Talk Business Arkansas March/April 2014 by Talk Business & Politics

March/April 2014

Executive Q&A

Richard Davies, Montine McNulty & Steve Arrison Gov. Beebe’s Last Legislative Session Meet Arkansas’ Newest Highway Commissioner

Frank Scott Tips On

Corporate Giving The Challenges Facing New Wal-Mart CEO

Doug McMillon

Governor’s Cup

Business Plan Competition Gears Up

Tyson Foods CEO

Donnie Smith

Food For Thought

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Contents March/April 2014 5

Editor’s Letter

Commentary David Bartlett Banks Facing Burdens

9 52

Danny Games Corporate Giving Tips PointCounter Point Marcy Doderer Sylvester Smith The Affordable Care Act Profiles Frank Scott Arkansas’ Newest Highway Commissioner

Shelley Haynes & Wesley King The Helena Revolution

Kristi Crum Verizon Wireless South Central Regional President

Hometown, Arkansas Booming Bentonville

Timber Finally, A Housing Rebound

Service How Cemeteries Make Money

Executive Q&A A Tourism Trio Richard Davies, Montine McNulty & Steve Arrison

Industry Trade The Challenges Facing Wal-Mart CEO Doug McMillon

Leadership Marketing Branding The Red Wolves Preparation Six Leaders Offer Insight

10 Cover story: Tyson Foods CEO Donnie Smith Smith shares lessons of a corporate turnaround and the challenges of feeding the world population.

Features Beebe’s Victory Lap

44 Politics:

With a final legislative session at hand, Gov. Mike Beebe recalls a three-decades career.

24 Business:

Willpower

The Governor’s Cup business plan competition may launch the next Sam Walton or J.B. Hunt.

COVER PHOTO: BOB OCKEN

www.talkbusiness.net

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and agriculture go hand in hand. To a farmer, the land is more than just a livelihood ... itâ&#x20AC;&#x2122;s a legacy, an heirloom, a gift to future generations of growers.

To see how Arkansas farmers are feeding a growing planet and reducing their ecological footprints, visit www.arfb.com/for-consumers/arkansas-ag-facts . 4

TALK BUSINESS ARKANSAS | MARCH/APRIL 2014

From the Editor

Change Is A Good Thing Talk Business Arkansas is owned by River Rock Communications and is published six times a year. For additional copies, to be included in our mailing list, or for information about advertising, contact Stephanie Baker at Stephanie@talkbusiness.net. March/April 2014 Publisher & Editor-in-chief Roby Brock Roby@talkbusiness.net Art Director Bryan Pistole Design Matters LLC bryan@designmattersllc.com TBA Managing Editor Kerri Jackson Case TBA Contributing Writers Larry Brannan Steve Brawner Jeanni Brosius Michael Cook J.R. Davis Benjamin Hardy Ethan Nobles Bill Paddack Casey Penn Ben Pollock Ryan Saylor Kim Souza Michael Tilley Jason Tolbert Photographers Bob Ocken bob@ockenphotography.com

We’ve made changes at Talk Business Arkansas that I believe you’ll be very pleased to hear. For starters, we’ve brought our magazine back in house to Talk Business’ media group, River Rock Communications. This will allow much more editorial, creative and sales control over our magazine product in conjunction with our TV, web, radio, and social media products. In this first issue, you’ll note a cleaner, more streamlined approach to our content. We’ve organized new departments and plan to expand with new features as we go forward with future issues. I hope that you, as a reader, will further appreciate the rich in-depth content provided by our veteran writers who are absolutely the best in the state. I’m also proud to announce a new TV partnership with KATV Channel 7. For more than a decade, Talk Business has aired on KLRT Fox 16 and it has been a great run with some phenomenal people. Our new relationship with Channel 7 will help us reach a new audience and bring our business and political analysis to an even broader audience of Arkansans. For those of you in the Channel 7 viewership area, you can watch us Sunday mornings at 9 a.m., following ABC’s national news program, “This Week.” Our strong relationships with The City Wire (www.thecitywire.com), the state’s NPR radio affiliates, and Stephens Media newspapers have long been stable platforms of our content partnerships. We are constantly discussing changes to improve and expand our contributions with these organizations so expect to see more on these fronts soon. We’ll also overhaul our web site – TalkBusiness.net – in the near future to bring you even more daily and weekly content. Of course, it will be developed in a manner to make it accessible on as many devices as you could possibly imagine. If you have suggestions on any of these “changes,” I hope you’ll share them with me. Drop me an email at Roby@TalkBusiness.net with your thoughts. And remember, change is a good thing. Sincerely,

Beth Hall photos@bethhall.com Vice President Operations Stephanie Baker Stephanie@talkbusiness.net

Roby Brock Editor-in-Chief

Printer John Parke Democrat Printing & Litho jparke@democratprinting.com River Rock Communications 8308 Cantrell Road Little Rock, AR 72227 501.529.1737

www.talkbusiness.net

• • •

TALK BUSINESS ARKANSAS | MARCH/APRIL 2014

Commentary

Community Banks Face Burdens With New Regulations By David L. Bartlett Simmons First National Corp. President and Chief Banking Officer Arkansas Bankers Association Chairman David L. Bartlett

here are more than 6,800 banks throughout the country, with more than 97,000 branch locations holding $14.5 trillion in assets that provide $284 billion in small business loans. While these numbers are impressive, the most meaningful statistic is that these institutions employ more than two million individuals who contribute daily to their local economy and help their communities prosper by enabling families and businesses to thrive. More specific to Arkansas, as of June 2013, 146 financial institutions had an office within the state, with a total of 1,442 branch locations accounting for $53 billion in deposits. This is a stark contrast from Arkansas banking in 1994. In the last 20 years, banks have more than doubled the amount of deposits in our state, up from $25 billion, however, the number of banks have decreased by 47 percent. This trend is not unique to Arkansas. Nationally, the past five years have seen a decline with 18 percent fewer banks and only one new bank chartered in the last two years. Community banks are uniquely situated to promote local business growth and job creation. However, the rapid influx of new regulations on the banking industry has stymied the ability of banks to provide lending assistance in the communities they serve. Current and proposed guidelines that force changes in an institution’s asset mix discourage community banks from participating in lending relationships where higher capital levels are required. With this “risk based capital” approach,

banks must determine where to focus their lending opportunities based on capital levels versus what is best for their community and customer. This shift is not limited to mortgage loans or business lending, it encompasses all lending possibilities; further reducing resources to the communities where we live and work. These loan cutbacks cause economic slowdown and restrict job growth in our communities. From our larger metropolitan areas to our smaller rural towns, Main Street is supported by our community banks. Of course, managing regulations is a tall task for any sized institution. However, for some community banks the challenge has become insurmountable. The cost of added compliance personnel, software enhancements and legal consultation can be devastating to an already tightly budgeted financial institution. In fact, many financial institutions are outsourcing their compliance department, thus taking jobs and income away from those towns, cities and counties the bank serves. Banks with roots in their local communities are withering under the shadow of reactionary regulations. Like any interdependent ecosystem, when community banks suffer, their local economies suffer and they are left foraging for the capital needed to grow new business, and the relationships that lead to healthy lending partnerships. The banks dubbed “too big to fail” are also too far away from the communities affected by the reactionary regulations to feel the full impact of the aftermath on local businesses and small town economies. Additionally, their size and resources have afforded

them the luxury of weathering not only the ensuing storm, but also shouldering the weight of mounting regulations and reporting requirements. It is not a single piece of regulatory guidance that has a devastating effect on community banks. It is the multitude of regulations: Dodd-Frank; SarbanesOxley Act; Community Reinvestment Act; Financial Institutions Reform, Recovery and Enforcement Act; the Durbin Amendment; and legislation enacted by the Consumer Financial Protection Bureau. Furthermore, pieces of this regulatory direction give conflicting guidance, causing an institution to comply with one requirement while possibly being out of compliance with another. Regulation is not the enemy of the banking industry. That being said, the examination process that all banks, both nationally and state chartered, are subjected to should be a mutually beneficial relationship. Bank examiners are here to assist financial institutions, making sure the risks involved in banking are managed thoroughly and carefully while also ensuring there is sufficient capital in the institution to protect depositors in the event loans are not repaid in a timely manner. Our task as bankers is to work with industry regulators to promote concise, clear guidelines for operations that actually encourage healthy growth across all lines of business. David L. Bartlett is President and Chief Banking Officer for Simmons First National Corp. and is the current chairman of the Arkansas Bankers Association. www.talkbusiness.net

Protecting farm families like your’s for generations.

The ACA would like to congratulate Young Cattlemen’s Leadership Class and Conway County Cattlemen’s Association member, Philipp DeSalvo and family on recently being awarded the 2013 Arkansas Farm Family of the Year.

The Arkansas Cattlemen’s Association has been diligently working for the Cattlemen of Arkansas since 1959, as we are devoted to improving the cattle industry within the state. This is derived not only through producer education, but also through representation on legislative and regulatory issues. The ACA is the only voice that speaks solely for the Cattlemen of Arkansas in looking after their interests and protecting their livelihood. As most cattle operations differ in type so do the types of memberships available. So don’t wait, choose the membership that best fits you and help support us in working and protecting the future of the Cattle Industry of Arkansas.

Find out more by visiting us at www.arbeef.org or contact us at 501-224-2114. 8

TALK BUSINESS ARKANSAS | MARCH/APRIL 2014

Commentary

7 Goals of Corporate Charitable Giving By Danny Games

ark Twain said, “Do the right thing. It will gratify some people and astonish the rest.” “Doing the right thing” is an often-invoked objective or rationale for decision-makers weighing corporate charitable contributions, but in the end, “the right thing” remains an elusive and subjective aim and can generate more questions than answers. Though not comprehensive, the following seven goals and challenges can be useful in helping decision-makers agree on the front-end as to why they may support a particular cause and eliminate some of the guesswork and tedious deliberations in making good investments. 1. Retail – One of the biggest reasons most companies exercise charitable giving is for retail exposure among customers – self-serving, but not without significant mutual benefits. Oftentimes incorporated into an overall advertising strategy, corporate giving that seeks to increase visibility among a target audience(s) can be very effective if would-be customers are appreciative of or influenced by such financial support. The challenge is, what are the marquee opportunities that will gain you exposure, and how best to maximize your visibility and presence? 2. Branding – Companies can gain significant “branding association” upside by supporting charities and causes where they gain mutual branding benefits generated by the recipient organization. Certain organizations and causes have been very effective at branding their logo and cause, even generating products and sales revenue of their own. Supporting these causes for co-branding benefits provides opportunities among valued customers and constituencies. The challenge is determining what reputable cause or organization best aligns with your company and products and can craft the right fit for your company. 3. Personal & Historical – Many companies, particularly those operating in smaller communities, have been the anchors

of community giving for many years, for instance, by supporting little leagues, festivals, and local schools. Community events and causes often have a lot of personal stock, including employee and managerial involvement, and can build appreciation over a long period that engenders much internal and external goodwill. The challenge is determining in which community event or cause your company and employees should invest, and whether it should come in the form of financial support and/or employee volunteerism. 4. Compelling Community Need – A growing social conscience movement within corporations is the realization that governments and non-profits cannot solve all societal problems and there is an increasing role for business leadership. Committing to these causes with significant financial support and conviction may help achieve that sense of “doing the right thing” if executed effectively. The challenge is knowing the major socio-economic indicator that may sink your community and adversely affect your talent pool or customer base and will require time, money, and partnerships to address…for a long time. 5. Promote Political or Religious Interests – Calculating risks is important when funding causes that are overtly political or religious, but based on a company’s ownership structure, decisionmaking hierarchy, and one’s personal convictions, the decision to wade in can be more satisfying among principle-driven leaders. Furthermore, if a company’s target audience is likely to agree, then product and brand loyalty can be derived if the reputational interests of the beneficiary organization and company are well managed. The challenge is identifying what warrants support in political or religious realms to affect real change, and determining if you have the fortitude to be criticized for stepping up and out.

Danny Games

6. Aligns with Long-Term Business Interests – Companies that have key customers who support the Heart Association should seriously consider being big supporters of the Heart Association. Personal relationships and a long-term view of your customers’, regulators’, and stakeholders’ interests can help shape where you need to be…or, not need to be. Companies that write more selective but larger checks to a smaller number of organizations appear to be taking this view. The challenge is what are the natural fits for your customers, business and product(s) that make for win-win places to be in the charitable picture? 7. Legacy – A very long-term view can often materialize into something more than branding, namely, establishing a legacy that will live beyond the founder or current CEO. Many philanthropic causes have seized upon this inclination among companies and are tailoring legacy nameplate opportunities whereby a company may be known for generations. Proactively carving out your company’s name and its leadership’s place in the history books is a worthwhile consideration. The challenge lies in filling in the blank: twenty-five years from now, your children will be able to say - blank - about your leadership and your company. There are numerous variables and complicating factors in helping answer all of these questions, but at the very least, it will be more productive and deliver a greater sense of satisfaction if goals such as these are determined at the outset. Well defined goals and results will be more gratifying, and, maybe even astonishing. Danny Games’ governmental & public affairs and economic development roles have included corporate giving at three Fortune 500 energy companies. www.talkbusiness.net

TALK BUSINESS ARKANSAS | MARCH/APRIL 2014

Cover Story

Tyson Foods CEO Donnie Smith

THE

FIXER By Roby Brock Editor-in-chief

Bell Buckle, Tennessee doesn’t sound like the launching pad for the career path of a CEO for the world’s largest protein company and one of Arkansas’ largest employers. However, it provided the foundation for a storied career for Tyson Foods CEO Donnie Smith, 54, who started with the Springdale-based meat giant in 1980 when he was fresh out of college.

