foster business magazine spring 2009

Investing for the Long Haul page 18 Financial Predictions page 26 People Person Howard Behar page 28

A retrospective of the program that raised the bar for business education page 10

foster

Michael G. Foster school oF business university oF washinGton spring 2009

You already know the huge difference giving makes.

Why not think differently about what giving can look like?

A bequest to the Foster School of Business allows you to have tremendous impact without making an outright gift today.

From scholarships to research, curriculum advances to global study tours, your gift represents a meaningful legacy

to the Foster School.

You may direct your bequest to a particular purpose or program and modify it any time you choose.Your assets remain in your control. To learn more about making a bequest to the Foster School, please contact the Advancement Office at 206.543.0304.

With your support, we’re breaking down barriers and creating opportunities.

SPRING 2009 1

12 Upward BoundBoeing Commercial Airplanes CEO Scott Carson’s career took off after graduating with the charter class of the Foster EMBA Program

15 Then and NowA look back at the start of the EMBA Program and the milestones that shaped it

17 Celebration of LeadershipEMBA alumni who were recognized as outstanding leaders

17 They Started ItA sampling of EMBA entrepreneurs and the companies they have started

EMBA TURNS 25A rEtrOSPECtivE OF thE PrOgrAM thAt hAS inCrEASEd thE CAliBEr OF BuSinESS EduCAtiOn At thE uW, grAduAtEd nuMErOuS nOtABlE lEAdErS, And CrEAtEd lASting tiES With thE nOrthWESt’S iCOniC COMPAniES

Cover story, page 10

CoNTeNTS

SPRING 2009 3

Economic upheaval. War. A winter that wouldn’t seem to end. there seems to be no shortage of daily afflictions. those were some of the reasons that prompted nBC nightly news anchor Brian Williams to ask his viewers to start submitting “good news” to feature on the program. he made the state-ment on March 4th and within days received thousands of supportive e-mails and phone calls.

Obviously, an over abundance of good news runs the risk of being cloying and shouldn’t overshadow the reality of the day and the need for a diversity of stories. And yet, Williams’ query—and the public response it generated—is telling. in the midst of enormous challenges, it’s good to embrace our successes and remind ourselves that opportunities lie ahead.

the challenges facing the Foster School loom large. As we work through 2009, the Foster School is making adjustments in anticipation of cuts of as much as $3 million to our annual budget.

While we are faced with cuts in many areas, they will be done purposefully to maintain our core offerings and to prepare ourselves to be in the best possible position when things turn around. As i stated in a recent letter to donors, we have made too much progress and invested too much time, talent and energy into this school’s future to surrender our momentum now.

Elements of that momentum are captured in success stories throughout this issue of Foster Business.

•FosterSchoolundergraduateandMBAteamsarewinningbusinesscompetitionsaroundtheglobe—from Bangkok to Montreal to Columbus (p. 6).

•OurDepartmentofAccountingwasrecentlyrankedfirstincontributionstotheareaof financialaccountingresearch,toppinginstitutionssuchasStanfordandWharton(p.7). And Professor rob Palmatier, Evert McCabe Endowed Faculty Fellow, recently received the Journal of Marketing’s top honor for a paper on the topic of relationship marketing (p. 22).

•TheFosterSchool’sGlobalBusinessCenterrecentlyreceivedhigh-praisefromtheeditors of the Seattle times for holding the annual global Social Entrepreneurship Competition. they wrote of its “potential of doing so much good” (p. 36).

•InNovember,wewererankedinBusinessWeek’s top tier of MBA programs and 9th among public schools. We also placed in the top ten in both curriculum innovation and program improvement. in April, u.S. news & World report ranked the Foster full-time MBA Program 26th in the uS and 8th among public institutions (p. 5).

Economic recovery and public trust that brighter days lie ahead will take time, but can be achieved with commitment, conviction, and a thoughtful, forward-looking approach geared towardtomorrow’splayingfieldratherthanwhathasworkedinthepast.That,bytheway, is the approach we take at the Foster School.

the Foster School exists to inspire and develop the next generation of management leadership. this year’s graduates are poised to contribute from day one on whatever career path awaits them. i’m certain that they, like Foster graduates past, will play a role in making a better tomorrow.

Sincerely,

James Jiambalvodean, Michael g. Foster School of Business Kirby l. Cramer Chair in Business Administration

Finding Opportunity in Every Challenge

2 foSteR BUSINeSS

4 In the Newstaking Shape, Executive Educators unite, Shifting Standards, Foster rising, dubs Wants in, global domination, Clean tech, Accounting Excellence, Mentoring goes Organic, Managing through the downturn, the Future of news, Sector-blind recession

18 Featureinvesting for the long haul

22 FacultyAwarding theory, research Briefs, Market driven, hard time, Financial Predictions, People Person

30 StudentsSnapping the globe: A photographic glimpse into the life-changing experiences of Foster students studying abroad

31 AlumniMarc Barros & Jason green, Melissa Adams, Cindy ryu, top Secret Alumni news, leadership Matters

36 First PersonBigger than Business

25 31

4

Departments

DeanJames Jiambalvo

Executive DirectorMarketing & CommunicationsPamela McCoy

Managing Editorrenate Kroll

Contributing WritersJocelyn Milici Ceder, Jean Choy, Steven hatting, Ed Kromer, Andrew Krueger, Eric nobis

PhotographyMatt hagen (principal), Paul gibson, uW Photography

Designa.k.a. design

Foster School of Business Marketing & Communications university of WashingtonBox 353200Seattle, WA 98195-3200 206.543.5102206.221.7247(fax)

On the Webfoster.washington.edu

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

Change of [email protected]

[email protected]

think differently. Make a difference.

CoNTeNTS

4 foSteR BUSINeSS SPRING 2009 5

despite the challenges of a long, inclement Seattle winter, construction of PACCAr hall is progressing according to schedule. When completed in 2010, the new $95 million home of the Foster School of Business will encompass more than 135,000 square feet of state-of-the-artclassrooms,breakoutrooms,offices,computerlabs,communityareas,a250-seatauditorium, a café, and atrium.

Can’t wait until PACCAr hall opens its doors in fall of 2010? go to the PACCAr hall Web site to view a live construction cam, video clips explaining every step of the process, andavirtualvideo“fly-through”togetastylizedpreviewofthefinishedproduct.Visitwww.foster.washington.edu/about/Pages/PACCArhall.aspx. n

Taking ShapePACCAR Hall is on budget, on time, and online

IN THe NewS

the international university Consortium for Executive Education (uniCOn) is an organization of leading business schools with a commitment to executive educa-tiondevelopment.Establishedin1972,it now has 90 members consisting of top business schools from around the world. Since joining the consortium, uW Execu-tive Education has continued to help raise the visibility of Foster among other leading business schools. this increased visibility led the uniCOn board to ask the Foster School to host the 2008 annual confer-ence—thefirsttimeitwouldbeheldinthe northwest.

the conference was a tremendous success,attracting175executiveeduca-tionprovidersrepresenting70schoolsfrom 18 different countries—one of the most diverse and well attended uniCOn gatherings ever. the Foster School was able to showcase its new brand and provide a working case study for repu-tation building initiatives that include getting faculty and local corporate leaders integrated into the program.

Conference feedback was overwhelm-ingly positive. n

On March 4th, the Foster School hosted the Winter 2009 CFO Forum Meeting, conven-ing more than 50 of Seattle’s top CFOs and seniorfinancialexecutivesand25businessschool faculty to discuss the impact of the transitionfromUStointernationalfinancialreporting standards (iFrS) on American businesses.

three panelists led the discussion: Mary Barth, a member of the international Accounting Standards Board (iASB) and professor of accounting at Stanford univer-sity; Paul Munter, a lead partner in KPMg’s iFrS practice; and Sue Sallee, vice president and controller at t-Mobile. While Barth provided insight into the iASB’s standard setting process, Munter and Sallee shared their personal experiences with helping firmstransitionfromUStointernationalreporting standards. the audience asked panelists a variety of questions, including how the current credit crisis and the Obama Administration’s priorities are expected to impact the uS transition to international standards. Audience members were also interestedinhowUSfirmsthathavealready transitioned to iFrS are dealing with the revenue recognition and asset valuation differences these new standards bring.

the CFO Forum sessions, which began in 2001, are sponsored by the Foster School, Cushman&Wakefield,KPMG,andFosterPepper. the Foster School’s own Mark Soliman, associate professor of accounting and CFO Forum faculty director, served as the session’s panel moderator. n

in April, u.S. news & World report ranked the Foster School of Business full-time MBA Program 26th in the united States, and 8th among public institutions. Earlier, the magazine listed the Foster School undergraduate Program 21st in the nation overall, 9th in international busi-ness, and 12th in accounting.

in February, BusinessWeek ranked the FosterSchoolMBAProgram27thamongAmerican business schools, and 9th among public institutions. in addition, the magazine found the Foster MBA to have the 10th most innovative curriculum and to be the 10th most improved program overall, according to its poll of corporate recruiters.

BusinessWeek also ranked the Foster undergraduate Program 25th in the nation overall and 9th among uS public universities. n

Shifting Standards

CFo Forum assesses the move to international financial reporting standards

Foster rising

U.S. News, Businessweek rank Foster School programs in top 10 of public institutions

let me in! dubs, the new husky mascot, peers into Balmer hall.

ExECuTivE EDuCATOrS uniTE

executive education hosts the first UNICoN Conference in the Pacific Northwest

SPRING 2009 7

Call it an “environmental stimulus” plan. the inaugural university of Washington Environmental innovation Challenge in April sparked 18 student teams from around the uW and several nearby universities to develop pioneering methods, designs, and products that provide innovative—and potentiallyprofitable—solutionstoenviron-mental challenges.

Entries ranged from environmentally friendly vending machines to algae-based fuels to wind power to water desalination. But after a long day weighing clean technology plans and prototypes, the judges awarded the $10,000 uW techtransfer grand Prize to hydroSense, a collaboration of uW engi-neering students developing a real-time monitor of household water consumption.

the $5,000 davis Wright tremaine Second Prize went to nanocel, a liquid-based laptop computer cooling technology developed for commercialization by Foster MBA daniel rossi and mechanical engineering Phd dustin Miller. And $2,500 honorable Mention awards—sponsored by Perkins Coie, the Washington technology industry Alliance and teledyne—went to Wind2O, producer of potable water using wind energy, Ecowell,vendingmachinesthatrefilldrinkingcontainers,andInTheWorks,reducingboatengine emissions.

the Center for innovation and Entrepreneurship developed the Environmental innova-tion Challenge, with the support of the Foster School, uW Applied Physics lab, College of Engineering, and College of the Environment. n

Clean teCh

environmental Innovation Challenge inspires students to save the world

According to a new study from a team of researchers at Brigham Young university, the FosterSchoolDepartmentofAccountingranksfirstamongallmajorbusinessschoolsincontributionstotheareaoffinancialaccountingresearch.

the study ranks accounting programs from around the world by topical area based on the number of articles published in top journals over periods of 19, 12, and six years. Topicalareasincludemanagerial,tax,andfinancialaccounting,informationsystems,and auditing. Financial accounting is the area of study pursued by the largest number of accounting researchers.

the Foster department of Accounting topped the 19-year measurement, followed by Stanford university graduate School of Business, the Wharton School at the university of Pennsylvania, the McCombs School of Business at the university of texas at Austin, and the university of north Carolina’s Kenan-Flagler Business School. the Foster School rankedsecondandfirstrespectivelyforthe12-yearandsix-yearperiods.n

Accounting ExcellenceFoster Accounting faculty ranks first worldwide in research contributions

Event: Business Strategy Challenge (Washington, dC)

Place: First

Team: undergraduates ray Phua, Olivia Miasik, Stephanie Payne, and rikki Johnson

Competition: georgetown, uSC, nYu, northwestern, and Carnegie Mellon

The Foster Difference: Advising united Way to weather the economic crisis by partnering with healthy kindred organizations for the short term and by reorganizing to influence legislation for the long term.

