Foster Business Magazine Spring 2012

foster

Michael G. Foster school of business

University of washington

spring 2012

Global Help A new partnership with the Bill & Melinda Gates Foundation allows Foster School students and faculty to work on the most pressing challenges in the developing world. page 18

Also: The Long View page 10 Marketing Momentum page 14

Think differently.

Make a difference.

It’s the Washington Way.

Count Us In! From left to right: Lauren, Kelcey, Eric, Max, Yana, Monica, Jordan, J.J.

“Giving back is what makes my Foster undergraduate experience come full circle.

I want my successors to be able to experience and contribute to the greatness that is the Foster School.

Count me in!”

Kelcey Simpson 2012 BA Business Administration (Marketing, Entrepreneurship)

“In 2011, I had the privilege to represent Foster at the National Team Selling Competition, in which we placed 2nd. This was the best experience I have had at Foster and want to give back to ensure others can have similar experiences— and to ensure we can send a team next year to defend our title! Count me in!”

“I give back because I will be a business leader in the future and I want a great pool of UW candidates to add to my team. Count me in!”

Yana Maslova 2012 BA Business Administration (Marketing) Certificate of International Studies in Business

Eric Hotaling 2012 BA Business Administration (Accounting) Sales Program

Seniors aren’t the only ones supporting the Foster School these days.

Can we count you in?

The University of Washington has always relied on the private support of alumni, friends and business leaders to make the Foster experience great for students like Jordan, Yana, Eric and Kelcey.

Please join these donors in creating transformational experiences and endless opportunities for our future business leaders.

To make your gift to enhance education at your alma mater, simply mail it back in the enclosed envelope or visit foster.washington.edu/countmein.

“I want to give back to Foster and show my appreciation for all of my professors and fellow classmates who contributed positively to my college education and overall experience. Count me in!”

Jordan Esparza 2012 BA Business Administration (Marketing, Entrepreneurship)

contents

On the cover

10 The Long View The Foster School is a world leader in the research and development of business ethics

14 Marketing Momentum A look at the marketing department that Businessweek ranked as second to one

18 Global Help

A new partnership with the Bill & Melinda Gates Foundation allows Foster School students and faculty to work on the most pressing challenges in the developing world

spring 2012

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contents

Dean

25

James Jiambalvo Managing Director Marketing & Communications

Eric Nobis Managing Editor

Renate Kroll Contributing Writers

Ed Kromer, Andrew Krueger, Jocelyn Milici Ceder, Eric Nobis, L.A. Smith

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Photography

Matt Hagen (principal), Paul Gibson Design

a.k.a. design

Departments

4 In the News

Phase 2: Business Hall, Diversity Dynasty, Leading the U, Dawg Days, Up in Down Economy, Social Start-ups, Optimism Now!, The Year of Living Dangerously, Green Gadgets, xTREME aCCOUNTANTS,

22 Faculty

Like!, Born This Way, Clawbacks Have Claws, Research Briefs, Exceptional Educator

26 Alumni

Emer Dooley, Jim Stameson, Jonathan Hill, Paul Smith, James Lepp

Foster School of Business Marketing & Communications University of Washington

Box 353200 Seattle, WA 98195-3200 206.543.5102 206.221.7247 (fax) On the Web

foster.washington.edu

Foster Business is published twice a year by the University of Washington Foster School of Business. The publication is made possible by donations from alumni and friends. No state funds are used in its production.

Change of Address?

fans@uw.edu

31 Q&A

Keeping it Above Board

Comments?

bizmag@uw.edu Think differently. Make a difference.

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It’s a Bird, It’s a Plane, It’s Marketing!

This issue of the magazine features a great story about how our marketing department is ascending in the rankings, and how we market ourselves as a business school. So I’ve asked our managing director of marketing and communications, Eric Nobis, to kick it off.

— Jim Jiambalvo, Dean

Jim Jiambalvo

Len Peralta, Illustrator

Eric Nobis

I almost miss the construction noise. Initially, it signified the building of PACCAR Hall. Then it heralded the demolition of Balmer Hall and the beginnings of our new building—now in its final stages. I suppose the quietude is good for concentration, but for the last few years the sound of machines has been a symphony of our momentum. Luckily, we’re not running short on other sources of forward movement—many of which you can read about in this issue of Foster Business.

You may remember from the previous issue that our MBA Program is ranked number two in the field of marketing by Bloomberg Businessweek. This is a good time to let your friends know that—especially those from other b-schools. In the perception game, our quietly competent Northwest manner does us no favors. Granted, it’s only one ranking, and I don’t want to make too much out of it from that point of view, but the larger significance is that it’s a milestone on Foster’s journey to become the best public business school in the US. As alumni, you know UW Foster is a regional powerhouse. Increasingly, we’re becoming a destination school where students who want to pursue careers in marketing—or accounting, corporate finance or entrepreneurship—can expect an educational experience that rivals any school in the country. How do you go from good to great in areas of academic focus? Learn more about what’s under the hood of our Department of Marketing and International Business in the pages that follow.

Other manifestations of Foster’s momentum were started decades ago. We have a long history of research and teaching on the subject of ethics; a recent, definitive study ranked our faculty sixth in the world on the subject. In the wake of scandals that have made ethics

top-of-mind news, many business schools have had to rethink their ethics curricula.

And perhaps you’ve seen the PR jockeying for position with students at Ivy League b-schools holding up their ethics cards for the New York Times education reporters. It makes me feel good to know we’ve been a leader in ethics education since the late 70s.

Meanwhile, read more on how a partnership between Foster and the Gates Foundation is supporting their mission to help solve global health crises. Foster MBA students have joined forces with UW Department of Global Health students to work with the foundation on some exciting projects affecting global health, and there are many more to come.

Another great example of our momentum is the fact that 10 new faculty members will be joining our team this fall. Our ability to recruit faculty who shine as brightly in the classroom as in their scholarly pursuits is a strong differentiator at Foster. Our faculty recruitment strategy gives students the best of both worlds—faculty who are at the cutting edge of their discipline and who also engage students in interactive, strategic discussions of important real-world business issues and problems. Look for more about our new recruits in the Fall 2012 edition of Foster Business.

Lastly, before you turn the page and experience more stories that I hope make you proud to be a member of the Foster community, I want to acknowledge this year’s Edward V. Fritzky Chairs in Leadership, Steve and Paula Reynolds. When we dedicated PACCAR Hall, the dean said, “this is where business meets school.” We’ve been committed to the idea that relevance is as important as rigor in the world of business education. As you’ll see on page 31, the Reynolds have done an amazing job of bringing outstanding business leaders to campus, creating wonderful opportunities for faculty, students and alums.

Sincerely,

Eric Nobis Managing Director, Marketing & Communications

sp ring 2012 3

in the news

Phase 2: Business Hall Ready for furniture and final touches Plants are rooted. Outdoor benches built.

Sky bridges installed. Exterior and interior are nearly complete. Foster’s new $42-million home will be ready on time and under budget for its grand opening this fall.

Business Hall, the temporary name for the building, has achieved “substantial completion,” says professor Pete Dukes, chair of the building committee. This means all critical inspections have passed—safety,

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fire, emergency exits, water system, lighting system, etc.

Finishing touches of PACCAR Hall’s nextdoor neighbor are now being put in place.

Landscaping is underway, exterior walkways are being finalized, construction equipment is disappearing, furniture is about to move in, as are faculty and staff. Business Hall will become headquarters for the dean’s office, MBA and undergraduate offices, the

Center for Innovation and Entrepreneurship, MBA and undergrad career centers as well as classrooms and an executive forum.

Sky bridges and underground walkways connect Business Hall, PACCAR Hall, Foster Library and the Bank of America Executive Center building, creating a seamless campus within the UW Seattle campus. n

DIVERSITY DYNASTY

Dawg Days

Evening MBA students win national case competition An MBA team from the Foster School’s Business and Economic Development Center (BEDC) took first place at the 2012 National Minority MBA Case Competition held at the Fisher College of Business at Ohio State University.

The team of first-year Evening MBA students, Brent Bauslaugh, Rakesh Saini, Ksenia Karpisheva, Ben Lapekas, beat out teams from 18 other business schools from around the US including UCLA, Carnegie Mellon, Indiana University and Boston College.

The grand prize for Foster’s Evening MBA students? $7,500.

Additionally, Lapekas was recognized as the best presenter and Bauslaugh won first place for best question-and-answer session.

Each of the 18 competing teams had 20 minutes to provide a solution to a case dealing with strategic choices for a third-party commercial loan servicing business at Key Bank.

EJ Burke, Key Bank’s head of real estate capital and corporate banking services, adds that “the University of Washington team’s presentation represented a thorough understanding of a very complex and difficult case. Their recommended solutions were actionable and thought-provoking.”

A team from the BEDC has placed among the top three teams nationally for the past four years in this diversity competition. n

Foster alumni show their Husky spirit in the desert

Long-time Washington booster Herb Mead (BA 1956), center, was honored at a UW Foster brunch held during Dawg Days in the Desert, an annual series of alumni events held in Palm Desert.

Surrounding Herb and his wife, Sharon, are program speakers Bruce Nordstrom (BA 1955), Carol James and Husky football coaching legend Don James.

Not pictured, Kirby McDonald (BA 1968) also spoke and organized sponsorship at The Vintage Club.

Leading the U Bill Ayer is the latest Foster graduate to serve on the UW Board of Regents In January, Governor Chris Gregoire appointed Bill Ayer (MBA 1978) to a four-year term with the UW Board of Regents. Ayer, the long-time chairman and CEO of Alaska Airlines and Alaska Airlines Group, announced his retirement from the company in February.

A three-decade veteran of the aviation industry, Ayer joined Alaska Air in 1995 and has led the nation’s 7th-largest airline and its 13,000 employees since 2002. He is chairman of the Puget Energy Board and a director of the Museum of Flight and Angel Flight West, as well as current chair of the Foster School’s advisory board.

With Ayer’s appointment, the 10-member Board of Regents now includes four Foster graduates. The others are Chair Kristianne Blake (BA 1975), president of the accounting firm of Kristianne Gates Blake, PS; Orin Smith (BA 1965), retired president and CEO of Starbucks; and Joanne Harrell (BA 1976, MBA 1979), senior director of E-Government Programs at Microsoft. n

Showing their purple and gold spirit at the Dawg Days brunch, Charlie Hogan (BA 1959), Nancy Hogan and Tom McFarlan were among more than 130 Huskies who joined Dean Jiambalvo for this March 11 outreach event.