PHOTO: BOB OCKEN

www.talkbusiness.net

Cover Story CEO Donnie Smith, Chairman John Tyson, and retired COO Jim Lochner

Chefs working at the Tyson Discovery Center

A researcher at Tyson Foods’ Food Safety Laboratory

“I

was a broiler service man calling on growers and trying to help them do a good job growing chickens,” Smith recalls. Bell Buckle is smack-dab in the middle of Tennessee. It boasts a population today of 500 residents and is known for its annual RC Cola and Moon Pie festival. The land surrounding the town – as its name might suggest – is fertile farm and pasture land with a lot of activity in the cattle and poultry business. According to legend, Bell Buckle derived its name from the settlers who discovered Indian carvings of a cow bell and buckle on a tree in the region. The lessons learned by Smith in tiny Bell Buckle proved instrumental for guiding his career to the top post of Tyson Foods, a dominant worldwide brand and business founded three generations ago by the legendary John Tyson. A pre-vet major at the University of

Tennessee, Smith figured out by his sophomore year that he ought to consider a different pursuit. Guided by his college advisor, a poultry science extension service representative, Smith pivoted to a degree in animal science. His advisor noted that Tyson Foods had a complex in Shelbyville, Tennessee about an hour-and-a-half from where Smith grew up. “I started working them really hard my last year of school,” Smith said. He graduated from UT on December 12, 1980; married his wife, Terry, on December 20; and started working for Tyson Foods on December 28. It’s been that kind of pace for Smith’s entire career. RISING THROUGH THE RANKS After a few years as a broiler service rep, Smith was promoted to feed mill manager in Shelbyville before then-CEO Leland Tollett called Smith to Tyson’s headquarters in Springdale in 1987 to work with the

TALK BUSINESS ARKANSAS | MARCH/APRIL 2014

company’s grain purchasing group. Smith mastered the challenge and by the mid1990’s he was in charge of additional purchasing groups – not just grain feed, but bags, boxes, food ingredients, maintenance items, and more. Another promotion was in the works after the purchasing gig as upper management asked Smith to move into logistics to oversee transportation and warehousing in advance of a major acquisition that Tyson Foods would make in 2001. That was the year, that the poultry giant acquired Iowa-based IBP – the largest U.S. beef producer and second largest pork producer. It was a $3.2 billion deal that transformed Tyson Foods from a chicken producer into a full-fledged meat and protein company. Smith’s role was expanded beyond logistics to include production planning by mid-decade. Pretty soon, the country boy from Tennessee was headed into the world

PHOTOS: COURTESY OF TYSON FOODS

Early truck used to haul live chickens from farm to market.

John H. Tyson Chairman of the Board of Directors for Tyson Foods, Inc.

Don and John W. Tyson in 1959

of information technology. With the integration of IBP, Tyson Foods was going through immense growing pains and Smith was put in charge of a struggling “enterprise resource planning” (ERP) initiative aimed at streamlining the new company’s assets and operations. “Our scope got really big,” said Smith, whose background in the company’s supply chain and business processes was useful to oversee the project and get it headed in the right direction. Dick Bond, CEO during the mid-point of the decade, then asked Smith to become the Chief Information Officer. “So imagine you go to the UofA and you get your masters degree in information systems and you find out that your CIO has an animal science degree from Tennessee,” Smith laughs. But it went really well. Smith’s background in the business coupled with a team of top technologists was a great fit for

positioning Tyson Foods for the future. By now, Smith’s well-roundedness in the company allowed him to take on greater responsibilities, including a “shared services” role where he and his team could cut across channels and serve the whole firm in a variety of ways. In 2008, Smith was asked to take another role in Tyson’s retail group working with the poultry and prepared foods divisions – two of Tyson’s four major business silos. By 2009 – after his early mentor Leland Tollett returned for an interim CEO stint – Smith’s broad and balanced skills made him a natural selection for the role he has today. Smith, however, says he really didn’t see it coming. “It didn’t seem like it at the time. But as I look back, all of those experiences in one way or another I can draw from today to do this job. But if somebody had a master plan, I think God was orchestrating it more than anybody else,” Smith chuckles.

“It sort of painted a brush stroke or two on the tapestry of how you get to be who you are. I’ve had a lot of great people along the way who have just – for whatever reason – taken an interest in me and tried to shave off a few of the rough edges and sand off a rough spot or two,” he adds. TURNING IT AROUND It won’t take ten seconds into a conversation with Smith to recognize his enthusiasm and animation, not to mention his endearing Tennessee twang. Throughout our talk, Smith is self-deprecating and humble, quick to credit his management team and employees, but full of zest for the subjects at hand. High-energy is another adjective that leaps to mind. He is intense in his personal engagement with others. As we walk briskly through the corporate headquarters on a tour, Smith interacts often with employees in the hallways, kitchen areas, and www.talkbusiness.net

Cover Story research and development division. The Springdale headquarters has a large volume of masterpiece art adorning its hallways. A whimsical statue of a chickencow – an artist’s rendition of a morphed animal with a chicken’s comb, beak and tail attached to a cow’s body – would make the perfect prop for a hilarious cover photo, especially if Smith would agree to sit on top of it and wave like Bronco Billy. “I’ll do it,” Smith says after I suggest the shot. We have a good laugh as his PR handlers wisely encourage us to “move along” to the next destination. When Smith took over as CEO in late2009, Tyson Foods was struggling – like most businesses – from the recession that reshaped the American and world business landscape. Tyson finished that year with a $547 million net loss. Its debt was massive and it had only invested $368 million in capital expenditures, a significant drop-off from the previous year. Smith says a focus on two primary areas

helped the company move forward since the bumpy years when he inherited the CEO mantle. Number one was culture. “I think creating a culture where people are willing to take some risks – not crazy risks, but reasonable, controlled risks – not afraid to fail, knowing that we’ve got to try different things, we’ve got to try to innovate … we knew we had to create a culture where people know we care about them, and they were willing to take a chance and try something new,” Smith said. As an example, he points to a time in 2009 when light truck weights were eating into the profitability of the company’s poultry business. He says Tyson was averaging about 24,000 lbs. a truck. Smith and his management team made the decision to enlist ideas from the customer service representatives who were on the ground dealing with the light truck weight issue. They were asked how to improve transportation efficiency, says Smith, and

in return ideas ranging from shifting order patterns to re-working production plant operations emerged. “Now we average close to 34,000 lbs. a load in that business,” Smith notes. “The bosses didn’t do that. It was the bosses turning the people loose.” He underscores that listening to clients and customers and responding with solutions has been a part of the culture, too. “I think God gave us two ears and one mouth for a reason, so we try to shut up and listen,” he jokes. “It’s hard to tell through this interview because I’m talking like a machine gun.” The other half of the equation leading to Tyson’s turnaround financial performance centers on a commitment made in 2010 when Smith was in his first full year as CEO. He said there was broad consensus that a realignment of the company’s cost and capital structures had to be brought in line. “I remember not long after they put me in this job, I brought the senior team together and said okay we’re going to have our first

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strategy talk. And here’s our strategy: we’re not going to talk about strategy for at least a year. We don’t need a strategy. We need to fix this business. Forget about grandiose ideas about who we could be in five years because if we don’t fix this thing, there ain’t going to be five years. Just go get good at what we do,” Smith told the troops. He emphasized that the turnaround investments and changes he’s helped guide have little to do with controlling grain and feed costs related to the beef, poultry and pork industries. As important as they are, Smith says Tyson Foods has spent the last four years fixing its internal operations in order to become more efficient and profitable. “I’m talking about things that we had complete control over that we just weren’t focusing on at the time,” said Smith, who highlighted changes in line efficiencies, labor resources, plant spending, and yields as examples. In four years, Tyson Foods has shaved more than a billion dollars worth of debt

from its balance sheet and lowered its debt-to-capitalization ratio from 44% in 2009 to 27.9% in 2013. Sales have climbed nearly 29% higher during that time and net income has reversed from that $547 million loss in 2009 to a $778 million profit in 2013. Its stock price has climbed from a low of $4.40 per share at one point in 2009 to a high last year of $31.83. It has approached $40 per share so far in 2014. “It’s been about getting back to the fundamental basics of blocking and tackling of running a good business,” said Smith, who is also quick to point out that he is undeserving of any individual accolades for the improvements. “I don’t think any one person can ever get credit for what a team or group of people accomplishes,” he said. CONSUMER SHIFTS In the future, Tyson Foods will rise or fall by how well it adapts to changing consumer habits and its ability – along with its food

production peers – to meet the rising demands of a growing world population. Tyson Foods eyeballs three big indicators for determining its product mix and future sales: consumer confidence, gas prices and their effect on disposable income, and price-value decisions. “Today, we have definitely seen a shift from beef to chicken,” Smith confesses. “Pork demand is about the same as it was, but beef is just pricing itself beyond the reach of a lot of consumers. Chicken looks like a much better value.” The beef markets have been roiled in recent years by drought and feed costs, leading to a much smaller supply of cattle that Smith says is years away from recovery. For the Tyson Foods business model, having multiple protein choices and the ability to reach consumers through different channels and in a variety of price ranges is key. Smith calls it an “omni-channel mindset.” A huge portion of Tyson Foods sales is in the restaurant chain business. The

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Cover Story

DONNIE SMITH, CEO CAREER PATH President and Chief Executive Officer Senior Group Vice President, Poultry and Prepared Foods Group Vice President of Consumer Products Group Vice President of Logistics and Operations Services Senior Vice President Information Systems, Purchasing and Distribution Senior Vice President and Chief Information Officer Senior Vice President, Supply Chain Management Feed Mill Manager Broiler Service Representative

ARKANSAS IMPACT Tyson Foods employs

23,000 workers in Arkansas at 18 different facilities.

More than 2,300 Arkansas farmers were paid more than

$216 million

by Tyson Foods last year. Tyson Foods overall economic impact in Arkansas is an estimated

$1.3 billion annually. Founded in 1935 by John Tyson, Springdale-based Tyson Foods, Inc. and its subsidiaries are the

world’s largest meat protein company

and the second-largest food production company in the Fortune 500. 16

TALK BUSINESS ARKANSAS | MARCH/APRIL 2014

SOURCE: TYSON FOODS

company supplies McDonald’s, for instance, but it also services many other chains and distributors. With recent acquisitions of tortilla and chip making factories, there is a good chance that your next cheese dip, salsa or enchiladas at a Mexican restaurant will have a connection to Tyson Foods somehow, someway. In just the last year, the company has also made prepared foods acquisitions that include pretzels, pizzas and flatbreads. Smith says since the Great Recession there has been a noticeable paradigm shift in consumer purchasing habits away from restaurants and into retail. Obviously, disposable income has been an important factor, but the variety of food distribution outlets for an average grocery shopper has multiplied and grown more complex. In addition to traditional grocery store shopping, there are now online food sites, dollar stores, drug stores, and other outlets. Beyond Wal-Mart, which accounts for about 13% of Tyson’s sales, no other vendor makes up more than 10% of its business. Healthy choices are also shifting consumer demand. Smith said that consumers define “healthy” differently than you might think. “If you go back eight or ten years, people wanted to talk about eating healthy, but we could look at the takeaway in food service and retail and tell it really hadn’t changed their purchasing habits very much,” he notes. From portion size to ingredients, Smith says today’s consumers are shifting their buying habits. That’s creating opportunity for Tyson, he says, as the company develops new products in its state-of-the-art research and development facility also located at the Springdale headquarters. On the day of our visit, 30 new products were being line-tested and dozens more were being prepped for taste-testing in the kitchen labs on campus. It’s a perk of the job to get a call or email in the corporate office to come sample a new product and offer anonymous feedback. The key to Tyson’s R&D is segmentation. Increasingly, food choices are becoming more segmented to consumer groups based on lifestyles, gender, ethnicity, age, and

regionalism. “We get to know them, we do focus groups. We do a lot of research on these folks and try to understand what they’re thinking. And we try to keep about an 18-month pipeline of innovation coming towards the market,” Smith says. FEEDING THE WORLD In the next 40 years, Smith warns that the world’s population will grow to the point that companies like Tyson will have to produce twice the amount of food made today. And it will have to be done with the “same land, same air, same water” on the planet. Demand is being driven primarily by developing countries that are seeing rising household incomes, and in return, want to add protein to their food choices. While Tyson’s full portfolio of chicken, beef and pork will benefit, chicken is likely the biggest winner because it has a low-cost value and there are no religious barriers to its acceptance. Smith suggests that education will become more crucial to the food conversation not just in overseas markets, but here at home where Tyson Foods and its competitors face a barrage of critics over animal management practices. Less engaged consumers could also use a tutorial, Smith contends. “It’s a huge issue. There is a group of people who care deeply about their food, but they’re not very literate on the supply chain that provides them their food. As a country, we’re a couple of generations off the farm,” says Smith. “One of the things that agriculture needs to do is increase the amount of communication we have about how important food is to the world. Part of the answer has to be in education and communication,” he notes. “But I think the other part of the answer is you just need to roll your sleeves up and get involved.” Last year in conjunction with the Clinton Global Initiative, Tyson Foods announced it would underwrite fellowships - called Tyson Foods Fellows - to assist developing countries in the education effort to combat poverty and food deficiencies. Currently

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Cover Story in Tanzania, Tyson Foods Fellows are working hands-on with local farmers to develop a poultry supply chain that will hopefully sustain them for the rest of their lives. Smith and his wife have been willing to put their money where their mouth is. Last month they personally pledged a $3.2 million gift to their alma mater, the University of Tennessee, to establish an endowed chair in International Sustainable Agriculture. The new faculty position will help bring

science-based agricultural solutions to areas of the world with struggling agricultural practices and economies. Population growth and emerging markets will also present more opportunity for Tyson Foods to expand worldwide. “One of the things we’re going to have to do is broaden our footprint,” says Smith. “We’ve got operations in four geographies outside of the U.S. today and over time we might expect that to expand.” While education and philanthropy are part of the solution to the food challenge,

Smith is also quick to point out that technology can’t be underrated. “I go in a modern chicken house today and just look at how comfortable the birds are in a temperature-controlled, computer-operated, environmentally-friendly chicken house that I couldn’t even dream in 1982 when I was growing chickens for the company – these chickens are more comfortable than our little house was in Bell Buckle, Tennessee. We’ve made a lot of progress with technology.”