Event: John Molson undergraduate Case Competition (Montreal, Canada)

Place: First

Team: undergraduates vanessa lopez, derrick nation, Eric Appesland, and Susan dugal (best presenter)

Competition: nanyang technological university, Singapore Management university and 18 others from Canada, China, hungary, ireland, the netherlands, new Zealand, Portugal, Singapore, and the uS

The Foster Difference: navigating three lightningroundsanddeliveringafinalcaseplan to move Montreal’s shipping facilities to a new site and reshape the city’s Old Port for tourism.

Event: CiBEr Case Challenge (Columbus, Oh)

Place: Second

Team: undergraduates Susan dugal, vanessa lopez, Yutong Yi, and Connor Bogin

Competition: Singapore Management univer-sity, Concordia university (Canada), Audencia nantes (France), university of north Carolina, ut-Austin, uSC, and many others

The Foster Difference: determining the best way to expand limited Brands internationally withaspecificfocusonBath&BodyWorks. n

©iS

tock

phot

o.co

m/F

loor

tje

Deftlyanddefinitivelyapplyingtheirstudiesto real-world problems, Foster MBAs and undergraduates are having a banner year in business competitions that measure them against students from the top universities in the world. here are the highlights of some of this year’s Foster successes.

Event: KeyBank-Ohio State university Minority Case Competition (Cleveland, Oh)

Place: First

Team: Evening MBAs Bryan tomlinson and rina Sarkar, full-time MBAs hakim Jones (best Q&A) and Kathleen August (best presenter)

Competition: university of Chicago, indiana university, Ohio State, Yale, Carnegie Mellon, and 15 others

The Foster Difference: delivering the best path to increasing KeyBank’s market share in the small business banking market.

Event: Silicon valley regional venture Capital investment Competition (Santa Clara, CA)

Place:First(Fourthatinternationalfinal)

Team: MBAs lalitha venkataraman, read Maloney, Chris Coffman, and Ben Sadler; bio-engineering doctoral student Brady Bernard

Competition: Brigham Young, uSC, uC-irvine, uC-Santa Clara, and university of San Francisco

The Foster Difference: investing wisely in a data-recovery software start-up and mitigating risk through a bullet-proof term sheet.

Event: East-West MBA All-Star Case Challenge (Beijing, China)

Place: Second

Team: Full-time MBAs Martin Wilson and nathan Kolmodin and evening MBAs george Zhu and Megan Armstrong

Competition: university of Chicago, university of virginia, uC-Berkeley, national university of Singapore, Yonsei university, Cheung Kong graduate School of Business, and others from China and Korea

The Foster Difference: devising a compelling localized mobile service that supports a Microsoft initiative to inspire young people to create technology innovations that make a difference in the world.

Event: Ethical leadership Case Competition (Waco, tX)

Place: Second

Team: MBAs Ben Pierson (best Q&A), Craig Wiley (best presenter), Scott greco, and davey Mchenry

Competition: Babson, Baylor, Pepperdine, Clemson, notre dame, Florida, Clemson, and texas A&M

The Foster Difference: recommending that general Electric approach corporate social responsibility as a strategic issue that can create a competitive advantage, rather than a laundry list of “do-good” projects.

Event: thammasat undergraduate Business Challenge (Bangkok, thailand)

Place: First

Team: undergraduates Eric Appesland, Alex-andra Berg, nathan ill, and Jennifer deWhitt

Competition: hong Kong university of Science and technology, Mcgill university, ut-Austin, and other top universities in Asia, Europe, and north America

The Foster Difference: Creating the most viable strategy for thailand-based Foamtech to become the leader in its industry through exhaustive analysis of the competition and emerging markets.

Event: Champions trophy international Business Case Competition (Auckland, new Zealand)

Place: Second

Team: undergraduates Jennifer deWhitt, Brad geddes, lejla Sudar, and Ben Wood

Competition: international case competition champions in the past year, including Singapore Management university, uC-Berkeley, Copenhagen Business School, hong Kong university of Science and technol-ogy, and national university of Singapore

The Foster Difference: Presenting the most compelling solutions to a range of cases regarding large publicly held companies, smallbusinesses,andnot-for-profits.

Foster students won second place in the CiBEr Case Challenge by determining the best way to expand the Bath & Body Works brand.

6 foSteR BUSINeSS

IN THe NewS

GlOBAl DOMinATiOnFoster students excel in business competitions around the world


the Business and Economic development Center (BEdC) at the Foster School pub-lishes the results of the semi-annual Wash-ington Minority Small Business Survey to provide business leaders and policy makers with critical and timely information about the state of minority-owned businesses in Washington.

this level of research and reporting is precedent-setting at a national level, and is the only effort of its kind in Washington State. “the minority business survey is one example of how we pair rigor and relevance at the business school,” said BEdC director Michael verchot. “We’ve established two key indices: the Minority Small Business

ConfidenceIndex, and the recent Perfor-mance index, both of which are supported by rigorous data collection and analysis.”

BEdC’s recently released Economic Crisis report gives a window into how the current downturn is affecting minority-owned small businessesacrossWashington.Somefind-ings include:

•TheMinoritySmallBusinessConfidenceindex, which measures owners’ percep-tions of the future business climate, dropped from 55 (out of 100) in April 2008 to 49 in november 2008.

•Thelatesteditionoftherecent Performance index, which tracks sales andprofitsbyquarterandyear,declined

from 56 to 54 (April 2008 to november 2008). Both scores represent the lowest levels since the report was launched in March2007.

•Unmetfinancialneedsroseby50percentbetween April and november 2008 with 19 percent of minority-owned busi-nesses and 16 percent of white-owned businessesnotgettingthefinancingthey need compared with only 6 percent nationally.

For more information about this research and other efforts driven by BEdC, go to www.foster.washington.edu/centers/bedc. n

Sector-blind Recession

BeDC study finds that minority-owned businesses, once a growth sector, are feeling the downturn too

is there a future for newspapers? no. in fact, there isn’t even a present.

the question was posed by former Q13 Fox news anchor ChristineChen.TheanswercamefromMikeDavidson(BA1997),CEO and co-creator of newsvine, the Seattle-based online news media company.

the exchange was part of an insightful 45-minute dialogue hostedbytheFosterSchoolonApril7aspartofitsFostering innovation lunch series.

the topic of the day was news in the internet era, a timely focus in Seattle and around the nation as dozens of metropolitan daily newspapers have ceased operation while the general public has increased its use of online “news snacking.”

Davidsonhasfirsthandknowledge.AsCEOofNewsvine,heisresponsible for the day-to-day operations of newsvine.com as well as community integration efforts between newsvine and parent company MSnBC. newsvine assembles stories from numerous worldwide sources including the Associated Press, the new York times, and the BBC, allowing users to edit articles for individual use, and even to write their own content for the site.

in addition to discussing the fate of newspapers, Chen and davidson’s conversation included issues ranging from the prolifera-tion of bloggers to the myopia that can result from overreliance on rSS feeds as a source for daily news.

interested in viewing the conversation? A video is available at foster.washington.edu/newsvine. n

ThE FuTurE OF nEWSFostering Innovation speaker looks to the world after print

IN THe NewS

Mentoring goes OrganicMBA Mentor Program Director Susan Canfield has written the book on modern mentoring

“the art of facilitating the professional and personal development of another.”

Thisdefinitionof“mentoring,”asprovidedbySusanCanfield,directorofthe MBA Mentor Program at the Foster School, also serves as the thematic glue of Mentoring Moments, her recently published book (January 2009). in it, she captures eight mentor/mentee relationships across

divergent industries, company sizes and personalities.

Why, amidst a busy career, did she take the time to write this book? “Because every encounterholdspromise,”citesCanfield.“Mentoring happens in many different ways, but in my experience all mentors have one thing in common: a generosity of spirit. i want to promote mentorship in the business world, encourage business schools in their mentorship programs, and prevent others from missing the chance to truly learn from remarkable people they encounter in their work.”

not only does Mentoring Moments meaningfully delve into the ways in which mentoring can be transformative for both mentor and mentee, it also serves as a map toward changing trends in the way mentoring happens today. For example:

Traditional view of mentoring:•Youareeitheramentororamentee•Amentormustbemoreseniorthanthe

mentee•Thementorstructuresanddrives

the relationship•Mentoringisaformalrelationship

Evolving view of mentoring:•Youarebothmentorandmentee

at the same time•Amentorisanyonefromwhom

you can learn•Thementeedrivestherelationship•Mentoringisoftenorganicand

may be based solely on observation

For more information on Mentoring Moments, including excerpts, go tofoster.washington.edu/mentoringmoments. n

“Managing is always a challenge in a global business environment, andwhenyou’refacedwithmanaginginafinancialcrisisthatis the worst since the great depression, the challenge becomes exponentiallydifficult,”saidDeanJamesJiambalvoinhisopeningremarks for the Foster School public forum, Managing through the downturn.

HostedbytheFosterSchoolonApril17th,thediscussionwasattended by hundreds of students, faculty, and alumni. they came to hear the remarks of a panel of business experts that included Karen Bartlett, executive vice president for operations, Premera Blue Cross; Martin Coles, president, Starbucks Coffee international; Jack levier, senior vice president for human resources, PACCAr inc; and girish nair, partner, McKinsey & Company. the dialogue was moderated by Foster strategy professor Charles hill.

hill began the evening with a question that directed much of the conversation: “What should a business do to survive the down-turn with core assets intact, but also position itself to prosper when the upturn comes?”

the panel responded unanimously about the need to invest

in human capital—retaining the best employees and investing in them. Each of the panelists expanded on this need by urging managers to be transparent with employees through ongoing communication.

the panel also cautioned managers to avoid the “bunker mentality” of focusing on the short term and instead think strategi-cally about a range of possible outcomes and opportunities for investment. the opportunities, however, were varied.

A few of the panelists addressed the opportunity to look at productivity and cost control. the business strategies of “lean” and “Six Sigma” were addressed at length. Another idea was offered by nair based on evaluation of industry “leaders and laggers” from

previous recessions. he said that regardless of the position held at the outset of a reces-sion, the leaders that emerged had consistently invested in sales and marketing efforts. n

managing through the downturn

expert panel explores what it takes to lead a company through an economic downturn


25A retrospective of the program that has increased

the caliber of business education at the UW, graduated numerous notable leaders, and created lasting ties with the Northwest’s iconic companies

EMBA TUrNs

Sinceitsinceptionin1984,theExecutiveMBA(EMBA)ProgramhashelpedtheFosterSchoolofBusinessdefine what it means to provide true excellence in management education. Preparing a curriculum—and overall program experience—rigorous enough to challenge seasoned businesspeople, and relevant to executives in the throes of diversebusinessdemands,islikerefininggoldfrom18to24karats.AsFosterSchoolDeanJamesJiambalvoputsit,“Our EMBA Program is a prime reason that the quality of our business education is so high.”

in celebration of 25 years of the EMBA, we’ve caught up with charter class member Scott Carson, interviewed the program’sfirstdirector,andnotedsomemilestonesand“greatesthits”oftheprogram’ssuccessfulquartercentury.

See how the EMBA has changed the landscape of business education. Some folks will even tell you that the EMBA is the new MBA.

chArTEr clAss, 1984

12 foSteR BUSINeSS SPRING 2009 13 SPRING 2009 13

Scott Carson (EMBA 1986) may have been destined to work for the Boeing Company. But his eventual ascent to president and CEO of Boeing Commercial Airplanes—a vast organization respon-sible for three-quarters of the world’s jetliners—would require some timely interventions.

the son of a Boeing test pilot, Carson was fascinated from birth byfast-movingvehiclesofeverystripe.Herebuilthisfirstairplaneand learned to fly before graduating from high school, served in vietnam on an aircraft maintenance crew, and got his start at Boeing as a technician. rather than begin his rise through the aerospace giant’s echelons, he soon fell victim to the company’s massive1970layoff.

