raised to date in water lines, sewers and utility have also shown their support Ann Arbor. through major gifts, including tunnels. Electrical conduit and steel Comerica, Inc.; National Bank of Robert M. Brown, BSE '63, reinforcing for the first floor Detroit; Manufacturers National president of the Monroe concrete slab of the library were Bank; Ann Arbor Trust Company; Management Company, is chairing finished, and the concrete floor itself Ann Arbor Bank & Trust; Great the Kalamazoo campaign effort. is finished. In addition, six of sixteen Lakes Federal Savings, and National Helping him are vice-chairmen first floor cement columns are in Bank 8c Trust Company of Ann Donald R. Parfet, MBA '77, place, the site for the Arbor. divisional controller of The Upjohn computer/executive education It's not only money that has been Company; Robert P. Kittredge, BBA building has been excavated, and contributed by Michigan's banks. '48, president of Fabri-Kal eight of fifteen cement pads for the Many of their executive officers are Corporation; David L. Hatfield, and building columns have been poured.

23 An informal collection of items, including news of the faculty, of alumni, and of the school, and assorted other information, opinion or comment that we think will interest you,

W. Edwards Deming Speaks at B School on Productivity Dr. W. Edwards Deming, internationally known authority on quality control and productivity, spoke October 28 at the Business School on the topic, "The Statis­ tician's Job for Quality, Productivity, Competitive Position and Re-education of Unemployment." His appearance was sponsored by the Ann Arbor Chapter of the American Statistical Association and the Business School. Dr. Deming is the creator of the Deming Method of Statistical Quality Control. His techniques were adopted by many Japanese manufacturers in the 1950s and are currently receiving much attention in the United States. Dr. W. Edwards Deming (left) is pictured at the reception which followed his talk at the Joseph M. Callahan, writing in Business School on "The Statistician's Job for Quality, Productivity, Competitive Position Automotive Industries magazine, and Re-education of Unemployment." He is talking with Business School associate credits the Deming quality control professor of statistics Roger Wright. Deming is internationally known for his approach program for much of the success of to quality control and productivity. the Japanese automobile industry. "Although the Deming approach originated in this country," Callahan DOR Publishes Monograph industrialized countries in Europe as said, "the Japanese began adopting it on Economic Policies in well as Japan and the United States. in the early 1950s and soon began France from 1976-1981 Extensive data on employment, converting their manufacturing unemployment, income, system from one that produced some A monograph written by W. Allen productivity, and other major of the world's shoddiest products to Spivey and entitled Economic Policies problem clusters are presented. A one that was sweeping world markets in France 1976-1981: The Barre more detailed examination is given to with some of the best products." Program in a West European Perspective monetary policy, fiscal policy, and Although U.S. production costs has been published by the Division of balance of payments problems; the run much higher, Callahan Research. French financial system is discussed concluded, "nevertheless, the The study analyzes the major and its impact on investment in Deming method has enormous features of the economic program of France is also considered. potential for the U.S. auto industry Prime Minister Raymond Barre — a The book concludes with a chapter because it offers the possibility of program which was aimed principally covering the first 9 months of the greatly improving both quality and at reducing the role of state new Socialist government — which productivity." intervention in the private sector and succeeded that of Barre in May 1981 stabilizing the franc on foreign — and which views policies of the exchanges. new administration in the context of The study compares these features the inheritance from the Barre to approaches taken in other program.

24 AT 8c T?s Chairman Receives Business Leadership Award Charles L. Brown, chairman of the board of American Telephone & Telegraph Co., received the 25th annual Business Leadership Award at ceremonies in Hale Auditorium December 8. He delivered the Business Leadership lecture on the topic, "The Breakup of the Bell System: A Personal Perspective." The head of the world's largest business enterprise began working for the Bell System in 1939 as a 17-year-old cable installer. After graduation from the University of Virginia and naval service during World War II, he joined the AT&T long lines department and moved through a score of positions in 10 cities. Brown was named president of Illinois Bell Telephone Co. in 1969 and AT&T executive vice president in 1974. He became vice chairman and chief financial officer in 1976, Charles L. Brown, chairman of the board of AT & T, receives the 25th annual business president in 1977, and chairman in leadership award from student council president Kenneth B. Kelly (left) and student 1979. He is presiding over the most council vice president William K. Creelman. eventful changes in AT&T's century-long history, changes nationwide partnership of companies consent decree (between the marked by shifts from a regulated providing total, end-to-end government and AT&T) and permit monopolistic environment to a communications service." Bell to use its technology in any nonregulated, competitive business Yet the Justice Department's market it chooses." world and expansion into a solution — which included Since the decree was signed last telecommunications system. divestiture of the 22 operating January, it has been accepted with Brown is a trustee of Columbia telephone companies by early 1984 some modifications by U.S. District Presbyterian Hospital, the Institute — had much in its favor, especially Judge Harold Greene — the judge in for Advanced Study, and Colonial when compared with the alternatives, the antitrust case — and has been Williamsburg Foundation. He is vice Brown said. appealed by more than 20 parties. chairman of the Business Council Among the points he cited were: The appeals have been sent to the and a member of the Business — "It would defuse the issue of Supreme Court. Roundtable, a former trustee of Bell's alleged size and power. "We and the Justice Department Loyola University, Lake Forest — "It should remove concerns both urged the Supreme Court to College, and the University of about Bell using revenues from step in to expedite a higher court Chicago. monopoly services to subsidize ruling. We anticipate the decree will Speaking to a standing room only competitive offerings. stand up under higher court review," audience of faculty and students, — "It would remove any basis for Brown said. Brown said AT & T's decision to long distance competitors' complaints He acknowledged that Bell must accept the Justice Department's about equal access to local phone now perform "the enormous and divestiture proposal was, in reality, a networks. unprecedented task of disassembling decision to "adapt our organization — "It would enable Bell to retain the world's biggest business, the Bell to the changed expectations of the its ability to manage a nationwide System, and reassembling it in eight American public." network as a single entity. separate enterprises, seven of which Brown commented that the — "It would preserve the vital link are regional companies. divestiture solution was "a painful between Bell's research and "Our job now is to adapt our one," adding that "to retain vertical development unit, Bell Laboratories, corporate culture to changing times integration and gain the freedom to and its manufacturing arm, Western and different needs. The challenge follow our technology into new Electric. will be to change our culture without markets, we would have to lay on the — "And it would remove the changing the character of our chopping block our well-functioning outmoded constraints of the 1956 business."