SALES & OPERATIONS Tyson Foods four major food segments are

chicken, beef, pork and prepared foods. Wal-Mart accounts for

13% of Tyson Foods overall sales. Products sold to approximately

130 foreign countries,

including the major markets of Brazil, Canada, Central America, China, the European Union, Japan, Mexico, the Middle East, South Korea, Taiwan, and Vietnam. In 2013, Tyson Foods donated more than

1 million pounds of protein as part of KNOW Hunger, its hunger relief program.

91M

Since 2000, Tyson has donated more than

91 million pounds of protein to food banks, food pantries, and relief agencies in 48 states.

115,000 workers.

The company employs approximately Approximately 99,000 employees were employed in the U.S.

SOURCE: TYSON FOODS, 10-K FILING

TALK BUSINESS ARKANSAS | MARCH/APRIL 2014

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Profiles Service PHOTO: BOB OCKEN, FOTOLIA.COM

Great Scott! At every fork in the road, banker and Highway Commissioner Frank Scott knows how to make a guided decision. By Casey L. Penn

TALK BUSINESS ARKANSAS | MARCH/APRIL 2014

Frank D. Scott, Jr., 30, has the heart of a servant and – it seems – wisdom beyond his years. The commercial lending executive for First Security Bank, and former advisor to Gov. Mike Beebe, has earned a reputation for his leadership skills in business, politics and faith. And despite being only 30, Scott already has years of experience making life-changing decisions – including this past October when he said yes to Gov. Mike Beebe who appointed him to fill the unexpired term of John Burkhalter on the Arkansas State Highway Commission, which will expire in January of 2017. A native of Little Rock, Scott is a former member of the Pulaski Technical College Board of Trustees and currently serves on several boards including the Little Rock Port Authority, UALR Alumni Association and Big Brothers Big Sisters of Central Arkansas. He is a member of Alpha Phi Alpha Fraternity, Inc. and he attends Greater Second Baptist Church in Little Rock, where he serves as an ordained minister on the associate ministers’ staff and as a member of the church’s board of trustees. THE BUSINESS OF POLICY At age 21, Scott had a Bachelor of Business Administration from the University of Memphis and was already a manager at Target Corporation’s Arkansas Distribution Center in Maumelle. It was a short-lived role, but one that taught him a great deal. “While working at Target, I listened to the concerns of my employees. It was a challenge,” he said. “I had to lead people who were twice my age, I had to hold them accountable while gaining their respect, and I had to be humble enough to gain their respect.” “I enjoyed the job so much, but I still felt a desire to get involved,” said Scott, whose interest in Arkansas politics and policy had developed partly, he says, from living outside the state. While at the University of Memphis, he did a small stint as Student Government Association Speaker of the Senate and worked on a couple of electoral campaigns. “I gained an appreciation for my home in

Arkansas – and Little Rock. I always loved Arkansas, but being away made me love it even more,” he said. As manager of the night shift at Target, Scott had a little free time during the workday (“when I should have been sleeping,” he says) during which he found his opportunity to get involved through a fraternity brother who was working with Gov. Beebe’s campaign. “From February 2006 through the end of the campaign, I was a campaign volunteer,” recalls Scott. “In January 2007, I transitioned to being part of Beebe’s administration.” For the next five years, Scott worked in Mike Beebe’s gubernatorial administration, primarily as Director of Intergovernmental Affairs & Deputy Director of Policy. He was the liaison between the governor’s office and everyone else (the White House, Congressional members and staffs, federal agencies, the National Governors Association, Southern Governors Association, etc.). He advised the governor on his legislative agenda as well as on an array of public policies such as broadband, budget, health care, health information technology (HIT), human services, economic development, and workforce development. FORGING TWO PASSIONS In January 2012, Scott left the Beebe administration to join First Security Bank as a commercial lender. While he has a true passion for public policy, he also has a keen drive to serve in business leadership. “I didn’t feel led to have a career in politics. It’s kind of common for political administration members to go into lobbying. I didn’t desire to do that. At night, while in politics, I attended UALR and obtained my Masters in Business Administration,” said Scott. As a man of dual passions, Scott felt commercial banking was a good fit for him. “I found that even in politics, it was advantageous to understand business. The two things tie together. I cut my teeth in business, where I gained a true understanding of operations management,” he said. “What better way to forge business and policy than to get involved with community

banking and economic development? It’s my job to create a better environment for businesses and their workforce by expanding financial options … to create a better economy, to create taxpayers, to keep money in the state.” A STRICT POLICY OF GRATITUDE As remarkable as the decade of legislative and business experience on his resume is, even more impressive – and refreshing – is Scott’s evident gratefulness for the opportunities that have come his way. He’s thankful to have worked for Gov. Beebe at the highest level of state government. “Being at that level, I could truly see changes made on a daily basis – sometimes with just a phone call that established a connection. Helping a constituent felt good,” he said. Scott is honored, too, by his appointment to the Arkansas State Highway Commission. “I count it as a blessing to join the Highway Commission,” he said. “He took a chance on me, and I have a responsibility to live up to his choice.” He’s grateful that his position at First Security allows him to serve on the Highway Commission, where he enjoys still having a hand in public policy. He said, “I’m so appreciative to First Security Bank and the Rutledge family for allowing me the time to serve our state in this capacity.” Scott is also appreciative of his parents, whom he credits for his success. Their sacrifices gave him and his siblings a fighting chance at a good life. “Do your best, be your best self, work hard, treat others how you want to be treated, and understand that your faith in God is what will get you through on the darkest days,” he said, sharing the biggest lesson they imparted to him. “They provided that strong foundation … I realize how that foundation steers the direction of my life and because of that, I pay much homage to my parents.” That strong core foundation of faith is evident in the future goals of this young, accomplished Arkansas businessman. “I want to be a servant leader,” he said. “I want to be a servant leader at First Security Bank, at the Highway Commission, and for this state.”

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Profiles Service PHOTOS COURTESY OF SHELWES TOOLS AND BODY

Helena Invention Could Reshape Global Auto Body Industry By Jeanni Brosius

TALK BUSINESS ARKANSAS | MARCH/APRIL 2014

When Shelley Haynes took her son’s truck to a local body shop for repairs in 2010, she never dreamed that she and the body shop owner, Wesley King, would become good friends and ultimately launch a product that could change the global auto body industry forever. “Wesley showed me several things he made and asked me to help him find out about patenting,” said Haynes, CEO of Shelwes Tools and Equipment. At the time, Haynes was a science and English teacher at Marvell Academy in Marvell, Ark. King’s body shop was outside of West Helena on Highway 49 on Hayne’s route to school. As she looked at King’s ideas, she fell back on her science-fair experience to help pave the way for the invention of the Shelwes Automatic Contour Sander. She also began taking classes through the Helena Entrepreneur Center for Business, a small-business incubator operated through a partnership between the UA-Phillips Community College and Thrive, a nonprofit community and economic development design firm. She and King worked with the center on testing and development of the tool for more than three years. Shelwes continues to operate out of the incubator, where it’s manufacturing facility and business offices are both located. The auto body sander was launched at the 2013 Specialty Equipment Market Association (SEMA) automotive trade show in Las Vegas in November. “Starting the patent process with Wesley, along with developing the Automatic Contour Sander and entering the SEMA trade show was very much like a science fair,” she said. There were more than 2,000 products submitted for judging, including the Shelwes sander. “To our pleasant surprise, we found out at the New Products Breakfast—the kickoff of SEMA—that we won runner-up in two different categories: Best New Tool and Equipment and Best New Collision Repair and Refinish Product.” The sander was competing against products developed by industry giant 3M and other well-known companies. The judges rated the products based on superi-

ority of innovation, technical achievement, quality and workmanship, consumer appeal and marketability. “We had a great reception at SEMA and lots of interest in our tool,” Haynes said. “We’ve been filling orders since we returned, receiving orders from all over the nation. We’ve had a lot of interest from Canada and other countries as well.” Because there’s no other product like it on the market, Shelwes has a patent pending on the sander due to its technologically innovative design to cut labor time for sanding jobs. A DOLLAR SAVED What makes the Shelwes Automatic Contour Sander so different from others? It automatically conforms to the sanding surface, no matter how curved or irregular. Because of that conforming ability, the

“It proved that small-town America can still compete,” Shelley Haynes, CEO Shelwes Tools and Body. workflow doesn’t stop to make adjustments or to change tools. “The body men who helped us test it, say they will not go back to the ‘caveman way’ of sanding again,” Haynes said. “It is our hope that anyone, whose work requires sanding technology, has this tool. It can be used on military vehicles, planes, boats, automobiles, just about any surface that needs to be sanded.” Mike Green worked with King for several years, and he recently opened his own body shop in West Helena. Green said he admires King’s innovative mind. “He’s always thinking outside of the box…. He’d thought about (the sander idea) for years,” Green said. “It’s easy to think about it, but a lot harder to actually do it. It’s a really neat product, and it eliminates a lot of labor time.” By saving time, it also saves the body

shops money by increasing profits. Haynes said labor rates have not gone up in the past seven years. “The rates are pretty much regulated by the insurance companies, and while the cost of everything else has gone up, labor rates have not,” she said. This was the problem that led to the idea of the sander by King, who has more than 30 years of auto body experience. He believed there was a need to find a way to get the job done more efficiently, because sanding is the most time-consuming job in the industry. Green agrees that the new sander saves a lot of labor time. “I’ve always been kind of old-school, but we’ve been using the sander since we opened. You don’t have to manipulate everything with your hands (as with other sanding tools). It’s a lot easier—almost like you’re cheating,” Green said with a laugh. Green said many times insurance companies don’t want a panel replaced on a car - instead they want it repaired. “I was doing a job about three weeks back on an Infinity with a damaged quarter panel,” Green said. “The sander turned sideways and wrapped around the area. I was thinking, ‘Wow, this is amazing.’” The sander is 100 percent manufactured in the United States at Shelwes Tools and Body based in Helena. Winning the SEMA awards gave Haynes and King instant recognition worldwide. “It proved that small-town America can still compete,” Haynes said. “Launching not only our product, but also our company at a worldwide event and receiving such recognition has helped with advertising on a global scale while giving us that SEMA stamp of approval that so many in the auto body industry recognize and trust when looking for new products and ways to improve quality and workmanship.” Although, Haynes said she can’t predict the future, she knows that each person who needs sanding technology will benefit from using one of the Shelwes sanders. “The savings will trickle right back to the customers who pay less and the insurance companies who pay less,” she said. “And everyone knows that a dollar saved is a dollar spent somewhere else, which is what makes our economy strong.” www.talkbusiness.net

Feature: Business PHOTOS: BOB OCKEN AND ARKANSAS CAPITAL CORPORATION

TrustedWills.com’s Lindsey Fowler and Bryan McKinney

Willpower The Governor’s Cup business plan competition may launch the next Sam Walton, J.B. Hunt, or TrustedWills.com’s Lindsey Fowler and Bryan McKinney. By Ryan Saylor

TALK BUSINESS ARKANSAS | MARCH/APRIL 2014

Even though the economy has been slow to recover since the start of the Great Recession in 2008, it has not stopped Arkansas’ budding entrepreneurs from not only having dreams of building their own business, but putting those dreams into writing in the form of a business plan. One event helping young entrepreneurs develop their business plans is the Donald W. Reynolds Governor’s Cup, billed as “the premier statewide business plan competition for college students.” Sam Walls, president of the Arkansas Economic Acceleration Foundation (AEAF), the annual event’s sponsor, said the competition, founded in 2001, is about more than just helping business majors write a wellformed business plan. “If you look at the great stories in Arkansas — Wal-Mart, Tyson, Stephens, Acxiom, J.B. Hunt — those have been a large economic driver for us. The question is where is the next one? You want to see as many of those businesses as you can.” According to Walls, the competition is about encouraging students to think outside the box and even if their initial idea does not place in the competition, to continue pursuing an interest in entrepreneurship down the road. “You hope it plants the seed, drives the interest for them, to be an entrepreneur, to at some point down the road step up with the next big idea for our state.” One business plan that has gone from an idea to an award-winning business plan to an actual company is TrustedWills.com, the brain child of Ouachita Baptist University student Lindsey Fowler and her faculty advisor Bryan McKinney. Fowler, who competed in the Governor’s Cup last year as a junior, presented the idea for a website that would allow individuals to create legally-binding wills online. And even though she still had a year of school to complete, Fowler said it was far from her first business plan competition. “Bryan McKinney came to me and had this vague idea for what became Trusted Wills and he had seen me participate in the freshman year business plan competition at OBU and he thought it would be a really great partnership for us to do this business, so we started working on it last year,” she said.

The vague idea from McKinney, who is an attorney and the dean of OBU’s Hickingbotham School of Business, landed Fowler with a first-place win in the school’s business plan competition, as well as first place in another business plan competition hosted by OBU that included entries from the school’s cross-town rival, Henderson State University in Arkadelphia. “The next step was the Governor’s Cup. Throughout the process, we were getting feedback from the judges that really helped prepare us for the Governor’s Cup and for the statewide level,” she said. Using that feedback to update the company’s business plan, Fowler was able to take TrustedWills.com to the Governor’s Cup, where she finished as a finalist and also won a competition known as the Elevator Pitch, where the various competitors are able to pitch their business plans to a group luncheon, with those in attendance choosing a winner of the competition. McKinney said he believed one advantage Fowler had as she presented was being able to have a product that was live and able to be shown in service. “The thing that I’ve seen win at these competitions are things the students are passionate about and actually intend to do, instead of just a class project.” Since launching in June 2013 and using the feedback from the competition judges to refine the company’s business plan, TrustedWills.com has logged 5,368 visits and 11,659 page views (as of February 7). And while the numbers may seem light when imagining an online business, McKinney said the company had already recovered its startup costs, again emphasizing that he and Fowler had taken the advice of competition judges in re-tooling the site. “We significantly exceeded our start-up costs immediately upon our launch in June of 2013, shortly after the Governor’s Cup competition. We had initially planned to launch in Arkansas and Texas, but we were surprised to see the level of interest from beyond those two states,” McKinney said. “Some of the judges in the competitions along the way had strongly encouraged us to go to every state as soon as we are able. Their advice was spot on. We are currently working to have each state live within the next two months.”