Carson’s rebound plan was to pick up his commercial pilot’s license. But some influential people in his life took a longer view. “i had an uncle i was close to who told me if you spent a little effort upfront, it would make a huge difference later in life,” he recalls. “then i met my wife and she reinforced that message.”

With a college degree a condition of marriage, Carson earned his BA in business administration from Washington State univer-sity. And after a brief stint selling Safeco insurance, he found himselfbackatBoeing—thistimeasafinancialanalystfortheB-1 Bomber avionics program. he progressed to management in1976.

Think globally, study locallyin the early 1980s, Boeing was sending its most promising young managers to Mit’s Sloan School of Management for executive development. But there were only a handful of slots, and a long backlog of prospects. Carson was wait-listed three times before being offered a slot in the brand new Executive MBA Program at the university of Washington.

the schedule would certainly suit his pregnant wife and four children, Carson realized. he decided to give it a go. “the format worked really well,” he says, “and it turned out to be a great experience.”

version 1.0 of the Foster EMBA was somewhat experimental. But it packed plenty of value for its pioneering students. Carson recalls the indelible lessons imparted by some of the legendary professors of the Foster School of Business—including Kasi ramanathan, Alan hess, rocky higgins, and the late Bill Alberts, many of whom became good friends.

he also built a lasting network of colleagues who have left their mark on the Seattle business landscape in a variety of industries, people like Mason Sizemore, retired president and COO of the Seattle times, roger neale of rEi and lifetime learning Center, Ken higgins of Boeing, and Jim Bloomer of Summation and l.W. Foote Company. “Maybe the biggest difference the program made was introducing me to a group of friends with a whole different perspective on life,” Carson says. “it’s a great value to have friends like these who are outside of your industry but can give good advice.”

The Boeing tourin the years after earning his Foster EMBA, Carson piloted many initiatives around the Boeing organization. he served as deputy program manager on the international space station project, then led a series of entrepreneurial start-ups within the company, including a satellite cell phone network, an agricultural monitor-ingsystem,andadatadistributionplatform.In1997,hebecameexecutive vice president of business resources for the former information, Space and defense Systems. in 1998, he was named CFOofCommercialAirplanes,bywhichtimethefullbenefitofhisFoster EMBA-infused thinking was coming into focus.

UpWArd BoUNdBoeing Commercial Airplanes CEO Scott Carson’s career took off after graduating with the charter class of the Foster EMBA Program

787 Dreamliner 787 Interior

©Bo

eing

imag

es

“I’m a big believer that education never stops, and have used the Foster EMBA program in particular as a place to send people who are clearly bright in a specialized area.... It allows them to think about problem resolution in a multidimensional way, which is so important in a technology-driven company like ours.”

scoTT cArsoN, President and CEO, Boeing Commercial Airplanes


Building more than planesCarsonknowsthesignificanceofhiscompanyandhisof-fice.WhileintheEMBAProgram25yearsago,heandhisstudycohortwroteastatisticspaperthatfoundasignificanthistorical correlation between the economic cycles of Boeing and the nation. “We couldn’t necessarily identify which was the leading factor and which was lagging. But it really drove homehowsignificantBoeing’simpactis,notonlyonSeattleand the region, but also the state and the country. And now the world,” Carson says. “We’re still the nation’s largest exporter, and we draw so many resources to support our business from all over the world. So if we allow ourselves to go through a major down cycle, we affect China, Japan, russia, Europe, countless suppliers here at home. that’s an awesome responsibility so you want to get it right.”

Carson’s life-long engagement with Boeing continues with his commitment to educating the next generation of leaders.Heknowsfirst-handthevalueinatimelyinterven-tion of leadership and strategy development during key stages of a career.

“i’m a big believer that education never stops, and i have used the Foster EMBA Program in particular as a place to send people who are clearly bright in a specialized area,” he says. “For them, i suspect the program makes an even greater impact than it did on me. it allows them to think about problem resolution in a multidimensional way, which is so important in a technology-driven company like ours. there are always good technical reasons for a decision, but when you have to blend that with a business outcome, it really makes a difference.” n

it all started with missing furniture, an inauspicious beginning for a program with “executive” in its title. it was 1984, and Jan Monti,EMBA’sfirstprogramdirector,searchedBalmerHallinhopes of solving the mystery of brand new chairs gone missing from the newly renovated executive classroom. her search was leanturgencybythefactthatthefirstEMBAclasswasgoingtoarrive the following day.

it turns out that several faculty members, other program direc-tors,andinternalfinancepeoplehadreappropriatedsomeofthenew chairs because their own furnishings were in disrepair and the new stuff was pretty nice. Why should these shiny new chairs be corralled into a single classroom?

Perhaps that anecdote is telling with regard to the power of introducing executives into a graduate business program. While the average MBA student is anything but average—the Foster MBA program draws top students from around the world—an executive MBA student is likely to be a mid-career professional with lots of time logged in the trenches. teaching this kind of studentrequiresadifferentapproach,amodifiedcurriculum,andthe ability to teach business cases practically ripped from the headlines. Available chairs are also helpful.

Presumably, incoming classes of students have no idea what it took to build the program that is one of the best-in-class programs in the country. that is proof of its successful evolution.

“We tested everything,” recalls Jan Monti. “Food selection, spouse ‘support’ groups, sponsor events, resident weeks, curric-ulum…we were very intentional from the outset. the experience wewantedtocreatewashighprofile,highlypersonal,andhighlyprofessional.”

Itworked.SusieHasty,a2007EMBAgraduateonthe“orangeteam” (EMBA classes are broken into study groups given color designations), said it best when she declared, “the ‘E’ should stand for ‘experience’…unlike any other academic experience you may have had in the past or will have in the future.” it starts with the classroom experience created by faculty, of which the

ThEN ANd NoWCarson’s training in what he calls “value management” became an invaluable resource as Boeing embraced this strategy in the late-90s,justashewasmovingintochieffinancialroles.“Thisnotion of structuring an enterprise around maximizing shareholder value came into vogue in our company easily 15 years after i’d finishedtheEMBAProgram,”Carsonsays.“Beingwellversedinthis already really made a difference.”

his strategic sensibilities and malleable management skills didn’t hurt, either. Carson’s career took a major shift in 2000. Overnightheswitchedfromleadingthefinancesandoperationsofa massive manufacturing and sales unit to running a tiny internal start-up called Connexion by Boeing. Connexion was developing high-speed, in-flight internet access, perhaps a few years ahead of its time. “But it was just about as exciting an opportunity as you could imagine,” Carson says. “Everyone involved learned volumes about what is possible.”

Commercial breaklearning what’s possible was a message that was sorely needed back in the beleaguered Commercial Airplanes division when Carson was named vice president of sales in december 2004. Heinheritedasalesforcewhoseconfidencehadbeenrattledbyseveral consecutive years of losing market share to archrival Airbus and its seemingly invincible master talisalesman, John leahy. But Carson, despite a marked lack of expertise in sales, came to the partyspoilingforafight.“Atourannualsalesmeeting,onefellowasked, ‘how can we compete with these guys? they have leahy,’” recalls Carson. “i replied, ‘But you have me.’”

it turned into a rallying point. Sparked by Carson’s scrappy attitude and empowering strategy—and a rapidly recovering market—Boeing not only bested Airbus, it did so in historic fashion.Aftersellingjust272airplanesin2004,Carson’ssalesteam sold 1,002 airplanes in 2005, 1,040 in 2006, and 1,400 in 2007tocreatewhatistodayabacklogofnearlyaquarterofatrillion dollars in sales.

Manyofthosesaleswereforthe787Dreamliner,Boeing’scelebrated new aircraft which is out to revolutionize the industry, from design to manufacture to in-flight experience. in September 2006, with the sales team on a roll, Carson was named president and CEO of Boeing Commercial Airplanes. After a career-long build-up, he took the controls of this new direction in commercial aviation.

Changing the way we flythe dreamliner is being developed in a fundamentally new way.Itisfabricatedoflight,resilientcarbonfibercompositetodramatically lower operating and maintenance costs. it is being engineered for enhanced flying experience, with vaulted cabins, appealing light, healthier air, wireless electronics, and advanced turbulence-quelling technologies. it is being developed in sympho-ny with a complex global collaboration of risk-sharing partners.

Carson has brought to bear his entire portfolio of expertise and experiencetoconductthisbreakthroughintroductionofthe787while leading a sprawling organization of 60,000 employees and thousands of providers and partners through a global economic crisis, producing an existing fleet of airliners for eager customers around the world, and keeping an eye on future threats and opportunities—mostnotablymaximizingfuelefficiencyandneutralizing carbon dioxide emissions. he’s worked through labor disputes and production delays of this experimental endeavor. But Carson believes the end result will change everything in commer-cial aviation. Again.

“TheBoeing707—America’sfirstcommercialjetliner—wasspecial because it initiated the romantic notion of the jet-setter. But flying, over the years, has become less special. it has lost a bit ofthatmagicoffirstlookingoutthatcabinwindowattheearthpassing beneath you at 180 miles per hour,” Carson says. “the 787willrestoretheexperienceofcommercialflighttosomethingtruly special. it’s a logical extension for our industry, and it’s exciting that the dreamliner is the product that will lead the way to this new era.”

Bob BowenLouise Kapustka Rocky HigginsJan Monti Business Plan Competition

16 foSteR BUSINeSS SPRING 2009 17 SPRING 2009 17

2007 Uw Business School becomes Foster School of Business

2009 Bill Alberts Scholarship launched

ThEy sTArTEd IT…EMBA ENTrEprENEUrs

A lot of EMBA students are born intrapreneurs who become game-changing entities at their organizations. Additionally, the spirit of entrepreneurship is very much alive with these students, many of whom have started their own businesses. Below is a sampling of the organizations started by EMBA alumni.

Kevin ConroyPresident & Founder, Blue rooster Marketing llC

Steven DimmerCo-founder, innovative Pulmonary Solutions

Cody GeorgeCo-founder, vintage hill Cellars

Larisa GoldinPresident and Founder, dreamclinic

Ken HeyCEO, Sunstream Corporation

Nimrod HoofienCEO, Six Slice Studios

Brian JohnsonCo-founder, Stickydrive

Santosh KhareCEO, gOlS

Stephen QuinnCEO, ratner BioMedical group llC

Charlie RobbinsCEO, Sea to Ski Properties

Vetri VetrivelkumaranCEO, Chronus

Jeri waitFounder, OrcaWave llC

Paul weinsteinPresident & general Manager, tenfold Organic textiles llC

cElEBrATIoN oF lEAdErshIp

the EMBA Program has been fortunate to play a part in developing truly great leaders. the following alumni were all honored as part of a “Celebration of leadership”—a series of events that recognized outstanding leadership and reunited alumni, faculty, and program staff from across classes.