25 Marketing Department Receives Grant to Study the Office of the Future A year-long study of the office of the future and its impact on the design and marketing of office furniture, is being conducted by marketing professors C. Merle Crawford and Martin R. Warshaw as co-directors. The study is being done in conjunction with the Business School's Division of Research under a $110,500 grant from the National Office Products Association. Also participating in the study is Dr. Robert Tank, research associate of the DOR and Professor Robert Marens, jointly with the School of Architecture and the Institute for Social Research. The research team has reviewed the background documents of the industry, attended various conferences on the subject, and undertaken a series of exploratory field interviews. They then conducted eight focus group sessions, two each in New York, John V. Roach, chairman and chief executive officer of Tandy Corporation, gave a talk in Atlanta, Dallas and Los Angeles. December at the Business School on "The Role of Microcomputers in the Business They are currently in the major Information System." After his talk, he met informally with faculty and he is pictured here phase of the study which is a making a point during that discussion. six-month Delphi study of the leading minds in the office furniture area. Delphi calls for a series of mailings of questions about the and also had been internal Deputy Secretary of future. Each wave of questions management consultant in 1973 for the Treasury Presents reflects the thoughts and ideas from the Cost of Living Council and the 16th Mclnaily Lecture predecessor waves, both in terms of Federal Energy Office. sharpening issues, and in terms of "The International Financial In 1972-73 he was director of the introducing new issues. Delphi is a Scene: Crisis or Adjustment?" was Office of Case Management and long-established technique in the the topic of the 16th annual Mclnaily Analysis for the Pay Board. From world of research generally, but has lecture, presented Nov. 15 by R. T. 1966 to 1972 McNamar worked not been applied extensively in the McNamar, deputy secretary of the as a management consultant with field of marketing. The research treasury. McKinsey 8c Co., Inc., in San focus here is on the Delphi and how it McNamar, who is a 1963 graduate Francisco, New York, and works in the marketing setting. Amsterdam. In 1965-66 he was legal of the U-M Law School, was The study will culminate with a nominated to the treasury post by and financial counselor for Standard Oil Company of California. He is a complete report to the industry late President Reagan in January, 1981, next summer, and in a subsequent and thus became, at age 41, the member of the California and American Bar Associations and the general-interest report on the office youngest deputy secretary in the of the future written by the study history of the Treasury Department. Financial Executives Institute. The Mclnaily Lecture is named in staff and published through the McNamar has been executive vice Division of Research. president of the Beneficial Standard memory of former Regent William Corporation, a diversified financial K. Mclnaily. Other speakers in the services holding company in Los series have included Harvard Angeles, for four years prior to his economist James S. Duesenberry, federal appointment. Earlier he had Michigan economist Paul W. served as executive director of the McCracken, humorist Richard Federal Trade Commission, 1973-77, Armour, and former Secretary of Defense Harold Brown.

26 A cause for celebration was the establishment of the Peat, Marwick, Mitchell &f Company Professorship in Professional Accounting at the Business School. Pictured here are (left to right) Charles T. Smith, Jr., managing partner of the Detroit office of Peat, Marwick, Mitchell &? Co.; Dean Gilbert R. Whitaker,Jr.; Robert W. Scharff partner in the firm's Detroit office; Wilbur K. Pierpont, professor emeritus of accounting; and U-M Regent Thomas A. Roach.

Peat, Marwick, Mitchell & Co. contributions to the field of Notable Contributions to Accounting Professorship in Accounting professional accounting. The holder Literature. The award was for his Established at School of the professorship will also teach article, "The Impact of Regulation on graduate and undergraduate courses Controls: Firms' Response to the University of Michigan Regents in accounting. Foreign Corrupt Practices Act," have approved the establishment of The first Peat, Marwick, Mitchell which appeared in the October, 1981 the Peat, Marwick, Mitchell & Co. & Co. Professor in Professional issue of The Accounting Review. Professorship in Professional Accounting will be nominated later, Then, a picture of past presidents Accounting at the Business School. he said. Holders of the professorship of the American Accounting "This professorship is being will be selected for three to five year Association reminded us that of the established by the gifts of alumni terms which may be renewed. 30 living past presidents, 13 are on of the School of Business "Income from the gift will be used our faculty now, or have taught here Administration who are employed by to provide a stipend over base salary in the past, or earned their doctorates Peat, Marwick, Mitchell 8c Co. and by to the named professor, and will also from here. The thirteen, along with a special matching grant from the provide limited funds to support their year of presidency, are: William Peat, Marwick, Mitchell Foundation," research efforts. Any additional A. Paton (1922); Herbert F. Taggart said Dean Gilbert R. Whitaker, Jr. income will be used to partially (1942); Robert L. Dixon (1949); "Gifts and pledges are in hand which support the salary of the professor," Frank P. Smith (1954); C. A. Moyer will total a minimum of $250,000. Dean Whitaker said. (1957); Charles J. Gaa (1960); Walter "Peat, Marwick, Mitchell & Co. is G. Kell (1963); Robert F. Mautz an international public accounting (1965); Herbert E. Miller (1965-66); Accounting Faculty is Sidney Davidson (1968-69); R. Lee firm with offices worldwide. This Featured in Accounting effort to establish the professorship Brummet (1974-75); Donald H. was led by Charles T. Smith, Jr., Education News Skadden (1979-80), and Thomas R. managing partner, and Robert W. Three stories in the November Dyckman (1981-82). Scharff, partner, of the Detroit office issue of Accounting Education News Another picture in the magazine of the firm." featured members of our accounting featured four members of the Dean Whitaker added that faculty. Accounting Hall of Fame, one of holders of the professorship will Michael Maher, associate professor whom is Robert K. Mautz, professor be distinguished scholars who of accounting, was pictured as one of of accounting and director of the have made important research the two award winners for the 1982 Paton Accounting Center.