There are dozens of teams in this year’s Governor’s Cup attempting to take an idea and use the feedback to build their business, just as Fowler and McKinney did. According to AEAF Executive Director Marie Bruno, 38 teams from 10 universities filed intents to compete by the January 31 deadline, with business plans due for the competition on February 21, with winners to be announced April 9. Among the students taking part in this year’s competition is John Brown University student Chase Skelton, who is one of a four-person team. Skelton’s idea, he said, came from his time interning for a Wal-Mart vendor in Benton County in the summer of 2013 and having a conversation with a co-worker who used to work for a company that produced dolls targeted to pre-teen girls. “She was just talking about her experience in the company and kind of the reason that she left was after she had a daughter, she kind of thought that their products really weren’t about the healthy values she would want to share with her daughter.” Skelton added that he and his classmates were also being bombarded by messages from their peers on social media decrying certain dolls for young girls as not portraying realistic self-image and realistic beauty, adding to the perceived need for a valuesbased doll. “Talking with my classmates, we thought there was a real opportunity here for a real accurate representation of beauty in like girls’ dolls, girls’ toys, and with that also healthy values,” said Skelton. As a result, their plan calls for not only the physical production and sale of the dolls, but also an interactive component online for children and their parents to craft the doll’s characteristics in a positive way. “And so that was the idea behind our product — kind of a custom doll that they like built together with the girl and the mother’s perception of what is real beauty,” he said. “And through that, like prompts about (the doll’s personality). Like what does the doll do for fun? Like activities that she’s a part of? And we’d have like different pre-set prompts that comes up as they’re creating the doll out of these like modular pieces and all of these different aspects that promote values conversations for the www.talkbusiness.net

Feature: Business mom and the daughter to kind of have naturally.” Eva Fast, Skelton’s business instructor and faculty sponsor for the Governor’s Cup competition, said while it may have sounded easy for Skelton and his team members to come up with the idea, it was a challenge to develop the right idea for a business. “That was not their first idea at all,” she said. “They went through probably…they probably had three or four other ideas that they actively researched before they landed on this one.” Fast said her role as a business instructor and advisor is not to form the students’ ideas and subsequent plans for them, but to get them to start noticing openings right in front of them. “What I do is I meet with the juniors once right before summer time just for an hour and I tell them you need to become aware of your environment and you need to become alert to opportunities. So I give each of them just a really small notebook that they can keep in their back pocket.” The goal, she said, is to get the students to

not only find challenges in their community but to see if there is a way to solve those challenges through business. “I encourage them not even to think first of the product, but to think first of the problem. A solution — you can write down a solution, but until you identify a real problem and a real need that people will pay for, then you don’t need to spend any time working on the product.” Another group competing in this year’s Governor’s Cup competition did just that. Danielle Clark, a senior business major at Arkansas State University in Jonesboro, is part of a group of four students who tackled the problem of individuals on bed rest — mainly pregnant women — who have back and neck pain as a result of being immobile for extended periods of time. “Basically, in the past, (pregnant women) have just had to stack pillows on their side or if you’re in the hospital, they just had to stack pillows on the side of your bed. You’re uncomfortable, plus the nurses can’t even maneuver,” Clark said. “So this pillow is shaped in a wedge and you don’t have to

Promoting a pro-business, freeenterprise agenda; contesting anti-business legislation, regulations and rules.

1200 West Capitol Avenue (72201) P.O. Box 3645 Little Rock, Arkansas 72203-3645 Telephone: 501-372-2222 Facsimile: 501-372-2722 Website: www.arkansasstatechamber.com

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move or anything like that. It just provides support for anybody on bed rest. And it also helps with bed sores.” The prototype Clark and her team members will present at the competition will cost about $500 each and will only be available through hospitals, she said, and was developed through surveying a variety of potential users in their region, reinforcing that the business plan was right for their target market. As part of the business plan, Clark’s group — Launch Pad Invents — estimates that it would need about $125,000 in startup costs. The group also included in the plan a sales projection of 85 pillows a month by August 2015, just more than a year after the company expects to launch in July of this year. Both Clark and Skelton said they hoped to follow in the footsteps of Fowler in launching a successful business, possibly while still in school. The process could be made easier should either place in the competition, as first prize is a $30,000 cash prize, with second receiving $20,000 and third receiving $10,000. Additionally, first and second place winners in the undergraduate and graduate categories will go onto the Tri-State Business Plan Competition later this year at the Mirage Hotel in Las Vegas. As for Fowler, she is in the process of finishing her studies at OBU and plans on using earnings from TrustedWills.com to help finance her ultimate dream — law school. She is also encouraging Arkansas students to pursue their dreams in business and to make competing in the Governor’s Cup a part of that journey. “There’s few things in life more satisfying then seeing an idea taken from the very first stages of just discussing it to having a vague idea to getting feedback from business professionals from across the state,” said Fowler. “The Governor’s Cup did such a wonderful job of bringing in people to encourage you and give you really healthy, helpful feedback to say you can take your idea from the beginning stages all the way to where we are right now with Trusted Wills, where we are a launched website, a working business.”

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Industry Trade

Wal-Mart CEO Doug McMillon 28

TALK BUSINESS ARKANSAS | MARCH/APRIL 2014

PHOTO COURTESY OF WALMART.COM

Up To The Challenge Retail Experts Note Opportunities, Threats For New Wal-Mart CEO By Kim Souza

REPRINTED COURTESY OF THECITYWIRE.COM

Analysts and retail experts anticipate strong, charismatic leadership from Doug McMillon as he takes the reins of the world’s largest retailer. Not to take anything away from the success of retired CEO Mike Duke’s tenure, but McMillon is faced with the task of moving the retail juggernaut through what some believe is one of the most transformational periods in retail history. Just 47 years old, McMillon is among the 71% of incoming CEOs to be promoted from within, according to a study by Booz & Company. The study also found that one in four CEOs promoted since 2012 worked exclusively for that company. Michael Exstein, an analyst with Credit Suisse, gave McMillon a favorable nod in late January when he upgraded Wal-Mart shares to “outperform” from a “neutral” position. (Credit Suisse conducts investment banking business with Wal-Mart and is compensated accordingly.) He said over the past several years, Wal-Mart has responded to its changed place in the competitive environment, rather than its historic place of setting the retail agenda for much of the industry to follow. Exstein and other retail experts outlined key areas where they think McMillon might focus his energy to produce the greatest results for shareholders, public perception and the retailer’s 2.2 million employees. “The ‘fill-in’ trip, exposure to gasoline, and one-on-one customer marketing are among the recent issues that Wal-Mart has lacked a head start in,” Exstein said. “We expect McMillon to delineate plans for a small store format and the acceleration of its roll out, to rationalize the international operations and to recommit to general

merchandise, where business is increasingly up for grabs as some big box retailers continue to close stores.” Analysts see McMillon as a “cool character” and one who pays attention to details. “I do not think Doug sees himself as a caretaker,” said Faye Landes, retail analyst with Cowen & Co. She said companies choose CEOs “on their ability to move the needle forward and effectively handle anything that might come out of the blue. Doug is a very appealing leader.” (Landes in an independent analyst, with no holdings or compensation received from Wal-Mart Stores.) MOVING THE NEEDLE  “While comparable store sales have been challenged, there are a lot of close-in opportunities that can move the needle,” said Jason Long, CEO of Shift Marketing Group. He said as Wal-Mart finally seems to be making a serious commitment to their small store format, he wonders if Walmart stores may be as common as Starbucks in the not-too-distant future. Long said as other big-box retailers are shuttering stores, there is an opportunity for Wal-Mart to benefit. Carol Spieckerman, CEO of New Market Builders, agreed. She said Target, once viewed as a major competitor to Wal-Mart, is faltering and this could be the time for Wal-Mart to reach out to Target customers. “There is a short window of opportunity for Wal-Mart here, but they would have to move quickly,” Spieckerman said. Exstein said Wal-Mart has been distracted by the immediate need to address several company-specific issues related to

the merchandising, technological, and operational aspects of its business. As Mike Duke successfully tackled these issues during his tenure, McMillon is now in a position to make more strategic changes. JUGGLING PERFECTION  The retail CEO of the future is one that must be able multi-task like no other, according to Spieckerman. She said as the digital, mobile, physical and social aspects of retail collide, an effective leader for a company as complex as Wal-Mart will expend a lot of energy “keeping the pins in the air.” To Wal-Mart’s credit, she said, they have been agile, testing multiple initiatives at once and then rolling them out with little fear of failure – especially after they made the investments in @WalmartLabs. At the same time, Wal-Mart is often singled out for low wages, something Spieckerman said is somewhat unfair as hourly retail worker jobs industry-wide have lagged other sectors. “Wal-Mart is very good at redefining the argument, and I expect this will continue,” she added. Cameron Smith, CEO of Cameron Smith & Associates, said it’s not that employee sentiment is at a concerning low, but it could be better. “That being said, this is Doug’s forte,” Smith added. Another area in which McMillon is deemed proficient is having the knack of empowering the leaders beneath him. Spieckerman said this will be a huge advantage if McMillon can mobilize effective leadership below on many different simultaneous tasks and have them report www.talkbusiness.net

Industry: Trade PHOTOS COURTESY OF WALMART.COM

up to him. “The company has become quite diverse in recent years, a radical change from the traditional buyers and merchants, adding software developers, marketers, IT engineers and content creators. Getting this diverse group on the same page will be a big job,” she said. E-COMMERCE GAINS   The experts in this report agree that Wal-Mart’s commitment to e-commerce has the most potential to grow company sales long-term. Exstein said McMillon is poised to benefit by the commitments to information technology and e-commerce under Duke’s tenure.

Smith said with the ease of price shopping today, Wal-Mart’s Everyday Low Price strategy can’t compete alone in the growing omnichannel world. He said the headline could read, “Doug’s biggest challenge will be to bring Wal-Mart into a leadership role on omnichannel” as they are estimated by some to be two years behind Amazon. “Wal-Mart has earned the right to be compared against Amazon, and there is huge opportunity here if Wal-Mart continues to leverage its physical scale,” Spieckerman said. In the November 2013 call with investors, Wal-Mart said investments in e-commerce would impact earnings about 10 cents a

A Walmart Neighborhood Market store located in California.

TALK BUSINESS ARKANSAS | MARCH/APRIL 2014

share. As Wal-Mart has 3.24 billion shares outstanding, that figure suggests Wal-Mart’s global investment in e-commerce this year is in the range of $324 million. The retail giant expected to grow e-commerce sales to $10 billion through the end of fiscal 2014, which was Jan. 31. Online sales were $7.7 billion during fiscal 2013. INTERNATIONAL EFFICIENCIES  McMillon, in his international boss role, has focused during the past five years on improving efficiencies within the diverse international operations. Conversion to Everyday Low Price strategies in Brazil and China has not been without its challenges. Factor in regulation changes in India and the dissolution of its partnership with Bharti and expansion in Canada, and there is no rest for the weary. Exstein said Wal-Mart has yet to rationalize its lower-return international division, but the opportunity is likely approaching as the Foreign Corrupt Practices Act (FCPA) investigation nears conclusion. “McMillon is uniquely qualified to initiate this rationalization having previously overseen the international division, and he appears realistic in holding this segment to higher levels of performance standards. Rightsizing the segment would enable Wal-Mart to reallocate incremental capital toward higher-return initiatives domestically, including refocusing on general merchandise and coming up with an integrated gasoline strategy,” Exstein said.

DATA SHARING  In this time of massive data gathering, Need a Spieckerman said Wal-Mart faces key Call, or visit our decisions about how they share this new software partner website today! Big Data with suppliers going forward. for your startup? She said McMillon helped to pioneer vendor-managed systems at Wal-Mart years ahead of other retailers. The Retail Mainstream knows Link system gives suppliers up-to-date how to get you out of transparency access which can be used to 501. 801. 6700 the gate and running. better manage shipments and sales data. Mainstream-Tech.com/B2 But the data now collected on shopper preferences, brand awareness and price PLEASE NOTE: This ad is shown at actual size. Please print it out and make sure all text is readable before approving sensitivity goes several layers deeper. “How much of the data will Wal-Mart hand over to suppliers? Will they charge for it or will they expect suppliers to share all the data they are collecting as well?,” Spieckerman asked. “Many of the larger consumer packaged goods suppliers are already involved in direct-to-consumer operations, further blurring the lines between supplier and retailer.” RISKS TO SUCCESS   Exstein listed several risks that pose a threat to his firm’s upgrade of Wal-Mart shares. He said failing to act decisively when addressing issues such as the Foreign Corrupt Practices Act, efficient small store expansion and shoring up productivity in the international arena could keep Wal-Mart from re-establishing its industry leadership. Exstein said other retailer FCPA issues have typically settled within two years, which is where Wal-Mart finds itself. Lack of food inflation also threatens Wal-Mart’s net margins, which is why the retailer is prepared to focus on general merchandise. Lastly, negative headlines regarding general business practices, labor issues and healthcare costs could create some headwinds for Wal-Mart shares. That said, Exstein does not think media headwinds – bad publicity – will ultimately inhibit Wal-Mart’s forward progress. During the past 52 weeks, Wal-Mart Stores (NYSE: WMT) share price has ranged from a $81.37 high to a $68.13 low. Wall Street’s one year target price of Wal-Mart shares is $83.77. Exstein is more optimistic and has raised his Wal-Mart target price from $80 to $87.