Peter AdkisonFounder, Wizards of the Coast

Dorothy Bullitt habitat for humanity

Phyllis Campbell Chairman,PacificNorthwest,JPMorganChase

Scott Carson President & CEO, Boeing Commercial Airplanes

Mic Dinsmore Former CEO, Port of Seattle

Michael Fancher Former Executive Editor, the Seattle times

Ken Hey CEO, Sunstream Corporation

Alice Ray President & CEO, ripple Effects

Dennis weston Senior Managing Partner, Fluke venture Partners

16 foSteR BUSINeSS

inaugural class boasted the likes of Bob Bowen, Bill Alberts, ted Klastorin, rocky higgins, and Kasi ramanathan. Faculty support and excitement from the visionary days is very much alive and well today.

then there’s the cohort. in demographical usage, “cohort” signifiesagroupofpersonshavingsimilarstatisticalcharacter-istics. in academia, it means “colleagues” and has connotations of strength and unity of purpose aptly descriptive of an EMBA class. Ask anyone involved with the EMBA what stands out at Foster,andasMontirecallsfromherveryfirstmomentslaunchingthe program, they’ll likely say, “it’s all about the cohort.” louise Kapustka (EMBA 1995), the current EMBA program director, says the same thing. “i don’t think a lot of prospective students realize how close they’ll become to their study groups and classmates,” she says. “You get to a point in your career where you’re nostalgic for the kind of collegiality you had as an undergraduate—we created our EMBA around a format that recreates a lot of that experience, and it’s always gratifying to watch an incoming class bond.”

As the EMBA Program has matured, several notable features havebeenadded.Thefirstlarge-scaleinnovationhappenedin1997withthelaunchofEMBA’sNorthAmericaProgram.Thenorth America (monthly) class appeals to people who: live or work outside of greater Seattle; travel frequently but live in the Puget Sound area; or prefer a concentrated class meeting time commitment.

Arriving from as far away as new York and Alaska or as close as Bellevue and Belltown, students in the north America class spend three or four consecutive intense days together each month (housing is provided near the uW campus). Many students, especially those who live in Seattle, also appreciate this format because it takes them away from day-to-day responsibilities and distractions, allowing them to focus on their classes.

in 2001, international study seminars were introduced, with trips to Seoul and tokyo. the study seminars give students a chance to connect their learning with on-site visits to inter-national businesses. there have been trips every year since the inception of the study seminars, from grenoble to Beijing, Prague to hyderabad.

in 2004, the EMBA Program saw the introduction of a business plan competition. Suresh Kotha, professor of management and faculty director of the Center for innovation and Entrepreneur-ship, introduced the competition as a capstone project for EMBA students. “the idea was to apply entrepreneurial and strategic thinking across different graduate programs,” explains Kotha. “We designed the business plan competition as a creative and fun exercise that provides students an opportunity to apply the different skills and concepts acquired in the various classes. Students are required to come up with a business opportunity, write a solid business plan, and then defend it in front of expert judges drawn from the Seattle community.” But it was more than that.Kothaandothersoverthepastfiveyearshavereachedout to Foster School EMBA graduates to participate as judges in the competition, thus completing the cycle of knowledge and strengthening the important network between EMBA alumni and students.

Coming full circle to one of the faculty who really got the EMBA Program off the ground, this year Foster has unveiled the William W. Alberts Executive MBA Scholarship Fund. Alberts was aprofessorofbusinesseconomicsandfinancefrom1967until1995. Prior to joining the Foster faculty, he taught for several years at the university of Chicago (where he completed his undergraduate, MBA and Phd work). he was instrumental in the creation of the uW EMBA Program and served as faculty director for many years.

Kapustka recalls, “those of us fortunate enough to have been in Bill’s classroom will fondly recall his iconic eyewear, 3-piece suits, clouds of chalk dust, and his delight and infectious enthu-siasm for both students and economics.”

reflecting Alberts’ vision of supplementing a rigorous curric-ulum with the engaging, interactive classroom discussions of a broad and diverse student cohort, the fund launched in his name willreduceafinancialbarrierforpotentialstudents,usuallyfromnon-profitorganizationsthatcannotaffordtosendexecutives to the EMBA Program. n

1997 North America Program launched

1984 eMBA Program founded

2001 International Study Seminars started (Spring Qtr)

2004 Business Plan Competition launched

MIlEsToNEs

SPRING 2009 19

Investment is a positive sum GameA common metaphor used for investing is sports; another one is gambling. in each of these activities, the totalatstakeisfixedandwhenonepartywins,anotherloses.Mathematicianscallthisazero-sumgame.the mind set and competitiveness created by a zero-sum game attitude pervades many aspects of business. it can be a destructive force and it often inhibits successful investing. if we must use a sports metaphor, i much prefer my young grandchildren’s soccer games: everybody wins.

in the late eighteenth century an Englishman, reverend thomas Malthus, looked back in history and propounded a theory that, on average, no human being could progress materially because every technical improvement would be met by a corresponding increase in population. Consequently, life was a zero-sum game. in order for one person to improve his lot in life, another had to have his lot reduced. And, looking back at history until about 1800, that had been the case. the average per capita income of human beings the world over had remained about the same for all of recorded history.

now here was one unlucky guy. his reasoning was inductive based on previous human history. What were the odds that at the very time that reverend Malthus was propounding his theory, the world was turning toward a non-zero sum game in the form of the industrial revolution? it’s what the hotshots on Wall Street would call a “six sigma event,” i.e., such a small chance of happening that an investor can ignore this risk.

the critical point to make about the still ongoing industrial revolution is that, starting in England and then spreading to other parts of the world, people began to increase the production of goods and services on a per capita basis. Starting about 1800 and continuing through today, the material wealth of the world is increasing faster than the growth of the population. A graph of average annual income per person in the world from the dawn of history to the present would look pretty close to the following:

©iS

tock

phot

o.co

m/H

2oad

dict

18 foSteR BUSINeSS

how many times over the course of his or her career does an executive, investor or entrepreneur wish

that there were breadcrumbs of business wisdom to follow through the forest of hard knock lessons? Mike garvey would have appreciated having a seasoned veteran to mentor him along the way, as he primarily “lived by his wits and learned things the hard way.”

garvey is now retired from Saltchuk resources’ day-to-day operations, and the holding company he co-founded in 1982 is in the hands of family. Perhaps because so much of Saltchuk’s business is in maritime shipping, and certainly because of his generous spirit, Mike has drafted some charts for navigating the shoals of business—in theformofa75-pagemanuscriptheplanstopublishforSaltchuk’s employees.

he’s called it, Forty Bumpy Years at the investing game. the sub-title is telling with regard to how he foresees the information can best be used: A Framework for thinking about Saltchuk investment Policies in a Family Business.

Within its pages garvey dissects: 1) Factors affecting the investment environment, 2) the attitude of the investor, and 3) Structuring an investment policy. he has kindly allowed us to excerpt material from all three sections for this article.

in the introduction, garvey offers a brief caveat: “While i make the argument in this essay that heuristic learning is the critical base knowledge that the investor must acquire, academic studies on how markets work have been very helpful to me.” this juxtaposition of bookish knowledge with on-the-job learning is a recurring theme, so much so that he questions the transferability of trial-and-error knowledge.

But garvey’s humility and philosophical reluctance to make too much of his learning does nothing to diminish its value to the reader. As he aptly points out, in the face of how much is still largely unknown about the nature of successful investing, “there is no intellectual discipline of any consequence where the body of known knowledge about the discipline is greater than the body of unknown knowledge.”

TheFosterSchoolisveryluckytohavethebenefitof garvey’s wisdom; he’s been on the dean’s Advisory Board for a dozen years now. he was also a co-chair of the school’s record-setting capital campaign. And while he didn’t graduate from the business school (he’s a dual degree holder—BA Mathematics, Jd law—from uW) he taught business classes for seven years in the late ‘60s andearly‘70s.Hewentontofoundasuccessfullawfirm,garvey, Schubert & Barer, a thriving company, Saltchuk, and still makes time to be a stalwart of community service.

Mike garvey is a man from whom one can learn volumes, and if he began his manuscript—which could bethefirstofmoretocome—to“provideacommonapproach” for the stakeholders at Saltchuk, he has inad-vertently created a guide that bears relevance well beyond his company’s walls.

Below are excerpts from three sections of garvey’s treatise.Thefirstdealswiththeideathatinvestmentcreates wealth for individuals besides the buyer. the second section notes the importance of humility as a character trait of a successful long-term investor, and the finalsectionlaysoutsomerulesofthumbgleanedfrom 40 bumpy years in the investing game.

Investing for the long haul

Ideas from 40 bumpy years in the investing game

$7,000

$6,000

$5,000

$4,000

$3,000

$2,000

$1,000

$0

-10000-9000

-8000-7000

-6000-5000

-4000-3000

-2000-1000 -0

10002000

World per capita Gdp10000 BcE – 2003 cE (1990 International dollars)

Brad delong Angus Maddison

Per C

apita

gdP

Year

Source: J. Bradford delong, “Estimating World gdP, One Million B.C.- Present” http://www.j-bradford-delong.net/tCEh/1998_draft/World_gdP/Estimating_World_gdP.html. Accessed Mar 5, 2008; Angus Maddison. “Contours of the World Economy, 1-2030AD:EssaysinMacro-EconomicHistory.”NewYork:OxfordUniversityPress,2007.382.©2008,MichaelW.Kruse

SPRING 2009 21

A. Avoid industries to which people are attracted because they offer a certain life style. Cattle ranching, currently the wineindustryandsomeotheragriculturalbusinessesfitthis category. if you think the business is some place you might like to hang out at on the weekend, watch out. the non-economic returns to the investors in those companies generally have the effect of reducing the economic returns. this is because these industries attract capital and talent out of proportion to the demand for their products and services.

B. Be very careful about letting political rhetoric and elec-tion results influence your investment decisions. there is a big difference between how people vote at the voting booth and how they vote with their pocket book. And there is a big difference between what politicians say they will do and what economic and political circumstances allow them to do. the 1992 presidential election was won by democrats. during the campaign, President Clinton and vice President gore emphasized the need for the country to become more focused on the environment. this involved cleaning up exist-ing environmental problems and generating new businesses that aided the environment, such as clean energy.

My assumption on their election was that existing envi-ronmental laws would be more rigorously enforced and new ones would be adopted. i was not alone in my assumption. in 1993 there were a lot of start-ups in the environmental business and a lot of existing companies started or grew their environmental divisions. there was a bandwagon effect supported by a lot of news media stories. All of this influenced my decision to buy a land-based environmental business. For a variety of economic and political reasons, the assumed increase in demand for environmental services and products did not materialize and for some reason the existing laws were not as rigorously enforced during the Clinton Administration as they had been during the previous Bush Administration. As a result, most of these environ-mental businesses expired and tons of money was lost in clean energy projects.

c. A corollary to the above is to be wary of making an investment decision based on something you have read in the newspapers or seen on television. if the urge strikes you, lie down for a while and often the urge will go away.

the media is usually biased in favor of the bad, the unusual and the immediate. And often the story is accompanied by some good looking, articulate expert who is certain of the future based on such events. if this expert thinks he knows the future, then he is self-delusionary. But i guess that is how he earns his living.

d. Financial projections for start-ups, mergers, spin-offs of a corporate division, or any project in which substantial change is contemplated are most often badly flawed. in fact, i cannot remember one that was not flawed. in spite of this experience, we have often placed too much weight on the projections as a driver of the decision to invest. the flawed projections are not the result of a poor work product. nor are they the results of biases, except sometime in cases where the proponent of the project is seeking other people’s capital. they are the result of the assumption that we can develop reasonably accurate numerical boundaries on future events that are not the result of repeated past experiences. the high failure rate of mergers, start-ups and the like attest to the futility of this effort. Yet there is some-thing comforting about numbers that describe the future which causes us to continually make this mistake. i am not arguingthatfinancialprojectionsshouldnotbemade.Arigorous approach to the planning process is important. they provide valuable insights into the business or project and can, to some extent, quantify some of the risks and opportunities. their real value is that the work of making projections helps prepare the person to react to events, but not to predict events. My point is that such projections should not drive the decision to invest.

