News Briefs Darden Launches New Center of Excellence: Initiative for Business in Society
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he global economic crisis and the resulting patchwork of policy responses have created a new, challenging operating environment,” says Darden’s Dean Bob Bruner, “The Initiative for Business in Society (IBiS) will prepare tomorrow’s leaders and innovate tangible
“We are energized to address the most pressing issues facing businesses and society. No other research institution has been established specifically to take on this challenge, and there is no business school better suited to lead this groundbreaking center.” —Dean Bob Bruner
ways that business and society can work together to build a more effective collaboration.” Launched in October, IBiS will develop current and future business leaders to function skillfully in an increasingly complex global society. IBiS will be the foremost global catalyst of thought, information and action on business’ role in society and will prepare leaders to positively influence society through business. In conjunction with Dean Bruner and Darden’s top-ranked faculty, IBiS will be guided by an advisory committee of chief executives and highly regarded thought leaders who will identify strategic IBiS issues, build new knowledge and proactively develop leading practices and competencies. IBiS will address wide-ranging issues such as the current regulatory environment, health care, corporate governance, intellectual property rights and trust in businesses and markets. It will be led by Executive Director Dean Krehmeyer (MBA ’99), who also serves as the executive director of the Business Roundtable Institute for Corporate Ethics, an independent business ethics center established in partnership with the Business Roundtable, which is housed at Darden.
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“Today’s business leaders face a new set of demands, expectations, responsibilities and operating requirements,” says Krehmeyer. “IBiS will offer a suite of strategic activities designed to empower an organization to successfully navigate the interface between business and society.” Specifically, IBiS will do the following: • Develop case studies that explore the increasingly complex intersection of business and society, where national and international constraints overlap and when the outcome has a significant impact on an organization’s ability to execute its strategy • Design courses and curricula that replicate the real-world challenges faced by today’s executives, and provide insights and leading practices for these situations that immediately add value to the organization and its stakeholders • Convene conferences and events of impact, delivering faculty-led thought leadership and a rich exchange of leading-edge insights and practices “IBiS deliverables will help business leaders anticipate and address the issues that inevitably occur when business and society converge,” says Krehmeyer. “We will articulate the fundamental forces that govern this relationship and equip corporate leaders with the Dean Krehmeyer knowledge and the strategies (MBA ’99) will serve they need to manage the tension as IBiS’ executive director. between business and society more productively.” Darden is actively seeking a syndicate of founding corporate partners — leading and highly renowned companies representing diverse industries across a global landscape — to join this initiative. “IBiS builds on Darden’s mission of ‘improving society by developing principled leaders for the world of practical affairs,’ and we are energized to address the most pressing issues facing businesses and society,” says Dean Bruner. “No other research institution has been established specifically to take on this challenge, and there is no business school better suited to lead this groundbreaking center.”
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n expert in international finance, Warnock researches and writes on such topics as myths about the U.S. dollar, the global financial crisis and housing finance in emerging economies. Numerous publications, including the Financial Times, The Economist and The Wall Street Journal, and a number of journals, such as the American Economic Review, The Quarterly Journal of Economics, The Review of Financial Studies and the Journal of International Economics, have featured his work. At the root of his efforts is a powerful goal: to help eradicate poverty and enable a better life for people around the globe. Most recently, Warnock and his wife, Veronica Cacdac Warnock, a Batten Fellow and senior lecturer at Darden, have been working with ShoreBank International and the Bill & Melinda Gates Foundation to identify ways of improving the availability of mobile banking for the poor. In the past year, they have traveled from Manila, Philippines, to Bogota, Colombia, (and back) in their efforts to tackle the issue of the sustainable provision of housing finance in areas where inhabitants lack adequate shelter. “Our message in a place like the Philippines, where the housing deficit is well over 3 million units and production capacity is only 300,000 units per year, is that no one in that sector — not government, not financers, not developers — can make a dent in the backlog merely by doing things a little better than before,” explains Warnock. “There needs to be a fundamental rethinking. And Veronica and I bring the various sides together to enable that rethink.” In 2006, the Warnocks joined forces with Saras Sarasvathy, the Isidore Horween Research Associate Professor of Business Administration at Darden, to design a new course called “Markets in Human Hope.” Their goal? To change the way students approach the seemingly intractable problem of poverty. “We knew that if we could prove the concept, that the School would get behind us,” says Warnock. “Darden allows us to explore these different avenues.” “The Darden classroom is a special place to work, but so is the boardroom at the Federal Reserve, and so is a class[room] with no windows in Malawi. What defines this job for me is everything we as professors do and are allowed to do. The possibilities are endless.” In the “Markets in Human Hope” course, which began as a doctoral course and is now taught as an MBA ‘group incubator’ — a program in which students develop new ventures and learn through interaction with each other — students realize that aid that falls from the sky isn’t as effective as the kind that bubbles up from the ground.