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IN the news

Up in Down Economy Seven growing companies honored at Minority Business of the Year awards On December 8, 2011, the Foster School once again recognized exceptional performance by minority-owned businesses throughout Washington, honoring seven companies that represent both a rich diversity and proven success. They are: • Sam & Jenny, a Bellevue-based waste paper exporter with anticipated 2011 revenues of over $70M, exporting 300,000MT of waste paper each year to South Korea and China (William D. Bradford Award) • Del Sol Auto Sales, an Everett-based dealership in operation since 2002 expecting revenues of $5.5M this year (NW Washington Award)

• Revel Consulting, a Kirkland businessmanagement consulting firm founded in 2005, expecting $26M in revenues this year (King County Award) • Hughes Group, a Tacoma logistics contract management company, anticipating sales of $8.1M (SW Washington Award) • Sister Sky, a producer of natural bath products inspired by Native American herbal wisdom on the Spokane Indian Reservation, expecting 2011 revenues to be $600,000 (NE Washington Award) • Indian Eyes, a Pasco business specializing in equipment logistics and construction management founded in 2005, expecting $20M in revenues in 2011 (SE Washington Award)

• Macnak Construction, a Lakewood company with revenue growth of 375% since it was founded in 2007 without borrowing any long term debt, expecting $6M in revenues in 2011 (Rising Star of the Year) “All seven businesses have proven that they have what it takes, even during this challenging economy, to survive and thrive,” says Michael Verchot, director of Foster’s Business and Economic Development Center.

Since 1999, the Minority Business Awards program has given much-due recognition to high-performing, minorityowned businesses. n

Social Start-ups This year’s best social entrepreneur ideas What do jewelry artists, mature women, the homeless and the impoverished all have in common? Their lives can be improved by budding social entrepreneurs who traveled from as far away as Rwanda and Bangladesh to compete in the UW Global Social Entrepreneurship Competition. 2012 brought record participation thanks to new travel grants provided by the Bill & Melinda Gates Foundation.

Grand Prize $12,500 = Ruby Cup

Copenhagen Business School’s team of graduate students created low-cost, medical-grade, long-lasting silicon cups for menstruating women and girls, to combat an environmental problem and social stigma in the developing world. They field tested their product in Kenya and are expanding in 2012.

Technology Prize $10,000 = SasaAfrica

SasaAfrica empowers African craftswomen to join the global ecommerce market via a mobile business model. While working in Nairobi slums for the past two years, Ella Peinovich, a Massachusetts Institute of Technology grad student, witnessed challenges poor women face daily. She and a Nairobi student joined forces to boost these women’s economic opportunity.

Honorable Mention Prize $5,000 = Greenovation Technologies

Bangladesh students offer an affordable, long-lasting, locally-sourced, patent-pending housing material, Jutin®, to shelter the vast number of homeless and people living in sub-par housing. Greenovation also creates jobs for Bangladesh residents to build homes and works with microfinance, non-profit and government organizations to sell products. $6,500 in other prizes went to Dartmouth Humanitarian Engineering (bringing hydro-power to rural Rwanda), SasaAfrica and Srujna (training women rescued from human trafficking in jewelry-making and entrepreneurship skills). n

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Optimism Now! Remarkable alumni, keynote challenge spark 20th Foster School Leadership Celebration In a keynote conversation before a record audience of 850 at the 20th annual Foster

“But they don’t teach you what it takes to run a business. That’s where the Foster School shines…

“But even a Foster degree can’t ensure your success. You must provide that most important element: your passion to succeed.”

School Business Leadership Celebration

in November, JP Morgan Chase chairman and CEO Jamie Dimon challenged America to wake up from the doldrums of a tooslow economic recovery.

Dimon contended that the US continues to have the best military, the best universities, the fairest rule of law, the deepest, widest, most transparent capital markets, the best businesses, and the hardest working, most entrepreneurial and innovative workforce in the world.

Jamie Dimon

Plus, a perfect track record of resiliency.

“Looking at American history, there have been times of distress and malaise,” Dimon said. “But it always got better. We grew past the Civil War, past the Depression, past World War I, past World War II, past Vietnam, past 1982. And we will again.”

Bruce A. Nordstrom and John N. Nordstrom

Both men spoke of their role as extending the legacy of transcendent customer service established by founder John W. Nordstrom, their grandfather. Their method of scaling this culture to a nationwide retail powerhouse, however, was far from orthodox. Bruce and John—alongside Jim Nordstrom and John McMillan—bore the titles of co-chairmen and each headed a different division and business function.

“There’s not a textbook in the world that would say a committee should run a business,” said Bruce Nordstrom. “But it’s what works for us.”

Lifelong entrepreneur L. Patrick Hughes (BA 1957) is a partner in three successful Washington-based companies—

Distinguished Leadership awards

Dimon’s optimism is embodied in the recipients of Foster’s leadership awards. The 2011 Distinguished Leadership Awardees have created real, lasting value over their long careers.

Cousins Bruce A. Nordstrom (BA 1955) and John N. Nordstrom (BA 1959) are members of the third generation of Nordstrom leadership. In 45 years at the helm, they helped guide the iconic Seattlebased retailer from $30 million to $8 billion in annual sales, and from a giant Seattle shoe store to the nation’s most-admired retailer of apparel.

L. Patrick Hughes

Renton Concrete Recyclers, Iron Mountain Quarry, and American Piledriving Equipment, developer of the world’s largest vibratory hammer.

Hughes reminisced about his early days in Aberdeen, jumping at the chance to drive a concrete truck and run a crushing pump as an afterschool job. “These kinds of experiences … give you a feel for the business and what it takes to be successful,” he said.

Builders of Our Future Awards

The two recipients of the 2011 Builders of Our Future Awards are off to a fast start.

Marc Barros (BA 2003) is the co-founder of Contour, a simple way to capture action video and share it online.

Since launching the company on its third-place winnings from the 2003 UW Business Plan Competition, Barros Marc Barros has led Contour to a passel of design awards, worldwide sales, and the number seven spot on the 2011 Inc 500 list of fastest growing companies in the US—and number one in the consumer products category.

Frances Youn (BA 2002, MBA 2011) was the first Foster School student appointed to the UW Board of Regents.

She was also named by the governor to serve on Washington State’s Commission on Asian Pacific American Affairs. Today Youn is a rising brand manager at Procter & Gamble.

“Business leaders are part and parcel of the Foster Difference,” said dean Jim Jiambalvo. “We have a great business school and, due to their efforts, a very bright future.”

The 21st annual Frances Youn Business Leadership Celebration will take place November 15, 2012. Alan Mulally, president & CEO of Ford Motor Co., will deliver the keynote address. n

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IN the news The year of living dangerously Revolutionary leader Ali Tarhouni views his native Libya, for once, with genuine hope “It’s a beautiful story, but also a very sad story,” began Ali Tarhouni, the Foster School’s senior lecturer in business economics who became a leader of the Libyan revolution as the Arab Spring stretched into summer and then fall.

Tarhouni was addressing an audience of Foster students in December, a detour from his official mission to thank the US government for its support. His reflections of the revolution were tinged with pride, pain and hope.

It began, for him, in March of 2011, when he left his teaching post to serve as minister of finance and oil with the National Transitional Council (NTC), Libya’s revolutionary government. Having fled his native country in 1973 after the regime of Moammar Gadhafi targeted him for execution, Tarhouni’s new job came with enormous personal risk. But it was time to fight.

“I spent a good part of my life trying to bring democracy to Libya. But everything I attempted failed,” he said. “And then there was the Tunisian revolution, followed by the Egyptian. I knew—and also my family knew—that if something like this happened, there wasn’t a question that I would go. ... What followed was truly amazing.”

Tarhouni managed to raise enough cash to fuel the grassroots revolution through some lean times. He emerged as one of its most prominent and popular leaders.

He famously traveled by fishing boat to the besieged city of Misarata in a show of support for the rebels. And later, he was one of the first NTC leaders to arrive in Tripoli, still under Gadhafi’s control. “To go into the capital, not yet liberated, and to claim it to be free.” he said. “That was a moment.”

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Libya’s future

Now, Libya is in a new moment. The revolution is won. Gadhafi is dead. A new state is forming. Tarhouni declined a post in the transitional government, opting to spark a grassroots movement to install a government “of the people, by the people, for the people.”

He’s currently barnstorming the country to teach democracy and political discourse, and support a national military and a modern free economy in which the private sector plays a significant role. “We’re moving now from revolution to building a new state,” he said. “It’s very challenging.

We’re almost starting from scratch. And there’s no manual.”

Tarhouni expressed great optimism for Libya’s economic future. A nation nearly three times the size of Texas, it has a young, educated, progressive population. It also has oil, agriculture and natural beauty.

“The potential of Libya is tremendous, and I think the world knows that,” he says.

“At the end of the day, I hope that we build a stable, democratic, Muslim country that

shows the world a different face of this culture. And I hope that the Libyan people finally get to enjoy their wealth.”

Hope in humanity

Speaking in the comfort of his school, in his adoptive home of Seattle, Tarhouni mourned the revolution’s heavy toll, the lives lost and families shattered. But he also reflected on the resoundingly positive larger theme underwriting this long-awaited democratic movement.

“I feel privileged to be part of a great grassroots revolution, to be part of bringing freedom to Libya,” he said. “Idealism, unfortunately, is often discounted. (The Libyan revolution) shows us that there is room for idealism. There is room for belief in what is right and what is wrong. There is room for these simple virtues. That’s what makes us human.” n Click to read more and view a video of the event.

xTREME aCCOUTANTS

GREEN GADGETS Clean-technology winners awarded $22,500 UW engineering and business teams won all five prizes at the 2012 Environmental Innovation Challenge, with 23 teams from five Pacific Northwest universities competing.

Teams pitched prototypes and plans for clean-tech ventures that address market problems with green, scalable solutions.

Foster team makes it to the finals

$10,000 Grand Prize

An alternative to concrete highway jersey barriers, Green Innovative Safety Technologies (GIST) is a start-up that revolutionizes a transportation sector with recycled technology.

They convert used tires to highway barriers. The team consists of UW engineers who specialize in chemical, mechanical, environmental and civil engineering and a Foster MBA student.

“Last year in this country there were 300 million used automotive tires thrown away with no good secondary purpose,” says MBA student Ricky Holm. $5,000 Second Prize

Replacing post-disaster relief transitional housing with sturdy, long-lasting, sustainable shelter, Barrels of Hope, improves the lives of natural disaster victims, with materials to make their eco-friendly house that fit inside a rain barrel. This UW team of entrepreneurs comprises four MBA students, a civil engineering student and two consultants.

“USAID, American Red Cross, World Vision International and Habitat for Humanity raised nearly $4.5 billion for the relief efforts to Haiti after the earthquake struck in 2010. Unfortunately, there were no scalable shelter solutions at the time,” says Ryan Scott, MBA student. $2,500 Honorable Mentions

Ambient-pleasing LED household lighting (UW team LumiSands), a non-toxic alternative to Teflon cookware (UW team OmniOff) and rooftop urban greenhouses (UW team UrbanHarvest) each won honorable mentions. n

For Foster undergraduates Daniel Beasley, Patrick Butler, Jonny Lu, Caitlin Snaring and Nash Springberry, 2012 started out in extreme fashion.

The team, accompanied by their faculty advisor, Pat Angell, traveled to New York City to compete in the finals of PricewaterhouseCoopers’ xACT competition.