E. Structuring a transaction, negotiating a contract to buy a company and then closing the deal is immensely satisfying. Over the years it has given me a sense of accomplishment that few other business activities can match. the more difficultthetransactionandthemorecreativethesolu-tions to the problems connected with the deal, the greater the satisfaction. here lies the problem. doing deals can become addictive and one can lose sight of their purpose. in my experience, some of the best deals i have made are those i have walked away from. the simplest and most straight forward acquisitions have, as a rule, been the most successful. n

some rules of Thumb

20 foSteR BUSINeSS

the economic history of the united States provides an example. roughly, the country’s income has grown by an average of 3 percent per year since its inception. About one-half of the growth in income is due to the increasing number of workers and one-half to increasing productivity. i was born in 1938 and in two years willbe72yearsold.Usingtheruleofthumb(divide72bythegrowthratetodeterminehowlongittakesto double), the wealth of the country doubled by the time i was 24 years old, doubled again by my 48th birthday,andwilldoubleagainbyage72—aneight-foldincreasefrommybirthyear.

the above example was calculated in real or inflation-adjusted dollars while investors think in terms of nominal, or non-inflation, adjusted dollars. inflation is quite variable, but on the simple assumption of an annual 3percentrate,the“Ruleof72”wouldyieldadoublinginnominaldollars(realgrowthplusinflation)every12years.

the point i hope to make is a happy one and consistent with basic economic theory. When a seller sells an asset to a buyer, both parties can gain by the transaction. the buyer believes that the purchase of the asset is the best available alternative to him; the seller believes it is the best alternative for realizing his existing investment. People will invest where they believe they will get the greatest return. this results in an efficientallocationofcapitalinoursociety.Moneyflowstoitsbestuse.Whatmakesallthispossibleisthecontinuing growth of the economy.

One way to think about the difference between gambling and investment is that when gambling at a casino, the house takes 3 percent of all bets, and, in investment, the economy adds about 3 percent per year to the aggregate of all bets.

An Essential Quality is humilityThepitfallthattoooftenaffectstheinvestorisoverconfidence,whichleadstoarroganceandthefeeling

that he is the smartest guy in the room. it seems to be particularly virulent in a young person with an initial success or two. these people have a tendency to gather a collection of folks who pander to and support the investor’s feelings of importance and superiority, which further distorts his view of himself. if the investor is also the head of an organization, this perspective tends to destroy his leadership abilities. it is important to keep in mind that high income or exceptional wealth does not make one a smarter or better person.

When an academic or lawyer calls someone “smart,” it is meant as a compliment. it usually means that the person is good at developing abstractions from a complicated mass of data, is articulate, is able to reason persuasively and often is quick with numbers. however, when a businessman calls someone “smart,” it is not necessarily a compliment. While he means the same thing, the term “smart” misses what is impor-tant to the businessman: effectiveness. if good things don’t happen over which the person is responsible, it doesn’t matter how smart the person is; he is ineffective. i have often heard a businessman describe a managerwhohehasfiredas“reallysmart.”Sodon’ttrytobesmart;tryandbeeffective.

For the investor, this arrogant behavior is particularly insidious because it distorts his sense of reality. We all have different perceptions of reality and see the world from different points of view, but it seems to me that a more or less consistently successful investor is constantly testing his sense of market reality. if this testing process does not involve some mistakes that the investor realizes are mistakes, he cannot properly adjust his sense of reality to the market and grow in his knowledge. there are a great deal of very wealthy people who made a ton of money on an early investment and, thereafter, were very mediocre or unsuc-cessful investors; unfortunately, they continued to maintain a sense of personal importance and superiority.

On a personal level, this self-important behavior really offends me. if the revolution comes, it won’t be because the rich are rich; it will be because the rich are arrogant and act like they are better than other people. Be warned, descendants of mine: if you behave like this, i will come back from the grave to haunt you!

PASSioN v. PREPAREDNESSInvestors put their money behind substance over style

the stereotypical entrepreneur is all about passion—a hyper-extroverted pitchman skilled, above all, in the persua-sive arts. But a new study demonstrates that preparedness trumps entrepreneurial passion when it comes to gaining back-ing from potential investors, according to Foster School authors Xiao-Ping Chen, professor of management and organiza-

tion and an Evert McCabe Faculty Fellow, and Suresh Kotha, professor of management and organization and the Olesen/Battelle

Excellence Chair in Entrepreneurship.Thefindings,culledfromtwoyearsof

uW Business Plan Competitions, show that non-verbal cues such as animated facial expressions, energetic body move-ments and buoyant tone of voice make little, if any, difference in persuading investors, even as they convey passion for the enterprise in question.

Chen says that true preparedness suggests a deeper, more cognitive form of passion that is not so easily perceived in a brief pitch. “nevertheless, in our study, presentation style mattered little ingainingsupport—afindingthat may apply not just to venture capital decisions but to other selection contexts, such as job interviews or report presentations.”

the study is published in the Academy of Management Journal. n

WANT MoRAl BEhAvioR?Pay attention to moral attentiveness

We may see ethics in black and white orinfiniteshadesofgray.Butwhether we view our decisions as ethical issues at all depends on our level of moral attentiveness, a concept developed by Scott reynolds, an assistant professor of business ethics at the Foster School.

Moral attentiveness is an assess-ablepersonalitytrait—afilterthroughwhichweseethemoralramificationsof decisions in differing degrees. new researchbyReynoldsfindsthatknowinga person’s level of moral attentiveness can predict his level of moral behavior over time. this new assessment tool could have great value in predicting and promoting an ethical workplace.

reynolds cautions that high moral attentiveness is no guarantee of moral behavior. likewise, low moral attentive-ness doesn’t necessarily mean immoral behavior is inevitable. “But for those who see an ethical issue, they are well down thepathoffindinganethicalsolution,”he adds. “And for those who don’t see an ethical issue at all, the odds that they will act ethically seem to be reduced.”

the study is published in the Journal of Applied Psychology. n

ThE loNg viEW oN ShoRT SElliNgControversial practice provides important benefit to market

Shortsellers—whoprofitwhenshareprices fall—are considered, by many, to be pariahs of the stock market.

But new research by Jonathan Karpoff, the norman J. Metcalfe Endowed ProfessorinFinance,findsthatthesenegative investors serve a positive purpose in at least one important circum-stance—when dealing in companies that are cooking the books.

Karpoff investigated the volume of short selling leading up to more than 600 cases of corporate fraud and found that short sellers:

1. expedite the average time to discovery of corporate misconduct (from 26 to 18 months).

2. abate the inflation of a company’s share prices during the period of financialfraud(bypublicizingnegativeinformation in an effort to lower the price of a company’s stock).

3. do not worsen the inevitable share pricedropwhenafirm’sfraudisrevealed publicly.

Karpoff’s study won the best paper award at the 2008 university of Chicago Center for research in Security Prices (CrSP) Forum. he also won a Q-group grant to further explore the question of whether short sellers, on average, aregoodatpredictingwhichfirmswill get busted for fraud. n

SPRING 2009 23

researCh BrieFs

©iS

tock

phot

o.co

m/d

anle

ap, s

tdem

i, ct

oelg

22 foSteR BUSINeSS

Awarding TheoryTop research honor recognizes work in business-to-business relationships

FACULTy

in February, robert Palmatier, assistant professor of marketing and Evert McCabe Faculty Fellow at the Foster School, received the American Marketing Association’s 2008 harold h. Maynard Award for his article “InterfirmRelationalDriversofCustomervalue.” the award recognizes one Jour-nal of Marketing article each year for its significantcontributiontomarketingtheoryand thought.

noting that 20 years of relationship marketing research has focused on the posi-tive effect of strong customer relationships, Palmatier poses a critical question in the article: What other attributes or mecha-nisms, in addition to relationship quality (trust, commitment), can account for rela-tionship marketing’s effect on performance?

using social network and exchange theory, Palmatier developed a new

multidimensional model for examining busi-ness-to-business relationships. he found that while relationship quality plays an integral roleinthevaluegeneratedbyinterfirmrela-tionships, so do the breadth of contacts, the decision-making authority of contacts, and the synergy among all three characteristics.

Palmatier says, “Most importantly, measuring, understanding, and building interfirmrelationshipsrequiresamulti-dimensional theoretical perspective. Dependingonthespecificcontextandthemarketing objective of the seller, different relational dimensions are most critical at improving performance.”

For example, successfully selling new products to customers requires sellers to increase the diversity and authority of their contact portfolio. Alternatively, to maintain and grow sales at businesses with high

employee turnover, the largest return is realized from expanding the breadth of the contact portfolio to mitigate the loss of relational ties and speed relational recovery.

interestingly, the research suggests thatcontactsthatarethemostdifficultto access and deal with may be the most valuable, whereas customers that are easy to access may generate the lowest returns. thus, busy salespeople making their rounds to their favorite customers (who are often open to meetings and easy to deal with) might be able to enhance performance by shiftingtheirresourcestofirmsorcontactsthataremoredifficulttoaccess.

“Overall,interfirmrelationshipsrepresenta complex web of interconnections that requiresamorefine-grainedandstra-tegic approach than is typically utilized in academia and practice,” reports Palmatier. n

SPRING 2009 25

in the wake of Enron and a raft of other major corporate scandals early this decade, a March 2002 Fortune magazine cover voiced the widely held opinion that

white collar crooks were running rampant in American board rooms. “they lie, they cheat, they steal,” the headline exclaimed, “and they’ve been getting away with it for too long.”

the facts, however, suggest other-wise, according to Jonathan Karpoff, the norman J. Metcalfe Endowed Professor in Finance at the Foster School. An extensive newstudyledbyKarpofffindsthatthevast majority of culpable executives in casesoffinancialmisrepresentationseesignificantpenaltiesthatrangefromjobloss to jail time.

The facts defy public opinion“the Fortune headline summarizes how many people think about this,” Karpoff says. “the popular perception is that there’s a massive breakdown in corporate governance, which would suggest a sys-temic problem and the need for increases in outside enforcement.”

Along with co-authors d. Scott lee of texas A&M university and gerald S. Martin of American university, Karpoff tracked the fortunesofthe2,206individualsidentifiedasresponsiblepartiesforall788Securi-ties and Exchange Commission (SEC) and department of Justice (dOJ) enforcement actionsforfinancialmisrepresentationfromJanuary1,1978,throughSeptember30, 2006. Much of the period under analysis preceded the Sarbanes-Oxley Act of 2002, which increased criminal penal-tiesandexposuretoliabilityforfinancialfraud.

the researchers found that 93 percent of the culpable executives lost their jobs by the end of the regulatory enforcement period.Mostwereexplicitlyfired.Thelikelihood of ouster increased with the cost of the misconduct to shareholders and the qualityofthefirm’sgovernance.Culpablemanagersalsoboresubstantialfinanciallosses through restrictions on their future employment, their shareholdings in the firm,andSECfines.Asizeableminority(28percent) faced criminal charges and penal-ties, including jail sentences that averaged 4.3 years.

The system works, as far as we knowthese results indicate that the individual perpetratorsoffinancialmisconductface

significantdisciplinaryaction.“Itturnsoutthat the sky is not falling,” Karpoff says. “Our research demonstrates that, on aver-age,firmsdohavewaystoidentifyanddiscipline rogue, cheating managers. And it supports the notion that the SEC and department of Justice actually do have teeth in their enforcement activities, even in the days before Sarbanes-Oxley. the currentmixoffirmgovernance,manageriallabor markets, and regulatory oversight does, in fact, discipline this type of illegal behavior.

“Of course, no system works perfectly. Some bad guys walk away with bundles. And we still have no reliable way of knowing how many don’t get caught in thefirstplace.We,andothers,areworkingto gain some insight into that problem.”

the paper, “the Consequences to Managers for Financial Misrepresenta-tion,” was published in the May 2008 Journal of Financial Economics.

it’s the latest in Karpoff’s series of studies on corporate crime and punish-ment, and a follow-up to “the Cost to Firms of Cooking the Books,” which estab-lishedthatcompaniespayasignificantfinancialpenaltywhentheirreputationsaretarnishedbyfinancialfraud.n

hard Timeexecutives actually do pay dearly for financial fraud

©iS

tock

phot

o.co

m/s

ium

on, g

eopa

ul, c

loud

ytro

nics

Jonathan Karpoff

24 foSteR BUSINeSS

FACULTy

DoWNSizE WiSElyIntelligent team layoffs can maximize adaptation

When company downsizing means surgi-cally removing individuals from work teams, new research from Michael John-son, an assistant professor of manage-mentattheFosterSchool,findsthatteamcomposition and disposition affect how well the surviving members adapt.