27 OHN ManwAwr-AfrHH'iirar^ K jDUKW'VWWN&Ctf' *Sf WVM rYWVWLWrV* #mt>&&VK ^yf O J W. CHUCHIAN, BBA TC5# '48, MBA'49, is a Che Chase Manhattan CotjHnnliun Inornate: self-employed CPA in Northridge, California and just moved into new John A. Htu>l>n\ MIA 77. MBA IS and larger offices. He has two daughters majoring in accounting; Dawn will graduate from California State University, Northridge, in December '82 and Shauna is a junior at University of Southern California.

RICHARD M. SCROGGINS, BBA '55, is vice president of real estate and general services for American Express Company in New York. After a tour of Marine Corps duty he started in business with Shell Oil Company. Upon deciding on a corporate real estate career, he made typical job moves, upward and lateral, at Shell, Burroughs Corporation and Ford Motor Company, including a five year stint in London with Ford of Europe. His wife, Jeanne, an undergraduate of Beloit College, received her MA in w^ education at U of M in '68. His ! daughter, Laura, received her BS in I in-1 li.isr \I.nib.u:.m kml ni l l IS. |>i i .INK ,i\iu zoology in '82; daughter, Lisa, has a ( .Ml pl < itlloll lj | <>i| II {>!( -hit Ml ill !'».»'* .Iltd W.is n,t Ul(( I BA from Parsons School of Design; X IIOOIK-I. Mi \' I'/. MB \ IS SMlliil \ H ( pt < •!(!( Ill ,ili(t ,{i s otlill and daughter, Sarah, is an active nine In \iu ( h.in nun. ! (< now it.i» !o.i>) d(-\( lojsun-1if oiiti i i in t!u year old. The family lives in 11 spoilMbllm loi t ); (III p<.ll< \ I S ()« p ii hii( III 111 I'M) I { 1c w.ts Greenwich, Connecticut. He writes, t oiitu i \ 11-si p«>ln \ 11 ,il t st.ni­ p! i fliiOh (j \i i <\l t |)||\t \ !< ( "It is difficult to relate specifics of the hil.tin t ll'lnllUS,! ^ I \ IC <"• Hid pii siiKt-.i lit I'.»S I. he lu% jiiv.) Business School training to my career i i ((In it .tin in j; .ind

JKA WILLIAM A. HOCKENBERGER, experience and ethical conduct. The JKP FREDERICK C. HERTEL, BBA %J %J BBA '59, has been elected Institute's membership represents a «Jp O '56, is general manager of a member of the Institute of significant proportion of the senior Creditanstalt Bankverein at their Management Consultants and has practitioners in the management New York branch which is now been certified as a management consulting field. He is manager of being organized. Creditanstalt is consultant. Certification by the Management Advisory Services for headquartered in Vienna and is Institute signifies that an individual Deloitte, Haskins 8c Sells in Salt Lake Austria's largest bank. He is also consulting practitioner meets the City, Utah. His consulting practice secretary of the Institute of Foreign Institute's strict standards of includes providing client firms with Bankers in New York. technical competence, professional