Short for “extreme accounting,” the xACT competition is one track of PricewaterhouseCoopers xTREME Games (the other track being taxation), an annual student competition held on campuses across the country.

Foster students formed 16 teams for the two-week competition on campus, and PricewaterhouseCoopers judges evaluated each team on their presentation, research and responses during a Q&A session.

The top-scoring Foster team was one of five selected from a total of 850 teams representing 44 universities to advance to the finals in New York.

And while the team didn’t win the grand prize—an honor given to the student team from UT Austin— they were the first Foster team to make it to the final round in the nine year history of the competition. n

Barrels of Hope displays their concept: sustainable shelter materials that fit inside a barrel.

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The Long View The Foster School is a world leader in the research and development of business ethics

T

hink you can master business ethics simply by studying the greatest hits of corporate scandal—Enron, Madoff, Lehman Brothers—and then doing the opposite?

Think merely adopting a motto like “don’t be evil” makes it so?

Think common sense and a moral compass are sufficient aids to navigation?

Think again.

“There are a lot of misconceptions regarding ethics,” says Elizabeth Umphress, an associate professor of management who teaches and studies ethics at the Foster School. “Common sense doesn’t always guide us well.”

The Foster School equips students with a far more dependable guide. A deep, dedicated study of ethical theory and practice is required in the core curriculum of every degree program, led by an ethics faculty that ranks among the most influential in the world.

Not because it has to. Not in reaction to scandal. And not for positive PR. Foster stresses ethics because it’s too often oversimplified, misunderstood and discounted.

And because it’s essential.

© iStockphoto.com / MHJ

Why ethics?

Dan Turner describes himself as a “loud” supporter of the school’s

vigorous emphasis on business ethics development. The associate dean for masters programs and executive education insists it is both the right and the responsible thing to do.

“To reach your potential as an individual and a leader in an organizational setting, you must be a person of character,” Turner says. “We have an opportunity and a responsibility to help develop that character in our students at every level of their careers.”

The Foster approach to ethics stresses knowledge over intuition, findings over feelings. The ethics course addresses the individual decisions we make, cultures we build and organizational strategy we set.

In the end, students are equipped not only to make better ethical individual decisions but also to lead more effective, ethical teams and organizations.

“Each ethical situation is different, and each requires a different set of skills,” says Scott Reynolds, an associate professor of business ethics and Helen Moore Gerhardt Faculty Fellow. “By understanding what those skills are, developing them, and testing them, we expand our capacity to deal with some of the most challenging issues that arise at work.”

Center stage

Accomplishing this requires a commitment to ethics that comes from the dean’s office. This manifests in two significant assets.

First is the assemblage of a powerhouse ethics faculty—ranked 6th in the world in the definitive survey recently published in the journal Business & Society—that provides the most complete expertise available on the subject. “You get a better outcome,” Turner says, “when you have people who live, breathe and contribute to the ethics literature teaching ethical theory in the classroom.”

Second is the central role that ethics plays at the Foster School.

“We’ve never taught it as an afterthought or a reaction to external pressure,” Turner adds. “Ethics is fundamental to our curriculum.

It’s ingrained in our DNA.”

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“There’s no question that the students I’ve met and worked with have a strong sense of ethics. It comes from the top and gets driven throughout the entire school.” Howard Behar , former president of Starbucks

Ahead of the curve

If ethics is part of the Foster DNA, then Tom Jones was present at the creation. Or, nearly. The Boeing Company Endowed Professor in Business Management joined the faculty in 1978, about the same time that business ethics became a formal branch of social science. Jones inherited the school’s first ethics course, “Business, Government and Society,” and soon chaired the department of the same name.

While the department was later folded into Management & Organization, Jones continued teaching ethics and corporate social responsibility. He also authored seminal work on individual decision making within an organization. In the mid-1990s, he turned his attention toward macroethics, or ethics applied at the corporate strategy level. In the years since, he has developed “stakeholder” theory, an alternative approach to business that argues corporations would better serve the societal good if their mission was to maximize the well-being of all stakeholders rather than shareholders alone.

As Jones began challenging economic orthodoxy, Reynolds arrived in 2002. A born ethicist—in the days before seatbelt laws, he persuaded his parents to buckle up by couching it as a moral issue—Reynolds jumped into the lead teaching role. “After Enron, business schools were scrambling to add ethics to their students’ portfolios,” he says. “We were expanding. We had been teaching this for years.”

Bench strength

Reynolds has become a world-renowned scholar whose work has revealed some important truths about the non-conscious elements of ethical awareness. One recent paper demonstrated the relationship between moral intuition and moral behavior, and identified circumstances under which an organization’s culture can “activate” immoral behavior. In another, he developed an assessment of “moral attentiveness” that can predict behavior over time.

Reynolds and Jones are in good company. Umphress joined the Foster faculty in 2011, bringing a line of research that tends toward the “dark side” of ethical decision making. She has studied why people do bad things for the good of their organization.

And she’s currently working to understand why people morally disengage—a major theme of her coursework. “If I can get my students to believe that we all are capable of unethical acts when not morally engaged,” Umphress says, “I know that they will be more ethical.”

Bruce Avolio, the Marion B. Ingersoll Professor of Management and executive director of the Foster Center for Leadership

and Strategic Thinking, joined the Foster School in 2008, bringing his extensive work to accelerate positive, authentic leadership development. Most recently he’s outlined the capacities that leaders require to think and act morally.

Morela Hernandez, an assistant professor of management hired in 2007, investigates how leadership emerges and how moral decision making can be developed.

Ryan Fehr, fresh out of his doctoral work, explores the intersection of ethics, morality and conflict management, with an emphasis on apology and forgiveness.

“The Foster School has put together a unique group of business ethics scholars, including several who are considered leaders in the field,” says Linda Trevino, a giant in organizational ethics research who directs the Shoemaker Program in Business Ethics at Penn State. “I can’t think of another department in the country that has this much bench strength in the area.”

The litmus test

A highly ranked program stocked with ethics scholars of the highest order doesn’t guarantee anything, though. What matters is performance, the field work of the Foster School’s ultimate product.

“There’s no question that the students I’ve met and worked with have a strong sense of ethics,” says Howard Behar, the former president of Starbucks who has spent a good deal of his retirement as a mentor and lecturer to Foster students. “It comes from the top and gets driven throughout the entire school.”

Jonathan Hill (MBA 2010) certainly sees the value. As operations manager for global project finance at the international development firm DAI, he oversees the accounting of US governmental aid contracts at work in 80 different developing countries.

His stock-in-trade is the ability to navigate the many local ethical codes while always maintaining the ethical standing of his conscience, his firm and its clients.

“I feel very fortunate to have had a solid grounding in ethics from a school that takes it very seriously,” Hill says. “It’s extremely empowering.”

Reynolds calls it something else: “It may not be obvious at first, but what we are conferring on our graduates is an intrinsic competitive advantage.

“When someone is associated with the Foster School, you know that not only are they going to be well-educated in the tools of business, but also they’re going to have integrity and a longterm perspective.” n Click to read more.

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Can you teach ethics?

Ethics in action Jesse Robbins is an honest man. The second-year MBA student never thought he needed to study ethics to know how to do the right thing. But Foster’s culture demands that even skeptical students like Robbins emerge with a new perspective. “I gained not only awareness,” he says, “but invaluable frameworks, ways of approaching a problem in a structured way that allows me to communicate the response even with people who aren’t on the same page.”

Robbins and a team of fellow Foster MBAs got on the same page to take third place at the 2011 national MBA Case Competition in Business Ethics, coolly proposing a 360-degree auditing plan to deliver Rupert Murdoch’s embattled News Corp from scandal to ethical leadership.

© iStockphoto.com / MaryLB

Sixth in the world (and rising) A survey recently published in the journal Business & Society ranks the Foster School’s faculty 6th in the world for productivity and prestige in the field of business ethics.

“This is a place where the dean and faculty believe business ethics is important enough to allocate a large number of scarce tenure-track faculty positions to exceptionally strong ethicists,” says Dan Turner, associate dean for masters programs. “If there’s a stronger testament to the importance of ethics at a business school, I don’t know what is.”

Yes! So shouts the unequivocal chorus of business ethicists on the Foster School’s faculty. As a matter of fact, it must be taught.

“Just as there are theories and frameworks that help people be better managers or strategists or accountants or marketers, there are also evidence-based ways to help people be more ethical,” says Elizabeth Umphress, an associate professor of management. “More importantly, there are ways for managers to help their employees be more ethical. It’s a pivotal knowledge set to have in the business world.”

Knowing right from wrong is not enough.

Ethics, the Foster way, begins with awareness, the ability to discern an ethical decision from just a business decision. Once identified, students are armed with frameworks to help make the right decision in any situation, large or small. Perhaps more importantly, they learn how to create teams and organizational cultures that embrace ethics as the foundation of a long-term strategy.

“Empirical evidence tells us that these are relevant skills, and that making students struggle through a rigorous learning experience in business ethics, led by a capable and knowledgable instructor, leads to better outcomes,” adds Dan Turner, associate dean for masters programs. “You need this kind of acumen to be an effective leader.”

spring 2012 13

Nidhi Agrawal

Leta Beard

fabio Caldieraro

gary erickson

Mark Forehand

Marketing momentum A look at the Marketing Department that Businessweek ranked as second to one

By Eric Nobis

Detra Montoya

Robert Palmatier

Jack Rhodes

Oliver rutz

Ann Schlosser

elizabeth stearns

Jessica Stone

dan turner

Jack Whelan

richard yalch

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I

shailendra jain

judy kalitzki

Douglas MacLachlin

n baseball, conventional wisdom holds that good pitching trumps good hitting. Then again, it’s tough to win a game without producing some runs. Ultimately, to be competitive you need good pitching and good hitting—good fielding helps, too. Building a strong business school department is very similar—you have to have great research, great teaching and relevance to the business community. Sometimes a strong showing in one of these areas comes at the expense of another. Not at Foster, where the Department of Marketing and International Business, ranked number two in the country by Bloomberg Businessweek, fields a team of faculty who routinely publish in the discipline’s top academic journals, win teaching accolades and equip students for successful careers in marketing.

As the director of marketing and communications for Foster, I wanted to go behind the scenes and take a deeper look at our marketing department. What does it take to go from having a reputation as the best in the region to being a strong contender at the national level?

Roughly four years ago, dean Jim Jiambalvo articulated a vision for Foster to become the best public business school in America. Since then, his commitment to securing the very best faculty across academic departments has been stronger than ever. And at Foster, the bar for “very best faculty” is high—we’re not talking about adding a few prolific researchers who can boost a school’s academic reputation while offloading teaching duties to assistants. We’re talking about outstanding scholars who can turn their classrooms into Van de Graaff generators of cerebral stimulation. Our marketing department is stacked with 11 professors, nine of them tenured or about to be; and that doesn’t count the first-rate lineup of lecturers. On top of it all, the marketing faculty are highly approachable, unencumbered by the kinds of egos that give academics a reputation for snobbery.