Johnson’s research looked at simpli-fiedworkteamscomprisedofaleaderand several team members. likewise, downsizing was limited to three scenarios—removing the leader, removing a team member, and removing a team member and shifting the leader into his role. the study found that removing the leader results in the most complete adap-tation as the surviving team members realize that everything has changed and they must share responsibility.

teams that bear a high degree of emotional stability have the strongest chance of adapting most quickly and completely, and performing at a level approaching the pre-downsized team.

“We’re not suggesting that in every team downsizing situation the leader should be taken out,” Johnson says. “But self-managing teams can be effective when they share leadership responsibilities.”

the study is published in the Academy of Management Journal. n

MixED-UP MESSAgESMarketing messages may backfire for consumers in uncommon situations

A favorite technique in the marketer’s playbook is “priming” consumers with subtle messages to encourage consump-tion. For example, the suggestion of thirstiness embedded in a Coca-Cola advertisement is intended to activate a desire to drink a Coke.

But a surprising new study co-authored by Marcus Cunha, Jr., an associate professor of marketing at the Foster School, reveals that goal priming canbackfire,especiallywhenconsumersencounter uncommon situations.

in one experiment, Cunha primed students to choose either a casual restau-rantorafinediningestablishmentbyexposing them to words related to having fun or to impressing others. he found that participants chose the intended restaurant when asked to pick a place to eat that night (a common situation). But when asked to choose a place to eat a month from that night (an uncommon situation), the students chose the restaurants oppo-site to their prime.

Subsequent studies yielded similar results: in familiar situations, priming goals worked. in uncommon situations, thegoalprimingbackfired.

“Ourfindingssuggestthatretailersshould understand the amount of experi-ence consumers have with certain choice situations before using priming as a marketing tool to influence consumers,” Cunha says.

the study appears in the Journal of Consumer research. n

researCh BrieFsMArkET DrivEn

Ann Schlosser listed among 50 most prolific marketing scholars

Ann Schlosser, an associate professor of marketing and Marguerite reimers FacultyFellow,hasbeenidentifiedin the Journal of Marketing as one ofthe50mostprolificscholarsinmarketing over the past quarter-cen-tury. the ranking takes into account marketing faculty publications in the field’sleadingjournalsduringtheyears 1982-2006.

Schlosser was previously named the second-most prolificscholarofinternet-related marketing research in the Journal of

Advertising. that 2006 listing consid-ered faculty contributions in this area of study from 1994-2003.

Since beginning her studies in online marketing at the dawn of the commercialized internet, Schlosser has published dozens of pioneering papers examining revolutionary marketing methods that have become standard operating procedure in the new Economy. topics have ranged from virtual product experiences to consumer attitudes on internet adver-tising and regulation, from the digital divide to converting Web site visitors into buyers. her latest research, to be published in the Journal of Consumer PsychologyinJune,findsthatallowing customers a sense of choice over the product information they receive online can result in a more positive view of the company, and make them more likely to buy the product. n


Question 1. Will the Dow be above or below 8,000?

Below

Siegel: Earnings are coming down, so valuations are not going to increase.

kolasinski: What happens to the dow this year depends on whether we get our bankingsystemfixed,andI’mnotoptimis-tic about that. if we could write down the debt of the banks, clean up their balance sheets and operate normally, we could be well above 8,000 or even 9,000, by the end of the year. But i’m not convinced that’s going to happen. We keep propping up banks that are on the verge of insol-vency and they’re operating like zombies—we’re not getting anywhere.

Dewenter: We’re in for two years of really bad times, so the dow will not go up until the economy shifts and the credit crisis is fixed—wellinto2010.

hajimichalakis: there’s a total loss of con-fidence.Thecreditsystemisbrokenandit’snotgoingtobefixedquicklysowewon’tsee a rebound in the dow above 8,000.

kolasinski: it comes down to what kind of bankingfixtheAdministrationproposes.Ithink whatever they come up with will be worse than people think it will be. When the details come out, i think the market will go down even more.

Above

rice: People are very risk-adverse now, which creates a huge risk premium for the market. Current prices are already dis-counted and the market expects them to rise to compensate for risk.

harford: i agree with rice. We have 10 months with more upside than downside because prices are low and the risk premium will get us above 8,000.

nET: The panel majority predicted the Dow would be below 8,000 (5-4)

Question 2. Will unemployment be above or below 10 percent?

Below

rice: if it gets close to 10 percent, it’s a dangerous political place for President Obama, and he will start hiring people. Also, it’s important to know that measured unemployment can stay low because peo-ple give up on looking for a job. if someone is not looking for a job, they’re not counted as unemployed!

kolasinski: in all the macroeconomic predictions of unemployment, to get large unemployment rates during down times you have to have downward wage rigidity —people unwilling to take wage cuts. reports suggest that has decreased recently; more pay is in bonuses and stock-based compensation. So in all economic down-turns going forward, and in this recession, we won’t see unemployment as bad as in previous recessions.

Above

Gilbert: Firms are trying to maximize the likelihood of survival, so they’re cutting costs and doing what they can to survive. So the rate could go higher, even up to 12 percent. Managers just want to survive and stay in business. they can always let go of people and re-hire them later. Managers are thinking, “i just want to stay in business.”

nET: The panel majority predicted un-employment would be below 10% (5-4)

Question 3. Will inflation be above or below 3 percent in 2010?

Below

kolasinski: i don’t think inflation will pick up in 2010. Even though the Fed has increased the money supply, they can de-crease it quickly and sell off their portfolio of treasury bonds.

Young: We haven’t talked about deflation. inflation is bad, but deflation is really bad. Some people are really concerned about this; with actual deflation, we could get into a spiral that would be hard to stop. there haven’t been many episodes of this, but when it happens it’s very dangerous, and some people are concerned about that now.

karpoff: TheFedlearnedfromthe1970sabout consumer price inflation and has been disciplined about keeping that down.

Above

karpoff: Big increases in the money supply cause prices to go higher. All these infu-sions of cash by the Fed to stave off the recession will play out in the future— it’s only a matter of time. the total pressure is so large that it might even be affected this year.

Dewenter: if we start getting inflationary pressures, at what point will the Fed try to step in and dampen that down? next year they’ll be too afraid about destroying the recovery to start pulling money out, so they will let it go above 3 percent and give the economy more time to improve. At 5 or 6% they will start to get more nervous.

nET: The panel majority predicted infla-tion would be below 3% in 2010 (5-4)

Postscript from Dean JiambalvoAsindicated,thefinancefacultymetonFebruary 19th. On that day, the dow was7466.OnApril24th,whenthisarticlewas sent to press, the dow was 8089. in February, the unemployment rate was 8.1 percent. in March, the rate rose to 8.5 percent. What will inflation be in 2010—that, of course, remains to be seen. We’ll revisit these predictions after the end of the year. n

©iS

tock

phot

o.co

m/N

ickS

, duc

kyca

rds

FinAnCiAl PrEDiCTiOnSFoster finance faculty offer some highly educated guesses about the future state of the economy

Casey Stengel, sounding like his catcher Yogi Berra, once said, “never make predictions, especially about the future.” But since investors and consumers need to make decisions every day, speculation about the future is unavoidable. With this in mind, James Jiambalvo, dean oftheFosterSchool,roundedupagroupoffinancefacultyonFebruary19thandaskedthemtoprognosticatewithrespecttotheUSeconomy.Specifically,theywereaskedtoconsiderthreequestions:

1. At the end of December 2009, will the Dow be above or below 8,000?2. At the end of December 2009, will unemployment be above or below 10 percent?3. Most everyone believes inflation will be below three percent in 2009, but how about 2010?

Foster faculty addressing these questions, were:

kathryn Dewenter Joshua green Family Endowed Associate Professor of Finance Phd, university of Chicago

Thomas Gilbert Assistant Professor of Finance Phd, uC Berkeley

karma hajimichalakisPrincipal lecturer in Finance and Evert McCabe Faculty Fellow Phd, university of rochester

Jarrad harfordMarion ingersoll Professor of Finance Phd, university of rochester

Jonathan karpoffnorman J. Metcalfe Endowed Professor of Finance Phd, uClA

Adam kolasinskiAssistant Professor of Finance Phd, Mit

Edward riceAssociate Professor of Finance Phd, uClA

Stefan SiegelAssistant Professor of Finance Phd, Columbia

lance YoungAssistant Professor of Finance Phd, university of rochester

FACULTy

Asyouwillsee,likefinancialexpertsaroundthecountry,agreementbytheFosterpanelwasfarfromunanimous.


People PersonHoward Behar, the former president of Starbucks and current edward V. Fritzky Chair in Leadership talks about why money isn’t everything, corporations aren’t greedy, and what business students can learn from Fiddler on the Roof.

FACULTy

What is your relationship to the university of Washington?

it goes back to when i was 4 or 5 years old. My father had a grocery on thackery (corner of latona and 45th) before the depression. So the college campus was my home; frosh pond was my swimming pool—when it was hot we’d go there until we got kicked out. the uW and the neighborhood are like a warm and fuzzy blanket to me.

When did you get involved with the Foster School of Business?

Well… not formally until my wife, lynn, and i sponsored a uW class that ties together the Foster School and the School of Social Work.

Why connect those two schools?

i think it’s easy to come out of business school and think your whole role in life is to join an organization and help maximize profits;butthat’sreallyonlypartofyourresponsibility. On the other side of things, social work grads need to understand that without a successful economic engine, there are no resources to drive good social poli-cies. the two schools of thought may not always agree, but they need to understand each others’ language and role in society.

As retired president of Starbucks, do you feel like business has a bad name?

i’m getting tired of hearing comments about greedy corporations. i’ve never sat next to a “greedy corporation” at any function i’ve attended. i’ve sat next to some greedy people, but they usually have

a name—they’re real human beings. At the same time, it’s ridiculous to label social consciousness as “leftist.” these kinds of labels don’t help any of us—it puts us in opposing camps, when at the end of the day we’re all in the same camp. One of the things that universities can do is bridge that gap—the goal is not just to create better businesspeople or better social workers, but to train better human beings.

is “training human beings” a goal you wanted to take on as the Edward v. Fritzky visiting Chair in leadership?

Absolutely! And it’s a bit like letting the fox into the henhouse. But i’m truly humbled by this honor and want to help the students in any way i can.

You talk a lot about people being the key in business and in organizations, and have published it’s not About the Coffee: leadership Principles from a life at Starbucks. how did you develop your leadership philosophies?

Experience. i had great opportunities, wonderful mentors who helped me along the way—and i was curious. i wanted to be conscious of people. i worked at companies where business success was built on the backs of people and said, “that’s not a way.” When howard Schultz, Orin Smith (BA 1965), and i sat down and hammered out what Starbucks would look like, we never had one argument about the values of the organization. All of us agreed that success is achieved by treating people as human beings instead of seeing them as assets.

What are some case studies that dem-onstrate winning at values and profits?

there are too many to name! i’ll say Costco, Whole Foods, and Starbucks are great examples. these companies have had setbacks, but have always stayed true to their values—that makes a big difference in the ability to course correct. i think the key to winning at values is to establish trust. in fact, i believe one of the biggest issues in our country today is that we seem unable to get past inherent distrust of other people’s intentions, and that makes it very difficulttoaccomplishanythingworthwhile.