28 Sftnos (i. Drelles, liliA ^/, MliA '52, f. >) tu of sit ti 1- s urd ln/utis •;/ ut-1 .illv w ill (tuip. i toi in ••th<-> is good at aaticiftatiag market treads ! \ pi s ( .1 ,JSM~Is Nisi h >(S ! f ,|( < ss.llt ni j.',*-liei ,il. o\i i tht in \i linn in II\I'\(,HMI till lit H in : * tn.UM'-- How aid < I'.il Miiis. MB \ IN "|W SM int t '•, ho.ii d ol tin ft to) ^ tuiffi t < oittio! ind iht ffdf i .tl kmdh ^ ni us a < li].}tni'.'. t nou thi- M lc« ti d I >i t lit * lot 11«« poMfioji i:< i\f i Mit if in '«hi inks in sj/t 'Muskf yon i Inunii If \\ liu li i« Ih !»»< ,IIIM h* is ,i * if.iiivc in\i stun-nl j It- Mill docs ahout Sp* io-1. Do lit". \'*\\ \ ,*l. dnnk* i. v.nd |(»hii it. H httntt.it . "\Vf h,i\f ht *• u .id\ iiitii.' OIM M l> \ '.V„!. i \« t nf l\f \ n c |M f side nt pit side nt .t tic I i hie I f \fi nine i lit-uts u, j t f tit n io sto< Ks ,Mit| of iiOfsl Ilicill |»'llt \ .llttl sli.H{-o\ oM i« f i. in ,i tu ton lit i MI; iht 1 )ic lit s hoilds SUM f LtM \ujiilst. i)f (lit s tni Pit SM'IIK r I i n*-i * .f» in Ncu .tppOlltlfUfUl s.iitl Vol k I ir !>• ,i stiuiis; IK In \«-l ni tht 1 )iclit-s h.is ^Mt t essj ulh I io\w \f \. hf W.H IM d ih.il iht I'd -ui« nii.il < \< It " tht to \ li»i i mplo\f(i u • huit .it .Hid ifdf i.tl >;o\f»liiii* ui s sh.iif «»f the pit ilii n 11 _t» how si i n ks ,n u I hi on U liMnl.nufnt.il anaivjs JU ind.umii (.toss \.ltHt|l.i| PloillU t (<.\l') w ill do in the (ill nit ih< ni.u Vt t in nils .tod id* lit if s mi; iiiii-l ill t litif ht hot fins con uit \, follow mi; Mtf N slot l s will tlo Wtll." lit s.ild. i t onomii t \p,it)siou h\ Ro«»fi < ) t jlfs s.tlfl, "» ,j||s |tij |||( .ipptoMiii.ttf l\ ^ 1.1 hilhoii iti h.t\f to t oittlol tis slwui oi ihf su>* k III.it kti to m,ik( ni tjot i>.nns t tliplo\ ff hetifllis Joi i- .tsfci li (.NI' hft oust tt has to. And hi isn't dill 111)4 if If last IHtiMMMil .t \t thf HUM l>it lies w.ts hut d h\ win i if«l about a sh.u p jump in pit suit nt s lei in I hi l.isl hlill Bf^sf mt i. \\ liitmoif fold Mom \ nidation ti* s.t \t-.tt iii.u k( 11 ,nnc \i\on-l old .ulniiinsii.itiotis (o ( ,n \ i our .1 ittt he lit thc \C.II s) " ht said. I JM juh . Ihfllfs s.iitt the tlu ii l.t.VC\CJ!Jpl 111,11 kft. Willi h lut-Ufs' fmai K i.tl hat l^iouud t in tf nt hf.ii mat k«t u.is ut-.ii III_U i ui it nih rn.dt s up SL*7:"> niillioti also im ludfv |h vcat s with Its r in! .uttl said slot ks .UMI ho nils t)f Bf^Sf tllf! S ,ISSt tN. I'lllshiii j)|i Nation.»l liaiik in would make In;; yams o\ t l the Btt.iust ht is wt-II know ii h\ I'llT-shui *_»h lit-\l IVII to tliK f \« .11 s i otiNult.nit' .uitl p» IISIOII pi.ill !>iflit s siaili d out at Pitishur t;h I If Said lh< II ( (Hisliliif I Moi ks, "ptoiM ii s .tli'kt . I )lf Hf s should do \atit'iial in i *KK! as a K'M.III h U Silt ll .!•• ) { 1\ Hllf\ . I'fdt t.ltftl nuit h to t jive th< t oinp.tm s altihsl Hfftj|i If.OMllilM i /H. !>i ji.mint nt Sioi« s .o H i } o\s U Is. Msthihix tu this .nf,f " U'htitnoif ht li.it i l)f{ on if \ it i- pt fstdt ui m ,111(1 tlflftJSf Slot ks. SIH ll .!•« N.ini. * li.iifu.f of .'.li ttn t stnit ut pf i sou lie-1 t ot Mit < d. < pfd a iiuiithfi oi bi^hlv IWo \f.tt S I l.istinos. < \«-« ut!\c \ t< * pn sid* nt sut t t-ssjul uit "If Is }ot mat kft Stt» k in.II it i .i( ti\H\ sun i his ni i h.u i;c of poi tloho m.iu.i^f- iimm«.', dft tsioiis and t oiuputci it t hmt|tifs ioi s( jf( mni* and }uh toi <-( cists h.is pi >>\t tl hini UM lit .iiul dttt ( t lll\( stuti. itl\. iiiihi. l)u il( s .ttid hi-- st,dl of It-1 st If i iitii; im <• si infiii Miinis.mil ! lis ,thiiii\ to anfu ipatt tii.u kt t II if nt'- .IIIUICIIII ,i wit if i .tu.m of intiis nfu.il slot ks licntis is ,i hiji tf.tsoti hf ts ,i top i!l\( --tllU Uts {fit Itldlll^ I :.S s|oi k> f le also sf i\tii as t halt man oi Bfsse. UK I otlil lal. .ind hoi ids. ft 'tci<_oi set ut itifs. oil a spfi ia 11 o«i it mitt t- to (iv\ flop hi addition to Hs New \ oi k .tod t;.is holdiu^N. t ( .ii t s(,itt ,iu hillioit in htlif\fd "fin.mt MI .issfts in iht" ,i>.sfts|tii sottti .MX) unh\tdu.ils ;ili institutions 9/? €% CHARLES L. TINKHAM, MBA O^ay '62, recently joined E. F. Vincent McLean, BBA ,^r f * X * JL JLJr j[ \ rjV>/ ^ A %J(? f f, f^-ff Hut.ton & Company, Inc. as assistant vice president, after 18 years with Michael Losey, BBA '61, MBA "62, are Sherman/American Express, to start promoted at Sperry Cor'potation a new office in Sun City West, a new retirement community. He writes, "Because of the aging of the Vincent R. McLean, BBA '54, Michael R. Losey. BBA T»l. American population with earlier MBA *5f>. has Ixivn promoted Co MBA "62, has been named staff and more affluent retirement, the executive vice president, direct)!', vice president for compensation retirement communities in the arid chief fmandal officer of and employee {jeneitfs bv the Southwest sun-belt should grow Sperry Corporation, effective. Sperry Corporal son, I le had been at a much more rapid rate than the January I HI. He wan formerly vice president for personnel ai U.S. as a whole. The phrase 'Go West corporate vice president, finance, Spern New Holland in young man' is more apt today We are proud in say thai he m Pennsylvania, the world's largest than ever." also seizing as co-chairman of the producer of specialized farm New York Primary Gilts effort of machinery. He will now lie based the Business School's (Capital at corporate headquarters in Campaign. New York city. 9££0 DAVID R. SMAIL, BBA '63, O«3 MBA '63, is now a vice president of corporate systems for consulting advice and assistance in president of the National Council of the Marriott Corporation in areas of strategic planning, systems Physical Distribution Management at Bethesda, Maryland. Besides analysis and designs and human the annual meeting attended by some development of computer systems, resource management. In addition, 2200 distribution executives from all David is responsible for office he is also treasurer of the Salt Lake over the world. He has been involved automation and the information City Chapter of The Planning in NCPDM activities for several center for the company, as well as for Executives Institute. years, serving as a past president of planning and administration for the NCPDM's Cleveland Distribution Information Systems Department. LYNN R. EVANS, BBA '59, MBA '59, Roundtable, as program chairman Prior to joining Marriott in 1981, he has been appointed divisional in 1979, as NCPDM's treasurer in personnel director of the Saginaw was an assistant vice president at 1981, and second vice president in Steering Gear Division of General Amtrak and involved in the Motors. Saginaw Steering Gear is a 1982. NCPDM is a professional administration of the Northeast component manufacturing division organization of some 3700 Corridor Improvement Project. of G.M. with plants in Saginaw, distribution management personnel David was employed in the Michigan; Athens, Alabama; Cadiz, who are located all over the world. consulting division of Arthur Spain; and London, England. Prior "Physical distribution" is the term Andersen & Company for 14 years to the Saginaw assignment, Evans was employed in manufacturing and before joining Amtrak. personnel director of General commerce to describe the broad Motor's Delco Moraine Division in range of activities involved in Dayton, Ohio. He has been active in planning, implementing and alumni and football recruiting affairs controlling the efficient flow of 9£? A F. ABBOTT BROWN, JR., (he has not missed a home football raw materials, in-process inventory O^K MBA '64, has been elected game since 1953) and his oldest son, and finished goods from point of president and chief executive officer Rodger, is currently enrolled as a origin to the point of consumption. of Ann Arbor Circuits, Inc. The sophomore in the U of M These activities may include, but are company manufactures a wide range Engineering School. not limited to, customer service, of printed circuit boards for national demand forecasting, distribution distribution. Abbott, his wife Grace, 9 £J£\ WILLIAM M. LUNDIN, communications, inventory control, '64, and four children live in Toledo, OH BBA '60, retired from the material handling, order processing, Ohio. U.S. Marine Corps as a Colonel, parts and service support, plant September 1, '70, and is now a real and warehouse site selection, TADD C. SEITZ, BBA '63, MBA '64, estate broker in southern California. procurement, packaging, return has been appointed as executive vice He was in the engineering class of'42 goods handling, salvage and scrap president and chief operating officer and returned to U of M under the disposal, traffic and transportation, of O. M. Scott & Sons Company. He "Bootstrap" program in '59. (He and warehousing and storage. Prior will be responsible for marketing and joined the Marines in February, to co-founding Cleveland Consulting sales, operations, and research and 1941.) Associates, Roger held a variety of development at Scott. In addition, distribution positions at Procter 8c he will be responsible for W. Atlee ^f+.'i ROGER W. KALLOCK, MBA Gamble and served as a principal for Burpee Company, based in O JL '61, is director of Cleveland the consulting firm of A. T. Kearney, Warminster, Pennsylvania. Both Consulting Associates and was Inc. Scott and Burpee are subsidiaries elected to the office of first vice of International Telephone and