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Industry Trade

TALK BUSINESS ARKANSAS | MARCH/APRIL 2014

PHOTO COURTESY OF ARKANSAS FARM BUREAU

Timber Industry Balancing Renewed Confidence And Concerns By Ethan C. Nobles Arkansas timber industry officials said lumber markets have a way to go before they are operating at what they’d consider normal levels, but increases in homes sales in the Natural State have led to some new construction and the promise of better days ahead. According to The Arkansas Housing Market Report published by The City Wire, realtors closed 20,644 single family, residential homes sales last year in Arkansas’ largest housing markets. That’s up 12.9 percent over 18,280 sales in 2012 and up 15.6 percent over 17,845 sales in 2011. Still, last year’s numbers were down 16.7 percent from 24,789 sales in 2005 when the state’s housing market was at its peak. The timber industry in the state has seen some declines over the past few years, too. Larry Boccarossa, executive director of the Arkansas Timber Producers Association, said his group represents people who are involved directly in harvesting trees and producing lumber. That industry, nationally, has declined by 30 percent since 2005, Boccarossa said, adding that in Arkansas there were 15,476 people employed in his industry in 2005 – that number had dropped by 32.2 percent to 10,495 workers last year. Still, Boccarossa said that demand for timber has increased somewhat over the past few years, but lumber mills are still not at full capacity and people who supply trees to the industry haven’t seen their prices increase dramatically. “It’s making the turn, but we’ve got some time to go,” he said. GROWING CONFIDENCE Ray Dillon, chief executive officer of

Deltic Timber Corp. in El Dorado and president of the Arkansas Forestry Association, said his company has been encouraged by growth in the housing market because that is a sign that new home construction will be on the rise. Residential construction is critical to the success of the timber industry, he said, because 75 to 80 percent of all lumber made is used to build single and multi-family residences. Dillon said his industry considers 1.5

“It’s hard to come up with a word other than ‘recovery.’” Kathy Deck, director of the UA Center for Economic and Business Research. million housing starts to be the norm for the United States. According to the U.S. Census Bureau, there were 923,000 housing starts in the United States last year and the bulk of those – 618,000 – were for single family residences. The 923,000 starts represent a substantial increase over 554,000 housing starts in 2009 but is off from the peak in 2003 through 2005 when 2 million starts were typical. The number of housing starts in 2009 is the lowest reported since the U.S. Census Bureau started tracking those starts in 1959. The highest number of starts on record is 2.22 million in 1972, while the second highest is 2.16 million in 2005.

Still, Dillon said housing starts are clearly moving in the right direction and timber industry insiders are expecting 1.1 million to 1.15 million in 2014. Gradual growth, he said, appears to have taken place and few people are looking for radical increases in housing starts or homes sales, for that matter. Dillon said it appears that excess housing inventory, which is largely composed of existing homes, is thinning in several areas around the state and new construction has picked up somewhat as a result. Shrinking inventory, of course, is driven by sales and 2013 represented a move in the right direction. Kathy Deck, director of the Center for Economic and Business Research at the University of Arkansas, said she is optimistic about the outlook for housing in 2014. “I think it’s clear,” she said. “If we look at the whole year, 2013’s average price sold was as high as it’s been in the state. … It’s hard to come up with a word other than ‘recovery.’” Deck said she anticipates continued, slow improvement throughout Arkansas markets this year, in spite of the threat of increasing interest rates. NOTES OF CAUTION Allison Scroggins – a realtor with Truman Ball & Associates in Benton – said she has observed excess housing inventory decline in her market over the past year. She said there has been a slight increase in new home construction, but builders are still cautious considering sharp downturns in the market that started in 2007 and increased in severity in 2010. Scroggins said, however, that upper end, custom home construction is in demand www.talkbusiness.net

Industry: Timber in Saline County. She said she’s seen a rise in the number of people who tire of looking at existing homes and decide to invest in building exactly what they want. Boccarossa said builders are not the only ones who are cautious in the current environment. He said a lot of loggers are private contractors who have families and their children - after watching the industry decline - may think twice about getting involved in it when demand is at a point where more loggers are needed. He said the average age of loggers in Arkansas is 55-years-old, so some younger people will have to enter the industry to replace those who are retirement age. Logging has been a tough business for many families over the past few years, so Boccarossa said he hopes too many people aren’t dissuaded from entering the profession when the demand for their services increases in the years to come. Dillon said there is another concern: landowners with forests that haven’t been maintained while demand for timber has

PHOTO COURTESY OF ARKANSAS FARM BUREAU

Logging trucks load up in south Arkansas.

been down. He pointed out that when timberland is well maintained – timber is a resource and, as such, landowners and people involved in the timber industry have an interest in making sure trees stay healthy and underbrush is removed. That underbrush, he said, contributes to

TALK BUSINESS ARKANSAS | MARCH/APRIL 2014

forest fires of the type that have been springing up in the western part of the nation and chokes out the habitat of some animals. Well-maintained forestland, he said, is good for wildlife, soil quality and the environment as a whole.

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Annual percentage rate for purchases and balance transfers: 9.25% Variable* Other APRs: Cash Advance APR 13.25% variable. Convenience Check APR: 13.25% variable. Transaction fee for cash advance: 3.00% of the amount, but not less than $4.00 nor more than $50. Transaction fee for convenience checks: 3.00% of the amount but not less than $4.00 nor more than $50.00. The information about the costs of the card(s) is accurate as of June 1, 2011. This information may have changed after that date. To find out what may have changed: write to us at Bank Card Center, P.O. Box 6609, Pine Bluff, Arkansas 71611.*Your account has a variable rate indexed on the Prime Rate. Your rate will increase if the Prime Rate increases. Changes in APRs (increases or decreases) due to changes in the Prime Rate will be effective on the first day of your next statement cycle beginning at least two days after the change in the Prime Rate. The Prime Rate is the prime rate published in the Money Rates column of The Wall Street Journal in effect for the second business day prior to the beginning of each statement cycle. Variance rate APRs are based upon the 3.25% Prime Rate in effect on August 22, 2010.

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Industry Trade

TALK BUSINESS ARKANSAS | MARCH/APRIL 2014

PHOTO BY BOB OCKEN

Money For The Soul

The business model for cemeteries is a lot more complex than you might imagine. By Ryan Saylor The old saying “whistling by the graveyard” may have new context for anyone who has seen a cemetery but never thought about how one makes money. According to Kelly Lowell, manager of Benton County Memorial Park in Rogers, the days of stand-alone private cemeteries have been largely replaced by a business model where a cemetery and funeral home are partnered. “For us, it’s really been about having the funeral home here on the premises. That’s the long-term aspect of it. I think having it where we can work both places is an important part of it,” Lowell said. Having funeral home staff work the cemetery business is what allows Benton County Memorial Park to not run into overhead issues, including staffing and grounds maintenance. “For us, our (customers) expect a cemetery that is well taken care of as opposed to a country cemetery (maintained by volunteers). It helps with the manpower situation. It takes a lot of time and a lot of resources to maintain a cemetery. For a funeral home, we can share staff. For us, that’s what makes us different. With the amount of work that goes into it, you really need people that can work both places,” he said. As a result of the level of care required to maintain the cemetery to Lowell’s standards, plots can run as high as $360 for the least expensive plot on site, while others can run as high as $600. But included in those prices is a fee required by the State Cemetery Board of Arkansas. “They are what are called perpetual care cemeteries. People might say that they’re in the business of making money, for-profit cemeteries,” Lowell said. “What happens is

if you’re not governed by a cemetery board or you’re not a city-owned cemetery, or if you’re not affiliated with a church, then you have to be perpetual care. With everything that sells, a percentage of that money has to go into the perpetual care fund. It is then held at a bank and overseen by the state cemetery board.” In the case of Benton County Memorial Park, the fee ranges from $60 to $100 and is included in the sale of the plots. Should the cemetery go broke, the State Cemetery Board will then tap into the banked perpetual funds for maintenance of the cemetery. “The only way it can be touched is with permission from the government,” Lowell said. “It’s also a positive thing for a family because they know whatever happens, there will be money set aside for a nice place to come to. They’ll never have to worry about weeds growing up or leaving messages and not getting a return call. That’s the advantage of it.” Cemeteries also profit through the opening and closing of grave sites, typically charging as much as the plot itself to dig the grave and then again to bury the remains. The fee can run higher if the burial takes place on a weekend or holiday. ALTERNATIVE CARE An alternative to perpetual care cemeteries are non-profit or public-owned cemeteries. One public-owned cemetery is Oak Cemetery in Fort Smith, which charges a flat $400 for each plot regardless of location or size — standard, infant, or cremains. As a result of the flat rate, Fort Smith Parks and Recreation Director Mike Alsup said the cemetery has become heavily subsidized.

“In our case, Oak Cemetery doesn’t make money. It doesn’t break even. We operate with money from the tax base in order to stay open.” In 2013, Alsup said the city spent $148,940 on the cemetery upkeep, maintenance and staffing while only bringing in revenues of $80,712, a little more than half of the operating cost. Alsup said with the high costs associated with running a cemetery, he’s “not sure why cities got into the cemetery business.” He said the difference between a public or non-profit cemetery and perpetual care cemeteries was essentially the cost. “I’d say it was to offer a more affordable funeral for people who couldn’t afford it. It’s a good service the city offers,” Alsup said. Lowell said while cost is a very likely concern for some, he said for those looking for a permanent resting place perpetual care was the way to go. “We’re probably on the higher end in terms of cost, but we tend to have a lot more personal attention for a family.” And Lowell said the ultimate goal at Benton County Memorial Park was to break even, using the funeral home to help prop up a business that often is unprofitable. “Our goals are a bit different than the average cemetery. We want to maintain it nice and have it compliment the funeral home,” he said. “That’s the wave of the future. You can’t just do one thing anymore. You need to diversify. It helps the funeral home, too, to have prices lower for people. The old days of having a funeral home, you’d see people working a crossword puzzle if they weren’t doing something. Those are the days of the past. If they have that kind of overhead, they won’t be that successful in the future.” www.talkbusiness.net

Hometown, Arkansas

Crystal Bridges Museum

TALK BUSINESS ARKANSAS | MARCH/APRIL 2014

PHOTOS COURTESY OF ARKANSASMEDIAROOM

Booming Bentonville

Home to Wal-Martâ&#x20AC;&#x2122;s world headquarters and the distinctive Crystal Bridges Museum, Bentonvilleâ&#x20AC;&#x2122;s leaders are mapping a blueprint for opportunity. By Steve Brawner

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Hometown: Bentonville When Ralph Overstreet bought a watch repair shop on Bentonville’s town square in 1948, the city had less than 3,000 residents, no one had ever heard of Sam Walton, and outsiders weren’t particularly welcome. “Actually, when I moved here, they seemed to resent any new person that came in. ... It was a small town,” he said. “Apparently, they didn’t much want to grow.” Overstreet, 97, who still works six days a week repairing watches at Overstreet’s Jewelry, has watched a lot change since then. What was once a sleepy rural town is now a community of about 40,000, with lots more on the way, for lots of reasons. Bentonville’s story starts, of course, with Wal-Mart. In 1950, Walton opened his Walton’s 5 & 10 on the Bentonville town square, not far from Overstreet’s shop, and became a fixture in the community, eventually serving as Chamber of Commerce president. After opening his first Wal-Mart in Rogers in 1962, he opened the company’s first distribution center and home office in Bentonville in 1971. Today, Wal-Mart employs more than 2.2 million people globally, including 1.3 million Americans and tens of thousands in Northwest Arkansas. In addition, approximately 1,250-1,400 of the company’s vendors have offices there, according to Tom Ginn, Chamber of Commerce vice president of economic development. “Most of the larger ones are here, obviously, the ones that do the most business ... If you have somebody that has a lot of SKUs on the shelf, then more than likely they’re in the area,” he said. Wal-Mart’s impact can be felt in many other ways, starting with the Crystal Bridges Museum of American Art. Funded by the Walton Family Foundation under the leadership of Sam Walton’s daughter, Alice, the 200,000-square-foot museum exhibits about 500 pieces of art at any one time, all free to the public. It has welcomed more than 1.2 million visitors since it opened on Nov. 11, 2011. About 120,000 visitors saw a traveling exhibit of Norman Rockwell paintings in 2013. Diane Carroll, interim director of communications, said about 60 percent of the visitors have been from Arkansas and

another 20 percent from touch states, which means the other 240,000 have come to Bentonville from farther away. The museum counted 220,000 visitors who walked its beautiful outside trail last year. The museum, which employs 150-200 full-time and part-time employees, hasn’t tried to estimate its economic impact, but its cultural impact is immeasurable. A wide range of art-making classes and programs are offered to the community. A program sponsored by the Walker Family Foundation

New York’s James Beard Foundation to Bentonville to sample the Southern cuisine. In return, its chefs were invited to New York to display their craft. “It really elevated our regional cuisine to a national spotlight,” Carroll said. DOWNTOWN REBIRTH Crystal Bridges has been a catalyst for a rebirth of the downtown area. The 21C Museum Hotel, part of a small chain of upscale hotels that display PHOTOS COURTESY OF ARKANSASMEDIAROOM

Sam Walton’s 5 & 10 on the Bentonville square.

pays all expenses for Arkansas schoolchildren to visit the museum. As of late January, 39,000 students have come. Meanwhile, artwork by Bentonville schoolchildren is displayed around the museum’s education area. Fellow museum professionals, art teachers and students converge at the museum to study, learn and collaborate. The museum is in the third year of a four-year art-sharing partnership with the Louvre and two other museums. One of Crystal Bridges’ portraits of George Washington is currently in France. The museum’s culinary department brought