Funding Good Ideas
“My objective is to bring about economic development from the ground up,” says Warnock. “It can be anywhere in the world, from Charlottesville to southern Africa.” Warnock first discovered the power of microfinance — how a simple loan can change a life — while living in Malawi. There he encountered a domestic worker who had no access to funds but wanted to start a brickmaking business. Warnock gave her a $100 interestfree loan. Not only did she pay him back on time, but she also made enough to fund her business and her life for the rest of the year. “Lack of access to finance holds people back,” says Warnock. “You cannot tell me that it is fair that we live in a world in which if you are born in one country and have a good idea, you can get it funded, but if you are born in another, you cannot. That’s what I am trying to fight against.” In the “Markets in Human Hope” course, the professors require students to develop private-sector solutions to long-standing social dilemmas. Ideas students have explored have varied from agrarian development funding in Lesotho to projects in Virginia in e4e
“You cannot tell me that it is fair that we live in a world in which if you are born in one country and have a good idea you can get it funded, but if you are born in another you cannot. That’s what I am trying to fight against.” (education that leads to improved employment prospects) and mobile banking for the poor.
Financial Access: The Democracy of Opportunity
While teaching the course “Global Business Experience in South Africa,” which takes Darden MBA students to Cape Town and Johannesburg, the Warnocks began working with a South African housing microlender. To help the lender assess risk and determine how to best allocate its resources and loan officers, they helped create credit-scoring models. “It’s important that they offer these services — home loans for the poor — but also that they do it well,” says Warnock. “This requires them to think carefully about risk and repayment. This particular housing microlender wanted a better sense of ‘riskiness,’ not so that they could completely avoid riskier clients, but so they could dedicate more resources to servicing them.” The potential borrowers had no credit scores on which their loans could be based, but the housing microlender collected significant detail on these clients and on their repayment histories. Using this information, the Warnocks were able to build a model that could assess the risk associated with lending to these individuals and determine the probability of default. “Microlenders want to do good, but they must also be prudent. I don’t think it is a good idea to give someone money, call it a loan and not expect repayment,” says Warnock. “I don’t consider that a positive interaction with credit.” The Warnocks are now working on mobile banking initiatives in Bangladesh and Pakistan with banks that are striving to gain millions of customers within the next year. “What we have seen in places like South Africa and Kenya is success in getting poor people to conduct transactions and maybe even transfer money using their mobile phone,” says Warnock. “But they are still not saving or storing money. That is the next big push — to bring about a change in behavior so that the poor in Africa, Bangladesh, Pakistan and elsewhere will be more willing to take that next step and start saving.” In time, Warnock believes microfinance, when conducted properly, will have a positive impact on the world economy by broadening the financial services available to the poor. “We want people to have opportunity,” he says. “I think of financial access as an important component of the democracy of opportunity.” — Melissa V. P. Rossow DARDEN.VIRGINIA.EDU/DARDENREPORT • Fall/Winter 2011
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A CLOSER LOOK AT MBA
by Melissa V. P. Rossow
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eciphering business school rankings can be a tricky business. Many prospective students look at them, yet no two ranking publications ever seem to come to the same conclusion or use the same methodology.
“I pay attention to Darden’s rankings because people I care about pay attention to them,” says Robert F. Bruner, dean of the Darden School of Business. “But I spend much more of my time thinking about the deep fundamentals of Darden’s progress and trust that the good work we’re doing will eventually be recognized in things such as rankings.” Darden appears in the top 20 of U.S. schools in the five major ranking publications: Bloomberg Businessweek, The Economist, Financial Times, Forbes and U.S. News & World Report. [See sidebar.] “We will not let the rankings dictate who we are,” says Bruner. “Fortunately, the rankings treat Darden relatively well.” For instance, in October 2011, The 20 THE DARDEN REPORT • Fall/Winter 2011
Economist ranked Darden’s MBA program No. 4 in the world, No. 3 in North America and the No. 1 “education experience” in the world. Darden tends to do extremely well in surveys that measure student and alumni experience, like The Economist and Bloomberg Businessweek, says Sara Neher, assistant dean of MBA admissions, because those publications value what Darden values. Each publication measures different factors, none of the publications have the same No. 1 school and their lists of top 20 institutions all look different. “So, when you are a school like Darden,” says Neher, “and you are showing up in the top 20 of all of these dif-
ferent rankings, which are all measuring different things in different ways, that means you are highly successful.” Neher manages the rankings process with the help of her two associate directors, a data specialist and numerous people across the Darden Grounds. The process entails gathering the data required by each publication, which often involves answering questionnaires or sending surveys to recent graduates and alumni. No two surveys are alike — some are more qualitative and some are more quantitative. Despite skepticism over methodology differences, there are some benefits to the rankings. “It would be a lot more work to do that benchmarking by ourselves,”
The world continues to cough and sputter as it suffers from economic malaise. Among its symptoms: sluggish growth, erratic stock prices, entrenched unemployment, political upheaval, skeptical consumers and skyrocketing fuel costs. Nine members of Darden’s all-star faculty, one representing each of Darden’s academic areas, share ideas for how the world might pull out of the slump.