30 f-% rjn * ill i O O A -* C* ^"«? /?. Timothy Leedy, O positive, KB A '57, appeared in the Dei ember 1. Then we see the same little hoy, I9H2 issue of The New York Times. t learly a spendthrift, manhandling a $2,200 telescope — which may "One reason for our success." cost 8 percent of Daddy's median R. Timothy Leedv, Discover income. magazine's advertising sales The little girl is thriftier. She director, said the other day. "is appears in another photograph, thai we tell it like it is." assembling a $ It).85 model of a AIKI indeed, there is an Stegosaurus dinosaur, unglamorous totality to tmirh of Such at iivism, Mr. Leedy the Time Ine.-owned monthly's indicated, is typical of "Discovery cool ems. The December issue, for readers as well as their offspring. instance, features pictures of such "We fhadr he reported, "that the subjects as "an ai ray of Cuban tree reader is an active, curious kind of snails*" "Crossed tusks, trait of an individual, hut he's not, a female elephants/* and "Edward scientist by any stretch of the <)„ Wilson with a cherished imagination." possession: an ant." The actual subscribers, he Yet there must he a lot of snail. reported, are about twro~thirds tusk ami ant fanciers out there. male, with a median household Discovers circulation has soared, income of about $33,000 to making it, as a recent trade press R, Timothy Leedy in hh office. $34,000 and a median age of advertisement exults, "America's about 34. Almost HO percent are largest st ience magazine" and were 0 percent higher than during college educated — "people who "lops in the science field, with a the same portion of 1981, and that feel it's important to know what's circulation of 850,000,*' the magazines had 2 percent fewer going on in the world of science of Its January advertising rate pages of advertising, technology." base — the total circulation chat Mr. I ,eedv ar k now led ged t h a t With those demographics, you the magazine guarantees to its "Discover" is not profitable at the might think the biggest advertisers advertisers — is 850.000, or I 12 moment, but he said it is expected would IM? makers of personal percent more than the 400,000 to turn the corner relatively soon. computers and other consumer figure when the magazine began "We are definitely on target," he electronics items — especially now, publication in October 1080, said, "We are living up to the with Christmas ahead. And you Speaking not of the magazine's expectations of the corporation." would be almost right, circulation figures, hut its Be that as it may. why is the C 'onsumer electronics contents, Mr. Leedy said: "We magazine nourishing so? Why are companies are indeed heavy don't fantasize things; some of the advertisers so eager to have their Discover advertisers, Mr. Leedv new science magazines have a messages appear in its pages, said, but the heaviest are makers tendency to do that; it's referred to among the snails and the tusks? of automobiles, both home-grown as gee-whizjournalism," "The audience you have here is and imported. The not 1-gee-whiz approach. rich haby boomers," Mr. Leedv And so a handsome two- he suggested, has brought rich said, "and that's a most desirable page Nissan ad runs next to a rewards. Advertising revenues for audience to have." no-nonsense article about 1982 will he 70 percent higher "If you look at your total opening blocked arteries, Its chief than for 1981, he estimated, and audience." he reported, "you find illustration is a painting of an the total number of advertising that 40 pen em of it is between the artery, enormously and rather pages will he up 18 percent, ages of 25 and 49 and making gaudily magnified, with the By way of rough comparison, $25,000 or more." unflinching caption: "Cutaway the Publishers Information What are the members of view of an artery being treated Bureau calculates that the more that audience like? What do thev with the laserseope; the balloon than 100 magazines it follows had want to give their children for behind the catheter tip is inflated total advertising revenues, for the Christmas, for instance? to halt the flow of blood." first 10 months of this vear, that The December issue has a Cee whiz! Telegraph Corporation. Tadd Lutheran Program for the Aged, and and Morgan, 7. They visited Ann joined Scott in 1972 as marketing is a master mason and a member of Arbor this past summer when administration manager and was a Kiwanis. He is also listed in "Who's returning from their vacation. director of corporate marketing Who in America" and "Who's Who in Richard is a past president of the prior to his appointment at Burpee in The World." Michigan Alumni Club in St. Louis 1979 as assistant general manager and currently serves as a director. and, subsequently, general manager 9g?£? GEORGE H. ASHLEY, BBA He is also a lay director of DePaul and chief operating officer. He OO '65, MBA '66, has joined Hospital in St. Louis. He and his wife had been with General Foods Seaman-Patrick Paper Company, in have recently taken up scuba diving Corporation prior to joining Scott. Detroit, as vice president of finance. and look forward to going to the Scott is the nation's leading producer He will have full control of and Florida Keys. of lawn and turf products and has responsibility for the financial and been in the business of growing accounting functions of the company '^7Hi AARON B. RIVES, D.P.M., things for more than 100 years. and all subsidiaries. George has a 4 \j BBA '70, is a podiatrist strong financial management with two offices in the Detroit Metro 5££ K JAMES W. WEITZEL, MBA background in private industry and 0*J '65, has been appointed vice area. He entered medicine after a public accounting experience with successful career as the youngest president of real estate operations Ernst & Whinney in both Chicago for Great Midwest Corporation. personnel manager of Hygrade Food and Detroit. He lives in Troy, Products in Detroit. He and his wife, Formerly vice president of Michigan. marketing, Weitzel's responsibilities Ronna, have a new daughter, Ericka. will include the leasing of space in FRANK HAVEL, MBA '70, is a regional Great Midwest Underground, sale of 9 d% hf DONALD S. OWENS, MBA manager for Ingersoll Milling improved surface land, property O 4 '67, received his JD degree Machine Co., a special machine tool management, security, and operation in 1969 from the U of M Law School. company based in Rockford, Illinois. of the Foreign-Trade Zone. Jim has He practiced law in Lansing for 4 Frank is based in Houston, Texas been with Great Midwest since 1978. years before becoming Probate Judge and is responsible for all accounts He was formerly a vice president with in Ingham County and has since west of the Mississippi River. He the Manhattan Company in Troy, become a nationally known authority received his professional engineer's Michigan. A director of the boards of on the law of child abuse and neglect. license in Texas in 1981. Most of his both the International Trade Club Judge Owens lectures widely on business dealings are with oil patch and Kansas City Foreign-Trade all aspects of the law relating to and aerospace/defense firms. Zone, Inc., Weitzel is past president children, and serves as chairman of of Sales 8c Marketing Executives of the Michigan Probate and Juvenile Kansas City, Inc. Great Midwest Court Judges'Juvenile Affairs 9 £"7 "1 JOHN BATTAGLIA, BBA '71, Corporation is a privately-owned Committee. He lives with his wife / JL has been in the real estate company based in Kansas City, Carolyn, a U of M graduate, and business in Roseville, Michigan Missouri and is involved with the their four children in a 142-year-old which, he says, has been in a bad development of 2,200 acres of land house which is a state historic site in depression for the last three years. located just east of the intersection of the small town of Mason, Michigan. However, because of his low Missouri Highway 210 and 1-435, Judge Owens feels that his business overhead, he has been able to seven miles from the central business school experience has been an survive, but, he has also started a new district. Great Midwest Underground invaluable asset to him, first as a business. The new business is is a rail-served, 460-acre subsurface probate and tax lawyer, and then as a Battaglia Distributors and they sell area underlying a portion of the Probate Judge, since his court has natural herbal and mineral development. Plans provide for approximately 100 employees and a preparations manufactured by industrial, office, recreational, and multi-million dollar budget. He also Paracelsus Laboratories, Inc. in Utah. residential development of Great credits Professor Arthur Southwick Midwest's properties. (Business Law) with instilling in him a 9^TC| RAYMOND LEUNG, MBA'73, love of the law and inspiring him to 4 *J has taken the job of ROBERT E. LONG, MBA '65, has been go to law school and pursue a legal planning systems manager at named chief executive officer of the career. As a result, he feels that the PennWell Publishing Company in West Allis State Bank in West Allis, 14 months he spent at the Business Tulsa, Oklahoma. There he Wisconsin. Robert, who had been School were among the most improves and oversees the current president of the bank for two years, important in his life. strategic planning process, develops a assumed the additional position upon planning guide, does forecasting, the retirement of the bank chairman. RICHARD CARL JENSEN, and helps individual planners with He has also been named executive MBA '68, has been strategic planning. Before going to vice president of Bancorporation of president of Boatmen's West Port PennWell, Ray worked at Clark Wisconsin Inc., a holding company Bank in St. Louis County, Missouri Equipment Company in Benton that owns West Allis State Bank. for the past two years. He has lived in Harbor, Michigan, where for nearly Robert is active in the Lutheran St. Louis since 1971 with his wife, five years he served in various Social Services and the United Louise, and his two boys, Arjay, 11, strategic planning capacities. There