At the end of the day, isn’t business success tied more to profitability than anything else?

that is certainly the perception. it’s like in Fiddler on the roof—what does tevye sing? “if i were a rich man…” the assump-tion is that you generate wealth and then you’re more important, sought after for wise counsel, and greatly admired by the community.Realsuccessisbetterdefinedbyhowyoudeveloppeople.Profitabilityisa critical metric of how a business is doing, butmaximizingprofitsshouldn’tbetheendgame.

What is the most important thing the Foster School of Business can teach?

that success in business isn’t a fork in the roadbetweenprofitsorvalues—it’saboutputting both of them together. the real geniusisinprofits and values. Make no mistake—performance counts! if you’re hired to run a company and you can’t get the desired results, you’re not the right person for the job. But if you run the numbers well and are taking advantage of your staff, then you’re not doing your job either. Students, really all of us, need to come to understand that success and values are inextricably linked—not mutually exclusive. n

“one of the things that universities can do is bridge that gap—the goal is not just to create better businesspeople or better social workers, but to train better human beings.”


ALUMNI

tokyo, JapanAlice Karsevar

SnAPPinG ThE GlOBEA photographic glimpse into the life-changing experiences of Foster students studying abroad

the global Business Center’s 2008 Study Abroad Photo Contest drew a veritable gallery of images captured by many of the 250 undergraduates and 150 MBAs who took leave of the Foster School for an international study experience in the past year. here are a few of the best from around the world.

First prize: “Bendin’ Backwards for Crayola”Soweto township, South AfricaBy Kim Pham

“how was South Africa? Amazing, crazy, unforgettable. there is no way to sum up this adventure of a lifetime into one word.”

Second prize: “Pedal Power” rotterdam, the netherlandsBy Anna demyani

“…the perfect mixture of epic history and cutting edge business techniques.”

Third prize: “Eye of the Beholder”rome, italyBy Elizabeth Whiteman

“in no way will i ever forget my study abroad experience; it really opened my eyes to the rest of the world and gave me a completely new perspective.”

galway, irelandAnne Paulsen

rosetta, Egypthillary Matson

Amsterdam, netherlandsJenny Wang

Shanghai, ChinaJoey hwong

São Paulo, BrazilJosue Mendoza

Prague, Czech republicKate Kingen

Afrodesias, turkeyKathleen August

Kyoto, JapanKelly voss

Marseilles, FranceMonica Barrett

trogir, Croatianathan Buxbaum granada, Spain

Scott Cornish

Buenos Aires, Argentinataylor Sloane

Zurich, Switzerlandtye howell Capetown, South Africa

victor Okocha

Kobe, JapanWilson Wong

guadalajara, MexicoShirin Ebrahimi Seoul, South Korea

Sook Kim

STUDeNTS

Fast Company

Marc Barros + Jason Green + wearable camera + Internet = adventure communityYou’re careening down a mountain bike trail, plummeting from the troposphere, yo-yoing at the end of a bungee cord, avalanching down an icy cliff. And your immediate concern is…?

a. Self-preservation.b. Maintaining normal bodily functions.c. Choosing the appropriate last expletive.d. Capturing the rush to post on the internet.

if your answer is d., you may already be acquainted with the vholdr high-velocity wearable video camera and its creators, Marc Barros (BA 2003) and Jason green (BA 2003). the tough, tubular camera attaches to a helmet or goggles to allow the adventure sportsman or woman a hands-free way to chronicle adventures in first-personvideothatcanbeeasilyposted

on vholdr’s social networking site to be shared by kindred spirits around the world. in less than 18 months on the market, the company counts 10,000 extremely active users in 60 countries engaging in 60 different adventure sports—from snow-mobiling to parasailing, mountaineering to skateboarding, BASE jumping to kayaking.

“vholdr is bigger than the camera,” says


Barros, CEO of twenty20, maker of the vholdr. “it’s a camera driving an inter-national community. Community is the difference.”

user-entrepreneursBarros and green got into fast-moving-video while students at the Foster School. With partner tim Ennis (BA 2003), they won third place at the 2003 uW Busi-ness Plan Competition with Motocam, an onboard camera system that covers a motorcyclist’s blind spots.

But Motocam was the passion of Ennis, a daily motorcycle commuter. Barros and green were skiers, and safety was not their concern. they were vexed by their lack of ability to record their downhill adventures. And they suspected that legions were similarly frustrated.

they morphed the Motocam concept and brought it into a new arena as big as the great outdoors. Operating out of a garage on a modest line of credit co-signed by an uncle, Barros and green assembled a wearable lens that attached to a camcorder that had to be borne in a backpack. not the most elegant solution, it nevertheless found a niche market.

“And then came Youtube,” says Barros, “which changed everything.”

light camera, action!Even though their analog lens was selling briskly, Barros and green could see the pixels on the screen. they ceased produc-tionin2007andbegandevelopinganall-in-one wearable camcorder that could upload video directly to the internet, a la Youtube. “When we started with a Chinese manufacturer less than two years ago, it was just the two of us,” green says of their adventure in offshoring. “it took them a while to realize that these two kids weren’t joking when they said they wanted thousands of these.”

they needed thousands. “We had revenue from the beginning,” Barros says, laughing. “We told customers we were going to make this new camera, and they started sending in orders. So Jason and i said to each other, ‘Okay we better go make this thing.’”

they convinced Ziba, the celebrated

Portland-basedproductdesignfirm,totake them on for a royalty. “We realized we couldn’t just put a plastic case around it,” green says. “that would be the death of us.”

By the end of 2008, the vholdr was selling on Amazon.com, at rEi, and an archipelago of outdoor sports specialty retailers. it has won prestigious innovative design awards from international CES and BusinessWeek. And in little more than one year, a voracious market has committed to “wear, shoot, and share” their adven-tures. Of the 10,000 vholdr owners, more than 80 percent actively post their thrill-ride videos to the site, building an unrivaled database that’s in on the action, wherever on earth it’s happening. “it’s a true community of adventure sports enthusiasts,” says Barros, “that just happens to be driven by our camera.”

Go big or go homedespite the distressed economy, adven-ture sports continue to penetrate further into the mainstream. Barros counts 100 million activists worldwide, and growing. So he and green are all in. “We realized that either we make this a stepping stone to the next start-up, or bring in some ex-perience that can help us grow this thing. that’s the option we chose,” Barros says. “We think there’s a huge opportunity, so let’s go big.”

today they orchestrate a seasoned staff of 12 and a network of distributors and sales reps that reaches across the globe. they recently unveiled the world’s firstwearablehigh-definitioncamcorder.But they’re largely still in start-up mode: lean operations, zero advertising, no frills.

great recession notwithstanding, they like their chances. “Our timing couldn’t be better, really,” Barros says. “We’ve matched shareable video with the rise of the adventure sports lifestyle and social networking. We’re hoping to double or triple our business this year, even though the economy is tough.

“People are still passionate about their lifestyle. We’re selling the simplicity of sharing the adventure.” n

Offshoring Onshore

Melissa Adams learns first-hand about global IT outsourcing

Concerned about offshoring? Excited about offshoring? Curious about offshor-ing?MelissaAdams(BA2007)wantedtoexperienceitfirst-handafterstudyingthomas Friedman’s “the World is Flat” in an international business class at the Foster School. So after graduation, she joined india’s infoSys, one of the planet’s largest IToutsourcingfirms.

With a group of 80 Americans, Adams lived in Mysore, india, for six months, training in software engineering along-side thousands of indian, British, Central American, and Chinese young professionals at the sprawling infoSys campus. “Software engineering may seem to be a bit of a leap for a marketing major,” she says. “But i thought it would be a good opportunity not only to develop a new skill set, but to learn more about offshoring and international business from an indian perspective. it was an excellent experience on both levels.”

it also put her on the front line of a growing trend in offshoring: the localiza-tion of the most complex and strategic ITprocessesbyglobalizedITfirms.TodayAdams is living in new York City, working with india-based infoSys for a European wealthmanagementfirminitsUShead-quarters.

through her, offshoring has come home (wherever that is). n

ALUMNI

President Barack Obama wasn’t the only politician to make history in 2008. Cindy ryu (MBA 1983), Shoreline’s mayor, became thefirstfemaleKorean-AmericanmayorintheUSonJanuary7,2008.Shecreditsastrong work ethic and supportive family as keys to her success.

ryu emigrated twice before age 13, leaving the economically-devastated South Korea with her family for Brunei, then moving to the Philippines before immigrating to Washington state in 1969. her parents sought a life free of political, cultural, and economic oppression,whileRyulearnedfirst-handthathard work was necessary to survive. “My parents drilled into me and my three brothers that we were in America for economic and educational opportunities,” she recalls.

upon graduating from Centralia high School with honors and voted ”girl most likely to succeed,“ ryu prepared for medical school. She earned a BA in microbiology with honors from the uW and scored high on her MCAt exam, but wasn’t accepted into medical school, saying, “i looked good on paper, but bombed the interviews.” She regrouped and pursued an MBA at the Foster School “to learn how to lead.” too shy to speak up in class, ryu coupled her degree with a year of public speaking via toastmasters, pushing herself beyond her comfort zone.

the Shoreline area has been her home for over 25 years, raising three kids with her husband Cody ryu (BA 1982). A model citizen, ryu was an active PtA member for nearly 15 years while working with her husband in a Shoreline-based insurance business.

As a leader, ryu takes a bird’s eye view when solving problems, connecting a piece of legislation to a greater vision. the seeds of ryu’s leadership style were planted back in business school. ryu says, “i concen-trated in operations management and use my MBA on a daily basis. Operation studies helped me look at the big picture and pinpoint where the training or improvement

needs to be.”One of ryu’s most formidable chal-

lenges as mayor is completing upgrades to the three-mile Aurora Avenue strip of businesses that comprise 88 percent of Shoreline’s sales tax base. She recently traveled to Washington, dC to request federal funding to help complete upgrades to Aurora, an infrastructure project that she sees as critical for her community.

volunteerism is also part of ryu’s vision as mayor. inspired by Obama’s call to national service on MlK day, ryu helped double the expected number of volunteers for that day of service and envisions hiring a Shoreline volunteer coordinator “to mobilize multiple generations for the collective good.”

Equality and fairness are matters of prin-ciple for ryu and she brought those ethics to a business venture with her husband when they reorganized their Shoreline Allstate insurance agency. her husband, having been the principal agent for years, proposed her 49 percent partnership to his 51 percent when they became co-owners in 2000. ryu recounted, “We are equals. We each got 50 percent.Inegotiatednicelybutfirmly.”

Ryutookonlong-termfinancialplanningfor joint ventures that still pay dividends. “After Cody and i helped build up the agency over a 24-year period, it became our cash

cow. With a mandatory reorganization and ownership structure, we realized we could also sell the business.” ryu and her husbandalsodiversified,buyingcommercialproperties along highway 99, investments that allow ryu the opportunity to serve as mayor while she and her husband manage the buildings part time and spend more time with family.

ryu draws inspiration from her family. Middle child Christine (a current uW engineering student), ran for high school student council, encouraging ryu to run foroffice.RyuservedontheShorelineCityCouncil for two terms prior to being elected by her peers as mayor. When she originally raisedtheideaofrunningforofficewithher husband, whom she calls “my best friend and sounding board,” he replied, “You have supported me for 20 years, and now it is my turn to support you.”