When it comes to assessing the strength of a department, there are many rubrics to choose from; and, the perception of quality as determined by an outside ranking means much less to Foster’s marketing professors than the impact they have on students. “One of the best measures of our department is the success that our graduates have in their careers,” says professor Douglas MacLachlan (“Mac”), department chair and 43-year member of Foster’s faculty. In his time at Foster, Mac has been associate dean, spent five terms as department chair and travelled extensively as a steward of marketing and international business. Despite having submitted his application for retirement, he’s published 15 papers since the summer of 2009. “In terms of our departmental strength, I think the tipping point has been our tremendous success on the hiring side,” says Mac. Those that can, teach

jeff shulman

jonathan zhang

The marketing department is rich in consulting and private sector experience, but as important as “real world” experience is to keeping the curriculum relevant over time, the thing that students most appreciate is the quality and commitment of the instructors. “As a career changer moving into marketing, I knew I had a lot to learn as an MBA student,” says Bryan Tomlinson (MBA 2009), a senior product manager at Microsoft. “At Foster, the marketing faculty are incredibly skilled at blending the latest in marketing theory with lessons from the private sector. What’s truly remarkable, though, is how much they care about our learning, staying late nights to help prepare us for national marketing case competitions, and meeting with small teams at all hours to ensure we were capturing the concepts and able to apply them immediately post-graduation.”

You won’t see “passion for teaching” or “impact of classroom experience” on any departmental ranking survey. But those are the things that students talk about when they reflect effusively on their Foster experience. I’ve sat in on classes to get a firsthand look, and it’s like watching a play in which the professor has written the script, supplied the stage direction and taken the leading part. It looks exhausting.

In one marketing class I sat in on, I was confronted with the following scenario: you’re on the beach, it’s a hot day, and a friend offers to go pick up some cold beer. There are two options for procuring said beer, a mini mart and a luxury resort. The professor asks how much you’re willing to pay for the beer at each location. Class is in session, and Dan Turner is revealing the counterintuitive results of a survey exercise he’d had students do ahead of time. Because he is wily,

spring 2012 15

Marketing Squared A brief note on marketing the marketing department—specifically to MBA candidates One of the things you may have seen around town, especially if you work in a high-rise office building in downtown Bellevue or Seattle, are LED panel elevator ads, as well as a large billboard ad on Highway 99, announcing our #2 ranking of the marketing department. These, and other campaigns, are important marketing tools for Foster.

Why? Because the Foster School of Business plays on a multi-tiered stage. On one hand, we compete globally for full-time MBA students. At this time, the overwhelming trend in graduate business programs is that full-time enrollments are down over previous years. Simultaneously, we offer programs designed to accommodate working professionals, and most of those serve people in King, Pierce and Snohomish counties—though we offer a program for students from further afield as well.

While we continue to make progress in the rankings, and more importantly, in our ability to fulfill students’ career goals, there is an increasing level of competition for the best and brightest students.

From distance-learning formats to low-residency programs, the marketplace is crowded with ways to get your MBA. Now, perhaps more than at any other time, the curriculum, quality of instruction and the cohort with whom you’re learning factor hugely into how successful you will be upon earning your MBA. There are also the rankings, reputation and network to consider.

QED: this is NO time to be a best kept secret or to rest on our laurels as a perennial NW favorite.

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there were actually two surveys deployed; an A/B split designed to test the notion that price sensitivity is a rational mechanism. Turns out it isn’t.

Turner is the associate dean of masters programs and a senior lecturer in marketing. He’s won the PACCAR Award for Excellence in Teaching, Foster’s premier teaching honor, and I can see why as I observe one of his classes. Not only does he bring considerable resources to the classroom, he also oversees the curriculum across all MBA programs and is a senior administrator on the dean’s leadership team.

Want to learn about branding? Professor Mark Forehand, also a recipient of the PACCAR Award, will be your guide. Forehand’s research is focused on consumer psychology and branding. Fellow academics follow his work in publications such as the Journal of Consumer Research and the Journal of Consumer Psychology, two of the world’s premier marketing journals. Forehand’s work has also been the subject of local and national media, including Time Magazine and National Public Radio.

Research you can really use

A common Foster mantra is the need to balance rigor with relevance, especially when it comes to research. Not a problem—especially when you’re able to teach elements of your research in the classroom. Or, for instance, to explain the charts on the white board in your office to the non-academically trained marketing and communications guy, as Shailendra (“Shelly”) Jain, professor of marketing and another PACCAR Award honoree (seeing a pattern…?), did with me.

“What’s PDB(X),” I ask him. Rising from his seat, he smiles and says, “Oh, that’s ‘power-distance belief.’” The chart about which I inquire is part of a study that tested the effect of anthropomorphism (ascribing human traits to products or brands) in marketing a fruit beer to two groups of consumers: those with more hierarchical cultures (generalized as ‘Eastern’), and those with less hierarchical cultures (generalized as ‘Western’). The result? The use of anthropomorphism does not aid in marketing the fruit beer to Eastern consumers. (The results were inconclusive for Western consumers.) There’s research, delivered in an ad hoc classroom, while you wait.

Relevance comes in many forms, and another way that Foster marketing research comes to life is in the hands of faculty like Rob Palmatier, associate professor of marketing, who’s created a massive data repository by partnering with companies to gather 20 years’ worth of marketing data and sharing reports (without listing other company names) back out to participants. Rob has the national business connections and a reputation for integrity that make him a hub in his specialty of relationship marketing.

Productive research is one sign of a healthy, engaged department— and by this standard Foster is not taking it easy. Dan Turner confirms what I’d previously heard from other marketing faculty about the balance that exists across the marketing spectrum. “From the practical to the theoretical, from the quantitative to the psychological, across both teaching and research, there is an impressive array of talent in this department,” says Turner. So how do we keep up this trend? “Fresh blood,” says Shelly Jain. “We need to continue to hire the very best faculty, who build bridges to the business community and challenge students.” n

Marketing that Matters Selected recent findings from the Foster School’s marketing faculty

Credibility counts

Encouraging online product reviewers to list both pros and cons can invalidate five-star ratings. According to research

by Ann Schlosser, consumers are suspicious when they see a highest-possible rating supported by a less-than-perfect explanation. The perceived inconsistency renders an “excellent” rating less convincing than a merely “good” rating that appears more credible.

Positive ID

Ads on social networking sites such as Facebook are powerful. But it’s not only because they can be customized based on our exorbitant online sharing.

According to research by Mark Forehand, the mere proximity to a positive expression of our selves makes us more likely to identity with a brand. And the more we like ourselves, the more we like the brand.

Good fit, bad fit

Want to see a Nike sports drink?

How about an Apple shoe? A study

by Shailendra Pratap Jain finds that whether or not you view a brand extension favorably can come down to personal philosophy. Consumers who believe people are incapable of change tend to support brand extensions that are a good fit with their parent brand (like a Nike “Just Drink It”). Consumers who believe we are capable of change tend to support brand extensions that are more of a stretch (like an iShoe).

Chatter matters

An internet-trawling study by Oliver Rutz and co-authors demonstrates a strong connection between online word of mouth and a firm’s daily sales. When

online chatter—reviews, blog posts, tweets, videos and emails—about a company or its products increases on a given day, sales are likely to increase at the same rate.

tend to perceive a product as more expensive when grouped with higherpriced items and cheaper when grouped with lower-priced items.

Cost plus

Chronic social stress makes adolescents more likely to consume beyond their means. A new study by Detra Montoya finds that “lifestyle-based depletion”—stereotyping, lack of positive role models, unrealistic media images, limited parental relationships, financial hardship—contributes to teens making financial decisions against their longterm best interests. Ethnic minorities, girls, and teens with strained parental relationships are at the greatest risk.

Your market research has indicated the optimum price for a new product. Now price it higher. That’s the advice of a study by Douglas MacLachlin. Because consumers are typically unsure about the real value of an unfamiliar product, they take cues from the posted price.

If that price is slightly higher than they initially expect, they will expand their willingness to pay accordingly.

Recession-proofed luxury

The most established luxury brands— Versace, Rolex, Hermes, Tiffany, Louis Vuitton—have survived countless recessions by strategic adaptation. According to Douglas MacLachlin’s historical analysis, the most enduring luxury firms have expanded on the rise of middleincome consumers by launching affordably priced product lines during boom times. In economic downturns, however, they have retreated to their highest-end products and market, temporarily ignoring a financially stalled middle class.

A pricing Paradox

How can you make a product seem less expensive? Conventional wisdom says group it with higher-priced items. But a study by Marcus da Cunha and Jeffrey Shulman finds just the opposite—under the right conditions. When advertisements or displays prompt consumers to think generally about the product category rather than the distinguishing features of a particular product, they

Smells like teen spending

Creature comforts

After a tough day at work, you’re more likely to choose comfort food over haute cuisine. Research by Nidhi Agrawal reveals that people tend to prefer easy over interesting—in food, leisure, exercise, even chores—when depleted by a difficult task. A final study indicates that it is possible to “prime” an exhausted person to seek a more challenging reward.

Loyal… to whom?

The payoff from relationship marketing—efforts to build customer loyalty— depends on who owns the customer relationship. According to research by Rob Palmatier, when the loyalty is to a salesperson, her employer will see a larger impact on customer behavior and increased sales. But such loyalty also increases the risk of that salesperson leaving—and perhaps taking her customers with her.

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Global Help A new partnership with the Bill & Melinda Gates Foundation allows Foster School students and faculty to work on the most pressing challenges in the developing world

© iStockphoto.com / malerapaso, lisegagne, MarkGillow, ranplett, Vardhan, imagotres, loops7

S

ay you need to pick up a prescription for antibiotics to treat an infected thumb. You simply drive to the pharmacy at Bartell or Fred Meyer or Walmart, right?

But what if you were in Bangladesh or Mozambique or Papua New Guinea? The solution is not so straightforward in the developing world. There, health care may be delivered in far-flung government facilities, clinics operated by non-profit groups, tiny mom-and-pop shops, or even by scrappy kids peddling unregulated medications on the street.

Guy Stallworthy thinks there is a better way. A senior program officer at the Bill & Melinda Gates Foundation, Stallworthy is working toward more efficient and effective delivery of health care in the world’s poorest places.

But first, he realized, he needs a lingua franca, a common way to frame the problem and solution. And it needs to be adaptable to different scenarios and locations. In short, he needs a business model.

“I came to the concept as a way to articulate what I would argue should be the foundation’s role in health delivery,” he says. “We don’t want to be funding health care, but rather catalyzing innovation in the delivery of health care. So we need to distinguish between making incremental improvements and coming up with a transformative model.”

To develop the tools that will help his team accomplish this goal, Stallworthy might have hired a business consulting firm. Instead, he has reached out to a bright new partnership between the Gates Foundation and the University of Washington. Graduate students and faculty from the Foster School and the Department of Global Health are contributing to a variety of projects in support of the foundation’s significant work in the discovery, development, delivery and advocacy of global health.

spring 2012 19

Creation story When Saara Romu (MBA 2007) was a student in the Foster MBA

Program, she would have loved the opportunity to work with the Gates Foundation.