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WAYS TO SAVE THE WORLD
The capstone leadership residency of the MBA for Executives program, dubbed “Creating the Future,” challenged executives with a colossal assignment: Identify a world problem about which you are passionate and commit to changing things for the better. by Carlos Santos
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esigned to enhance the students’ leadership skills, the final residency of the MBA for Executives program challenged the 57 members of the MBA for Executives Class of 2011 to create a future of new opportunities to help resolve some of today’s vexing societal problems on a local, national and global scale. “What’s unique about the MBA for Executives format is that students have the opportunity to discuss with their professors and classmates the challenges they confront every day at work and what they are seeing in the world,” said Paul Simko, associate dean of Darden’s MBA for Executives program. “The students can go back to the workplace and to their lives with fresh ideas, information and approaches that can make an immediate difference.” In November 2010, the executives received a questionnaire asking, “What are the three to five ‘things’ in the world today (upon which you can have an influence) that you consider real gaps, real anomalies and real discontinuities?” The data revealed a group of professionals who care deeply about society and the planet and are determined to help solve the world’s persistent, vexing problems. “The future will be shaped by entrepreneurially thinking people who create new solutions to fill the gaps, to address the anomalies and to respond to discontinuities,” said Darden Professor Sherwood Frey, who led the course with Michel Schlosser, a Batten Fellow who helped design and deliver the residency.
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The students identified an array of topics, including personal health care, globalization, regulation, the impact of information technology and social unhappiness. Four key problems stood out, each of which was mentioned by a third to a half of the students. 1. A lack of sustainability: the need for better harmony between economics and nature to ensure resources for future generations 2. Corporate glitches: the frustration of corporate inefficiencies, the failure to stop unethical behavior, and unmotivated, unsatisfied and unhappy employees 3. Education: the systemic failure of the U.S. educational system, including rampant financial illiteracy among the young and the poor 4. Inequality/poverty: inadequate living conditions for people around the world, including in America, and inefficient mechanisms for redistributing wealth To fully understand the terrain defined by each issue, the class engaged in a process of “collective investigation” from December 2010 to April 2011. Using a specially designed “Creating the Future” website, developed in a Web 2.0 environment, the executives developed a deeper understanding of their areas of concern through collaborative research and discussion and by asking key questions: What are the genuine issues at stake? What are the symptoms of the problem? What are the root causes? Why will my initiative achieve its intended effect? In white papers, the executives outlined a strategy to guide their actions. On the final day of the course, with graduation just days away,
many members of the class committed to begin taking real steps to make a difference. For example, Rutuja Pathare (pictured above, center), a rehabilitation program manager at Cameron Glen Health & Rehab Center, a skilled nursing facility in Reston, Virginia, committed to providing more “patient-centered” experiences. “Our patients come to us from the hospital after a life-altering event like a stroke or a heart attack or after major surgery,’’ said Pathare. “It may seem simple and basic, but the patient’s opinion is often the missing factor in health care. I have started talking to patients more about their personal goals for therapy. Luckily, the company I work for is very supportive of this; its motto is ‘Your therapy, your way.’” Other students set out to improve financial literacy among the disadvantaged and to encourage work-life balance in their organizations. Said Frey, “We look forward to witnessing the fruits of these leaders’ efforts in the months and years ahead.”
Alumni News CORE STRENGTH — ALUMNI LEADERSHIP
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arden’s recent success illustrated by The Economist rankings of No. 4 in the world and No. 3 in North America underlines the notion that our great alma mater is doing well. We couldn’t help but notice that Alumni Effectiveness at Darden was ranked No. 5, reinforcing what the data suggests: Darden alumni are connected and will propel the School to No. 1. Your attendance at admissions events, contributions to the Darden Annual Fund, recruitment of top students, teaching in the classroom and participation in student club activities are unprecedented. Our chapter event support remains strong, and the enhanced effort to elevate our brand via the dean’s recent trips to India and Japan reinforces the strength and connectedness of our international alumni population. Remaining top of mind is the joint initiative with our Alumni Board of Directors to build the most robust engagement index in the world. We are striving to understand all the ways that you are engaged at the School and within the network that we may not yet measure and to determine how in the future we may capture and leverage all the work you are doing to move Darden forward. Our goal is always to connect alumni back to the School in ways that are meaningful and impactful to help deliver on Dean Bruner’s vision and the School’s strategy. We welcome Jennifer McEnery Finn (MBA ’00) and Karen Edwards (MBA ’84) as the incoming Alumni Board of Directors chair and president, respectively. They have just executed one of the most energizing and actionoriented board meetings in the School’s history — a clear indicator that their tenure is going to be synergistic and transformational. Lastly, we extend our heartfelt thanks and appreciation to Mark Riser (MBA ’94), immediate past chair of the Alumni Board of Directors, for his dedication and unrelenting commitment to enhancing the Darden volunteer experience. His leadership has empowered and motivated volunteers to engage with the School in new and influential ways.