Aside from family, ryu says her Christian faith gives her a sense of higher purpose. “My way of loving my neighbor as myself is toserveinpublicoffice.”

ryu is running for re-election because she enjoys the strategic planning and policy setting. in many ways, she is living the Amer-ican dream. By giving back to her community, ryu is able to advocate for improvements thatwilloutlasthertermofoffice.n

Breaking Barriers

Cindy Ryu is the mayor of Shoreline, via South Korea, Brunei, and the Philippines


lEAdErShiP MAttErS

While Marilyn Carlson nelson may not be a household name in the northwest, in Midwest business circles “Carlson” is the equivalent of Seattle’s Boeings, nordstroms, and Pigotts. Carlson nelson’s family business, Carlson, is one of the largest and most successful private companies in the world, with 160,000 employees in 150 countries and annual revenues of nearly $40 billion. Offerings over the years have ranged from trading stamps to luxury cruises, though the busi-ness is now focused on key holdings that include radisson and re-gent hotels and restaurant staples like t.g.i. Fridays. Stepping out of the day-to-day Chief Executive role in 2008, Carlson nelson remains

chairman of Carlson and will be visiting Seattle on november 5th to serve as keynote of the Foster School’s 18th annual Business leadership Celebration.

She will be sharing lessons learned over a lifetime that’s taken her from educational experiences in Paris and geneva to pressing 9gs in an F-16 to bringing the Super Bowl to Minneapolis (if you’ve ever been to Minnesota in January, you can appreciate what a feat that was!) and even helping to bring her industry back in the devastating aftermath of 9/11. Carlson nelson has chaired the World Economic Forum in davos and, by Presidential appointment, led the national Women’s Business Council. She serves on numerous civic and corporate boards, including the Mayo Clinic, the Kennedy Center for the Performing Arts, andExxonMobil,namedtheworld’smostprofitablecompanyin2008.Marilynisalsothecurrent chair of the u.S. travel and tourism Advisory Board.

Carlson nelson has published a book of reflections entitled how We lead Matters. A quick review of the Carlson trophy case suggests she has more than passing knowledge of her subject matter. the company founded by her father and once known for its hard-charging, male-dominated bravado is often cited as a favorite on the annual lists of “Best Places to Work,” and boasts a culture celebrated by working mothers in particular. interestingly, her book, which proves to be a quick and lively read, demonstrates the intended double entendre. Collectively, via historic quotes and brief one-page anecdotes, a blueprint emerges for how one successfully leads. Carlson nelson, a regular herself on the Forbes list of the most powerful women in business, brings a humanity, approachability, and set of values that have helped her reshapeCarlson’sculturewhileenhancingitsprofitabilityandcommunityactivism. n

rEGiSTEr nOW FOr A PrEFErrED rATE!the Business leadership Celebration is the Foster School’s marquee Seattle event for alumni and friends. Among those being recognized this year are two distinguished alumni who have done as much to advance our community as they have to advance their businesses. Don nielsen (BA 1960) made his mark with hazleton laboratories along with Kirby Cramer, but he is now viewed as a champion for teaching reform and advancing K-12 education in Seattle and across the nation. Phyllis Campbell(MBA1987)hasrecentlyopenedanewchapter by taking the top leadership post for JPMorgan Chase in Washington, after being the president and chief executive for the last six years at the Seattle Foundation, where she helped more than double its charitable assets and increase funding provided to the community.

Join these dynamic leaders in november, and with this announcement in Foster Business, we are opening registration with a Summer Special rate good through June 30. register as an individual attendee for $85 ($40 off our 2008 rate) by visiting foster.washington.edu/banquet. Also, for $5 more, we will send you a copy of Marilyn Carlson nelson’s book, how We lead Matters, so you can do your homework before the event. Again, this rate is good through June 30 only, so act now. those interested in saving up to $1,000 with a corporatesponsorshipandtablepurchaseshouldcontactJennySelbyat206.221.6725orjselby@u.washington.edu by the end of June.

EvEnTS CAlEnDAr

June 16, 2009BEdC Annual report to the Community luncheon12:00 - 1:30 p.m.Seattle Westin grand Ballroom

June 27, 2009PACCAr hall Picnic for Foster School Alumni, Friends, and Familiesdenny Yard July 18, 2009Ernest i.J. Aguilar Endowed MBA Scholarship dinner and Auction4:00 -7:00p.m.Conibear Shellhouse uW Campus

September 11 - 13, 2009MBA reunion Weekend for class years 1984, 1989, 1994, 1999, 2004

September 14, 2009Executive development Program beginsBank of America Executive Education Center november 5, 2009 Business leadership CelebrationKeynote speaker: Marilyn Carlson nelson

For more information on all these events, visit www.foster.washington.edu/alumni

ALUMNI

Top Secret Alumni news: You’re a Member for lifeSome thoughts on a “Foster first” alumni network from Assistant Dean Steven Hatting

harvard Business School is billed as the birthplace of the MBA. however subjec-tive that statement may be, it is generally agreedthatHBS’successhasbenefitedgreatlyfromadefinitivealumninetworkthateffectivelyclearsapathfromfirst-yearadmissiontothecorneroffice.Infactthe last two Foster School Advisory Board chairs, both harvard alumni, can attest to this. the immediate past chair, Artie Buerk (BA 1958), describes the alumni network at harvard as “potentially more valuable than the education itself.”

While Artie may not have intended his quotetobetakenliterally,Ifindvalueinit.harvard’s graduates wear their alma mater on their sleeves. When was the last time you told someone you are a graduate of the Michael g. Foster School of Business at the university of Washington? (i know it’s a name that’s still new to 90 percent of our alumni, but there’s no better group to get the word out and build our brand than our graduates!) Why keep it a secret? We take pride in our alumni and hope you feel the sameaboutyouralmamater.Thebenefitsof getting the word out should be tangible for all of us.

i can’t help but wonder what would be possible if we could get our graduates to consistentlythink“Fosterfirst”fortheircompany needs and opportunities—partic-ularly in today’s economy. the talent-rich Foster network is out there and loaded with potential—factor in our outstanding undergraduate alumni population and it’s actually larger in degreed alumni than the vaunted hBS!

CAllinG All FOSTEr GrADS…Often we refer to our graduates as stake-holders, but in this case i prefer the term shareholders. By virtue of your degree, whether it was completed six months or six decades ago, you have voting rights and can mandate the importance of strengthen-ing a Foster Alumni network. You can vote to support your alma mater as well as your-self, your fellow graduates, your companies, and your communities by attending and even hosting Foster School events, volun-teering to help, asking for faculty expertise or outstanding student talent…using YOur Foster School network.

too many times i hear that we only contact alumni when we need money. Well, we’re always going to need money and frankly the participation in support of the Foster School difference Fund continues to run behind that of our peers. But…most of our outreach has nothing to do with fund-raising. dean Jiambalvo has said the Foster School needs to be a source of information

and inspiration. We’re poised to become thatdefinitivesourceforstrategicleadersand research in the not-too-distant future. i challenge you to get involved in 2009 and beyond. if you haven’t been since you graduated, just do one thing…go online and update your professional records, ask your corporate recruiter to visit the Foster School, go to one of our events, get some career advice or even make an annual gift if you have more money than time. You can also e-mail me at [email protected] and easily tell me how we can serve you to strengthen our alumni network, enhance our reputation, and advance members like you.

i’m very interested in your thoughts about how we get our alumni and friends to think of Fosterfirst for business education, business talent, and business opportunities. Your uW and Foster alumni membership is an asset worth leveraging and a secret worth sharing. thanks for getting involved and spreading the word. n

Class of 2009 graduates will add more than 1,000 to the growing Foster Alumni network. Shown at one of the many husky Men’s Basketball victories this season are four of our newest alumnae who really knowhowtoshowtheirschoolpride:MichelleLow(accounting),HeidiHankins(finance/marketing), EmilyWarner(finance/marketing),andAmySharpe(marketing/sales).

5 out of 5 Foster alumni recommend

taking Fosterfirst to enhance career success.*

THANK YOU.* Foster Programs are not recommended for those apathetic about business acumen, strategic thinking, innovation and leadership. Side effects include frequent bouts of success and moments of inspiration. May result in inexplicable passion for subjects like managerial accounting, international finance and brand management.

36 foster BUsINess

first person

Lindsey Engh, graduating this year with a major in linguistics, spent some time in February at the Global Social Entrepreneur-ship Competition, a three-day event hosted by the Foster School’s Global Business Center that challenged student teams from around the world to find creative, sustainable solutions to prob-lems of poverty in the developing world. For more information on the competition, visit foster.washington.edu/gsec.

As I walked around the first Global Social Entrepreneurship Competition (GSEC) event that was open to both the public and potential investors, I noticed an exuberance among those present that seemed counter-intuitive amidst team rivalry and serious-minded investors. Everyone in the room knew for certain that each idea displayed on a poster or vocalized in the infamous one-min-ute elevator pitch held the potential to become a tangible project, capable of changing the lives of people all around the world.

For me, conceiving ideas and gaining knowledge in a specific area is much easier when there is a concept that exactly describes what I am pursuing. “Social entrepreneurship” was not always a ready term in my vocabulary. As a non-Foster School UW student, I was first introduced to the idea of social entrepreneurship and social business through an internship in Washington, DC last spring semester. I returned to UW not only with an interest, but also up-close experience, in the role that social business can play in the developing world. Luckily for me, UW is one of a few schools in the US that focuses on this specific aspect of entrepre-neurship, and I was able to take a social entrepreneurship course at the Foster School. Social business was now a familiar presence in my mind, and I was ready to find a tangible outlet.

GSEC was my next discovery, and with my growing experience with the Foster School, external NGOs, and social enterprises, I quickly grew to understand the role that business and non-business majors alike must take in the growth of worldwide social enterprise. Changing international social issues is an endeavor that involves persons from every background. The plethora of ideas and innovations emerging to combat global social issues opens the door for anyone with the passion, motivation, and realization of their own skills to take part in the continuum of social business.

GSEC is a perfect access point, but also an example of Foster’s leadership in the role social entrepreneurship is beginning to play in schools across the world.

The different posters and brochures set up around the trade show venue from local Seattle investors, including Microsoft, the Gates Foundation, PATH, and Unitus were an inclusive glance into the role that social enterprise is now taking in the business world. This year’s competition contained business plans that covered a wide variety of genres, including sustainable aquaculture in Tanzania, rural healthcare in India, pedal-powered telephones in Nicaragua, and anti-counterfeiting technology in West Africa. But it was the team members—each coming from a background that complemented other members’ skills to create a perfect opportunity for sustainable management—who made the competition so memorable. Every person involved contributed to the overarching enthusiasm that persisted throughout the week, which was especially noticeable at the banquet where prizes were announced. The teams were able to present their business plans in front of all the participants one last time, but mainly focused on their experiences throughout the competition and the oppor-tunity to meet like-minded individuals who wish—and have the power—to change the world.

In parting, I’d like to share a GSEC acronym created by the UW team MiNGO, an enterprise that focuses on building donor networks of ex-international volunteers to financially support their host NGOs in Latin America:

G for great experience,S for support, E for educate, and C for cash!

The GSEC week is all the proof anyone needs that the world of business is transitioning toward an era of economic development via socially responsible and sustainable business practices. With the Foster School at the leading edge of supporting start-ups such as the teams found at GSEC, it’s impossible not to become excited about social entrepreneurship! n

Bigger Than Business

through the Global social entrepreneurship Competition, a UW linguistics student sees the foster school as a cross-disciplinary catalyst for world change

By LINDSEy ENGH

NoNprofit orgaNizatioN

U.S. poStage

PAIDSeattle, Wa

permit No. 62

aDVaNCemeNt

Box 353200

Seattle, Wa 98195-3200

Mark Your Calendar

Saturday, June 27th @ 12:30pm

PACCAR Hall Picnic

for Foster School Alumni, Friends,

and Families

Kick off the summer with food and fun at the foot

of the UW’s future “headquarters” for business education

More information and registration available at

www.foster.washington.edu/picnic

Register Today!

Spr ing 2009

foSter

foster business magazine spring 2009

Documents

issue of foster business

business education page

foster emba program15

foster school loom large

caliber of business

financial predictions

long haul page

abundance of good news