32 he developed monthly forecasts, coordinated an annual and five-year planning system and put productivity laiTy C. Myers HL MBA "72, is now improvement programs into effect. ZEO of Highlights for Children, Inc. TOM WETZLER, MBA '73, is vice president of operations/sales of Garry C.Myers 111, MBA 72. then to president. I then became Tetra Resources, Inc. in Houston, wrote tin an interesting note alnmt president of Zaner Bloser,an Texas which he formed with two what had happened to him since elementary textbook publisher other people in February of 1981. In graduation. He says, "After and wholly owned subsidiary of 1981, Tetra Resources had sales of $5 graduation from Michigan I Highlights. In 1981 I was made million and in 1982 sales were $15 worked as a sales representative GEO of Highlights and all of its million, with 85 employees. The lor Alcoa in Ohio until 1975 when four separate subsidiary company is an oilfield service the bottom dropped out of the companies. company specializing in completion aluminum market and Aleoa "Highlights, which is in fluids and specialty drilling products. began to cut hack. I had a sou, Golumhiis, Ohio, is an educational It has seven sales offices and 15 Garry IV, in February, 1975, saw publisher as are the subsidiary operations facilities in Texas, the handwriting on the wall in companies, Zaner Bloseraiict Louisiana, Oklahoma, New Mexico, aluminum in August, arid quit in Skilleorp Publishers Inc. and California. December, The Toledo office of Aggregate sales are between $25 MICHAEL K. MENEREY, BBA '73, Alcoa was subsequently closed and and $30 million and we have a moved to Los Angeles in June where all people released. In I Jet ember, combined workforce of over 400 he is presently the manager of 197f* I took a gigantic pay cut to people, accounting for Transit Mixed work as an in format ion analyst *in 1975 I learned I had Concrete Company, the second for Highlights for Children, a lymphatic cancer and during most largest producer in the Southern company my grandparents had of the time from 1975-1979 I California market. Before his present founded m 1940, The company underwent chemotherapy and position, he spent V-h years with was owned and controlled by a radiation treatments. Am now free Seidman and Seidman CPAs, then family trust and was managed very of it 1 hope. Melanie, my wife, has spent the next two years in his own ably by turn-family businessmen, I l>een a great help and support CPA partnership before moving into leai tied to program the company's during the whole time and is private industry, which he says he computers, and was promoted to currently a business student at enjoys immensely. He and his wife, director of mail marketing, then to OSU," Suzie, have two sons, aged 41/2 and vice president of mail marketing, 2V2, and he says he keeps up with the University by belonging to the L. A. operations, is listed on the New York active consummating tax benefit alumni club and to the Big Ten Club and Midwest stock exchanges. transfers and credit real estate leases. of Southern California. He writes that he enjoys working with ROBERT H. PEIFFER, MBA 74, is a JIM SWIGART, MBA '76, in Dean commander in the U.S. Navy Supply Witter's project finance group, and Corps stationed at the headquarters has managed to keep proficient at J M A WILLIAM E. SHERIDAN III, in Washington, D.C. He is currently f TE MBA '74, has assumed fly fishing, golf and various involved in analyzing the Navy's racquet sports. responsibility for Apache problem with poor inventory record Corporation's revenue and accuracy, defining the causative J hf £* C. MICHAEL KRUSE, MBA well-costing accounting services. He factors, and developing and 4 %3 '76, has been named was elected controller of Apache implementing a corrective plan of representative for Venezuela for Corporation, Minneapolis, action. He writes, "I continue to be an Bankers Trust Company of New Minnesota in May of 1981 after avid fan of the Maize and Blue and York, and has moved to Caracas. He joining Apache in May of 1980 as really miss those Saturday afternoons joined Bankers Trust on graduating director of planning and financial cheering on the Wolverines." reporting of Apache Corporation from the Business School, and served and controller of Apache Programs, ' ^7 K JOHN E. JAMERSON, BBA 75, as deputy representative of the bank Inc. Bill was previously an audit 4 %J after an MBA from the in Madrid from 1978 to 1981. He manager with Arthur Andersen 8c Sloan School of Management at MIT, then became head of the bank's Co. and is a member of the American joined Dean Witter's corporate Iberian desk in New York. He is Institute of Certified Public finance department in New York. married to the former Jeanne Nelson Accountants and the Minnesota Following four years on Wall Street, and has one 17 month old son. Society of Certified Public John moved to Montgomery Street Accountants. Apache Corporation, in San Francisco to oversee Dean 9 M M RAZIEL ROM, MBA '77, went an oil and gas program, exploration Witter's western project finance / / back to his home country of and production company with activities. He has been financing Israel after having some experience industrial and agricultural various energy projects and has been with Ford Motor Company and