Jennifer McEnery Finn (MBA ’00)
Karen Edwards (MBA ’84)
Until we see you in Charlottesville or around the globe, my best. Michael J. Woodfolk (TEP ’05) Vice President, Alumni Relations woodfolkm@darden.virginia.edu
Professor Emeritus of International Business Leslie Grayson (second row from top, far right) visited with Darden alumni in Tokyo in September.
DARDEN.VIRGINIA.EDU/DARDENREPORT • Fall/Winter 2011
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20 Questions Rhonda M. Smith (MBA ’88)
RHONDA M. SMITH is the founder of Breast Cancer Partner, an organization that uses health, wellness and a holistic view of recovery to help breast cancer survivors recover, restore and reenergize themselves after treatment.
What was your first job?
Staff engineer for the city of Charlotte.
Which living person do you most admire?
What’s the best advice you have ever received? Your reputation is everything.
Unfortunately, he just passed away, but Steve Jobs changed how we communicate and access information, and our lifestyle. He had a vision, and he didn’t let anyone interfere with it. I really admire people who do that.
What motivates you?
How do you deal with conflict?
My ability to help make a difference in people’s lives. Helping others have an ‘aha’ moment about their health and wellness.
In which social networks do you engage?
Twitter, LinkedIn and Facebook. I blog and have a website: www.breastcancerpartner.org.
What technology can you not live without?
Well, I guess a smartphone, much as I resisted. The other day, I started a post, “Do smartphones make people not so smart?”
What’s your favorite business book of all time?
Malcolm Gladwell’s The Tipping Point: How Little Things Can Make a Big Difference and Blink: The Power of Thinking Without Thinking.
What’s your motto?
Never expect anything from anyone that they’re not willing or capable of giving you, and you’ll never be disappointed.
I meditate or I go for a walk on the beach.
What characteristics do you look for in people?
MELANIE ACEVEDO
In October 2010, More magazine named Smith a First-Place Prize winner in the publication’s Beauty Search Contest based on her essay “Why This Is the Most Fabulous Time in My Life.” The essay chronicled her journey through breast cancer and her emergence from the experience with a new sense of passion and purpose. The publication’s “Reinvent Yourself With More Magazine” television program will profile Smith this fall as a woman who stands and delivers. Smith earned a degree in civil engineering from Virginia Tech and her MBA from the Darden School of Business in 1988. After graduating from Darden, she worked in marketing management and sales for Eli Lilly and DuPont before joining StratX International as a senior consultant. In 1998, she launched her own consultancy business in Miami, Florida, where she still lives. Smith served as board chair of the Women’s Fund of Miami-Dade. In 2006, Success South Florida magazine named her one of South Florida’s “25 Most Prominent and Influential African-American Women.”
Who’s your favorite action hero? I like Lara Croft.
What’s your favorite food and beverage?
I love Thai food. I love anything spicy. And my favorite beverage depends on my mood and the time of day, but champagne, wine and margaritas all make the list.
Which class at Darden impacted you the most?
Authenticity and integrity.
“Communications and Analysis,” which was all about speech and writing.
Which natural talent would you most like to have?
Which Darden professor influenced you the most?
My bike.
I don’t want to answer this one because I would have to leave someone out. There were a few: Professors John Colley, Bob Landel and Sherwood Frey. And Professor John Snook, who’s long gone but was a gem.
What have you recently uploaded onto your iPod?
Describe a moment when you realized the true value of your Darden education.
I’d like to be able to sing or have some sort of musical talent.
What is your most treasured possession?
I’m really digging Adele right now.
If you could live anywhere, where would it be? I’m already there: Miami. If not here, then Costa Rica.
When I heard that The Economist ranked Darden the number three business school in North America, ahead of Harvard, I thought to myself, “Wow, now that’s great.”
What do you consider your greatest achievement?
I’d like to think I haven’t gotten there yet. 36 THE DARDEN REPORT • Fall/Winter 2011