TALK BUSINESS ARKANSAS | MARCH/APRIL 2014

contemporary art, recently opened a 104room facility just off the town square. Last year, the website TripAdvisor declared it the country’s number one “Hot New Hotel.” Anticipating a runoff effect from Crystal Bridges, the city has designated a downtown arts district where it expects galleries to open. The museum was announced in 2005. Realizing how close it would be to downtown, Mayor Bob McCaslin and the city undertook a campaign to renovate the town square. In 2007, Bentonville voters easily passed five initiatives to raise the city sales

PHOTOS COURTESY OF ARKANSASMEDIAROOM

Sam Walton’s pick-up truck; a modern Walmart

tax by one cent to pay for a $110 million bond issue, part of which paid for the renovation. With its new look and the Crystal Bridges attraction nearby, the downtown area has gone from two or three restaurants to about 14 eateries counting food trucks, according to Kalene Griffin with the Bentonville Convention and Visitors Bureau. More retail shops have opened, and the Wal-Mart Museum, located in the old Walton’s 5 & 10 building, has undergone a major renovation.The new Midtown Shopping Center, built by Wal-Mart, will feature retail spots including a Walmart Neighborhood Market grocery store as well as offices and a parking deck. The city offers many other cultural amenities, with more on the way. Proceeds from the bond issue and other contributions are funding a $16 million, 80,000-squarefoot recreation center. Just off the town square is a splash pad that converts into an outdoor ice rink during the winter months. There’s also a Museum of Native American History, and a new interactive children’s museum, the Amazeum, is opening in two years. The fortunes of the city and the fortunes of the region are interconnected. Northwest Arkansas consists of a string of suburb-sized

cities without an urban hub that work well in concert. Mike Malone, president and CEO of the Northwest Arkansas Council, an economic and community development agency that supports the region, said the council developed a five-year plan in 2010 that included 56 projects. Of those, 53 have been completed, or work is underway. Among its goals was the widening of I-540 from four lanes to six, which is happening because of the half-cent sales tax passed by Arkansas voters in 2012. Work is being completed on the Northwest Arkansas Razorback Greenway, a 36-mile walking and biking trail meandering through six downtown areas. Wayfinding signs pointing to attractions will have a consistent look city to city. Moreover, Northwest Arkansas cities accept that an employer that locates in one community benefits all of them, so economic developers usually compete as a region, Malone said. The region will get on more potential employers’ radar screens when the population tips past 500,000, which is only 17,000 residents away. The area’s visitors bureaus share that spirit of cooperation. While there is friendly competition, Griffin said cities don’t suffer from “Friday night syndrome” – historical rivalries that get in the way of progress.

PHOTO COURTESY OF WALMALRT.COM

After all, it’s hard to tell where one city ends and the next begins. “If somebody calls me about a meeting that we can’t service, that’s too large for us, my goal is to pass it on to Rogers and Springdale and Fayetteville,” she said. “If it’s going to come, I want it to come into Northwest Arkansas because the city of Bentonville will benefit from it.” GROWTH MODE Bentonville’s population has doubled since 2000, which means that the www.talkbusiness.net

Hometown: Bentonville Bentonville School District educates a student population that grows by 500 students a year. Voters last year approved a 2.9-mill increase to build a second high school. A larger request was rejected in 2012, but the school district scaled back plans to a smaller facility and arranged that both schools will share one football field – an appropriate Wal-Mart-like efficiency. In fact, Wal-Mart helped the district pass the millage. Superintendent Mike Poore and school board member Becky Koontz visited thenWal-Mart president and CEO Mike Duke at the start of the effort asking for support. That led to a luncheon meeting with about 30 executives who, Poore said, “picked us apart for over an hour.” Poore later spoke to a larger Wal-Mart audience, and the company sponsored a community survey that helped supporters tighten their message. Poore, who came to Bentonville from Colorado, said leading the Bentonville

School District involves a unique set of challenges and rewards. The district must assimilate many transient students, some from other countries. It educates children of executives from Wal-Mart and its vendors, so expectations are high. So, however, is the support the district receives. The Indian conglomerate Tata is helping the district with technology. Each month, the community hosts a First Friday event that brings booths, activities and musical acts to the town square. One month, the school partnered with Nickelodeon. Not long afterwards, Poore received a call from Disney asking why it hadn’t been involved. “There’s things like that that happen on a pretty cool and regular basis here (with) people reaching out to us to say, ‘We’d like to partner with you and we want to support you,’ and I’ve never been a part of a community that gives more,” Poore said. BLUEPRINT FOR OPPORTUNITY Graduating Bentonville High students can

drive half an hour south to the University of Arkansas, or they can stay in town and attend Northwest Arkansas Community College. Dr. Evelyn Jorgenson, the NWACC chancellor, said the school serves as a feeder for the university as well as a “safety net” for UA students who don’t thrive in the large freshman classes there. NWACC has created a track for students to transfer smoothly to the UA’s Sam M. Walton College of Business, and the two colleges have matriculation agreements in a number of other areas. Credit enrollment is down about 6 percent to 7,546 students – a drop Jorgenson said was caused by an improving economy that attracts people to the workforce instead of college. However, non-credit enrollment has reached 6,000. Students in this program train for specific skills needed by employers. A retail analyst program, unlike any in the country, requires 45 weeks of classes to learn to run a proprietary software system used by Wal-Mart and its vendors. Students

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who complete the program don’t get college credit, but they do get job offers. Mayor McCaslin arrived in Bentonville in 1996 during a 30-year career moving from city to city with Kraft Foods and was elected mayor in 2006. He said getting elected without deep roots in the community wasn’t a problem. He guesses there were more PHOTO COURTESY OF ARKANSASMEDIAROOM residents from without than from within by about 2000, when the city was half the size it Native American Museum is today. “Most people that come in, they’re looking for friends, they want to establish JeffersonCountyAd 2/14/14 3:57 PM Page 1 relationships, and it’s been our experience that the friendliest communities often are the transient communities. ... It just seems like a lot of people are hungry for friends,” he said. “I will tell you it’s been my experience that I’ve never seen a region PHOTO COURTESY OF ARKANSASMEDIAROOM that assimilates outsiders any better than Peel House Museum Northwest Arkansas.” The city is finishing a strategic economic development plan known as the Bentonville Blueprint. The objectives are to increase the livability of the area and target businesses and industries that complement existing entities as well as fill in holes. Among the city’s challenges is land. Scattered subdivisions have been built to accommodate new residents, reducing the space for commercial properties. Meanwhile, the city is a bit landlocked, with Rogers to the south and east and Bella Vista to the north and west. There are corridors to the northeast, but also some hilly terrain. Moving forward, the city will have to fill in the empty areas, which it can do with planning. In fact, the Chamber of Commerce’s Ginn said it could more than double in size and still have the same population density. Traffic will be a problem then, just as it is now. In fact, the entire Northwest Arkansas region suffers from a lack of roadways. Mayor McCaslin acknowledges that’s an issue. However, there are worse problems to have. “Where you have traffic,” he said, “there’s something going on to cause that traffic to be there.”

PHOTO COURTESY OF BENTONVILLE123

PHOTO COURTESY OF THECITYWIRE

21c Museum Hotel

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TALK BUSINESS ARKANSAS | MARCH/APRIL 2014

Feature: Politics

The

Victory Lap Begins

Completing his final legislative session as governor, Mike Beebe and others reflect on the masterful navigation of his 30-year political career. By Benjamin Hardy

During his eight years as Arkansasâ&#x20AC;&#x2122; chief executive, Mike Beebe has seen his party lose ground time and again. Five out of the six members of the Arkansas congressional delegation were Democrats when Beebe took office in 2006; today, five out of six are Republicans.

PHOTO COURTESY KIRK JORDAN

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Feature: Politics PHOTOS COURTESY KIRK JORDAN

Barack Obama lost Arkansas in 2008 by a 20%, a margin that increased to 24% in 2012. The GOP now has control of both chambers of the state legislature for the first time in more than a century. Meanwhile, Beebe’s tenure in office has taken place against a bleak national backdrop of financial crisis and recession, political polarization and near-complete gridlock at the federal level. And yet, if Beebe could run for a third term in 2014, it’s a virtual certainty he would win. Early last year, an analysis on a blog kept by national pollster Nate Silver showed Beebe was the second most popular governor in the nation. A poll performed by the University of Arkansas last October showed 68% of likely voters approved of his performance. Talk Business and Hendrix

“Beebe conveys a lot of confidence to voters. He’s got a very confident personality, but without the ideological purity -which is counter to most successful politicians today. And he tends to brag about issues on the back end, after something is accomplished, but not on the front end, like so many do.” - Dr. Jay Barth professor of politics at Hendrix College

TALK BUSINESS ARKANSAS | MARCH/APRIL 2014

College surveys have reported Beebe’s popularity in the 60% and 70% range throughout his governorship. How has he done it? It’s partly his sheer skill in negotiating the weakening political center, undoubtedly, and partly a matter of good timing. But underlying Beebe’s achievements are three properties without which his brand of pragmatic centrism might well have failed to achieve results in either elections or governance: a complex relationship with the state legislature, a shrewdly narrow approach to the business of policy, and an unwavering focus on Arkansas affairs as opposed to national ones. AN ADVANTAGE OF EXPERIENCE “My success is based upon a willingness to sit down and listen and work with [others]

rather than just jump up and say it’s my way or the highway,” said Beebe in a morning interview for Talk Business Arkansas shortly before the 2014 fiscal session began. The governor wasn’t talking about the struggles between the two parties, but between the legislative branch and the executive. Beebe spent two decades as the state Senator from Searcy, half of it under the long reign of Bill Clinton. As he built his law practice back home in the off months, the legislative sessions educated him on public policy and gave him a deep understanding of the fiscal machinery of the state. The Senate that Beebe knew as a legislator has been transformed today – by term limits, by the ascent of the GOP – but, he says, there are more fundamental truths about the job that haven’t changed. “Here’s the deal about being a legislator. You worry not so much about the big picture. Your focus is more parochial. Your focus is more district oriented, your focus is more narrowed to one or two areas you have a major interest in or a major reason to be involved in. You don’t have time to be everything to everybody.” Although that’s not a bad thing, he emphasized, it’s in stark contrast to his responsibilities as governor. “The main difference between the two [jobs] is the global reach of the governor’s office and the big picture that permeates everything you do, every decision you make. I have to look at the big picture every minute, every second – because all the pieces fit together.” And yet, he said, it’s essential that a governor exercise leadership “in a way that involves an understanding and some empathy with the issues and the problems that legislators have to face.” If his previous life of 20 years in the Senate gave Beebe a valuable respect for the function of the legislature, it also provided him with a more pointed political tool: a tremendous amount of knowledge in a body whose high turnover creates a chronic experience deficit. Beebe came into the governor’s office at a time when term limits were stripping the Capitol of many members who had been around since the early nineties.

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Feature: Politics That has given him a unique leverage among newcomers to the General Assembly, who struggle to navigate the labyrinth of state government on the fly. Senator Jonathan Dismang, a rising leader in the GOP who has served in the legislature since 2009, says the governor embodies an institutional memory that’s sorely needed by members intent on learning how to run the state. “When I first came in, we were losing potentially all those folks who had strong legislative knowledge, the Percy Malones of the world. You can rattle off a list of guys who went through both chambers, because of term limits …I didn’t always agree with Percy Malone, but I wanted to sit next to him because he had the institutional knowledge that I would like to learn from. With those guys all fully turned out at this point, it obviously gives [Beebe] a great deal of…maybe ‘power’ is not the right word, but his understanding [of government] is critical in how successful he’s been.”

“His understanding [of government] is critical in how successful he’s been.” - Sen. Jonathan Dismang (R-Beebe)

TALK BUSINESS ARKANSAS | MARCH/APRIL 2014

PHOTOS COURTESY KIRK JORDAN

“It all goes back to an ability to lead through knowledge,” said Dismang. SPENDING & SAVING POLITICAL CAPITAL Beebe’s ability to thrive in a Southern state in the Obama era is something of a puzzle, says Dr. Jay Barth, professor of politics at Hendrix College. Yet if that tension bothers the governor, he never shows it. “Beebe conveys a lot of confidence to voters. He’s got a very confident personality, but without the ideological purity -- which is counter to most successful politicians today,” said Barth. “And he tends to brag about issues on the back end, after something is accomplished, but not on the front end, like so many do.” The governor seems to feel neither the need nor the desire to rally voters around big, systemic changes. His major 2006 campaign issue was the grocery tax; in 2010, he emphasized his stewardship of the budget through the national recession. His history of accomplishments is a decidedly non-activist one – a record of steady improvements, lack of crises, fiscal responsibility, and firm but cautious adjustments. Pragmatism and compromise aren’t concessions with Mike Beebe, but simply how he does business. This too has been shaped by his career in the legislature, says Democratic Senator Joyce Elliott, who has served a decade in the General Assembly under both Beebe and Mike Huckabee. “I don’t think he discounts all these years of being a senator,” she said. “It’s an understanding that goes, ‘I’m one of many people, and as one person I can’t get it done. So the pragmatic thing says I have to take into consideration what other people think in order for them to do at most 75% of what I want to see happen.’ He’s never hung up on that 100% -- ever.” She laughed. “Sometimes that’s to the point that it drives everybody nuts, but that’s the way it is.” “Because the legislature was envisioned by our founding fathers as the first branch of government, I defer to that for a good reason,” Beebe said. “They’re in charge of the money and the policy and the www.talkbusiness.net

Feature: Politics executive branch is supposed to execute by its very nature, by its very definition.” That appreciation cuts past partisan affiliation, he asserted. “Whether it’s been Democrats or Republicans, it’s been a good relationship. [Senate President Pro Tem Michael] Lamoureux is easy to work with. [House Speaker] Davy [Carter] is easy to work with. We don’t always agree, but, you know, I didn’t always agree with Bennie