She found her way soon enough. With a background in biological research and non-profit management, and considerable skill in entrepreneurship and finance, she joined the foundation in 2009. Her current role as portfolio manager in the Global Health group—providing business and strategy oversight to internal teams and grantees—exercises her eclectic skill set and satisfies her need to make a difference.

It also exposes her to the full range of projects across the foundation’s initiatives in global health. She noticed that her colleagues—largely MDs and PhDs—sometimes encounter a need for expertise on a particular subject matter, often business-related.

She knew from experience that the UW could provide solutions.

Romu envisioned a partnership modeled after an existing Evans School program that provides the Gates Foundation with policy analysis and research.

Last spring, she initiated and negotiated just such a partnership with the Foster School and the UW Department of Global Health.

Both programs launched last fall, initially in parallel. Same idea, different expertise. Romu became the Gates Foundation’s hub for UW-bound project requests in global health, development and policy/advocacy.

The result, she hoped, would be a local, specialized alternative to consulting for the foundation. Faculty would get to apply their expertise to global challenges. And the students would get a golden opportunity.

“A big piece of this collaboration is offering students the chance to work on the most pressing issues in global health,” Romu says.

Adds Martha Choe, chief administrative officer of the Gates Foundation: “The partnership is valuable not only because it provides graduate students and faculty the opportunity to engage in research projects that support the foundation’s strategic program goals, but also because it contributes to the training of the next generation of global leaders.”

Test pilots

The Foster School partnership began with a pair of projects in the fall. The test pilots, so to speak, were Cynthia Miller, working under the guidance of Mark Hillier, an associate professor of quantitative methods, and Eric Slagle, working with Ed Rice, an associate professor of finance and business economics.

Slagle and Rice created an exhaustive database of early stage vaccine R&D going on all over the world—the groundwork for the foundation’s efforts to spur development of effective vaccines for neglected diseases and populations. “We don’t want to ignore promising research simply because we don’t know it exists,” says Romu.

Miller and Hillier completed an initial job projecting the costs of developing different “vector controls” that prevent the spread of malaria, and then creating strategies for specific countries where the disease is a particular threat.

They’ve followed with a new project modeling the probabilities of various vaccine candidates to succeed, a refinement of an existing model that will help the foundation organize its pipeline to maximize the chances of generating viable vaccines.

Quick win-win

Partnership founder Saara Romu (center) is flanked by Foster MBAs Eric Slagle, Cynthia Miller, Katie Collier, and Joelle Bassily.

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The initial projects were an unqualified success.

“The caliber and capacity of the UW has not ceased to impress the programmatic teams at the foundation,” Romu says. “There is a depth of accessible expertise that consulting firms can’t necessarily provide.”

“The Gates Foundation is realizing that the UW has a unique capacity to meet their needs,” adds Kirsten Aoyama, director of the UW Global Business Center, which manages the Foster School’s contracts with the foundation.

Seizing the opportunity, Romu created an internal web site to formalize and publicize the program internally, and barnstormed

The beginning of a beautiful friendship

across the foundation to promote it. She also endowed it with the familiarity of a pronounceable acronym: GARP (Global Analysis and Research Program).

And word spread, well, virally.

The UW Department of Global Health is stocked with world-class faculty and students. But the collaboration with the Foster School has added considerable value, according to Lisa Manhart, an associate professor of epidemiology who co-leads the department’s Gates Foundation consultancy.

“We’re really excited about this partnership,” she explains. “All of our training is in science. But business is an important component of global health.

We know there’s a lot we can learn from the Foster School. It’s important for our students. They graduate with a masters degree, go off to work with an NGO, and then, all of a sudden, they’re business people.”

The Department of Global Health has begun discussions with Foster School officials to formalize the cross-training in the form of a joint course or, eventually, a certificate program. “We’re loving the link with the Foster School and want to expand upon it,” Manhart says.

More help wanted

Work orders came in from all corners of the foundation’s Global Programs. And the requests no longer broke into purely business (modeling, marketing, analysis) or global health (science, technology) problems.

It was becoming clear that the Foster School and Department of Global Health should be collaborating. “We started to look at how we might work together instead of just shunting projects to one group or another,” says Lisa Manhart, an associate professor of epidemiology who mentors the student consultants from the Department of Global Health.

In January, MBAs Joelle Bassily and Katie Collier beat out 17 Foster candidates for the opportunity to work with six global health students on a variety of projects. Their mentor is Mark Forehand, the Pigott Family Professor in Business Administration and an associate professor of marketing.

Bassily initially contributed to a massive strategy project of the Gates Foundation’s pneumonia team, specifically reporting on the extent that the costs of manufacturing, importing, and distributing medications act as a barrier to effective interventions.

Collier delivered market and cost analyses of different technologies that measure micronutrient deficiencies in a given population.

Mission critical

A joint MBA/MPA student at the Foster and Evans Schools with a background in environmental and economic development, Collier was born to collaborate. She sees the multidisciplinary approach to global health as both essential and challenging—in the best sense of the word. “MBAs are always driving forward on a timeline, racing toward conclusions. Scientists, on the other hand, are more focused on the process and the details,” she says. “There’s a tension between the two approaches that’s really healthy for both sides.”

She calls the work energizing: “The projects are challenging, and demand all of the skills I’ve learned in the Foster core. And I love that my work makes an actual impact.”

Hillier, an expert in quantitative methods and operations management, concurs. “It’s exciting to work on something that’s so important,” he says. “The research I do at the Foster School is important, but not to the magnitude of saving lives.”

Collier and Hillier are playing a small part in a philanthropic revolution. The Gates Foundation approaches global health not only with a big heart and budget, but also with Silicon Valley ambition, Wall Street urgency, and Seattle sensibility. The powers of business and science must work hand in hand.

“Good decisions in global health require a combination of clinical rigor and business acumen,” says Choe. “Similar to the foundation’s approach to philanthropy, the Foster School brings

an application of data analysis, knowledge of market forces, and other skill sets to measure and assess evidence of impact.”

High demand

Romu reports that the Gates Foundation is set to fund the UW partnership for year two. And interest continues to build.

Among the flood of new project requests is work on Guy Stallworthy’s business model for health care delivery in developing countries. Collier and Bassily are teaming with Warren Boeker, the Douglas E. Olesen/Battelle Endowed Chair and professor of management, to synthesize the literature and deliver a best-practices framework that they’ll beta test on several scenarios.

“It’s going to be tremendously useful for the foundation and probably for others in global health, where ‘business model’ is not a term that’s used often—or consistently,” Stallworthy says.

He’s enthusiastic about the partnership with the Foster School, and the wealth of expertise on offer.

“We’ve often worked with top-of-the-line consulting firms,” he says. “But I’ve often thought there are smart individuals at the UW, maybe even students, who could deliver a lot of the things we need. That’s why I think this is brilliant. We have many tasks that might be suitable. All we needed was a structure that makes it easy to get in touch with the right people.” n

spring 2012 21

faculty

LIKE! Social networking ads impel us to identify with brands

Facebook is a great place to advertise. And not only because of its celebrated ability to customize on the vast quantities of personal information we gladly share each day.

It’s also because we tend to like brands—any brands—that appear on our personal sites, in close proximity to a positive expression of our selves. The more we like ourselves, the more we like those brands.

That’s a key finding of a new paper co-authored by Mark Forehand, an associate professor of marketing at the Foster School. The paper investigates the subtlest of ways that marketers can lead consumers to personally identify with a given brand.

“The vast majority of marketing exposures are experienced under conditions of low attention and little cognitive involvement,” says Forehand. “This research demonstrates that brand identification can form even in these low-involvement conditions if the brand is merely presented simultaneously with self-related information.”

Me, myself and I

The ultimate goal of many marketing campaigns is getting consumers to identify with the brand—to feel that this iPad or Volkswagen Jetta or Red Bull was expressly made for me. It’s a tall order, usually requiring consumers to interact with the brand in some meaningful, conscious way.

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But Forehand and co-author Andrew Perkins, of the University of Western Ontario, wanted to learn just how subtly they could create a personal connection between consumer and brand.

In a first experiment, they asked participants to sort fictitious brand names with terms related to either “self” or “other.” Their attitudes toward the “self” brands were more positive. A second study established that the effect was stronger for individuals who possessed higher selfesteem.

A third study demonstrated that the effect occurs even when brands are simply presented near the personal content on a consumer’s social networking site. Participants compared banner ads for different fictional automobile brands that appeared on their own Facebook profile page and the profile pages of strangers on Facebook and a competing social networking site. They strongly preferred the brands that appeared on their own pages—without being aware that they had even noticed them.

“The car brands did not benefit from Facebook directly,” Forehand says, “but rather from their proximity to consumers’ personal content.”

Positive ID

How can brand identification be activated by so slight an association? Credit a con-

cept that Forehand calls “implicit self-referencing.” It suggests that consumers don’t need to own, choose or endorse a brand to identify with it.

When a brand’s attributes become associated with a consumer’s self-concept, Forehand believes that some degree of the consumer’s self-esteem automatically rubs off onto the brand. The greater the self-esteem, the more positive the attitude toward the brand.

It begins with a personal association.

And, as the study demonstrates, that association can be created very subtly, even passively, wherever a consumer has a heightened sense of self.

“Any advertisement that evokes the self is going to be more likely to make that kind of connection. But that’s not a new insight,” Forehand says. “What is new is just how trivially that connection can occur.

Stripping away all of the other reasons why a consumer might identify with a brand, we’ve found that simply making that nonconscious connection between self and product—even when there is no ownership, no use, no endorsement—still has a positive effect.”

New ad venture

Facebook. MySpace. LinkedIn. Twitter. YouTube. hi5. Bebo. These bustling networks that didn’t exist a decade ago have become the most public expression of our collective self-esteem. Not to mention a fertile environment in which to advertise.

“Because consumers are increasingly comfortable posting a wealth of personal information,” Forehand adds, “social networking provides a particularly rich domain for achieving positive brand identification through these subtle associations.”

“Implicit Self-Referencing: The Effect of Non-Volitional Self-Association on Brand and Product Attitude” is forthcoming in the Journal of Consumer Research. n

Born This Way Heredity is a major driver of irrational investing behavior Why do we trade too much, refuse to sell at a loss, fail to diversify, bet on lottery stocks, chase past performance? Why do we invest against reason?

It’s the genes, stupid.

Well, some of it, anyway. Heredity explains 26 to 46 percent of an individual’s various irrational investing behaviors, according to a new study by Stephan Siegel, an assistant professor of finance at the Foster School.

Siegel and Henrik Cronqvist of Claremont McKenna College analyzed the investing behavior of more than 15,000 pairs of twins logged in the Swedish Twin Registry (the world’s largest) by cross-referencing with the extensive personal financial data tracked by the Swedish tax authority.

To significant but differing degrees, the authors noted that identical twins—who share 100 percent of their DNA—were more similar in their investing behaviors than fraternal twins—who share 50 percent of their DNA, on average.