33 Burroughs Corporation. After three a^t&in Ql^ § Pi § § f %* /\t\jfYtJT ¥ £^1 i "¥*^%iR i T years with a large manufacturing company, he started a company of his own with two partners. Cycon Ltd., We would like to include more news about alumni in Dividend, and hope you will formed in May of 1981, is a high help by providing us with information about yourself. We'd like to know where technology corporation specializing you are working, and other news about you, such as promo lions, new business in CAD/CAM systems for tool, dies, ventures, any business or academic honors, authorship of books or articles, of and prototypes. The company was other informadon that would be of interest to alumni. If you would take the time started with five people employed to fill out the form below and send U to "Editor, Alumni News, Graduate School ot and now has 31. Razi says that they Business Administration, University of Michigan, Ann Arbor, Michigan 48109," have invested 1.5 million dollars in we would very much appreciate it. R&D and predict sales of $18 million a year from 1985 on. He writes, "I tell Name: Degree(s) and Class Years: _ you all this because I remember and appreciate Professor Warshaw who Business Position: advised me: 'Keep your eyes open, and make the move when the time Business Address: comes.' There is no doubt I owe him some of the success." Home Address: ™ THOMAS E. CHANDLER, BBA '77, Please write below some personal or business news about yourself that we can graduated from George Washington share with other alumni, University law school in May, 1981 and passed the District of Columbia bar exam in December, 1981. He is now working for Finkelstein, Thompson and Levenson in Washington, D.C., practicing corporate and securities law.