Petrus or Robbie Wills or Paul Bookout or any of those folks either.” Beebe’s popularity raises a question: In a state that still lags far behind many national indicators of well-being – in health, in education, in poverty – could he have done more? When George W. Bush was elected to his second term as president, he was quoted as saying, “‘I earned capital in this campaign,

political capital, and now I intend to spend it.” Beebe’s own reserves of political capital are overflowing, but the governor has expended it with the same parsimonious hand that he’s taken to the state budget over the years. Given his immense talents and golden position, one could argue that Beebe’s governance has leaned too heavily on caution. Still, it is also worth remembering that President Bush’s ambitious agenda of immigration policy and Social Security reform floundered during his second term. Overreach is always a possibility, even with a 68% approval rating. Perhaps Beebe’s tendencies towards restraint and compromise have secured the policy legacy for which he may be best remembered, the private option. Given the necessity of GOP support in securing its original passage, it’s likely a more activist approach from the governor would have derailed the process. Instead, he allowed Republican leaders such as Dismang, Senator David Sanders and Representative John Burris to craft the historic legislation. “Obviously, his influence is present on the majority of legislation we see,” Dismang said, but it’s been cognizant of the new Republican majority. “With the creation of the private option… he had a broad picture of what he wanted to do, but then we as legislators influenced that with a more conservative tone. He had an overall goal to expand Medicaid and what we did was – while staying within some of the parameters of his leadership – we then took off and developed a different plan, and he’s been supportive of that. And that’s kind of replicated itself on a number of different issues.” AN ARKANSAS FOCUS Wrapping up his final legislative session as Governor this year, Beebe will exit office in January 2015. It’s perhaps no accident that Beebe uses the phrase “global reach” to describe the office he still holds, because Arkansas is Mike Beebe’s world. In over thirty years of elected office – he served four years as Attorney General before

TALK BUSINESS ARKANSAS | MARCH/APRIL 2014

becoming Governor - he has kept his focus squarely on legislative decisions made in Little Rock, not Washington. Despite approval ratings that are the envy of his peers and despite the state’s history of producing formidable presidential candidates, Beebe is decisive in his intent to end his career as an elected official in 2014. One gets the impression that to Beebe, the Arkansas governorship is both the natural outgrowth of legislative leadership and also the apex of political power. Arkansas is a famously provincial place, and Beebe’s lifelong dedication to the state resonates with voters. It also helps to explain how Beebe has managed to insulate himself from increasingly negative sentiment towards the Democratic Party, even in the 2010 election that swept so many Republicans into office. That sets him apart from his predecessors. “Every other modern Arkansas governor, with the exception of Frank White, had ambitions for national office,” Jay Barth said. It also sets him apart from either of his likely successors. While both have played significant roles in state-level affairs, Mike Ross and Asa Hutchinson have forged much of their political careers through federal elections and appointments. Both are accomplished in their own right, but neither has the wealth of experience in state government that Beebe brought to the office. “It’s going to be difficult for the [new] governor no matter who it is,” Dismang said. “There is no one running at this time that has that institutional knowledge that he possesses. It’s going to be interesting, in my opinion, to see how that shifts with the process…when I first came here, and to some extent today, a lot of things originated out of the governor’s office. I don’t believe that when that institutional knowledge is gone with him as governor that that will necessarily be the case.” The new governor will face a shifting political landscape as well. Although Beebe may have a rare talent in seeking compromise, it’s also true that not all executives have the good fortune to work with legislative leadership as generally like-minded as the ones he’s encountered,

both within his party and the opposition. So can either party replicate Mike Beebe’s formula for success? In short, no. The Senate that Beebe knew – the Senate that made him – is gone. Term limits have made twenty-year Senate careers impossible. One-party rule has disappeared. As Arkansas continues to slowly shed its provincial image, the labels of national politics seem likely to be more inescapable

for state leaders. Nonetheless, for the gubernatorial candidates this season and in the future, Beebe’s lessons of restraint are crucial. Respect legislative partnerships over executive fiat. Prioritize state governance over national ambitions. Accept 75% rather than demand 100%. And, above all, never underestimate the power of institutional memory.

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Point Counter Point Putting Our Children’s Health First

Understanding The ACA & Private Option in Arkansas By Marcy Doderer Arkansas Children’s Hospital President & CEO

n the seven short months that I have been serving as the leader for Arkansas Children’s Hospital (ACH), I’ve had the opportunity to share with many business leaders, government leaders, staff, donors and friends, that there is one constant that will never change at ACH: We always put our children’s health first. Now, more than ever, it is critical that we do so as health reform initiatives such as the Affordable Care Act roll out and we begin to fully understand the law and the associated challenges ahead for children’s healthcare. As we enter our 102nd year of service to our state, ACH is dedicated to providing the highest quality of care our patients and families expect and deserve. We are committed to improving children’s health by providing integrated patient care, research, education and prevention. We serve every Arkansas child who needs us, regardless of the family’s ability to pay. In order to continue our mission, we are taking a contemporary look at how healthcare is funded and how we can navigate in the new world of healthcare financing. Some background for you: In 2013, ACH had 334,821 patient visits from all 75 counties across Arkansas. Sixty-two percent (62%) of our patients are funded through the state Medicaid and ARKids First programs. Medicaid serves children whose family income is less than 100 percent of the poverty level (a family of four making $23,050 or below); and ARKids First, which started in 1997, serves children whose parents’ income is 100-200 percent of poverty (a family of four making $23,050$46,100). Given the number of children we serve, ACH is the largest recipient of Medicaid reimbursement in this state. Arkansas is on the cutting edge of healthcare financing reform with the new Private Option. Created in the 2013 legislative session, the Private Option will allow Arkansans from 19-64 years old, who make

less than 138 percent of the poverty level ($15,860 for an individual or $32,500 for a family of 4), to enroll in health insurance plans offered by private health insurance companies. This is a unique program for Arkansas allowing the state to use federal funds to purchase private health insurance for this group of citizens. ACH supports the new Private Option program for many reasons. First, it helps the families whose children are on Medicaid or ARKids First. Of the 200,000+ people who are eligible for the Private Option, 80,000 of them are parents of the children currently being served by Medicaid or ARKids First. Multiple national studies show that when parents take care of their own healthcare needs, they are more attentive to their child’s needs. In fact, because of the efforts to enroll adults in the Private Option, the state has discovered over 3,000 children who were already eligible for ARKids First, but were not registered. In the same vein, our certified application counselors at ACH are licensed by the Arkansas Insurance Department and trained to assist our patients’ families with consumer enrollment in the Private Option whenever possible. Another reason ACH supports the Private Option is financial. Although our focus is serving children, many Arkansans may not be aware that there are two areas in our hospital where adult patients are treated on a regular basis: The Burn Center and Cardiology Unit. We have the only comprehensive burn center in the state, where our patient ratio is 1/3 pediatric to 2/3 adult patients. The ACH Burn Center sees over 2,200 outpatients and 400 severe burn patients annually. Our Cardiology Unit sees patients with congenital heart disease, diagnosed as infants or children. ACH continues to see these individuals throughout their adult lives. Because of these treatments, both the Burn Center and the Cardiology Unit may have patients who could qualify for Private Option coverage.

TALK BUSINESS ARKANSAS | MARCH/APRIL 2014

In order to maintain our “open door” policy, we must also continue to operate our hospital efficiently and be responsive to a host of opportunities and challenges affecting our financial viability. That includes not only the Affordable Care Act, but also changes to our state Medicaid program, particularly the Payment Improvement Initiative, an effort to standardize costs while also rewarding providers based on the quality of care they provide rather than the volume. Initially, this was an effort promoted by the current Medicaid payment system, but Medicare and most private providers are applying it, too. Along the same lines, we need to have more consumer input in the delivery of healthcare. As a parent of a child being served in our hospital, I am well aware of the maze the health system can be and understand parents and patients need to have a more active role in their healthcare choices. So speak up, be your child’s advocate and have a clear and mutual understanding of your child’s care at all times. You are the most important voice on your child’s care team. As we look to the future of healthcare in Arkansas and this country, we need to remember that our children’s health always comes first. Even though the dollars for healthcare will be limited, the number of children we serve will no doubt continue to grow so our delivery model will have to evolve and be more efficient. In business, strong outcomes are required to succeed. Healthcare in the 21st century will need to follow suit. Arkansas Children’s Hospital stands ready to meet the challenges of healthcare’s future while continuing to care for every Arkansas child who needs us. Marcy Doderer, FACHE, is the President and CEO of Arkansas Children’s Hospital. A 20-year veteran of the health care profession, Doderer joined ACH in July 2012.

Point Counter Point Obamacare: More Pain on the Way for Arkansas Small Businesses By Sylvester Smith National Federation of Independent Businesses Arkansas State Director

rkansas small business owners always seem to keep getting the short end of the stick from Washington. Most recently, the Obamacare rollout debacle has added a whole new wave of uncertainty for small businesses and all Arkansans. Perhaps even more troubling, no one in Washington seems to have an answer. Politicians there just keep kicking the can down the road. The latest example came in February, when the Obama administration said it was again delaying the implementation of part of the health-care law’s employer mandate. Businesses with 50 to 99 employees now have until 2016 to offer health benefits to their employees. The original deadline was 2015. Every time small-business owners hear about a delay in the health-care law, they can’t help thinking, “We told you so.” If the Patient Protection and Affordable Care Act worked as advertised, the Obama administration wouldn’t have to keep delaying it and trying to fix it. It’s time our elected representatives started facing facts. Obamacare remains broken, even after almost four years since the law took effect. We’ve heard the reports come in from all over the country: individuals getting their health insurance cancelled, on top of premiums continuing to rise. For small businesses, the news gets even worse, as the recent delays and other actions taken by President Obama’s Administration are only adding to the uncertainty and confusion that they’ve been feeling since the law’s passage. Consider that small businesses continue to face skyrocketing premiums, with no relief in sight. The online exchange program for small businesses, called the SHOP

exchange, has already been delayed for a whole year. So while the cost for small businesses to insure their workers keeps rising, most will be unable to take advantage of the small business health insurance tax credit. And to top it off, the Health Insurance Tax kicks in on January 1st. The HIT tax, as we like to call it, is a new tax in Obamacare that will hit small businesses and individuals particularly hard. This new tax, which is essentially a tax on small businesses who offer insurance to their employees, will result in an about a $500 yearly premium increase for a family of four. The small business community in Arkansas and across the country has been clamoring for real health reform. What that means for us is controlling the everincreasing costs of health insurance premiums. Indeed since 1986 our small businesses have told us that increasing healthcare costs are the number one challenge they face. That should have been the goal of health reform from the very beginning. Instead, what we’re seeing are even more costs in the form of premium increases, tax increases, and new regulations and mandates that small business owners just can’t afford. Small business owners are viewed as the backbone of our country’s economy for a good reason: They tend to have a real stake in the communities they serve and take that responsibility seriously. For most small businesses, their employees are like family, and that’s what’s really getting lost in all the back and forth between politicians in Washington: The fact that Obamacare is forcing small businesses into impossible choices of continuing to provide health insurance coverage, cut back hours for

workers, lay off staff, or fold up their businesses altogether. And it’s a choice that all too many small business owners have to face today. That’s not what government should be about, and Washington needs to understand that. Without significant changes, this law will continue to cause problems for the small-business economy. Small-business owners support continued efforts to remedy the most harmful provisions in the law that are already impacting their businesses and their employees. But enough is enough. Arkansans need our elected officials to stand up for small businesses, workers and families, before Obamacare does any more harm. People like Senator Mark Pryor, who voted for and continues to support the law, have got to start doing more than halfmeasures and delays that are only adding to the already considerable burden that small business owners must bear every day. That’s why NFIB-The Voice of Free Enterprise, recently began a new campaign to educate Arkansans on the impact of Obamacare on our small business community. We don’t need more empty promises coming from our Washington representatives. What we need are pragmatic solutions that undo the damage caused by Obamacare and help to lower healthcare costs for Arkansas families. It’s time for Washington to hit the reset button on the law and pass meaningful legislation that actually helps our job creators and the hardworking men and women they employ. Sylvester Smith is Arkansas state director of the National Federation of Independent Businesses, the nation’s largest small-business association.

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Thorncrown Chapel

Arlington Hotel

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TALK BUSINESS ARKANSAS | MARCH/APRIL 2014

Executive Q&A

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Three leaders in the tourism and hospitality industry offer their thoughts on the current and future state of affairs. By Talk Business Staff

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Executive Q&A: Tourism PHOTOS COURTESY OF ARKANSASMEDIAROOM

Mount Magazine

The Lodge at Mount Magazine

Editor’s note: Talk Business Arkansas editor-in-chief Roby Brock conducted this month’s roundtable which included Arkansas Parks & Tourism Director Richard Davies, Arkansas Hospitality Association Director Montine McNulty, and Hot Springs Advertising & Promotion Commission Director Steve Arrison. Richard Davies

Montine McNulty

Steve Arrison

Roby Brock – Let’s talk about jobs and labor force, first. There’s been roughly 100,000 jobs on average in the leisure and hospitality and tourism related industries in Arkansas. What kind of pressures do you sense are affecting the labor force out there? Richard Davies - I think that obviously when the economy goes down we have lots more applicants for the jobs that are open. The good news is -- Montine may have actual numbers -- is that the hospitality jobs are growing faster than almost any other sector of the economy. The predictions are that they will continue that way. I get a little irritated when you hear people say, “Oh that’s just burger flipping.” A lot of those jobs can turn into management jobs and, in my opinion, hospitality has probably some of the best potential for people to move up into management positions. Montine McNulty – I agree with what Richard’s saying and will tell you that this month the National Restaurant Association is doing a major survey because the projections and the needs are so high for the

TALK BUSINESS ARKANSAS | MARCH/APRIL 2014

next ten years that they’re trying to figure out where are we going to get the people. One thing about our industry is we continue to need people. It’s not going to be replaced by robotics or anything else. We’re in the service industry and we’re going to have to have people.