With this data, they calculated that genetic variation explains: • 46 percent of inadequate diversification • 26 percent of excessive trading • 30 percent of reluctance to sell at a loss • 31 percent of chasing past performance • 28 percent of trading in lottery stocks The rest can be chalked up to the environment that is specific to each individual; “experiences that have made twins

different from one another,” Siegel says.

But if predispositions are not destiny, he found that parental guidance and general education did not make much of a difference.

“We are, to a significant extent, born with our investment biases,” Siegel says.

To address the problem at the societal level, Siegel proposes the creation of a new form of asset management contract—certified by a trustworthy third party—that would provide extensive protections to the average investor, affording him the confidence to delegate financial decisions to an experienced professional who’s bound by strict standards and incentives tied to the client’s best interests. n

Clawbacks have claws

© iStockphoto.com / akinbostanci

Compensation provision makes CEOs more accountable for firm’s financial reporting In recent years, corporate boards of directors have increasingly sought to dissuade accounting errors and fraud by tying executive compensation to behavior. The vividly named “clawback” provision requires top execs to pay back excess incentive pay in the event of an accounting restatement.

But do clawbacks actually improve the quality of financial reporting?

They do, according to a new study by Foster doctoral student Ed deHaan; Frank Hodge, the Herbert O. Whitten Professor of Accounting; and Terry Shevlin, the Paul Pigott-PACCAR Professor of Business Administration.

Their analysis of 299 public firms that voluntarily adopted clawback clauses concludes that clawbacks improve the accuracy of financial statements and

increase investor trust. They also result in CEOs receiving greater overall compensation, suggesting that executives negotiate a hedge against the risk of losing future bonuses.

The clawback provision has become increasingly prevalent since the financial reporting scandals of the early 2000s and the resulting Sarbanes-Oxley Act of 2002 which imposed greater personal accountability on leaders of public companies.

Now, the recently passed Dodd-Frank Wall Street Reform and Consumer Protection Act requires all publicly traded firms to adopt a clawback provision for top management that is triggered by a restatement, regardless of fault.

It has been widely documented that accounting errors—intentional or not—are

bad for business. There’s also a wellestablished link between restatements and executive incentives. “So firms face a strong incentive to structure an executive’s compensation contract to reduce the risk of both intentional and unintentional accounting errors,” deHaan says.

As a voluntary measure, the clawback provision appears to accomplish this. Now that clawbacks are required of public firms, the authors hope their findings help the SEC provide more informed guidance.

Adds deHaan: “Any organization that pays performance-based compensation and desires to curtail image-damaging behavior might do well to adopt a clawback provision.” n

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faculty RESEARCH BRIEFS Attention deficit

Set Them Free

Smart Money

Corporate acquisitions promote adoption of technology—if leaders maintain market focus

Want to retain high-value employees? Empower autonomy

Corporate venture capital comes with strings attached, for better or worse

How do corporate acquisitions affect the propensity of subsidiary firms to adopt new technologies?

The answer is a good news/bad news paradox, according to a study by Jeffrey Barden, an assistant professor of management at the Foster School.

Barden examined adoptions of HD Radio technology among 745 commercial radio stations across the United States from 2003 to 2008—during a period of industry consolidation at the hands of media giants like Clear Channel.

What he found is that corporate acquisitions infuse subsidiaries with new resources, people and ideas that tend to promote technology adoption. At the same time, the disruptive acquisition process makes subsidiaries less observant and responsive to innovation in the market.

The message? Pay attention.

“The acquisition process can cause managers to lose sight of the competitive environment and potential opportunities to innovate,” Barden says. “So it may be worth dedicating someone in or around the organization to focus on competitive and technological movements.” n

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Recession. Expansion. Doesn’t matter the economy. High quality employees are always in demand. And as firms increasingly execute in teams, positive performers become even more critical to maintaining an effective workplace dynamic.

So what’s the key to retaining employees in the modern organization?

An environment supporting autonomy, according to research by Tom Lee, the Hughes M. Blake Endowed Professor of Management at Foster, and former doctoral student Dong Liu (now at Georgia Tech).

Lee and Liu studied employees and teams at a large auto parts manufacturer.

“When the team environment supports autonomy, individuals tend to feel more engaged with the team and empowered in their work,” explains Lee. “This leads to greater probability of retention.”

He adds that organizations are taking a heightened interest in retention due to the changing nature of work, workers and the workplace. More and more jobs require special skills or training. A cohesive mix of personalities and skills is essential to effective teams. And a generation of Millennials—young, educated, tech-savvy, mobile, autonomous-but-networked—is replacing the Baby Boomers and redefining the work ethic. n

Is corporate venture capital always a sound investment? Should entrepreneurs always accept advances from corporate suitors?

It depends on the circumstances, according to a new study by Kevin Steensma, a professor of management and Evert McCabe Fellow at the Foster School, and former doctoral student Haemin Dennis Park (now at the University of Missouri-Kansas City).

Their examination of early-stage computer, semiconductor and wireless firms demonstrates that corporate VC funding is particularly beneficial to new ventures that operate in uncertain environments or require specialized complementary assets—expertise and infrastructure in product development, manufacturing, law, sales, distribution and customer service.

But accepting corporate money can create a conflict of strategic interests with the investing firm, and it may close doors in the open market.

A related study demonstrates that corporations tend to invest in new ventures that are more innovative, and that new ventures that receive corporate VC tend to remain more innovative, which is not always conducive to profit.

“There are always strings attached,” Steensma says. “Where a new venture accesses its capital has a significant bearing on its chance of success.” n

© iStockphoto.com / courtneyk, retrorocket, tap10, alashi, Lusky

Exceptional Educator

Inventrepreneurs

Pro Diversity

DIY entrepreneurs launch nearly half of all innovative startups

“Motivational cultural intelligence” can enhance the bottom line

Nearly half of all innovative businesses are founded by user entrepreneurs, people who commercialize products they have created for their own use.

This according to the report, “Who Are User Entrepreneurs?” co-authored

by Sonali Shah, an assistant professor of management at the Foster School, and published by the Ewing Marion Kauffman Foundation.

Of the study’s sample of US startups launched in a single year across all industries, user entrepreneurs founded 10.7 percent of firms that survived the first five years.

Diversity is not a fad. Globalization means dramatically more interaction with foreign cultures. And America’s shifting demographics are creating an increasingly diverse work force and customer base.

So corporate pro-diversity programs may originally have been born of good intentions (or good PR). But today, attention to diversity is becoming a central strategy to profit-seeking firms.

Or it should be, suggests new research

by Xiao-Ping Chen, a professor of management and Evert McCabe Fellow at Foster, and former doctoral students Dong Liu and Rebecca Portnoy.

Their study of the real estate industry indicates that firms and individuals who are motivated to learn about and adapt to different cultures can improve the bottom line—especially in intercultural business.

They also found that an individual’s motivational CQ (cultural intelligence) can be developed by organizations that regard diversity as an asset and proactively leverage its benefits.

“Simply being willing to learn about other cultures makes a huge positive difference in one’s business interactions with people of different cultures,” says Chen. “And this willingness is enhanced when an organization has a positive diversity environment.” n

But user entrepreneurs founded 46.6 percent of innovative businesses— formed around an innovative product or service—that made it past their fifth birthday.

The data also showed that a relatively high percentage of user entrepreneurs receive some form of equity financing, and user entrepreneurship may be particularly effective for women and some minorities.

“User entrepreneurs make significant innovative and economic contributions to society,” Shah says, “contributions that we are just beginning to understand and acknowledge.” n

Shevlin named Outstanding Accounting Educator by American Accounting Association Terry Shevlin, the Paul Pigott-PACCAR Professor of Business Administration at Foster, has been named 2012 Outstanding Accounting Educator by the American Accounting Association (AAA).

A kind of global MVP among accounting scholars, the Outstanding Accounting Educator is judged on educational innovation, teaching excellence, publication record, research guidance and academic service.

“A few are particularly accomplished at one or two of the criteria,” says William McCarthy of Michigan State, chair of the award committee.

“Terry aced them all.”

Shevlin joined Foster’s Department of Accounting in 1986 and has chaired the department since 2006.

He also leads she school’s Master of Professional Accounting Program in Taxation and directed the Foster PhD Program (from 1999 to 2006).

An internationally acclaimed researcher, Shevlin’s contributions to the financial accounting and tax literature landed him in the top one percent of the world’s most-prolific accounting scholars of the last half-century, according to a 2009 study. And he’s just as passionate about mentoring doctoral students, serving as chair or committee member for more than 90 percent of Foster accounting PhD graduates in the past 15 years.

Shevlin has served as president of the American Taxation Association (2007-08), is a five-time Distinguished Visiting Faculty at the AAA Doctoral Consortium, and editor of Accounting Horizons (2009-present), The Accounting Review (2002-05) and the Journal of the American Taxation Association (1996-99). n

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alumni

Entrepreneurial Energy Foster alum and lecturer Emer Dooley has a passion for pushing boundaries

How does a North Pole marathon winner become one of TechFlash’s top 100 tech women in Seattle? For Emer Dooley— engineer, PhD, entrepreneurship lecturer, angel investor, advisor—it’s easy. Dooley pushed boundaries long before her career began.

Her first broken barrier? Becoming an electrical engineer, a field dominated by men.

“In Ireland when growing up, I wanted to be a science teacher. That’s what girls did. My dad talked me out of it. He persuaded me to do electronic engineering.

That changed my life,” says Dooley.

After working as an engineer for seven years, Dooley circled back to her original passion. “I’ve always wanted to teach. I sort of knew I wasn’t really an engineer in my heart.” She earned an MBA (1992) from Foster, worked as marketing manager for Seattle start-up Mosaix, came back to earn her PhD (2000), and taught at UW through 2011.

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“I thought that doing an MBA in Seattle would be high-tech nirvana,” says Dooley.

“I’m also a huge outdoor person. I like to ski, climb, water ski, run, bike. I just love Seattle. I never applied anywhere else.”

At the UW, she launched a high-tech speaker series, software entrepreneurship class and co-taught with various UW computer science professors, including Oren Etzioni, founder of Farecast and Decide.

Her first guest speaker? Venture capitalist Mike Slade, a Microsoft and Apple veteran and entrepreneur. Dooley continued to bring in heavyweight guest speakers year after year.

“It was using the community to change the way that the old classes had been taught,” says Dooley. A memorable speaker was Tom Burt who led the Microsoft defense in the antitrust lawsuit. He shared the reality of being sued. “During discovery, they had so many documents piled up in the corridors that they were cited by the Redmond fire department.”

After 11 years of teaching entrepreneurship to business, engineering and computer science students, Dooley now serves as strategic planner, board member and faculty advisor for the UW Center for Innovation & Entrepreneurship. She successfully launched a $3 million fundraising campaign to move the center into a new building and open a new innovation lab.

Dooley also manages a $4.4 million fund at Alliance of Angels and is setting up an angel fund for UW students and a visiting professor to invest in start-ups.