' ^7 Q ROBERT A. BAILEY, MBA # O '78, is an internal auditor with Hanna Mining Co. in Cleveland, Ohio after four years on the audit staff of Coopers & Lybrand. He and his wife, Mary, continue to live in Chagrin Fall, a suburb of Cleveland.

CHRISTIAN E. SOMERS, MBA '78, joined McKinsey & Company, Inc. of Los Angeles, California on August 1, 1982 and will be primarily involved with the firm's electronics practice. Prior to joining McKinsey, Chris spent three years at Gould's instrument division in Santa Clara, California as a product group manager.

NAT MALCOLM, MBA '78, is still in the U.S. Navy stationed in England but is also running his own retail business doing about $18 million annually at 11 different locations. They sell everything from stereos to Wheaties; and he says, "I could use another two or three MB As for this!" He claims the hardest part is finding time to see the beautiful country and would love to be a tour guide for any MBA '78s visiting England, Scotland or Wales. Continued on page 36

34 fi|:;:ii|fi^^ Graduate School of Business Administration NON-PROFIT ORGANIZATION The University of Michigan U. S. POSTAGE Ann Arbor, Michigan 48109 PAID ANN ARBOR, MICH. PERMIT NO. 144 Address Correction Requested

Class Notes Continued from page 34

jHA JON CANTOR, MBA '79, is an PAUL J. GIBLER, MBA '80, has been PocketBooks. In his newly created • %J internal consultant in the promoted to market communications position, he will be writing sales management services division of manager of Ohio Medical promotion, advertising and Bankers Trust in New York. His Anesthetics in Madison, Wisconsin. communication materials. Lee responsibilities over the past six In this position he will be responsible was recently employed as an assistant months have taken him to Korea, for worldwide advertising and sales product manager with Japan, Los Angeles, and Miami, as promotion programs for enflurane Fundimensions, a division of the Bankers Trust seeks to expand its and isoflurane. Paul joined the General Mills Toy Group. national and international services. company in June, 1982 as market analyst for Latin America and the BRIAN M. SMEENK, MBA '79, joined a Far East and was active in the large Toronto law firm after leaving organization and development of U of M and was admitted to the direct and export operations in these Ph.D. Notes Bar of Ontario in May, 1981. He is a regions. Prior to joining OMA, Paul labor lawyer with Winkler, Filion 8c was an instructor of business Wakely and represents many large administration at the Milwaukee DARYL N. WINN, MBA '64, PhD '73, international and Canadian School of Engineering. He is fluent has been at the University of corporations in arbitrations, in both Portuguese and Spanish, Colorado since 1971 and is now Head collective bargaining and labor board having lived in Latin America for of the Business Environment and proceedings, as well as in court. He 14 years. Policy Division. Daryl worked for the writes that while he followed a Federal Energy Administration in somewhat atypical career path for DANIEL COTA, MBA '80, has joined Washington, DC for one year MBAs, his time at U of M was Computer Sciences Corporation's (1975-76). He and his wife, Elizabeth certainly helpful and that he often Infonet division as their accounting (Pinky), BS LS&A '64, have two thinks of the good times and good products manager; it is located in El children, Tom, 10 and David, 12. friends from his MBA days. Segundo, California. He was with ADP Network Services in Ann Arbor THOMAS A. CASE, PhD '74, is prior to joining Computer Sciences. managing partner of CATHO Progresso Profissional Comercial 9 Q /"| MARK KAPLAN, BBA '80, WILLIAM WAGNER, MBA '80, Ltda. which has completed its fifth O vl has finished his two-year has accepted a position with the year of existence. They have become "apprenticeship" to become a CPA Pepsi-Cola Bottling Group in the largest executive search firm in and is currently on leave of absence Southeast Michigan as an area fleet Brazil and the largest outplacement and pursuing a longtime dream. He supervisor. Bill and his wife, Pat, had firm. He writes that the brokering of is traveling around the country as the their first child in September, a son acquisitions and divestitures is an business manager for one of San named Mark. exciting new area that they have Francisco's top new wave bands, become very active in. Tom's Barry Beam, and has been working daughter, Susan, U of M '81, is with them for almost two years LEE BERKE, MBA '81, has working with them as manager of the touring around U.S. in support of '81 been appointed promotion direct mail advertising division and their newly released record. associate/senior copywriter at studies for her MBA at night.