Roby Brock – Steve, what do you see in terms of the recruitment of workforce for tourism and hospitality in your community? Steve Arrison – I think if you’re looking around the state I think tourism is robust in Arkansas. Just looking at Hot Springs, we have an expansion getting ready to happen at Oaklawn - they’re going to expand by 50%. We’ve got the Mid-America Science Museum. We’ve got hotels coming and new restaurants -- everybody needs people. That’s the big challenge of our industry.

Roby Brock – So what does your industry do to meet that challenge? Obviously some training is critical, but is there something about changing

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Executive Q&A: Tourism the image or basically selling what the opportunities are in tourism and hospitality? Steve Arrison – I think that tourism destinations - the cities themselves - work very closely with the Arkansas Hospitality Association and Richard’s department. The Department of Parks and Tourism with their training programs and working with all the hospitality programs at the universities across the state. You don’t have to have a four-year degree to become a manager and make some really good money in the hospitality industry. You’ve got to have the experience. Richard Davies - I might add that 30 years ago there weren’t any hospitality programs at the universities to speak of. Now there are several in the state and people are realizing because of the demand that it’s a pretty good college degree if you want to find a job when you get out.

PHOTOS COURTESY OF ARKANSASMEDIAROOM

Most Visited Arkansas Destinations 1. Crystal Bridges Museum of American Art 2. Oaklawn Racing and Gaming 3. Pinnacle Mountain 4. Floating the Buffalo River 5. William J. Clinton Presidential Center and Park 6. Little Rock Zoo 7. Thorncrown Chapel

Roby Brock – Tell me about the balance of technology versus touch. You obviously have to take advantage of things that are changing in terms of technology, but at the same time you’re still a human profession. Montine McNulty – The success of our industry depends on customer service. That’s a human person and a human touch. Even though we’re going to use technology to its fullest in a lot of different ways, what really interfaces with the customer is going to be a person and that’s going to take growing a workforce.

8. Blanchard Springs Caverns 9. Crater of Diamonds State Park 10. Ozark Folk Center SOURCE: TALK BUSINESS ARKANSAS, U.S. BUREAU OF LABOR STATISTICS

Tourism and Hospitality Employment in Arkansas

Roby Brock – Richard and Steve, you guys are utilizing technology from a marketing perspective more than anything else. How has technology changed the industry? Richard Davies – The whole advertising and marketing in the media has turned upside down in the last 20 years because of the online presence. Everything from blogs to websites to mobile websites. Then on to Facebook, Twitter, Pinterest. The way you do it changes and it also has great challenges on how you measure that because it’s not as simple as it used to be when you could clip a coupon from Southern Living magazine

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Executive Q&A: Tourism and know exactly where that came from. You throw that all into the computerization of the businesses -- you know when you go to a hotel or a resort and you can play golf, over here you can eat at the restaurant, it’s all on the same bill, it’s all computerized, it’s all tied together. That’s a big change in the last few decades - and if you don’t keep up - I always said in this business if you’re treading water you’re going backwards.

Steve Arrison – I’d have to agree with Richard, I mean we’re a high-tech, hightouch industry and I get the high-touch part of it, but you know, I go in meetings on social media with some of our younger staff members – I was in a meeting last week - and I know about Facebook and Twitter. But they came up with like three or four other types of social media that people are using now. Trying to keep up with it is

Tourism 2013 Sales Tax 2012 Collections 2011 SOURCE: ARKANSAS DEPARTMENT OF FINANCE & ADMINISTRATION

2010 2009 2008 2007 2006 2005

a full-time job. I think the technology is there, but you can’t forget that touch. I think that’s the key to the hospitality industry and I think that’s the key to why Arkansas has been so successful. People visit us and we treat them like they’re our relatives. They love the warm welcome they get at any part of the state from Delta all the way up to the border in North Arkansas.

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Leadership ARTWORK COURTESY OF ARKANSAS STATE UNIVERSITY

TALK BUSINESS ARKANSAS | MARCH/APRIL 2014

Howl, Yes! Arkansas State University’s rebranding of its school mascot offers insight on how to successfully navigate a tricky task. By Kerri Jackson Case TBA Managing Editor

n 2007, Arkansas State University was forced to make a decision: fight what

would almost certainly be a losing battle with the National College Athletic Association to keep their long-time Indian mascot or rebrand. Two years earlier, the NCAA executive committee adopted a new policy to prohibit NCAA colleges and universities from “displaying hostile and abusive racial/ethnic/national origin mascots, nicknames or imagery at any of the 88 NCAA championships.” At the time, Walter Harrison, then chair of the Executive Committee and president at the University of Hartford issued a statement declaring, “Colleges and universities may adopt any mascot that they wish, as that is an institutional matter. But as a national association, we believe that mascots, nicknames or images deemed hostile or abusive in terms of race, ethnicity or national origin should not be visible at the championship events that we control.” In practice, the ruling meant all Native American mascots were essentially banned, but for a very few exceptions. Some at ASU believed their mascot would not fall under the new policy because of the steps taken to create what they considered a “more reverent” depiction of Native Americans, having dispatched with the former Running Joe and adopting a generic Indian family. But the NCAA did not agree. “The estimates we got for legal fees to fight the decision were somewhere in the neighborhood of $300,000 with a low

chance of success,” said Jeff Hankins, Vice President of Strategic Communications and Economic Development for the Arkansas State University system, “It didn’t make sense to pursue that option.” At the time, he was part of the committee to decide how to proceed. The Indian mascot was retired and the search for a new mascot began. It was hard at the time for many loyal ASU alumni and fans to imagine how successful the new mascot would be and how widely it would be received. SUCCESSFUL FROM THE START The university decided to include as many stakeholders as possible in the decision process to increase the potential acceptance of a new mascot. Faculty, staff, alumni and students were asked to submit thoughts and ideas for the future ASU brand. Markaham Howe, now retired, worked on the decision and rollout. “It was the single most successful campaign I was ever a part of,” Howe said. He said by engaging the fan base on and off campus, the university was able to get buyin from the people who would eventually be asked to embrace the decision. Some variation of a wolf was a predominant theme to all the submissions. Eventually, the Red Wolf was selected. “It was successful from the start,” said Mark Ferguson, who runs a sports message board for ASU fans. The first football game as Red Wolves was the win over Texas A&M and the next week at home, fans were already predominantly switched over.”

Ferguson says the Red Wolves mascot “met a need,” for Arkansas State fans. The years of limbo when the Indian was seen as less inclusive, or to some offensive, created a desire for a mascot fans could embrace without reservation. Hankins confirmed that sales of officially licensed products have soared in the past five years. Part of that he attributes to the new mascot, but also the success of Arkansas State University athletics that coincided with the change. No one could have predicted the lightning strike of good fortune to rebrand at the same time the football program won three consecutive conference championships and made bowl appearances. By percentage increase in sales, Arkansas State is 7th in the country for merchandise sales over the past five years. Another measure of success Hankins points to is the 66% increase in state license plates bearing the Red Wolf. The alumni association went from $18,000 in revenue to $33,000 from their cut of the plates sold. Anecdotally, the number of requests for the appearances for the new Red Wolf mascot is up significantly, though no one keeps exact numbers. While the fan base has largely embraced the Red Wolf mascot with cheers including “Howl yes!” and a call to “Get your wolves up!” there are still a few who are not quite ready to let go of the past completely. A popular t-shirt in Jonesboro in the past few years reads, “My Indian name is

Red Wolf.”

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Leadership

Sixth Sense:

Be Prepared Talk Business Arkansas asked six business leaders in Arkansas for their perspectives on how crucial preparation is to leadership, their daily work, and the companies they run. By Talk Business Staff

Hugh McDonald

Dr. Leah Braswell

Chris Thomason

Preparing for the companyâ&#x20AC;&#x2122;s future is a continuous process that includes evaluating various future scenarios with many moving parts. We must understand current industry trends with the accompanying rules, regulations and regulatory framework and anticipate the policies that will be needed to support the future energy needs of customers. These considerations include the price consumers pay for energy, the environmental needs of our communities and the broader region, and the return on investment requirements of our investors.

Nothing in interventional radiology proceeds without preparation. Patients and their families expect us to be experts in their specific and individualized care. Sometimes that means reading journal articles late into the night before a big case, and sometimes that means knowing that a certain 4-yearold girl prefers princess Band-Aids. Knowing these things ahead of time reduces frustration for the team and anxiety for the kids. All the preparation in the world canâ&#x20AC;&#x2122;t make it easy for my patients to be sick, though. Part of being successful in this work is taking the time to listen. My preparation for truly taking care of people started long before medical school. I owe that to my father, a self-described country doctor who told me when I was six years old that the secret to doctoring is listening. Touch every patient. Look people in the eye. Spend more time than you really need. That kind of preparation is worth more than any medical degree and technical training in the world.

If commitment and dedication are the engines that drive success and accomplishment, then preparation is the fuel that powers the desired positive outcomes from such energy. Preparation, when combined with what is often emotional energy, provides the stable and measured foundation that maximizes the likelihood for short- and long-term success. In addition, for me personally, as an attorney and a prosecutor, it provided an opportunity to gain a strategic advantage in what is by nature an adversarial environment. If I was prepared for every possible contingency in a case, then the just outcome was less likely to be disrupted by frivolous surprises. As a legislator and chancellor, preparation provides a level of assurance that the policy actions that you champion will deliver the positive results that you intended and promised.

President Entergy Arkansas

Pediatric Radiologist Arkansas Childrenâ&#x20AC;&#x2122;s Hospital

TALK BUSINESS ARKANSAS | MARCH/APRIL 2014

Chancellor University of Arkansas Community College at Hope, Former Prosecuting Attorney and State Representative

Colette Honorable

Darin Gray

Sheridan Chadwell

Those who are most successful in my line of work are those who are most prepared. When taking on a task, preparation is the key factor which will determine your ultimate success or failure. Not how much you know. Not who you know. Preparation equals success. Lack of preparation means lost credibility and missed opportunity. Are you prepared for the task? Are you able to respond to both the anticipated and the unanticipated? Have you prepared adequately to meet the deadline? As the old saying goes, “A lack of preparation on your part does not constitute an emergency on my part.” If you want to achieve success, you must master the ability to properly prepare.

Preparation is as much about qualities as it is about specific steps. There are four qualities of preparation I’ve focused on. First is vision…knowing what the goals are…what you’re really trying to achieve. Second, curiosity that seeks input, insights and answers needed to fulfill a vision. Third, anticipation in terms of obstacles and opportunities that may present themselves along the way, as well as options should course correction become necessary. Lastly, discipline that sees a vision through to a successful end. These qualities are foundational to effective preparation, and help ensure motion isn’t confused with progress.

Preparation in our business is two-fold if you look at it from a short- and long-term perspective. Our business is about half retail gift and half retail floral. On the retail gift side, you prepare a season in advance, so you look at preparation from a long-term perspective. You’re buying for Christmas in January; you’re buying for spring in June, etc. We must seek out the new, the unusual, the attractive and the attainable, and hope it will be popular the following season. On the floral side, you look at preparation from a short-term perspective. Our inventory is perishable, and most of our business comes to you one or two days in advance – especially with sympathy flowers. We will order flowers and supplies in smaller quantities 3 to 4 days a week, in order to keep our rotating inventory as fresh as possible. So, preparation for us is truly twofold. Our profits and returns come quickly with the floral business, and our profits and returns are more gradual with the gift business. It’s nice to have a balance.

Chairman Arkansas Public Service Commission

President Cranford Johnson Robinson Woods

Owner Purdy’s Flowers and Gifts

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On Demand with Kristi Crum By Bill Paddack & Roby Brock Verizon Wireless South Central Regional President Kristi Crum returns to Arkansas after stints in New Jersey and California. A Hendrix College alum with a degree in biology, Crum started her career as an analyst with Alltel Corp. The North Little Rock native and mother of twin boys talks about technology and offers career advice. Tell me a little bit about what it feels like to be back in the Natural State. I left here a little over five years ago. When the opportunity came, I obviously jumped on it. But when you leave here, you realize what a gem it is; just the people and the beauty of it. I really missed it. New Jersey was beautiful, California was amazing, but there’s nothing like coming home. You realize you left the wine country of northern California and the technology center of the universe near Silicon Valley, what were you thinking? It’s funny, last October I was talking to some peers of mine and I said my next step - and I’ve never been bold enough to tell everyone what my next step was going be - I said my next step: I want to go home to Arkansas and be the president of the South Central Region. That’s what I want. I’m from there. You guys aren’t from there. Let me have it. So, this was definitely what I wanted. Your industry is undergoing fundamental changes. Every day things seem to move at the speed of light. How do you balance moving quickly, but also moving cautiously? Three years ago, we launched our first LTE markets. It was the first time anybody

TALK BUSINESS ARKANSAS | MARCH/APRIL 2014

PHOTO BY BOB OCKEN

had experienced true LTE speeds. Now fast forward three years later, and we’ve got over 300 million people covered in LTE in 500 markets. But we have to balance that with what our customers want. We still have customers who want to have a basic device. They aren’t interested in moving into that type of technology. So we’re trying to balance what they want with what we have to offer. How should consumers think about the technology you have to offer? We don’t want our consumers to think of us as a wireless company. We want you to think of us as a technology company. We’ve got so many things, so many tools besides just smartphones. We have accessories that can really change your life. There are so many things you can do right now just off your smartphone that you could not have even dreamed about three years ago. We want to make sure that our customers come in and take a look. What’s the best career advice you’ve either received or shared with people? Number one, be relentlessly optimistic because people want to work with someone who’s fun and wants to be here. I’m not the smartest one, but I’m the one that’s willing and the one that’s most excited to be here. The other thing, cultivate a beginner’s mind. Beginners don’t see any reason why you can’t succeed. They don’t see any objections or any obstacles. They just see green pastures. So I would say ask a lot of questions and just pretend you’re a beginner.

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