She sees companies bootstrap in ways inconceivable to previous generations of entrepreneurs. “After the big dot com crash, nobody would fund anything. It used to take $30 million to get a company to market. And now with the advances in the tools, people can start companies from nothing. It’s just incredible to me that if you’re really savvy about social media, there’s still opportunity there to run rings around the traditional companies.”

The other pivotal change she’s witnessed in the last 10 years in Seattle is start-up expertise from second-generation entrepreneurs. “It used to be all Microsoft start-ups. Now there’s Expedia, Amazon, Real Networks. That’s really changed the level of talent in the area.”

One of the few women in the angel investing community, Dooley hopes to encourage her kids to push boundaries themselves. She and her husband, also an Ireland native, choose to raise their daughters in Seattle to expand their opportunities.

“I love the abundance of opportunity for women here, and the incredible role models like Bonnie Dunbar that my daughters get to see and meet in the community.”

Speaking of incredible role models...

Dooley won the 2010 North Pole Marathon in a blizzard and finished second in the 2011 Antarctic Ice Marathon. “My goal is to run a marathon on every continent.” n

Covering the Bases Blending principles from baseball and philosophy, Jim Stameson builds a lasting legacy

Baseball is used often enough as a metaphor in business: the sales team knocks it out of the park (or strikes out) at a client presentation, the project manager on a successful product launch names the lead developer her MVP, the CEO steps in as the closer on an important negotiation.

American business is steeped in America’s game, perhaps nowhere more deliberately or to greater effect than at Plasma Ruggedized Solutions (PRS), a leading provider of coating and related specialty engineering services co-founded by CEO and former Husky outfielder Jim Stameson (BA 1981).

“Baseball was the reason for coming to UW,” says Stameson, but his experiences as a student athlete taught him a bit more about dealing with adversity than about hitting and fielding. Stameson credits that experience with helping him to develop the discipline, maturity, and endurance it takes to build a successful career and to run an industry-leading company. “Baseball instilled in me so many of my basic values,

like perseverance, especially when dealing with difficult times and facing challenges.”

According to Stameson, athletic training and the extraordinary hours he put in developing his skills helped him learn to focus on developing good ideas and practices from the foundation up and gave him the confidence to take on leadership roles and do some intelligent risk-taking.

“I’ve felt comfortable taking calculated risks along the way,” he says.

After a short minor league career with both the Mariners and Giants organizations, Stameson started his business career working for large firms such as Hughes Aircraft, Parker Hannifin, and Vickers, a course he recommends for new graduates.

“Working for larger firms, you get a chance to learn a great deal about people and about communication,” Stameson says.

“You can take those lessons and apply them later if you decide to build something of your own.”

And that is exactly what Stameson eventually did, building over time the “All

compounds, a hallmark of environmentally friendly “green” operations.

That commitment to environmental stewardship is just one way in which Stameson applies a business philosophy rooted firmly in ethics and still informed by some of the lessons he took away from his classes with faculty like David Hart, winner of the UW Distinguished Teaching Award in 1974, who taught business ethics at Foster from 1968 to 1983.

As a student in Hart’s undergraduate Business, Government and Society course, Stameson learned to tie the other disciplines of his business education together.

“Dr. Hart made it about what you’re supposed to be as a person,“ Stameson says. “It was about learning how 20 or 30 years from now, you will want to be remembered not so much for what you have done, but for what you have left behind.”

Hart’s message resonated with Stameson, a student of the classics who has consistently applied ethical and long-range thinking to the progress of his

“In the end, the only thing you leave the world with is what you stood for. That’s the importance of making a mark and finishing well.”

Star” team of people who comprise the management of PRS, a world-class engineering and manufacturing company that provides services and products to virtually every industry that requires electrical and mechanical systems to operate in harsh or challenging environments. With locations in San Jose and Huntington Beach, PRS occupies more than 35,000 square feet of manufacturing space and consistently applies practices and chemistries that produce very low output of volatile organic

career, the development of his company and his responsibility to his people and his customers.

Stameson shares his philosophy readily.

He currently mentors a physics major from Stanford and recently hosted a group of Foster MBA students during a tour of his San Jose facility.

“In the end, the only thing you leave the world with is what you stood for,” Stameson says. “That’s the importance of making a mark and finishing well.” n

spring 2012 27

alumni

Accountant Without Borders Jonathan Hill works to ensure that international development funds do their job It’s probably fair to say that most accounting jobs don’t contend with tear gas, violent protests or suspicious checkpoint guards brandishing automatic weapons.

All in a day’s work for Jonathan Hill (MBA 2010).

Hill is the operations manager for global project finance at the international development firm DAI. He enables smooth financial operations and proper cost accounting of aid contracts in 80 different developing countries, each with a unique set of challenges.

“We’re doing complex, comprehensive development work,” he says, “in places recovering from war, disaster, disease, famine, political upheaval—or all of the above.”

DAI designs and implements contracts that are funded by foundations, corporations, and, most often, governmental organizations such as USAID and the World Bank. Hill, based in the firm’s Bethesda, MD, headquarters, regularly travels to field offices to set up financial procedures and train local staff. He also implements and manages DAI’s customized financial management system that records, tracks, and verifies thousands of expenditures each week.

The goal is tracing every cent of those millions of aid dollars to effective development outcomes. “My work is means to a very positive end,” he says.

Hill, a Seattle native, became internationally aware at the beginning of his sophomore year at Claremont McKenna College. September 11, 2001, to be exact.

“It was such a shock,” he recalls. “I remember wanting to understand what was going on and what we could do about it. I didn’t want to sit on the sidelines.”

As a student he traveled to Asia and Latin America, where he saw “true poverty, but also rich and diverse culture.” He was hooked.

After graduation, Hill landed an internship at DAI. He was impressed that a for-profit firm could be so values-driven.

After joining full-time, he performed 28 f o s t e r B USINESS

in-country research for projects to marry Colombia’s antidrug campaign to social development, and an effort to curb corruption in Peru.

Hill came to Foster’s MBA Program for management skills and a bit of soul searching. Despite a promising internship with biotech leader Genentech, he realized his heart was in the work of DAI. He returned, this time to play a more central role.

Like his employer, Hill is quietly, competently making a difference around the world. Over the past year alone, he has traveled to Thailand, Uganda, Moldova, Mozambique, Tunisia, Kenya, and Vietnam, supporting efforts to fuel economic development, prevent disease epidemics, manage energy resources, spur agricultural development, and foster nascent democracies.

“We are an arm of US foreign policy, with all that entails,” he says. “The diversity of experiences is absolutely incredible.”

Hill is well-equipped for the work. DAI’s merger of best intentions and business urgency suits him. He says he applies his Foster education daily—from accounting to project management, ethics to currency exchange. It’s essential but not sufficient.

“The rest is social and cultural intelligence, and the ability to see the trees and the forest at the same time,” he says.

Despite the often difficult, sometimes dangerous conditions, Hill’s work fills him with hope. “Uganda and Mozambique have had over five percent growth rates for years,” he says. “In Liberia, after 13 years of civil war, people don’t say they think things will get better, they know they will.”

But the main cause for his optimism is the people themselves. “The warmth and humanity I encounter…” he says. “It’s a universal experience wherever I go.”

He recounts the unexpected Thanksgiving party his Thai co-workers threw him as he worked through the holiday in Bangkok. A Peruvian taxi driver’s emotional wish for an end to corruption in his country.

The glowing faces of his Tunisian colleagues as they returned, with enormous pride, from voting in the first democratic election of their lives.

“It gives me faith in our world,” Hill says, “that professional and human relationships can form so quickly and be so lasting when we are working toward the same goal.” n Click to read more.

X-Man Paul Smith propels revolutionary oil spill cleaning technology to $1 million X Prize

Let no one doubt the power of competition to spark innovation. Paul Smith (EMBA 2000) certainly believes. He’s lived it.

Vying for the $1 million Wendy Schmidt Oil Cleanup X Challenge, Smith was part of a team that made the first significant advancement in oil-skimming technology in decades. Just 45 days from conception to prototype, Team Elastec/American Marine produced a grooved-disk skimmer that not only won the grand prize, it also quadrupled the industry standard for oil removal.

“Past X Prizes—for commercial spaceships and a 100-mpg car—seemed to me like neat photo ops,” admits Smith, who just recently joined Elastec to head new product development. “But now, having seen what all the competitors bring to the game, I’m fascinated by it as a mechanism for innovation.”

It worked for Team Elastec. Engineers from the Illinois-based firm created a skimmer with grooved disks that spin on an axle, picking up oil to be scraped into a holding tank and leaving water behind. The real innovation is the grooves, which collect much more oil than flat disks as they pass through the water.

But to compete in the X Challenge—and to work in the real world—the skimmer needed to perform in open water under any conditions. So Smith and colleagues from The Glosten Associates, a Seattle marine engineering firm where he worked at the time, designed the “wrapper,” a vessel that ferries the abacus-like rows of skimming disks through moving water, fooling them into feeling stationary.

In the X Challenge test, Team Elastec’s skimmer proved capable of removing 4,670 gallons of oil per minute from open water, with nearly 90 percent efficiency. The old industry standard recovery rate for skimmers—unchanged from the 1989 Exxon Valdez spill to the massive BP Deepwater Horizon blowout of 2010—was 1,200 gallons per minute.

For Smith, it was another maritime innovation in a career full of them. After earning a BSE from Michigan and an MS in ocean engineering from MIT in the 1970s, he worked for years in marine operations and salvage. Salvors are never far from oil spills, so when he sought to come ashore after Exxon Valdez, he joined Seattle-based MARCO Pollution Control in 1992. There

he managed an engineering and manufacturing operation with worldwide reach.

Feeling he needed a greater grasp of the business, he enrolled in the Foster School’s Executive MBA Program, where he was valedictorian of his class. “I went initially to learn accounting,” Smith says. “But I really fell in love with all of the management sciences, especially finance.”

Expertise in business and marine engineering made Smith a hot prospect.

He joined Glosten as a principal in 2002, and for a decade managed its marine consulting group, specializing in “anything nobody’s done before,” he says. “It was a great opportunity to apply my background in operations and engineering to solve strange, unique, fun problems.”

For instance, he’s been working with Lockheed-Martin to generate continuous, renewable energy by harnessing the temperature differential of water at the surface and depths of the ocean, a technology with roots as far back as the 1800s.

Smith also developed sophisticated financial modeling tools for Glosten’s clients that have “killed a lot of marine transportation projects,” he says. “But they have shown others to be homeruns.”

One of the biggest was a next-generation oil skimmer, built on the hope of a prestigious prize. “For us to take on a job like this on speculation was out of character,” Smith says. “Were it not for my Foster background, I’m not sure if I could have sold the business case to my partners.”

Good thing. The prize could get a lot bigger if Elastec’s skimmer can be refined for the commercial market. “We still need to convince response organizations that this really is a better mousetrap,” Smith says, “and that they owe it to the world to put the best machinery available out in the next spill.” n Click to read more. spring 2012 29

alumni

Kikking It Golf champion-turned-entrepreneur James Lepp is bringing style and performance to the green

Different. Believes saddles are for horses.

Always scores better than it appears. Only replaces divots that are actually going to grow back. Welcomes unnecessary noise in his backswing. Is in several people’s dream foursome. Respects golf history, but embraces change. That describes the Kikkor golfer, according to the shoe company’s 2011 catalog.

Sound a little edgy? Cool? Like you— maybe? If that’s the case, James Lepp (BA 2006) welcomes you to the world of Kikkor Golf.

“I don’t know many guys who say they want to dress like their dad,” says Lepp.

So, in 2008, with his career as a pro golfer lagging, he felt the entrepreneurial spark and began designing alternatives to classic golf shoes. The company started with six styles when they launched in 2010; they currently offer more than 40.

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Lepp finds inspiration on the streets and the courts. Kikkor’s current line-up of styles range from slip-ons resembling skater shoes to a high top that begs for a shot beyond the three-point line.

Read the shoe names and descriptions and the Kikkor brand comes to life. For the Men’s New Heights - Whiteout: “No, we weren’t high when we designed this bad boy.

This high top golf shoe is legit.”

Or, the Women’s Tour Classe Black Aruba: “While the shoes may be lightweight and waterproof, you’ll want to resist the temptation to dive into the ocean or nearby pool. Instead, just run to your ball and tap in for birdie.”

Make no mistake however, as cool as “Kikks” may be, they are also made to perform. A review on mygolfspy.com gave the shoes 96 points out of 100, and 20 out of 20 points for performance.

Kristen Williams, the author behind the popular blog “The Golf Chick,” writes about her Kikkors: “If I could stop looking at them I might forget I was wearing shoes at all. However, they’re also quite stabilizing. They make me feel secure when addressing the ball and give me confidence in my golf shots.”

The fact that Kikkor shoes perform as well as they look shouldn’t come as a surprise, given Lepp’s background. Among his many golfing triumphs, Lepp was named the Royal Order of Merit as Canada’s top amateur golfer for 2003 and 2004, was the first non-American to win the Pacific Coast Amateur Championship, and made Husky history when he became UW’s first NCAA Individual Champion in 2005.

“I love the subject of James Lepp” says UW men’s golf coach Matt Thurmond.

“James is a guy I’d always bet on because he’s committed to finding creative and innovative ways to get results.”

Take Lepp’s approach to wedge play, something Thurmond says is a point of pride in the program and that Lepp took to a new level.

“He would constantly practice his chipping,” says Thurmond. (For golf novices, a chip shot is a short, usually low-approach shot that lofts the ball to the green.)

“He’d do it the night before a round in the hallway of the hotel, chipping over and over again, or into a garbage can, or onto the seat of a chair. He even chipped on the putting green, which most golfers say is taboo, but he knew that and he would practice his chipping on the putting green doing things that no one else does—he’d chip it into the pin and bang the pin over and over to make sure his alignment was perfect. He’s incredible with a golf club.”

But, similar to many entrepreneurs, the classroom didn’t garner as much attention from Lepp as the things he was most passionate about—like the golf club.

“Looking back on it I wish I didn’t view assignments, tests, projects, as something I needed to get done, like a chore,” says Lepp. And yet, his business school experience did to help him launch the company.

“There were definitely some things I learned that helped me when I started to think about launching Kikkor.”

There is ongoing research about whether entrepreneurial success is rooted in passion or preparedness. In Lepp’s case, it may be a bit of both. Lepp is still making mad chip shots (just check out Kikkor’s “Day at the Office” video on their website), Kikkor experienced a 550% growth in its first year and revenues are up 250% to-date in 2012. As Lepp would say, “Awesome.” n Click to read more.

Q&A

Keeping it Above Board Steeped in leadership, current Edward V. Fritzky Chairs in Leadership, Paula and Steven Reynolds share wisdom on the role of boards, the double-edged sword of transparency, and what turkeys teach us about why past growth is not a predictor of future success. managing the organization. Setting goals jointly, but not getting into operations.

You see the pendulum swing too far with absentee boards or heavy handed boards.

Paula: If you went back even 20 years, you’d be hard-pressed to see much role definition for boards. We talk about this issue a bit when we lecture on the evolution of contemporary management. The old system of governance—with little role definition—only worked as long as business prospered. Post WWII, the US was monolithic in commerce. But in the 70s, and again in the 80s, you saw US productivity stumble and over time, boards became more involved in corporate strategy.

Collectively, you’ve served on 20 or so boards, you’ve been CEOs in Seattle at the same time—Steve at Puget Energy and Paula at Safeco—and your term as Fritzky Chairs has been marked by bringing iconic business leaders onto campus—yet neither of you is a Foster or UW alum. What gives?

Steve, laughs: My sister went to UW, that’s the connection. Actually, we were approached by Dean Jim Jiambalvo and Michael Verchot, from Foster’s Business and Economic Development Center, and one of the enticements is that this is a role in which you can do with it whatever you want to do. So our focus has been on bringing in outside speakers—leaders at the top of their games—and creating opportunities for exchange among faculty, practitioners and students.

Paula: Steve’s been involved with the business school community for a decade or so.

I’m newer to it, having arrived in Seattle (from Atlanta) in 2006 to take on the role of CEO at Safeco Insurance.

That’s a long commute.

Paula: Yes, and Steve did a lot of the travelling. It was a unique opportunity for both of us to serve as CEOs in the same city.

Steve: I was CEO of Puget Energy and its utility subsidiary, Puget Sound Energy. I retired last year which also created the opportunity for us to be Fritzky co-chairs!

You’ve both chaired and participated on numerous boards. Given what’s expected of boards today, what are your views on the “ideal” role of a board?

Steve: I like the phrase, “heads in, hands out.” In other words, the board members should have their heads firmly rooted in the process, but keep their hands out of

In light of all the recent financial unpleasantness, what are your thoughts on ethics? Key topic or overblown media frenzy?

Paula: Ethics is a fascinating and complicated topic in company leadership today.

When I was brought in at AIG as chief restructuring officer, what I saw underscored the dynamic tension you have to maintain between innovating—pushing the envelope—and staying true to business fundamentals.

Steve: Recent meltdowns make it easy to forget, but most companies are ethical and strive to adhere to specific business rules— but you end up with gray areas, and migration into those areas without preparation for how to handle new situations is dangerous. It’s like sailing into new waters with no charts. The more you stress test your base case, the more scrutiny it can withstand, the better your chances for avoiding ethical problems.

spring 2012 31

Q&A Paula: It may sound highly oversimplified, but we have this saying, “if you do everything right every day, eventually it will work out for you.” Basically, it’s a reminder to hold the big picture in focus, to keep business fundamentals top of mind, and to approach the gray areas with eyes wide open. Arrogance, thinking you have all the answers, is the easiest road to an ethical breach.

So what’s with the constant use of “transparency?” Doesn’t the frequency with which that term’s bandied about imply opacity is the actual norm?

Steve: Transparency poses some interesting conundrums. Traditionally, what you could say while at a publicly traded company was very limited. Now, you need to talk about aspects of your business in great detail.

But you can’t talk about everything. So, while transparency is considered a good thing, you don’t want to get into trouble on the other side of the law by disclosing something you shouldn’t.

Paula: I think a primary reason “transparency” comes up so often is that there’s a real need to break through the technical clutter that can bury crucial business data. For example, we had two global vice chairmen from two of the Big 4 accounting firms on campus to talk to our students and each addressed what’s expected from accountants nowadays. Technical excellence is a given. You need to be on the cutting edge of assurance issues; you need to be able to dig deep and not get snowed by jargon. They compared the modern skill set to peripheral vision—you can already see what’s central, but how well can you decipher what’s at the edges?

Sounds like leaders need to be equipped with strongly inquisitive minds…

Paula: Yes—things are not always what they seem. It’s like the chart on turkey growth in the book The Black Swan (by Nassim Nicholas Taleb). What you see is this very steady, strong upward growth in the weight of a turkey…right up until its head is chopped off and it goes to market

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for Thanksgiving. It’s a good metaphor— often when things are going well is when you need to be most vigilant.

Steve: At the same time, it’s funny how well protocol governing ethics and transparency is followed when things are going well. Talk to Seattle Mariners’ management and what you hear is: business is good when we’re winning. When we’re not, nobody in the chain is happy. It’s the same in the corporate world. Look at Apple right now.

What about the media’s influence?

Steve: Sure, that’s a huge factor. When I was growing up, the Wall Street Journal was a publication you read and said, “how can I get my name in here?” Now there’s much more inquiry and investigative reporting from the media. Business leaders are advised to keep their names out of the paper. There wasn’t a CNBC looking deeply into every potential wrongdoing.

Clearly, there are some positive side effects there, in terms of accountability. However, perception can also overtake reality unless the reporting is reliable. How many times do you see an article which quotes “an unnamed source”? Where’s the accountability in that?

Paula: The ramifications of transparency and the media are broad. Back to the AIG situation, that was extensively covered in the press. There was the Treasury Department, the Federal Reserve, counter parties, employees…all of whom had access to the media and could contribute to developing stories. In today’s litigious environment, you can even get the media coming at you with questions given to them by opposing counsel in a lawsuit. UW could start a course around media and business and create a very fruitful area of study.

The Edward V. Fritzky Chair in Leadership serves an academic year at Foster in an advisory role. This faculty position was specifically designed to put a distinguished business leader (or two) on campus to share their expertise with faculty and students. n

EVENTS CALENDAR June 2012 3 Foster Undergraduate Graduation Celebration

Keynote speaker: Mike Garvey (BA 1961, Arts & Sciences; JD 1964) 4 EMBA, GEMBA, TMMBA

Graduation Ceremony Keynote speaker: Neal Dempsey (BA 1964) 8 MPAcc Graduation Celebration

Keynote speaker: Cathy Hylton (BA 1979) 9 UW Commencement

Keynote speaker: Lisa Jackson MBA, Evening MBA, MSIS, PhD Graduation Ceremony Keynote speaker: Helen Rockey (BA 1978, Arts & Sciences; MBA 1980)

22-24 MBA Reunions for Classes of 1987, 1992, 1997, 2002 & 2007

various locations 23 Foster School Alumni Picnic

PACCAR Hall Lawn September 2012 27 Foster Alumni UW vs. USC Tailgate party Pyramid Brewery November 2012 15 21st Annual Business Leadership Celebration Husky Union Building, UW Seattle Campus Visit foster.washington.edu/events for details and more events.

Question:

How can we better serve our students and business community?

Answer:

With a robust set of career services for our undergraduates.

This fall we welcome director Andy Rabitoy to open and lead our new Undergraduate Career Center, adjacent to MBA Career Services in our newest facility.

As an alum or friend of Foster, you’ll be glad to know that finding the right person for your organization will be easier than ever.

足N on profit Organization U.S. Postage

PA I D Seattle, WA Permit No. 62 A DVA NCEMENT Box 353200 Seattle , Wa 98195-3200

foster

Spring 2012